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Why Mining

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          In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically "minting" currency.

          For example, as of March 2022, there were just under 19 million bitcoins in circulation, out of a total of 21 million.

          Aside from the coins minted via the genesis block (the very first block, which founder Satoshi Nakamoto created), every single one of those bitcoins came into being because of miners. In the absence of miners, Bitcoin as a network would still exist and be usable, but there would never be any additional bitcoin. However, because the rate of bitcoin "mined" is reduced over time, the final bitcoin won't be circulated until around the year 2140.

          This does not mean that transactions will cease to be verified. Miners will continue to verify transactions and will be paid fees for doing so in order to keep the integrity of Bitcoin's network.

         To earn new bitcoins, you need to be the first miner to arrive at the right answer, or closest answer, to a numeric problem. This process is also known as proof of work (PoW). To begin mining is to start engaging in this proof-of-work activity to find the answer to the puzzle.

         No advanced math or computation is really involved. You may have heard that miners are solving difficult mathematical problems—that's true but not because the math itself is hard. What they're actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a "hash") that is less than or equal to the target hash. It's basically guesswork.

         So it is a matter of randomness, but with the total number of possible guesses for each of these problems numbering in the trillions, it's incredibly arduous work. And the number of possible solutions (referred to as the level of mining difficulty) only increases with each miner that joins the mining network. In order to solve a problem first, miners need a lot of computing power. To mine successfully, you need to have a high "hash rate," which is measured in terms gigahashes per second (GH/s) and terahashes per second (TH/s).

         Aside from the short-term payoff of newly minted bitcoins, being a coin miner can also give you "voting" power when changes are proposed in the Bitcoin network protocol. This is known as a Bitcoin Improvement Protocol (BIP).

         In other words, miners have some degree of influence on the decision-making process for matters such as forking. The more hash power you possess, the more votes you have to cast for such initiatives.

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    Eugen Tanase

    Chief Operating Officer, 1BitUp

    Eugen Tanase is Chief Operating Officer at 1BitUp. Along his long Corporate Management career he gained lots of expertise in Renewable Energy Projects, Transnational Trade of Energy Resources, and many other fields. Starting 2015 he stepped into the study Decentralized Applications and Blockchain along with Bitcoin mainstream. From 2017 he embraced WEB3 and Cloud Mining .

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