Mining in bitcoin means to put the block in the ordered sequence forming a blockchain. Each block consists of information about transaction history. This information is saved in it permanently. No technology can change this information.
What Do Miners Do?
The main issue is to organize the blocks according to the information stored in them to form a good blockchain. For this purpose, there is a hash for each block. The heading of that hash consists of the information present inside its relative block. Moreover, each has also had the information that what type of block containing what kind of information should come after it or come before it. So the main work of the minors is to find that specific hash in the thousands of the hashes present and make a complete organized blockchain. If there is the slightest change in the order or the types of blocks, the nodes will reject them.
Aim Of Mining
The blocks contain the records of the transactions. This record serves as proof that the two parties that made the deal kept their consent under consideration. Moreover, the parties collectively passed the order for the transaction. A third party is also present, and the network rewards it for remaining truthful during the whole process.
How Miners Get Paid
The network pays the miners in the form of rewards. We can categorize the reward into two categories; one is from the user while the other is from the web. The blocks are the source of income for the minors. Users pay the miners to transact off the block while the network rewards miners when he generates a new block. There is a specific rate per generation of each block. This rate can fluctuate as well.
The selection of the hardware is essential for the miners. They need to purchase an ASIC device. A minor’s main features should look for in these devices are efficiency, price, and electricity consumption/. The efficiency of a machine depends on its hash rate. It is the number of hashes that a device produces in a second. Miners should always go for the device with the maximum hash rate. The more the hash rate is, the less the time it consumes during mining.
Secondly, the extent of electricity consumption is also very important. The miners should compare the devices with the same hash rate and select the one which uses less electricity.
Thirdly one should check the price of the device. Do not go for a device that is too pricy, or the miner will end up spending more than half of his money to pay for it.
Economics Behind Mining
The whole process of mining and the gaining of profit depends on only one thing that is location. It is because each state has different rates of electricity. Usually, the domestic sector is a bit affordable, but the miners have to see that either that bill will add in their profit or not. So, for the miner, the developed countries won’t be a good option because electricity rates are high.
The miner select areas with low electricity prices to ensure they will still enjoy their profit even if the market blows off.