You've heard about bitcoin mining, and you know it's the way people are getting cryptocurrency; however, you have no idea how to do it yourself. You picture setups with fancy computers that emit a powerful glow, and you believe that this is only a skill for intelligent tech wizards. Because this is a newer idea, there are all sorts of interesting but entirely wrong things people think about how bitcoin mining works. Let's look at five prevalent myths and bust them wide open right now so that you can really understand what is up with this whole digital gold rush.
Myth 1: You Need Super-Powerful, Fancy Computers
You may imagine a warehouse full of supercomputers stacked up just for mining Bitcoin. Sure, it's correct that currently, a type of specialized hardware called ASICs (Application-Specific Integrated Circuits) is the best equipment to use for efficient mining, but you don't have to have a NASA-level setup to get involved. In the early days of Bitcoin, regular desktop computers were sufficient. And as more people joined in, the competition grew, and those beefy ASIC machines became the only way to do some serious Bitcoin mining. Consider it a variant of the gold rush. Early on, an ordinary pan could work, but eventually you'd need a larger, more efficient device if you want to find anything substantial.
Myth 2: Mining New Bitcoins Is Like Gold Mining
This is a big one. Mining doesn't just generate more Bitcoin out of thin air. Rather, the miners are, for all intents and purposes, the record-keepers and security guards of the Bitcoin system. They dedicate computing power to the arduous task of verifying, several times each second, that transactions are legitimate and write them in a gigantic general ledger, which is known as the blockchain. And in return for this verification and security work, the network gives them a new number of newly minted Bitcoins and the associated transaction fees that came with the block. It's more like discovering a finite number of gold nuggets while rigorously safeguarding the gold ledger.
Myth 3: Bitcoin Mining Is Only for Private Citizens
So-called “solo miners” are still in operation, but most of the Bitcoin mining now takes place in large “mining pools.” These pools combine the strength of many miners to increase the likelihood of successfully mining a block and sharing the gains. This is a more predictable approach for the mining process, but it does sometimes yield smaller profits per miner.
Myth 4: Mining is Easy Money and You Get Rich Quickly
The idea of simply plugging in a computer and having the Bitcoin pour in is appealing, but the reality is more complex. The process of mining for Bitcoin is expensive as it requires a lot of computing power and electricity, both of which come with a cost. Mining also changes over time, so it becomes harder as more miners hop on the network. Though a few early adopters made some serious money, it is more difficult and competitive now, and it requires some special skill.
Myth 5: Mining is Bad for the Environment Because it's Inefficient and Wasteful of Energy
The energy use of mining Bitcoins is indeed something to worry about and continue to discuss. But the energy waste isn't the full story. Many mining companies have been turning to renewable forms of energy, such as solar, wind, and hydro power. What's more, the energy expended for mining helps safeguard a decentralized financial network that some believe provides more value than it takes up in energy. The industry is continuously trying to figure out how it can be more sustainable.