Date posted :08-04-2020

Date updated:

What is bitcoin mining? The explanation of mechanism and reward contents

Bitcoin, which has been immovably popular as a representative virtual currency, is issued by a mining work called mining.

The word mining itself may be difficult to imagine even for those interested in virtual currency.

This is because many people buy and sell Bitcoins through exchanges and other means.

However, if you keep the concept down of mining, you will have a better understanding of how much Bitcoin is being supplied in the future virtual currency market.

The price movement changes depending on the supply and demand relationship of Bitcoin, so if you are investing in the virtual currency market, you should keep in that mind.

In this article, I will explain in details about the mining mechanism and how to get Bitcoin, also the types and how to do mining.

What is Bitcoin mining?

Bitcoin always writes transaction records to the ledger at regular intervals.

These transactions are carried out on the network, but each transaction data is processed by precise calculation to confirm the accuracy of the transactions.

Such a series of steps to ensure the consistency of transaction data requires enormous computation processing by a computer.

In order to perform enormous calculation processing, computers all over the world connected to the network work together to record operations in the ledger.

This is also called "mining", and the person who performs mining work is called "Miner".

Mining work has been carried out since the first Bitcoin as a virtual currency, and is now applied to many virtual currencies.

In many virtual currencies, new currency can be issued only by mining.

In addition, miners can receive commissions as rewards for processing when mining. As a result, an increasing number of investors and companies are entering the business as a whole.

Mechanism of mining

First of all, I will introduce the mechanism of Bitcoin mining.

In simple terms, mining is responsible for issuing new currencies and approving transactions. It will be explained in detail in the following chapters.

Issuing new currencies through mining

The role of mining is a mechanism common to all virtual currencies as well as Bitcoins. In the first place, mining is a mechanism in which a newly issued virtual currency is given to a person who has succeeded in mining work.

Currently, it is said that there are more than 1,500 virtual currencies issued by mining.

First, mining is done to save all transaction records in a transaction record book using blockchain technology for a certain period of time.

All transaction data is a mass of transaction records that are managed in blocks and is being managed in the chain.

Therefore, it is checked whether the transaction information is correct by performing enormous calculation processing with a computer.

There are a certain number of people who do such mining work for business purposes, and they are called Miners.

As Miners, they contribute to record transactions by performing faster computations than anyone else on a good computer.

The role of miners is enormous and they can receive reward fees from newly issued currencies (as will be described in detail later) as soon as transactions are approved.

Virtual currencies such as Bitcoin are issued as new currencies only by mining. Therefore, the mining activities are popular not only for individuals but also for visiting companies.

Deeper understanding of mining

To understand deeply the concept of mining, you should know about hash values and nonces.

What is a hash value?

A hash value is a hash function value that uses a hexadecimal number from 0 to f as one digit.

The role of the hash value is to display the same number for the input value and the output value, but if the input value changes, the output value will be completely different.

It is an important index in mining, as well as to obtain a certain value in order to maintain precise consistency.

When introducing the mining function as a distributed ledger, the calculated value of the hash function is useful.

What is nonce?

On the other hand, a nonce is a numerical value generated when connecting blockchains.

In Bitcoin, the nonce value is 32 bits. This nonce role is required during block approval work by miners.

For example, when connecting a new block as a chain, by changing the 32-bit nonce every time, a random number including 0 at the beginning appears. Consistency is achieved by finding a hash value greater than this number.

The hash value can be calculated from the new nonce value, new transaction data, or the past encrypted hash value.

Keep it in one corner of your head for a more professional understanding of mining.

The mechanism of Mining reward and how to get it

I explained that the reward mechanism in mining is a compensation obtained by connecting blocks generated by a certain transaction like a chain.

In order to connect the blocks, it is necessary to perform enormous calculation processing on the computer owned by the minor.

Therefore, in order to carry out these calculations, companies that have a large amount of capital are increasing their capital investment and entering the business.

If the transaction is successfully approved, the miner will receive a fee. This accumulated fee becomes a big profit.

Capital expenditures are being made by companies and large-capital investors, making it difficult for individuals to profit from mining.

Hash rate difficulty in Mining rewards

You would want to know in advance how much profit you can get when you receive mining rewards, right?
Hash rate and difficulty metrics are important to make the most predictions from mining.

What is a hash rate?

Hash rate refers to the calculation speed in mining, and shows how many hash functions are calculated per second.

