Along with Bitcoins, their mining has also recently captured wide interest. Designed to validate every Bitcoin transaction, the mining process helps validate the coin, and makes it temper proof. In general, every coin undergoes this complex validation process, where miners solve a complex puzzle to earn Bitcoins. If successful, then they get a ‘Mining Fee,’ in Bitcoins. Then the successfully mined Bitcoin is appended to a series of similar Bitcoin block, called a Blockchain. It is a chronologically organized leger that is maintained and updated in public domain. Undoubtedly, it is this document that imparts verifiability and immutability to the Bitcoin.
Bitcoin mining is energy intensive, so it is very expensive. It also requires a ‘Proof of Work,’ to demonstrate that the miners have expanded sufficient resources to win a ‘Bitcoin fee.’ In order to prove their claim to the fee, they compete on P2P network, where the competition involves solving a series of complex mathematical puzzles. This competition or the race is characterized by the processing speed (hash rate), and the processing power, the hardware hash power. As the competition proceeds, the computer appends hashing functionality on the header of the block.
The block header or a hash uses a unique set of numbers known as nonce. As different nonce are created, the computer looks for the correct nonce. Once it is identified, and unanimously recognized by P2P network, the corresponding miner is allowed to Bitcoin as well as the finding fee, currently set at 12.5 coins in Bitcoins.
How to Start Bitcoin Mining?
The legal issues surrounding Bitcoin mining in the US are still evolving. Also, the objective of this Blog is to NOT recommend a process that may have some legal ramifications. Hence, the ideas presented below are meant to satisfy only the scientific curiosity of the readers. They are advised to seek legal, accounting, and professional help prior to initiate Bitcoin mining.
In general, one needs a powerful PC, and an access to internet. Also, as the process is energy intensive, it would require a cheap source of energy. For individual mining, people can down load wallets or mining programs on their PC or smart phones. For large scale mining, they can join a mining pool or even opt for Bitcoin mining cloud groups. There are advantages of joining the mining pools, as they collectively solve for at least some coins in a day.
Is it Legal in the US?
That question is left up to the lawyers. One must seek out their advice prior to attempting to mine Bitcoins.
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