Bitcoin Mining Terms And Why You Need To Know Them
Bitcoin is quickly becoming a household name and many people across the globe are beginning to take an interest in Bitcoin mining. Making a profit with Bitcoin is quite easy, once you understand some important concepts, terms, and other factors that go into this new digital currency. Before you start investing your time and money into bitcoins, you’ll want to understand exactly what it is your doring. Bitcoin mining is without a doubt a great way to make some extra money. However, how much you make depends greatly on what your are willing to spend. Here are some important terms to help you better understand the concept of Bitcoin mining.
Simply put, a Hash Rate is a mathematical problem that miners need to solve-the rate at which the problem is solved is described as a Hash Rate. The performance from different miners is measured in terms of Mega Hash per second, Giga Hash per second, Tera Hash per second, and Peta Hash per second.
Bitcoins Per Block
Every time that one of these mathematical problems is solved, more and more bitcoins are being created. Bitcoin numbers generated per block starts at fifty and then it is halved every 210, 000 blocks. Currently the bitcoins awarded per block is 12.5 million. It’s important to know that the last “halving” happened in July 2016 and the next will take place in the year, 2020.
The Bitcoin network is created to produced a fixed amount of bitcoins every ten minutes. The difficulty level of the mathematical problems is meant to increase in order to adjust with the increased Hash Rate of the network. This means that as more miners join the network, it will become tougher to mine bitcoins.
The power consumption is different from miner to a miner. There are different miners available in the market, and each has different energy consumption rate. At the very start, it is important to find out the exact amount of power consumption for calculating your profitability. This can be easily carried out online or seeking the help of Bitcoin miners. Power consumption is always measured in Watts.
When you start mining, it is important to join a mining pool. This “pool” is basically a group of miners who band together in order to mine more efficiently. There are various platforms that allow miners to join together. Mining pool maintenance requires some extra expenses, so there may be a fee to join one of these groups. The profits are then divided amongst the pool members based on how much work a miner did and their Hash Rate.
Declining profitability with passing year
This is the most elusive and important variable of all these terms. The idea here is that as no one can predict the rate at which miners are joining the network, no one can predict how difficult it will be to mine in five months or five years. This is why it is next to impossible to answer whether Bitcoin mining is profitable or not.
The conversion rate of bitcoins is changing each and every day. This is one of the main reasons it is tough to predict BTC to USD conversion rate after a few years. This is one important fact that Bitcoin mining profitability needs to be calculated. If our are mining bitcoins to accumulate bitcoins, then this won’t affect you. However, if you are planning on converting your bitcoins to a traditional currency, this may or may not create a huge impact.