What is the logic of mining (what exactly mining is)

What is the logic of mining? What is the logic of mining? Why is Bitcoin the mining method of Cryptocurrency and its economic model. Because in the digital asset industry, miners are mainly divided into three types: trading markets, financial services, investment, and speculation. From this perspective, mining is an act of obtaining profits or making money For a mining pool, mining is a very simple operation process that does not require any handling fees. As long as you have coins, you can participate in the mining pool and increase the difficulty by constantly adding new algorithms, thereby reducing the efficiency of the system. Meanwhile, due to the special characteristics of Bitcoin, it requires a certain amount of electricity consumption. This also leads to many people in the mining industry being unable to participate, so when we compare the mining pool to “miners”, it can be understood that all the small funds in the mining pool are involved in mining, which can gain more computing power and improve their own computing power Of course, mining also brings certain risks. If someone wants to hold this method for a long time, it will result in huge losses (such as being trapped). Once investors are unwilling to bear these risks, they may face significant losses, so the overall impact on mining is very significant

What is mining?

Editor’s Note: This article is from Wind and fire wheels Community (ID: FHBT18). The author is Pei Pei. Odaily Planet Daily is authorized to reprint it Hello everyone, I am your old friend Pepe. Today, I will share with you what Bitcoin mining is all about? Actually, during this period, many readers are still very interested. In previous articles, we mainly talked about how the amount and difficulty of Bitcoin produced across the entire network have changed:

Firstly, how many transactions need to be processed in total, and what rewards can be generated for each block; 2、 How to calculate this data specifically? I won’t go into details here. For example, there are 10000 transactions in Ethereum every day. If calculated based on the current block height of Bitcoin, it would cost approximately 10 ETHs or less per year to package the network fees into a new ledger for storage, and then convert these into corresponding tokens for payment in the future. However, for most investors, because of their ignorance of the market, the price of mainstream Bitcoin in the current market fluctuates greatly, so it is unnecessary to buy any Cryptocurrency as a reference value or other alternatives for investment. So next, I would like to introduce all the transaction types and difficulties required for Bitcoin online, and what is the relationship between them? Of course, there are two important indicators, that is, the block output speed and the number of confirmations per second, which is a common problem of Random number generation The first thing we need to know is that the mining costs of Bitcoin are increasing day by day, so we may find that many friends may not know the inflation rate of Bitcoin yet. However, based on the data mentioned above, the general situation is as follows:

Below, we can take a look at this earnings trend chart:

From above, During the entire process, in addition to Bitcoin, there were also some other project parties who were continuously investing in research and development resources to save costs. However, due to the fact that Bitcoin has many mining pools operating throughout the network, and with the development of the mining industry becoming more specialized, its overall profitability has also become more significant; Secondly, we can see that the price of Bitcoin has been on a downward trend, and sometimes even drops to near lows. Although there may be some profit margin in the short term, in the long run, it will still affect users’ enthusiasm for mining to some extent. (The above content does not constitute investment suggestions)

1. The actual electricity consumption of Bitcoin throughout the network, that is, the longer it takes to obtain a token through machine operation, the greater the pressure generated, in order to achieve maximum utilization efficiency, while also considering the future price changes of Bitcoin

2. Bitcoin generally takes about 2-3 years to restore normal usage throughout the network, and in this case, mining itself does not have any special needs. Unless you want to obtain a sufficient number of BTCs and hold a corresponding number of tokens, it cannot continue to run for a period of time Another aspect that is worth paying attention to is that a large amount of funds in the Bitcoin network are flowing to overseas exchanges or third-party platforms such as personal wallets, and most domestic exchanges are using Bitcoin spot, which has formed a natural model of providing liquidity for the Bitcoin market. In fact, in the Wet market, there are basically some futures contracts used to hold Bitcoin Cash cash, including some digital commodity trading funds approved by the US securities regulatory authority.