It is not news that Bitcoin is a highly volatile market in which either you can earn a lot of cash or can lose all the earnings. Also, it is a fraud-free market as it is a full cryptographic encrypted safe system. But now the question arises where these bitcoins come from? The answer is “Mining”.

We all have been seeing these days that the prices of cryptocurrencies, to be specific prices of Bitcoin cryptocurrency, in particular, are touching the skies. It is certainly visible that the interests earned from bitcoin mining have picked up significantly as well.

Yet it has been found that for most people, the concept of Bitcoin mining is not clear because of the complex nature and high cost it has. Considering this very fact I am here to bring that clarity to you about what bitcoin mining is and how Bitcoin mining works.

This article will help you to give a clear picture of the Bitcoin mining guide simply. But before stepping into the algorithm to start bitcoin mining, let's have an understanding of the concept of bitcoin mining first. 

What is Bitcoin?

Bitcoin is a cryptocurrency like Ethereum, Dogecoin, etc. It is not any physical coin but a digital currency with a fluctuating price value that can be a withdrawal to a physical amount. This technology was discovered by Satoshi Nakamoto and does not have any operator on its head, although there is a public ledger in which all the transactions across the world get recorded. It has the maximum number of coins among all the cryptocurrencies- approximately 21 million bitcoins can be mined. 

What is Bitcoin Mining?

Bitcoin mining is defined as the procedure of discovering new bitcoins and bringing them to a digital ledger of circulation. In simpler words, as the workmen work hard underground for mining precious metals like gold, with the same idea, here the miner set up a piece of high tech machinery or computer system to work for solving some mathematical equations computationally, and thus a new coin is generated digitally. Later on, we make those new coins join their circulation process throughout the globe.

Mining is also the second way of having bitcoins with you, apart from purchasing them with real money. Basically, what happens in this process is, the top of the latest transactions online comes up with a cryptographic algorithm in the form of very complex and technical equations. For every online transaction, there is a ‘hash’ number generated which is a 64- digit random number sequence. During the mining procedure, a hash sequence has to be arranged.

The mining procedure is totally legal. But mining is very costly for an average person. The rate of bitcoins generated by mining is proportional to the market rates of bitcoins. Bitcoins also have several disadvantages like that of some environmental issues because of high power consumption and carbon emission. Any time the government of any country can put regulations on bitcoin i.e. putting rules for it’s working. Malware threat is also predictable. Its rate fluctuation is very volatile, one can lose his/her all money in a few minutes.

Now the question arises as to how one can generate new bitcoins. The answer to this question is by solving all the algorithmic equations involved. 

Bitcoin Mining and Circulation                                                          

To start Bitcoin mining, first of all, one needs to have a high-power computer system as the network has been enlarged to a great extent.

A Blockchain is a very intensive online database constituting information of crypto transactions all over the globe. As the blockchain is a heavy informational chain, therefore it needs high power consumption to operate on it and this is the reason behind the requirement of high-tech computer systems for bitcoin mining.

This also causes a heavyweight on the miner’s pocket as the fulfillment of both ASIC and GPU chips in the system causes a very high cost of setup. The database form of a blockchain is different from a casual database. In regards to the maintenance of data, it is more structured and irreversible in the case of blockchain. Blockchain consists of 'blocks' that particularly store the information.

Now what happens is that the newer block is filled with some specific data and later attached to the blockchain database. This pattern keeps on repeating. The decentralized nature of the blockchain is the reason behind no one’s control over the cryptocurrency functioning which means there are no regulations till yet over the blockchain ledger.It functions on its own. 

Major requirements in mining systems:                        

Here comes the concept of GPU( Graphical User Interface) and ASIC (Application Specific Integrated Circuits).

There are two different types of chips or cards either of which is required in your system. By inserting an ASIC chip, our mining process gets focused on a single specified type of coin; you can’t jump to another bitcoin. Now your profit and loss depend on that single coin only.

ASIC gives many advantages like it provides a very high rate for hash sequence solving, it makes your system require somehow less power than usual. And if we talk about GPU cards, it can let you and your mining procedure focus on whichever coin you want. Its main advantages are; firstly these cards are easily available from many sources; second, they can fit and work properly in any standard system; they are upgradable i.e. its version and properties can be updated to the latest updates. But on the other hand, it is not as efficient in usage as compared with ASIC chips. 

Cloud mining is also in trend nowadays as it provides better efficiencies but also has a risk factor of various kinds of spam. 

What is the software used in mining?                             

Software is the medium through which the mining procedure is started. No matter if we have high-efficiency hardware, they will remain of no use until and unless we have proper software technologies to operate on that hardware. 

Talking about the basic software used in mining, they are SHAMING, ECOS, BGFMiner, MultiMiner, Be Mine, Cude Miner, Kryptex Miner, Awesome Miner, etc. NiceHash is one of the leading software companies of now. You have to check which software is lenient with your system requirements and majorly operating system. 

Types of Bitcoin Mining                                             

Bitcoin Mining can be several types, some of which are explained below.

Solo mining:                                             

Solo mining is a costly way of mining, but at the end of the day, you get the exclusive reward. There are 2 options available for equipment –

  • General crypto mining rig
  • ASIC miner

Its set-up starts from configuring a full node, then creating a bitcoin.conf file, followed by installing bitcoin mining software, and at last launching of the mining software.

Pool mining:                                                            

In Pool Mining, joining a miner community would make little time difference for you, but your reward gets divided according to your hash rate. Pool fee, reputation, payment circle, and pool cycle play the role of critical factors here.

CPU and GPU mining:                                                              

CPU mining is basically the mining process with the use of standard CPU computer systems i.e Central Processing Unit which is also called the ‘Brain of the Computer’. This technology is easily found in standard systems with low cost and with less power requirement.

GPU mining is the process of mining carried out on the basis of Graphical User Interface cards of computer systems. It’s main role is in 3D graphics rendering for a better interface, which helps with better speed and resolution while working.

The cost of CPUs is lower than the cost of GPUs. A similar setup is there in both of them, differences can be spotted just in the type of hardware used. GPU mining is much better than CPU mining in regards to processing.

Cloud mining:                                                         

Cloud mining is defined as the way of mining bitcoins by renting the services of space, speed, and power from online available remote data platforms. In this case, you don’t necessarily need a high-tech computer system as the maximum of your requirements will be accomplished by the online rented service.

Here mining of coins is based on the availability of the miner and one has to pay the periodic fee as well.

Bitcoin mining from Smartphone                    

Yes, you heard it right, mining can be done via smartphone also but it is recommended to avoid doing so. It is not profitable enough as compared to traditional methods as well. The competitors who are mining with way more powerful systems of mining would more or less overpower the one using a smartphone.

Bitcoin Mining Hardware and ASIC                         

For minimum losses and maximum success in bitcoin mining, the Bitcoin Mining hardware must be equipped with ASIC chips. ASIC chips are specifically designed chips for a particular purpose with proper specific protocols. Their size is much smaller than normal chips, they use less power and give comparatively better performance, provide IP protection which a standard chip does not, have a competitive edge i.e., one-time investment for a better result, and are smarter, faster, and more reliable.


Coming towards the conclusion, I must say that Bitcoin-like cryptocurrencies are indeed benefiting, but only when the game is played in a proper way. Such a transparent flow of money with proper accessibility and liquidity and high return potential was the need of the hour in this growing modern world. The growth and popularity of Bitcoin are flying like a rocket.

Hence you surely can step in the technology of Bitcoin mining and start this process but only with a proper strategy so that there can be more chances of your success.