Crypto Mining Calculator

How Does Bitcoin Mining Work?

>>   When you do crypto mining, you earn cryptocurrency without needing to pay for it.

>>   Bitcoin miners get Bitcoin as a reward in exchange for completing "blocks" of verified transactions which will be added to the blockchain.

>>   Rewards are paid to the miner who finds a solution to a complicated hashing puzzle and the probability of a participant discovering the solution is related to the portion of all the network mining power.

>>   In order to set up a mining rig you'll need either a graphics processing unit (GPU) or an ASIC (Application Specific Integrated Circuit.

>>   Using this calculator you can find out what your expected return on you mining is depending on your hash rate and electricity cost. Discover if it's going to be profitable to mine Bitcoin, Ethereum, Litecoin, Dash or Monero.

How Does Bitcoin Mining Work ... in Detail ...

Bitcoin mining is the method new Bitcoins are put into circulation and it additionally functions to maintain and develop the blockchain ledger. Mining performed by using powerful computers solving complex math problems.

Crypto mining is costly, painstaking, noisy and only rewarding from time to time. Despite this, mining is attractive to many investors interested in crypto because of the reward for their mining work with crypto tokens.

Note however that you don't have to be a miner to own Bitcoin or other crypto currency. You can simply buy cryptocurrencies using fiat currency or you can trade on an exchange like Bitstamp using another crypto currency like Ethereum.

You can also earn crypto by shopping using Lolli or set up an interest-earning crypto account.

The Bitcoin reward for miners is an incentive for assisting in monitoring Bitcoin transactions to ensure their validity. Due to this responsibily being spread among many users all over the world, Bitcoin is a "decentralized" cryptocurrency, i.e. it's a currency that doesn't rely on any central authority like a central bank or a government to supervise its regulation.

How To Mine Bitcoins
Releasing New Bitcoin
How Much Can a Miner Earn?
What Do I Need For Mining Bitcoins?
Will Bitcoin Mining be Profitable for Me?
What Are Mining Pools?
Is Bitcoin Mining Legal?
Mining Risks

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How To Mine Bitcoins

Miners effectively get paid for working as auditors because mining involves verifying the legitimacy of Bitcoin transactions.

This procedure is intended to keep Bitcoin users honest and was set down by Bitcoin's founder, Satoshi Nakamoto. Miners help to prevent "double-spending" by verifying transactions.

Double-spending Bitcoin is roughly similar to if you have one legitimate $20 bill and one counterfeit of that same $20.

If you try to spend both bills, someone taking the trouble to look at the serial numbers of both bills will see that the numbers are identical and therefore one of them must be false. In a similar way, Bitcoin miners check transactions to ensure that users haven't illegitimately spent the same Bitcoin twice.

Crypto Currency Converter Cryptocurrency Prices by Coinlib

When miners have completed verification of 1 MB (Megabyte) of Bitcoin transactions (a "block"), they are eligible for a quantity of Bitcoin reward.

The 1 MB limit was set by Satoshi Nakamoto's protocol and has caused some controversy because some miners want the block size to be increased to accommodate more data, meaning that the Bitcoin network could process and verify transactions faster.

Note that even when a crypto miner is eligible to earn Bitcoin after verifying 1 MB worth of transactions, he/she may not necessarily get paid.

This is because 1MB worth of transactions can, in theory, be as small as 1 transaction or as big as several thousand - it depends how much data the transactions take up. Consequently, after all the transaction verification work, the miner might still not get paid.

In order to earn Bitcoins the miner needs to fulfill both of these two conditions:
1.   Verification of 1MB of transactions, and
2.   The miner needs to be first to reach the correct or closest answer to a numeric problem, known as "proof of work".

No advanced math or computation is really involved as "proof of work". What miners actually do is trying to be first to come up with a 64-digit hexadecimal number, known as a "hash", that is less than or equal to the target hash.

It is essentially guesswork but with trillions of possible guesses for each problem it is very arduous work.

In order to be first at solving a problem miners need a huge amount of computing power or "hash rate" measured in megahashes per second (MH/s), gigahashes per second (GH/s) and terahashes per second (TH/s).

To estimate how much Bitcoin you could mine with your mining rig's hash rate, Cryptocompare offers a useful calculator.

Releasing New Bitcoin

In addition to earning an income, miners help to bring more Bitcoin into circulation.

