Mommy, Where Do Bitcoins Come From? Bitcoin Mining Explained

 Mommy, where do Bitcoins come from?" Well, you see, when a shiny young Bitcoin catches the eyes of an ambitious miner, and because they love each other very much...


Wait, that's obviously too difficult to solve here. Besides, my whole goal is to keep things simple. Anyway, Bitcoins are made by solving complex math problems. This is done by a powerful machine that is built to solve these math problems. This process is called mining. People who own these machines to make money mining Bitcoins are called miners. When a batch of problems is solved it becomes known as a block. Blocks are verified by other users and once they are verified, they get added to what is called the blockchain. This chain continues to grow with a new block being added to it roughly every 10 minutes. This chain is really just a master ledger that will continue to grow and never end.


The very powerful machines that mine zap a lot of power and drive up the miner's monthly utility bill. The reason it takes so much power is the genius of the mathematics involved. It requires the mining machine to perform complex cryptographic algorithms. Once a math problem is solved by the machine, a block of coins is birthed. Every time 210,000 blocks have been created, the reward to the miner is halved. It takes 4 years to accomplish this. So it's kind of like a Bitcoin Olympics. Currently, the block reward is 12 Bitcoins (on June 23, 2020, the reward will only be 6 coins). Those coins go to the miner whose machine was the lucky lottery winner at that time. There is a winner every 10 minutes. There are also a lot of miners competing out there too. Said miner now has something of value. Mine enough coins and you pay your electricity bill and then some.


There is also another way to mine. It's called cloud mining. With this type of mining, you are paying to use someone else's network and that cuts into your profits significantly. The positives to this method are that it doesn't require using your electricity or even buying a machine.


Sounds good to me. I want to start mining now. Is it a good idea and can I generate passive income on a regular basis? Possibly. Hold tight for now and you can make that call later.




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