WHAT IS BITCOIN MINING
Bitcoin mining is the process of utilizing energy by solving a computational problem to secure the network a transaction at a time and getting a block reward as remuneration. The block reward for mining Bitcoin currently is 6.25 Bitcoin per block, equivalent to approximately 40,000,000 KES at the time of publishing this article. Unlike SWIFT fiat currency legacy financial system standard, denominated in USD which is slow, intrusive and expensive in Bitcoin the value being transferred has no bearing on fees. Bitcoin transactions are transparent on a decentralized leger, 3rd parties can be eliminated completely and your privacy guaranteed.
Satoshi Nakamoto solved a computer science problem known as The Byzantine Generals Problem which provides a distributed consensus between parties where some are dishonest and or unreliable. Proof-of-Work (PoW) is the consensus mechanism used in Bitcoin to produce a commonly agreed history of transactions without relying on a central coordinating authority.
Bitcoin uses SHA-256. A hash function is a special function where an input of any string of numbers, letters or other data entered gives out a giant random looking number with a guaranteed output for the same input. ASICS are computers that only have 1 purpose, hashing SHA-256. This is the hardware you need to have in order to mine Bitcoin profitably today. The Nakamoto consensus holds that the node that expends the most energy for all the blocks wins.
Bitcoin is the most popular coin mined internationally at 89% according to the September 2020, 3rd Global Cryptoasset Benchmarking Study by Cambridge Centre for Alternative Finance
GET AN ASICS AND START MINING BITCOIN
Due to ‘number go up’ which you will come to love and hate in equal measure the latter being because the Bitcoin market never closes, ASISC are hard to come by at this point in time with multiple charlatans on the prowl.
A trusted resource to get a great deal for an ASIC miner from a legitimate source is the Hardware Market group on Telegram. Only vetted thus verified dealers in ASICS are allowed to post on the group giving you a great opportunity to do your due diligence in an environment of like-minded individuals.
Some of this hardware providers also offer hosting services for instance Blockware Solutions which is ideal if you just do not want the hustle of running the AICS yourself, you do not have a proper place to run the ASICS and or an affordable energy source to make maximum profits possible.
If you choose to run your own ASICS, the rest of the equipment needed: Computer, cooler, Ethernet cables, sound diffusers and mufflers are readily available on EBay or locally on Jumia.
SERVICES YOU NEED TO MINE BITCOIN
A mining pool is where numerous miners come together utilizing their combined processing power over a network then dividing the rewards they get as per each participant’s contributions.
Bitcoin mining pools have reward systems created to incentivize participants against “pool-hopping” with novel reward techniques being developed to offer better rewards thus loyalty. The reward systems divide mining rewards to hashers contributing to the mining pool e.g. Block subsides and transaction fees. Some of them include:
The Pay-per-share (PPS) model provides instant, guaranteed payout to a miner for contributing to a pool that finds a block. The payment is from the pools existing balance.
In the Pay-Per-Last-N-Shares (PPLNS) model when a block is found, miner rewards are calculated as per the contribution to the last N pool shares.
Bitcoin Pooled Mining (BPM) is a system that older shares from the beginning of a block round are given less weight than more recent ones. New rounds start when the pool solves a block and miners are remunerated proportionately to shares submitted.
Whichever option you choose it is vital to understand how the pool is governed and the exact role the administrators play in the mining process. This is important as the administrators can take advantage to mine in a dishonest way by redirecting miners hashpower to support another chain or even blacklist transactions.
EXAMPLES OF MINING POOLS:
Slush pool uses the BPM system outlined earlier. It is the 1st mining pool with over 1.2 Million Bitcoin mined since 2010.
Boasts the most transparent mining data, advanced FPPS revenue model with cutting edge Smart pool function, ensuring prompt payments.
Laurentia is a novel peer driven mining pool with an optimized and efficient backend using the Fair SPLNS+ score scheme.
Poolin mining pool utilizes the FPPS reward system and has multiple features such as hash rate transferring making mining more flexible.
It is very important to get a licensed electrician to do all your upgrades, fixtures and fittings wherever you choose to mine your Bitcoin. This is important because of your personal safety, to ensure your ASIC has optimum power to hash as effectively as possible and the licensed electrician will provide valuable insights on optimizing the energy source you have chosen to mine.
CALCULATING BITCOIN MINING PROFITABILITY
FACTORS TO CONSIDER:
- Cost of purchasing and installing mining equipment
- Daily operating expenditure
- Energy required
- Labour (If any)
- Bitcoin mining profitability calculators are a great tool to calculate this with inputs such as:
- Current Bitcoin price and difficulty
- Total hashrate (TH/s)
- Total power consumption (Watts)
- Electricity price ($kWh)
- Average transaction fees per block
- Difficulty increment
A Bitcoin calculator to check out.
Bitcoin mining is very lucrative and can be carried out in a sustainable environmentally friendly way. The Sahara Desert to the North and Kalahari Desert to the South make Bitcoin mining using solar energy very viable. Predominant sunshine along the equator and numerous solar companies being willing to accept instalments for their hardware will give you a competitive edge to get started.
Take full advantage of the free resources and people in the Bitcoin echo system that are very willing to onboard a new comer. This is just one way in which you can earn Bitcoin. With multiple sources of green energy available in Africa, unlike blood diamonds Bitcoin mining ensures Africans can benefit on an individual level as they mine. Vast resources being exploited in the African continent are being exploited by foreign miners, stake your claim to Bitcoin through mining thus financial emancipate yourself from the legacy financial system.