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What is Bitcoin Mining – Bitcoin Mining Explained (in laymans terms)

January 21st, 2015 | by BTC News
What is Bitcoin Mining – Bitcoin Mining Explained (in laymans terms)
Tech
25

One of the most confusing concepts within Bitcoin on the whole, is the process of mining. The explanations to “what is bitcoin mining” often given on the new…

 

25 Comments

  1. avatar Jonathan Rossignol says:

    +Cryptocurrency (Crypto Currency) News Electricity does not create many
    jobs and I bet most of the hardware is machine built, but ten thousand
    dollars in electricity expenditure, on top of that hardware overhead to
    perform this “mining”, does make for one busy wage slave in the state of
    this economy, though. This isn’t even meant as an insult to the
    crypto-commune, because under the right circumstances I see Bitcoin as
    another viable trading opportunity (much like stocks). I’m just trying to
    find the true value here, and it’s not adding up for me. 

  2. avatar Rochelle Hughes says:

    How much is one bitcoin worth?
    

  3. avatar Filthy Peasant says:

    First video that I found where someone actually has a clue of what really
    goes behind cryptocurrency mining… good watch.

  4. avatar Hinata says:

    So, you basically lend your hardware to solve some mathematic problems or
    do transactions, and you get paid in some fucking shitty bitcoins and not
    CASH? Bullshit.

  5. avatar Siskin's Bits and Bobs says:

    It seems a bit sad that this involves the wasting of global energy
    resources. Talk about a power struggle….

  6. avatar SpyengoEen . says:

    So WHO are those mysterious miners? Why are they spending so much
    power/money to get a little virtual money? Isn’t that like gambling, also
    risky e.g. you can lose more than you earn? This whole concept is just
    mumbo jumbo to me.

  7. avatar ebasi boka says:

    Check out this Wq5irIx3Nhw (yt video)

  8. avatar Obama says:

    All of you need to understand that when you mine in bitcoin – you’re
    fighting against the Federal Reserve Banking and Big Government that uses
    your tax money NOT to help you but to help themselves. I let my computer
    system mine bitcoin so that freedom lovers can freely trade goods/services
    and I do it for free with the intention to limit Big Government and the
    destroy the Federal Reserve Banking System who’s job now is to transfer the
    wealth of America to other countries to begin merging us into a one world
    governing body. We can strip them of all their powers by not supporting the
    dollar that is backed by nothing. This is our only way out of fascism!

  9. avatar Brett Miller says:

    Thanks for actually EXPLAINING the mining process/costs/etc. instead of
    just using cryptic marketing speak :)

  10. avatar Dan DeMarco says:

    But what IS IT?!

  11. avatar tomburg2 says:

    Bitcoin is artful global pyramid scheme.

  12. avatar Epic Viral-Fail says:

    Let’s get this straight. There is NO work done by miners. They run
    software. The hardware does all the work. A caveman could do it. 

  13. avatar Stéphane Chalangeas says:

    Thanks.. Now I understand :-)

  14. avatar tubebility says:

    Great microphone.
    You seemed a bit high at the end though.

  15. avatar Tom M says:

    What do you mean by checking the math? Does this mean that if I bought
    multiple GPU’s they will be able to solve the generated algorithms faster
    when combined? AMD GPU’s are supposed to be good for BitCoin mining I hear
    and if a person combined multiple GPU’s together they can almost double
    their processing power. So in the end the expensive hardware that is used
    is used to efficiently check the generated algorithms? In other words the
    miner doesn’t do anything but manage their system and make sure that it is
    up and running and is connected to the BitCoin network? 

  16. avatar Devon Ott says:

    Thank you for this! You’ve managed to provide a great explanation of a very
    difficult concept.

  17. avatar evanb0 says:

    A couple of points that confuse me.
    1) If bitcoin mining is the processing of transactions, and bitcoin as a
    currency serves in transactions, then for me it’s kind of blurry where it
    all started, as a process. To my mind it sounds as there must have been an
    initial set of transactions that miner(s) had to process. A beginning of
    the chain.
    2) Miners receive a small reward for their work. From whom? Who or what
    decides the reward and the fact that it will diminish to 25 and 12.5 and so
    on? Who or what establishes those figures? (Even more curious about this
    since you said there is no central authority.)
    Thanks for any additional explanations you could provide!

  18. avatar Fraidoon Khuram says:

    So basically we waste power and energy to sort transactions of fake
    currency that has no value and is made up.
    Its like playing Pokemon. Hurray one person decided to make Pokemon and the
    next person went and caught them all and in the end it meant nothing.
    By the way if a bit coin is 1000 dollars, how are u going to buy a cup of
    coffee. Here is my 0.001 bit coin?

  19. avatar Duncan Carr says:

    Hi. Great video. I’ve been messing about with a spreadsheet and noticed
    that the difficulty has been rising at approx. 0.18% per day. This
    exponential rise means that on average, every 39 days, the difficulty
    doubles. Over 1 year (to date) the difficulty has risen from approx. 3.3
    million to 2.6 billion. This is 800 times more difficult than it was a year
    ago. That would be like buying an airliner that would do the speed of
    sound, and 1 year later it is limping along at 1 mph. Wow.

    So yes, I agree – I cannot see how one can compete with this.

    Is it ALSO true that the reward is dropping at the same time !!!???

  20. avatar Nathan Dunleavy says:

    This was a very informative, easy to comprehend video, well done. Earned a
    subscriber here :)

  21. avatar Captain Kimchi says:

    Excellent explanation.

  22. avatar danny blackhorse says:

    another B–L S–T that pc component manufacturer came up with to sell
    hardware
    the modern day pied piper and o yes there is a line of followers spending
    thousand of dollars to do this and , and the pied piper took them all
    away lol

  23. avatar xkluzivtv says:

    The problem with this video is that Satoshi has explained this. The other
    problem is that people like this geek always try to detract people based on
    cost. However, if in 2013 it costed a total of $2,000 to recoup 25 bitcoins
    and one Bitcoin is worth about $500 today, then 25 x 500 = $12,500.
    Therefore, I don’t get what these geeks be talking about when a person is
    in for the long haul. The investment pays off eventually just like
    traditional investing. Furthermore, newbies like myself who have the
    Full-Client are not looking for profits but are looking to help the
    community by using the Full-Client, then I believe I am entitled to have my
    Client set up for solo mining. However, every time inquirer about solo
    mining using the full client I get responses to join a pool despite my
    telling these *fuckers* I don’t want to join a pool and I don’t care about
    whether or not a receive bitcoins from solo mining. I just want to fucking
    do it as instructed by Satoshi. What’s more *Fucked* up is the fact every
    person who has recommended sites like Mt. Gox and Bitinstant have set
    people up for failure, then throw those sites under the bus when they get
    hacked saying it is not bitcoin but the people who are running and
    operating those sites. Furthermore, these geeks failed to mention that they
    are responsible as well for recommending those sites under the claim that
    they use those sites as well. That is, until the sites are hacked then they
    recant their statements telling people they were the ones warning people
    against those sites. *FUCKING LIARS *

  24. avatar Mack Johnny says:

    If you live on a university can you use their electricity? 

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