Bitcoin runs on its miners.
These energy-intensive operations, mostly run out of China, both produce new bitcoins and process transactions for tokens already in circulation. Every time a token changes hands, mines process the complex algorithms that unlock the blockchain and record a new owner. They are, in every real sense, the backbone of the Bitcoin network.
Mining bitcoin is also the only way for the blockchain to produce new bitcoins, awarding them to miners as they are digitally unearthed. As a result, successful bitcoin miners can run a very profitable business in this era of high-value bitcoins.
Yet, as the network has grown in popularity this process has come to require increasingly intense amounts of computing power. Without spending a fortune it’s almost impossible for individuals to set up a mining operation with a realistic chance of reward. So companies have set up mining pools.
A mining pool connects users into a networked mine. They dedicate a portion of their computer’s processing power to the overall operation, and in exchange get a portion of the created bitcoins. By joining a bitcoin mining pool you can contribute to the network… while also getting a realistic chance at earning some bitcoins in the process (albeit in small amounts).
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While reviewing mining pools, one of the most important terms you should know is “hash rate.” This is the speed at which a mine processes the bitcoin algorithm. A hash is a mine’s attempted answer, and the rate is measured at hashes per second. Below we have represented this as “Pool Share,” each mining pool’s percentage of the overall hash rate across the Bitcoin network. (A pool share of 20.9 percent, for example, means that this mining pool provides 20.9 percent of the Bitcoin network’s overall hash rate.)
If you are interested in getting onboard, here are some of the very best you can consider:
In the 1990’s SETI had its screensavers that searched for extraterrestrial intelligence. Today, we use the same concept to create the next generation of money. If you’d like to know more about how that works, you can always subscribe to the Bitcoin Market Journal newsletter!
