Decrypting Crypto: How bitcoin is mined
WACO, Texas (KWTX) - More people are investing in bitcoin, and other forms of cryptocurrency. While different types of cryptocurrency are produced in different ways, more bitcoin are brought into the market through mining.
Bitcoin mining is done by computers, all over the world, running algorithms and complicated math equations to solve a block. Blocks make up a blockchain, which makes up bitcoin.
According to Jason Les, CEO of Riot Blockchain, a bitcoin mining company, bitcoin transactions are pooled into a block. Once the transactions are pulled into a block, miners all over the world compete to solve it.
In order to solve a block, they run it through algorithms and equations until they get to what the bitcoin network calls a “valid answer.”
The first miner or group of miners to solve the block earns 6.25 bitcoin, which as of the afternoon on Jan. 25, equals $233,531.
Les said the process is really just guessing, and in order to have the most guesses, miners need to have the latest and greatest mining software and hardware.
Dr. Abhijit Nag, an assistant professor of computer information systems at Texas A&M University Central Texas, said the process of mining is not something that just anyone can get into.
“They also need a computer hardware, any desktop computer cannot do that,” Nah said. “There is actually a sophisticated computer with high performance machines, they can actually be able to run billions of different numbers in a very short period of time.”
While bitcoin is not a tangible object, it is a finite resource.
“Over the next 10 years, most of all the Bitcoin that there will ever be will be mined,” Les said. “There’ll be a little bit more after that for the next 100 years, until 2140. But Bitcoin miners right now are really racing to mine that last chunk of Bitcoin that’s available for issuance over the next decade or so.”
Les’ company owns Whinstone, a bitcoin mining facility located in Rockdale in Milam County. Les said Texas is an ideal state for bitcoin mining, for a few reasons.
“Governor Abbott has said that he wants Texas to be a bitcoin mecca,” Les said. “He wants it to be an opportune area for bitcoin miners.”
Les said since bitcoin mining requires so much energy, they look for areas where low-cost energy is available, as well as a surplus of energy, and he said that’s something that can be found in Texas.
According to Les, the Rockdale facility was built in a part of the grid that has a surplus of power. When power demands rise, it’s something they can respond to.
“There’s about 85 different times between June July, August and September, that Whinstone shut down in order to respond to grid events that were high demands in power,” Les said.
Whinstone also completely shut down during the winter storm last February.
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