Bitcoin Mining Timeline: Explore the Inner Workings of a Blockchain Block
Many people know that mining Bitcoin has become a big business, and like many big businesses, it is exceedingly difficult to get into the industry without massive capital investments. Bitcoin mining might be lucrative, but it's also expensive. Saturation has been hit and exceeded in some cases in 2019 with Bitcoin inching ever higher in the last month of 2018 and continuing since then too (almost) the start of a new bull market.
Why Though? A Little History Lesson To Get Started
Well, it's pretty simple. Bitcoin as a decentralized payment/currency network needs to make sure that all transactions are legitimate. It checks that these transactions are legitimate using blockchain technology, which has everyone checking blocks to see if they confer with previous blocks and all transactions tacked on to everyone else's blocks. Then those transitions and all the other transactions are put into the next block in the chain.
Complicated? Sure, but it is a pretty secure system. The only problem is… why would anyone give their computational power just so a community can check transactions? Bitcoin incentivizes this behavior by reward Bitcoins for every block that is solved. The rate at which Bitcoin is mined is 1 every 10 minutes. In the beginning, it was easy enough to mine with a normal PC. Anyone could do it. Then more people got involved and the hash rate increased. The Bitcoin network compensated for this by increasing the difficulty. This lead to GPUs being used to calculate the hashes, which made ordinary CPUs obsolete.
The biggest jump, however, was too specialized mining computers called ASIC Miners. ASIC stands for Application Specific Integrated Circuit. The application that these integrated circuits were made for was Bitcoin mining. They were far more powerful and power efficient than even the best GPUs. The hash rate began to increase exponentially from then on and unless you were a major corporation that dedicated itself to mining Bitcoin, you were out of the game… until mining pools came along.
Mining Pools Change The game
When Bitmain came out with its very first ANT Miner, they changed the Bitcoin mining landscape forever. So much so that they have a de facto monopoly on the Bitcoin ASIC miner market. They also run one of the most popular mining pools in the world. This is where anyone can connect to a “pool of computers” and share their own computational power with everyone else. It's like [email protected], only for cryptocurrency.
The amount of computational power that you add gives you the amount you get back in return. Now there are many mining pools that compete with each other for users and Bitcoin alike. Some offer more money (through taking lower percentages) and others give a more user-friendly experience at the cost of slightly higher fees.
If you are looking to get into Bitcoin mining then you need to find a decent mining pool and here is a list of the top mining pools out there.
Bitmain is not only big in creating miners, but they also run one of the most popular mining pools out there. It's great that it is free to join and pays out every day at around 10 AM UTC. All that and it is simple to set up.
This pool was launched sometime in September 2016 as Blocktrail, but it was acquired by Bitmain and rebranded. They use various tools to run their pool including BTC Smart Agent, BTC Tool and the BTC.com pool app.
They take a 1.5% mining fee, on a pay per share method and they share transaction costs with the users. While it is a great pool, many people prefer going straight to the source and signing up with Antpool instead.
The first and largest Bitcoin mining pool in existence. It is operated by a company called Satoshi Labs that is based in the European Union country of Czechia. It is so large, that it mines close to 11% of all bitcoins.
This pool takes a 2% cut from all the payouts and has a fairly transparent method of sharing the spoils.
This is the second largest mining pool with approximately 25% of the network hash rate. They charge 2.5% for the Bitcoin section and they have set a payout threshold of 0.005 BTC. They also offer solo mining programs where they control everything for you but you would need a lot of money to set it up with them.