Let’s be clear – the process of making bitcoins is actually very complex. That’s why it is a better idea to explain it in a simplified way.
The process of creation of bitcoins is known as mining. There is a strong connection between this activity and the actual meaning of the word mining because it takes some effort to obtain bitcoins. Similar to real miners that invest their energy, equipment, and tools to dig some resources underground, Bitcoin miners use their energy, tools and equipment to acquire Bitcoins. So, look at Bitcoin as a kind of virtual gold. There is another thing that makes Bitcoins similar to gold – this is a non-renewable resource – there are just 21 million bitcoins in the world. What’s interesting is that not all of these coins are mined yet. At this moment, there are around 17 million of them.
The process of Bitcoin mining includes a computer and a specially designed program that is created to rely on the specific resources of the device to conduct complex mathematical operations. When the “miner” (the owner of the computer) solves a mathematical calculation successfully, he (or she) will get a chance to generate a new block and get the reward for their mining efforts. This is a so-called block reward that comes in the form of bitcoins. The block reward is reduced by 50% on every 210,000 blocks.
In case you didn’t know, a block like this consists of data. To be more precise, it includes information about transactions that have happened during the same period of time. So, whenever you are mining, you are adding records of brand new blockchain transactions. Back in 2014, miners received 25 bitcoins for a block. In the last year, they got 12.b Bitcoins for doing the same thing.
What every potential miner should know is that mining on regular PCs was profitable only in the beginning. Today, there are thousands of miners and only high-end hardware can help you make a profit. The good news is that this cryptocurrency keeps growing which means that all the investment made I equipment and tools used for Bitcoin mining have paid off.
Now to summarize our basic guide we will once again point out that Bitcoins are generated with the help of a process known as mining. Every miner relies on high-end hardware to solve different mathematical calculations. They receive a block reward for their efforts in the form of bitcoins.