Since you can check the speed of the hash rate, you can see how much the mining profit will be by observing the numerical value.

About Difficulty

Difficulty, on the other hand, means how difficult it is to generate blocks when mining.

In fact, in the case of Bitcoin, the difficulty level is adjusted every time 2016 blocks are generated.

And it prevents the block generation time from becoming too short or too long.

As the level difficulty of mining increases due to the difficulty, the price tends to rise easily, and it can be seen that there is a correlation.

Mining method / type

You can see that mining plays an important role in supporting blockchain technology.

Next, I will explain in detail the specific methods and types of mining.

Solo mining

First of all, there is solo mining as a method for easily performing mining. Solo mining literally refers to “a mining method that can be performed alone”.

The method of solo mining stems from the fact that personal miners purchased computer machines and started mining individually at the dawn of the birth of virtual currencies such as bitcoin.

In the past, solo mining was popular as a way to luckily find virtual currency.

However, in recent years, large-scale capital investment by companies has occurred due to intensifying mining competition.

Currently, in order to generate a certain amount of profits in solo mining, it is necessary to install a huge computer machine, a facility where machines are placed, and a cooling fan.

Therefore, it is very difficult to get mining rewards from solo mining by individuals.

Pool mining

Pool mining uses a mining technique that is opposite to solo mining.Pool mining forms a team called a pool to gather people who are interested in mining.

Pool mining has an operator who operates mining, and by jointly providing computer machines, it strengthenes machine power.

This is a collaborative mining method that collects and manages a small amount of individual capital and distributes the profits obtained.

The appeal of pool mining is that even those who want to start mining individually can mine with a realistic investment amount.

Solo mining requires a minimum investment of several hundreds of millions of yen, but pool mining can start with hundreds of thousands of yen.

Moreover, since multiple investors collaborate in mining, remuneration and risk are easy to disperse.
As a disadvantage of pool mining, you need to pay a certain fee that is determined in the operator of the pool from the mining reward.

In addition, the mining currency varies depending on the pool, so it may take time to select the currency you want.

Nonetheless, it is a recommended mining method for those who want a certain amount of stable revenue.

Cloud mining

Next, I will explain about “cloud mining” that allows you to mine without the cost and detailed knowledge of computer machines when mining.

Cloud mining is a mechanism that allows you to make money by investing in organizations that manage mining, such as companies and businesses.

Mainly, you can purchase hash power of corporate computer machines and get rewards according to the calculation speed of mining.

The more money you have, the more hash power you can buy, so you can expect to see more profit as you invest.

As a benefit of cloud mining, since the equipment of companies and operators is already available, you can easily start even from small amount of tens of thousands of yen.

Even if you don't have deep knowledge of mining, you can leave the management from mining work to earning rewards, so it is recommended for beginners.

However, the currency for mining may be determined by the company / business. In addition to that, you may have to carefully select a dealer in terms of reliability.

The reason is that there are some companies that do fraudulent mining business, and it is necessary to make sure that they are legitimate mining companies with no risk of running away.

Let's participate in cloud mining considering "Is there a currency I want" or "Is it reliable?"

How to get Bitcoin other than mining

There are other ways to get popular Bitcoin than mining, mainly purchases at exchanges and sales offices.

For exchange purchases, you create an account on the cryptocurrency exchange and get bitcoins that are bought and sold on the market.

The minimum purchase unit varies depending on the exchange, but you can get Bitcoin from around several thousand yen.

On the other hand, a virtual currency exchange may also have a sales office.

Sales offices compare with exchanges trading with third parties,you can directly buy Bitcoin held by the exchange.

Although there is an advantage that you can purchase immediately even when the number of orders in the market is small and liquidity is low, the fee is slightly higher.

In addition, it is not installed in many places, but you can purchase it at Bitcoin ATM.

Create a virtual currency wallet, deposit into Bitcoin ATM, and receive Bitcoin for the deposit amount via QR code.


In this article, we explained detail the mining mechanism in Bitcoin, how to get rewards for mining, and the types of mining.

The history of mining is one of the indispensable technologies in the virtual currency mechanism that has been around since the birth of Bitcoin.

In fact, it can be understood that each transaction of virtual currency is approved by the people who perform mining called miner, which is the fundamental technology to generate blockchain.

Furthermore, in recent years, not only solo mining, but also joint pool mining and cloud mining that invests in companies are popular.

I also introduced that mining is not the only way to get Bitcoins, but that by various means.

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