E.g. By November 2020 there were about 18.5 million bitcoins in circulation. Leaving aside the coins minted in the very first "genesis" block by its founder, Satoshi Nakamoto, each one of those 18.5 million Bitcoins came into existance due to miners.

Without miners, the Bitcoin network would still exist and be usable but there would not be any additional bitcoin.

A time will come when Bitcoin mining ends because, according to the Bitcoin Protocol, the maximum total amount of Bitcoins is 21 million.

However, due to the rate of mining being gradually reduced over time, the final Bitcoin will not be in circulation until about year 2140.

This doesn't mean that transactions will then no longer be verified because miners will continue to do this job and will be paid fees for doing so.

An additional perk for miners is their voting power when alterations are proposed to Bitcoin's network protocol.

This gives miners a degree of influence on decision-making on such matters as forking.

How Much Can a Miner Earn?

In a process known as "halving", Bitcoin mining rewards are reduced by half every four years or so.

When Bitcoin was first mined in 2009, one block would earn the miner 50 BTC. In 2012 this was halved to 25 BTC.

By 2016 it was halved again to 12.5 BTC. And in May 2020 the reward halved once more to 6.25 BTC. In November 2020 Bitcoin^s price was approximately $17'900 for 1 Bitcoin, meaning you would earn $111'875 for completing a block.

You can keep track of exactly when halvings will occur by consulting the Bitcoin Clock, which is updated in real-time.

Incidentally, Bitcoin's market price has, over the years, broadly corresponded to the reduction of coins issued into circulation.

Web sites like BuyBitcoinWorldWide.com will tell you how many Bitcoin blocks have been mined so far and how many remain to be mined.

What Do I Need For Mining Bitcoins?

During Bitcoin's early years it may have been possible to win blocks using an ordinary desk-top computer.

This is no longer possible because of the progressive increasing mining difficulty requiring ever more computing power.

Crypto Prices Cryptocurrency Prices by Coinlib

To ensure smooth functioning of the blockchain and its ability to process and verify transactions, one Bitcoin block is produced about every 10 minutes.

But as there are a million or more mining rigs competing to solve hash problems, they will probably reach a solution faster than, say, 10 mining rigs working on the same problem.

That's the reason Bitcoin was designed to evaluate and adjust the mining difficulty every 2'016 blocks.

So when there's more computing power working together to mine Bitcoin, the mining difficulty level increases in order to keep block production stable.

Less computing power results in decreased difficulty. So in 2009, when Bitcoin launched, the initial difficulty level was one but by the end of 2019 it was more than 13 trillion.

What this all means today is that to mine competitively, miners need to invest in powerful computer equipment like a GPU (graphics processing unit) or an application specific integrated circuit (ASIC).

These can cost from $500 to the tens of thousands of dollars. Some miners, especially Ethereum miners, purchase individual graphics cards (GPUs) as a low cost way to mine.

Will Bitcoin Mining be Profitable for Me?

In addition to the costs of purchasing expensive mining equipment, you also need to consider the cost of electricity needed to power your mining rigs.

Cryptocompare provides a useful calculator so you can estimate your likely costs and benefits.

What Are Mining Pools?

Mining pools are operated by third parties and bring groups of miners together who share the payouts among all the participants.

That way miners can get a steady Bitcoin income as soon as they activate their miner. Popular mining pools include Poolin, Slushpool and Binance.

Is Bitcoin Mining Legal?

Bitcoin mining legality depends on where you are located.

Because Bitcoin is considered a threat to fiat currencies (Dollars, Euro, Yen, etc.) and governments' control over financial markets, Bitcoin has been designated illegal in some countries.

This currently includes Egypt, Kyrgyzstan, Bolivia, Bangladesh, Iran, Nepal and Thailand, but governments do periodically change their policies so, in case of doubt, a search for Bitcoin illegal countries is useful.

Mining Risks

Bitcoin mining bears a financial risk because you could make all the effort and expense of buying thousands of dollars worth of mining equipment and have no return.

This risk can be reduced by joining a mining pool, as mentioned above.

If you are thinking of mining Bitcoin but live in an area where Bitcoin is prohibited, you should obviously reconsider.

It would also be advisable to research your own country's regulations regarding cryptocurrencies before investing in mining equipment.

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