Bitcoin is controlled by an algorithm that monitors transactions and generates more Bitcoin. Every 10 minutes, 12.5 Bitcoin is generated, which go to the people who “mine” it. When the Bitcoin are generated, the algorithm creates a random number similar to a winning lottery number. Someone who mines uses a computer to try to guess the winning number.

When that number is guessed by a mining computer, all the Bitcoins go to that user. But as you know, it’s difficult to win the lottery. The same concept applies to Bitcoin mining. Individuals who mine by themselves to win the big prize of 12.5 Bitcoin are known as “solo miners“. These people almost never win and most solo miners just mine for fun. People who are serious about generating Bitcoin mine in “pools“, a giant group of miners who all try to win the Bitcoin prize together. It can be compared to buying lottery tickets with your coworkers and agreeing to split the winnings if someone wins. While you won’t win as much Bitcoin compared to if you solo mined, you a significantly higher chance of winning something. Pools such as Antpool or BTCC have thousands of people all trying to win that 12.5 Bitcoin prize.

When Bitcoin is mined for a certain amount time, the network increases its “difficulty“, meaning that the magic number to win the prize gets larger and harder for the miners to generate. Because of this, miners must upgrade their technology in order to win the same amount of Bitcoin. With the increase in competition in the last few years, some technology have been made completely obsolete. When mining first started, people used the CPUs in their computers to generate Bitcoin. As technology improved and Bitcoin mining became more popular, people who used CPUs transferred to using GPUs because it has a higher “hash-rate“. The hash-rate is how many times per second the Bitcoin code can be executed on a given device. The average CPU has a hash-rate of about 23 mega-hashes per second, or 23 million hashes a second. While this sounds like an astronomical number, it is nothing compared to the average of 1 gigahash per second of GPUs (one billion hashes per second). Even then, technology continued to evolve. CPUs and GPUs are both long gone in favor of an ASIC miner. An ASIC miner is a separate computer that devotes all of its power to generating numbers for the Bitcoin code. Huge miners have dozens or even hundreds of ASICs who mine Bitcoin 24/7.

As you can see, the current Antminer S5 can generate 5 terahashes per second (5 trillion hashes). However, with power always comes at a cost. While ASICS have great power, they are very expensive. The S5 is nearly $200 and newer model ASICS can cost up to $1,100. Many ordinary people can’t afford to keep up with competitive mining, causing large companies to gain control over the mining process. To combat this, some Altcoins have changed their algorithms to ban ASICs all together from mining their coins.

I hope that gave you a little introduction into the world of Bitcoin mining. If you want free Doge or Bitcoin please click on my affiliate links to get us both extra coins for free.

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