What is Bitcoin Mining?
Bitcoins are generated by “miners” who use computer power to complete mathematical processes that confirm each transaction and introduce new Bitcoin into the market. These miners are essential performing the accounting work for the entire network.
A log, also called a “block chain” is a collection of all transactions in the network, with every new transaction being broadcast across the Bitcoin network. Mining computers collaborate together to create an updated block chain that becomes the new official block chain on average every 10 minutes. Every 10 minutes, the miner or miners whose block chain has been approved by the network is awarded a fixed number (currently 25) new Bitcoins. And the process continues indefinitely until all the Bitcoins are mine – 21 million of them – where the last will be mined in the year 2140.
There are 3 hardware options available when it comes to mining: CPU, GPU and ASIC. CPU mining was the first type of mining that utilized the CPU in your computer to do the math required to mine Bitcoins. This was a viable option when Bitcoins were new to the scene. Over time, as more and more users started to mine, the difficulty began to increase. This brought on a change to look for better, faster ways to mine. The next step was using GPU (video card) power to mine Bitcoins at a much faster rate compared to CPU mining. Miners would create computers with many videos cards to increase their total mining power. Once again, over time, as more and more people began using numerous and advanced video cards, the difficulty increased.
This led to a revolution in Bitcoin mining. ASIC (Application-Specific Integrated Circuit) are the new top-dog for profitable Bitcoin mining, unfortunately they are not easy to get a hold of. Only a few companies are producing these and they are in high demand and on pre-order.
What is a mining pool?
A mining pool is a group of Bitcoin miners that combine their computing power to solve the math together. Once they solve the problem (block), they split the profits up usually based on the amount each individual did. As of now, this is the best way to see any rewards by mining. Individual mining is a thing of the past unless you own one of the best ASIC miners.