Is It Worth Getting Involved With Bitcoin Mining?

Bitcoin mining is essential to keep the Bitcoin network
going. The miners verify and confirm all of the Bitcoin transactions and
without them the whole thing would grind to a halt. There would be no more transactions
and no new Bitcoins created.

What is Bitcoin
Mining?

Bitcoin miners use very powerful computer equipment to
update the Bitcoin decentralized ledger. They need to solve very complex
cryptographic challenges and the first to do this will update a block and
receive a reward in Bitcoins (at the time of writing this is around 12
Bitcoins).

With Bitcoins being worth thousands of dollars these days
this seems like a really good idea. But is it really? You cannot perform
Bitcoin mining successfully with a powerful desktop computer. You need to
invest a ton of money into very high end computing power and then pay for the
running costs of these computers.

The Process of
Bitcoin Mining

Anyone can get involved in Bitcoin mining. There are already
thousands of Bitcoin miners that update the Bitcoin blockchain ledger and
thousands more want to get involved. With Bitcoin mining you need to guess a
number that will solve an equation that the blockchain generates.

You need to use powerful computers to make these guesses.
When you have a lot of computing power you can make many guesses per second
which increases your chances of being the first to get it right.

When you guess right the mining software on your computers
works out which of the currently pending transactions need grouping together in
the next block for adding to the blockchain. After this the entire Bitcoin
network validates the transaction.

Bitcoin Mining is
difficult

The inventor of Bitcoin and blockchain, Satoshi Nakatomo,
created rules for mining where the more mining power in the network the more
difficult it is to guess the right random number. As more and more people are
becoming Bitcoin miners the difficulty level continues to rise.

The reason behind this increasing difficulty is to create a
regular flow of Bitcoins. In reality this means that it takes around 10 minutes
to create a new transaction block on average. The actual times vary
considerably. It is all about mining power these days and the more you have the
more likely you are to succeed.

Bitcoin Mining Pools

To get involved in Bitcoin mining these days is beyond most
individuals. The costs of the equipment required and the running costs are just
too much. There is increased competition as well with many miners collaborating
together.

One solution to this problem is the Bitcoin mining pool.
This is a simple concept where groups of people create a pool and combine their
mining power and share the rewards. Even small players can get involved with
Bitcoin mining in a pool.

There are a number of large Bitcoin mining pools existing
today. They will take a percentage of any success that you have. Usually this
is around the 2% mark.

So is Bitcoin Mining
worth it?

If you are a newcomer then the answer to this is probably
not. There are a lot of factors to consider if you really want to get involved
in Bitcoin mining. If you want to go it alone then you will have to invest a
ton of money into computers that can make very high numbers of guesses every
second.

Then you have to keep these super computers running which
usually means storage costs (they need proper cooling as they run all of the
time) and electricity costs. In truth you would be better off using the money
that you would need to invest to purchase Bitcoins.