How Does Bitcoin Mining Work?

Bitcoin mining is a legal process and can be achieved by running SHA256 double round hash verification. You must buy the mining hardware from Bitcoin or some of the leading online stores.

The consumption of electricity can run into high figures which may not be profitable for you unless you have the best hardware. Once you have the hardware deployed you should download the free Bitcoin Mining software. There are several applications available and you may choose the one you are comfortable with.

You then set up a bitcoin wallet to receive the Bitcoins that you mine. You are given a unique Bitcoin address. For safety and security purpose, you must enable a two-factor authentication or set up the Bitcoin wallet in a computer system that is not connected to the internet.

The Bitcoin network pays the miners by releasing a bitcoin for their efforts in compiling new transactions and solving difficult computational puzzles. The miner is then given the permission to place the next block on the chain and claim the rewards which could include incentive mining as well as transaction fees paid in the form of Bitcoins deposited in the wallet.

Anybody with an internet connection and Bitcoin hardware can join the network and almost all decisions regarding the process are made on a consensus basis.

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