What is Bitcoin mining?
When Bitcoin was introduced to the world in 2008 by the pseudonymous individual(s) Satoshi Nakamoto, it heralded a new type of technology called the blockchain. The blockchain is a chronological series of interconnected blocks, each holding a limited number of transactions processed within a given period.
How does Bitcoin mining work?
Blockchain blocks are cryptographically linked and created through a competitive process involving miners. Bitcoin miners re hardware devices that run remotely, and are tasked with validating and confirming transactions. Once the transactions are confirmed, they are thus added to a block created by one of the miners. The miner or a person is selected following a competition to solve an arbitrary computational puzzle. The first one to solve the challenge gets the chance to create the next block and add it to the chain. As a reward, the miner is given a ‘subsidy’ in the form of new coins whose issuance is programmed to reduce by half approximately every four years. Currently, that reward is 6.25 BTC. When Bitcoin launched in 2009, that figure stood at 50 coins. Decentralized networks require a consensus mechanism to ensure that nodes within the network easily communicate with each other to maintain an accurate record of the blockchain. In the case of Bitcoin, it uses the Proof-of-Work (PoW) mechanism, which also used to be the case for Ethereum mining, however, as of 2022, Ethereum moved to Proof-of-Stake (PoS) method. PoW requires that for any miner to be rewarded, it needs to prove that it has dispensed resources such as energy. That is why mining Bitcoin is an energy-intensive process whereby BTC miners consume a lot of electricity to secure the network. Additionally, the mining process ensures that anyone participating in the validation of transactions is sufficiently invested in the network’s success to discourage them from malicious activities. Crypto beginners’ corner:
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How to Mine Bitcoin?
Now that we’ve specified how Bitcoin mining works, we’ll specify different methods on how to mine Bitcoin. These are:
Solo mining – as the name suggests, this type of mining involves validating and confirming transactions individually. It is potentially more lucrative than other forms of mining as the miner gets to keep 100% of the rewards. However, it’s more difficult to mine this way successfully; Pool mining – here, solo miners join forces to create a pool of common computing power that can then be used to mine Bitcoin. Increased computing power increases the chances of successfully creating a new block and therefore rewarded with new BTC coins. Rewards are this shared amongst pool members proportionately according to computing power contributed; Cloud mining – there are two subcategories of BTC cloud mining – the first involves investors pooling financial resources and funding a technical team that uses the funds to create and run a mining operation. The other form of cloud mining involves a solo individual renting out computing power on remotely located servers and using them to mine Bitcoin.
How to start Bitcoin mining?
In this section, we will look at a typical three-step process on how to start Bitcoin mining, confirm transactions, create blocks and earn some BTC coins while you are at it. These steps are:
Step 1 – Get the right Bitcoin Mining Hardware
When Satoshi mined the Bitcoin Genesis block in January 2009, [they] used a normal computer to do so. That means that any computer with a normal multi-core processor personal computer was strong enough to run the Bitcoin software. With time, as more miners joined the network, the competition necessitated the use of more powerful machines. Hence, the move to the use of graphics cards months into the launch of the network. Graphics cards, also called graphical processing units (GPUs), were much more powerful and more efficient. However, these were also replaced with slightly more efficient field programmable gate arrays (FPGAs), which were reported to be about twice as powerful as the high-end GPU cards. The year 2013 saw the introduction of ASICs (application-specific integrated circuits) by the Chinese company Canaan Creative, a computer hardware manufacturer. Following this event, all previous miners relying on the GPUs and FPGA were rendered obsolete when it comes to mining Bitcoin. ASIC miners immediately dominated the BTC mining space and have maintained their dominance ever since. If you are looking to join the fray, you will need to invest in, not only a powerful ASIC miner but also an efficient one. Some of the more common ASIC miners currently include:
Antminer series from Bitmain; Ebit miners from Ebang; Avalon miners from Canaan Creative; Whatsminer by MicroBT, and several others.
Recommended video: What is Bitcoin Mining? Simply explained by 99Bitcoins
Step 2 – Create a Dedicated Bitcoin Wallet
If you successfully create a block on the Bitcoin network, the software will send the reward to a provided BTC wallet. There are several options for choosing the preferred crypto wallet, including one that is automatically generated by the Bitcoin Core software. However, if you prefer to create a different wallet, you can choose from these different categories:
Software wallets – these are wallets existing in the software format and can be downloaded onto a desktop computer or mobile device. They are often freely available; Hardware wallets – these are physical devices that are used to store cryptocurrencies. They may be costly to acquire but have proven to be safer to use than their software counterparts; Paper and steel wallets – perhaps the most secure form of Bitcoin storage media. Paper wallets are created by simply downloading both public and private keys and printing them onto a piece of paper. The same applies to steel wallets but these require a bit of work to set up as you may need tools to etch the wallet address characters onto the steel plates. However, they work the same as paper wallets.
