Bitcoins, as you may already know, are not made by central banks. And as you may have already heard, they are ”mined” by Bitcoin ”miners.”
Bitcoin miners are people who use powerful computer equipment to verify bitcoin transactions. Each time they successfully verify 1MB (megabyte) worth of transactions, also known as a ”block,” they become eligible to be rewarded with X quantity of bitcoins. Now, not everyone who completes a block receives a bitcoin. Verifying transactions is merely a way to become eligible to earn a bitcoin. It is also one of the two conditions to be rewarded with a bitcoin(s.)
Miners must also be the first to solve complex hashing puzzle power. The probability of them being the first to discover the solution depends on the mining power of the network or the computing power. Hence, why miners must invest in powerful computer equipment like a graphics processing unit (GPU) or an application-specific integrated circuit (ASIC).
Now, the quantity of bitcoins miners get awarded with reduces over time. In 2009, when Bitcoin was initially released, 1 block can earn you 50 bitcoins. In 2012, this was halved to 25 bitcoins. In 2016, another halving year, the reward was halved to 12.5 bitcoins. Last May 2020, it was halved to 6.25 bitcoins.
Who are the Bitcoin Miners?
Anyone who has access to a powerful computer, WiFi, and some special graphics cards can mine bitcoins. Miners are everywhere. They are your average Joe, your neighbour, the Uber driver who picked you up last week, that acquaintance you met through a friend, that girl/guy you met on Bumble, and maybe, one of your friends. Bitcoin miners are all over the world.
The early miners were cypherpunks, Bitcoin enthusiasts, software developers, and libertarians who believed that this cryptocurrency is the future of money that will liberate us from our dependency to banking institutions. They were mining bitcoins using powerful computer equipment in their own home. While some were simply doing it as a hobby and for fun, some were mining to sell them and make money, and others were mining because they saw Bitcoin’s future value, what it could become, and how it will change the world.
Some miners mine solo, others join a mining pool, a group of miners working together and sharing resources, such as processing power over a network, to enhance the mining output with enhanced processing. These people is a mixture of regular people who have a full-time job and who mine Bitcoin on the side, and of people who dedicate a lot of their time mining Bitcoins.
However, as Bitcoin started becoming more and more popular, private Bitcoin mining companies such as the Quebec-based company, Bitfarms, and the China-based company, Bitmain, started mining bitcoins as well.
Bitcoins are not made — they are mined. To earn bitcoins, miners must meet these two conditions:
- Verify 1MB worth of transactions
- Be the first miner to solve a complex hashing puzzle.
And in order to meet these conditions, they’ll need powerful computer equipment, Wi-Fi, a very good understanding of how Bitcoin is mined, patience, and time.