Step 3 – Configure Your Mining Equipment
This stage can get technical; therefore, not everyone will be comfortable going through the setup procedure. It entails installing the hardware in an appropriate location. If you are planning to run a major mining operation, you will need a large open space to set up the Bitcoin mining rigs. Even a small operation will require a dedicated room. It is almost unfeasible to set up a single machine to mine Bitcoin due to the kind of competition you will be facing. Therefore, to give yourself the best chance to mine at least one Bitcoin, you will need several miners at the very least. It is a large investment, as noted earlier, thus limiting some of those who used to mine as a hobby. If you prefer to mine as part of a pool, you could opt to invest in fewer miner machines compared to solo mining. After installing the machines, configure them to contribute their hashing (computing) power to one local server, ensuring that they mine as a single unit. This way it makes it easier to control all the miners from a central location. Other configurations you will need to make include:
Downloading and installing the Bitcoin Core software (for solo miners) or proprietary software provided by the mining pool operator (for pool miners); Specifying the wallet address; Connecting your Bitcoin mining rig to a remote pool server (preferably one that is closest to your mining rig location);
That is it for configuring a Bitcoin mining rig, and it could take a few minutes to a few hours to finish the setup. Once done, let it run and maintain the equipment to ensure it runs efficiently.
Bitcoin Mining Profitability
Calculating Bitcoin mining profitability is highly subjective, as one miner’s profits may be another’s losses. To calculate this figure, you will need the following information:
Investment cost, which includes the cost of the hardware, and maintenance costs; Energy costs are determined by the location of the mining rig; Pool mining fees or commission (for those mining within a pool); Price of Bitcoin or the exchange rate between Bitcoin and the US Dollar.
Expectedly, different miners will have varying profits even if they end up mining the same amount of Bitcoins. For that reason, it is advised to estimate your miner’s profitability using one of the several freely available profitability calculators online, such as this one from Minerstat.
How long it takes to mine 1 Bitcoin
Technically, it is not possible to mine 1 Bitcoin, especially if you are a solo miner. However, if you mine within a pool, your rewards will typically be in satoshis, which are denominations of the BTC coin that could equal 1 BTC over a period of mining. If you opt to mine solo, the minimum reward you can get if you successfully mine a block is 6.25 BTC. Any of the following factors could change thereby affecting your initial calculations. These are the most important factors to consider while estimating how long it would take to mine 1 Bitcoin:
Factors that Affect How Long It Takes to Mine One Bitcoin
Example calculation:
Let’s consider an example based on the following facts: Mining hardware factors:
Antminer S19 Pro; Output: 100 TH/s (Tera-hashes per second); Power consumption: 2,950 Watts (W); Number of units: 10; Total output from 10 machines: 1,000 TH/s Total power consumption: 20,500 W Total cost of acquisition: $1,900 X 10 = $19,000;
Location factors:
Canada; Electricity cost in Canada: ~$0.06/kWh (it varies but this is the lowest rate offered after conversion from CAD to USD currency);
Bitcoin network factors (as of October 2022):
BTC Price: $19,612; BTC network hash rate: 246.76 EH/s BTC difficulty: 31.3605T
Pool mining factors:
Pool: F2Pool; Total hash rate contributed from all miners: 43.32 EH/s (17.5% of total BTC network hash rate); Pool commission: 2.5% PPS+; Pool server location closest to Canada: United States;
Now that we have all the following hypothetical factors to use for our calculations, let’s use one of the popular BTC mining calculators (minerstat) to estimate how long it would take to mine 1 Bitcoin. Input your data on the top row as highlighted in this example paying attention to the total hash rate that your mining setup would contribute, how much electricity it would consume, and the mining pool fees. Also include the price of electricity in the location in which you have set up (or plan on setting up) your mining rig. According to minerstat, this mining setup would have earned us about 0.00177151 BTC within a 24-hour period. Meaning it would take us about 564.5 days (1 BTC/0.00177151 BTC) to mine 1 Bitcoin. That is roughly 18 months. In this calculation we have ignored the cost of the mining hardware, however, if you include it in the calculation, it might double the duration it takes to mine a single Bitcoin. There are ways to reduce this period such as migrating to a location with cheaper electricity, investing in more miners, or even joining a mining pool that charges a lower commission. All these changes might contribute towards increasing our profitability.
Final thoughts
With various factors affecting the time of mining a single Bitcoin, it is easy to see that one person’s duration will vary from the next by a margin of a few days or weeks to years. It all depends on their choices, including hardware, location of the mining rig, whether to mine individually or be part of a pool, and which pool to join, among several others. Hopefully, you have learned in this guide that determining how long it takes to mine 1 Bitcoin is not as clear-cut as the question seems. Consider all the above factors to calculate a figure that may reflect your specific circumstances. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
Whether the miner mines as part of a pool or not; The kind of hardware they use to mine Bitcoin; The location; The Bitcoin difficulty number; The price of Bitcoin, among other factors.
Solo mining – transactions are validated and confirmed by a single person (the most lucrative option as 100% rewards go to you, but also the most difficult as you’re on your own). Pool mining is where solo miners join together to have increased computing power, increasing chances of creating a new block. Cloud mining: investors pool financial resources and fund technical teams to run the mining operations; or a solo miner rents out computing power on remote servers to mine Bitcoin.
