In the beginning, one could mine bitcoins through their CPU! But mining through CPU’s proved difficult because the overhead costs would far much exceed the profits.
Miners moved on to GPU, which was more advanced than CPU, and next was ASIC, a microchip tailored specifically for mining. Application Specific Integrated Circuit (ASIC) was a big step forward considering that it brought down the overhead costs of mining.
Miners that don’t own any mining tools can sign up for cloud hosted platforms and will have access to “software rigs”.
As you can almost guess, solo-mining is a hard place to be. It can take months or even years before your node earns a share. This is what necessitated miners to pool their resources together and contribute toward a single hashing power.
Mining pools have a decent chance of solving computational problems and delivering proof of work so that the Bitcoin network may reward it with new bitcoins. The winning pool is also awarded users’ transaction fees as an incentive.
When shopping around for a mining pool, you need to check their terms first, i.e. their revenue share policy. You’d expect that a mining pool ought to share new BTCs equally among its members. But some mining pools are set up to benefit only the mining pool’s owner while the rest get by with meager wages.
Types of payments
Pay per share
Capped pay per share
Double geometric share
Pay on target
Pay per last X shares
Pay per last X group-shifts
Full pay per share
China is a key player in the bitcoin economy, and it is home to the two largest mining pools; BTCC and Antpool.
But why does China seem to be at the top of the bitcoin foodchain?
It is not because they are kind of special.
It’s just down to the numbers; the Chinese population is in the billions!
That’s the major reason why China holds dominance in the bitcoin economy.
Future of mining
Before we discuss the future of bitcoin mining, you need to first understand something about bitcoin; the supply is finite (limited)!
After a specific amount of blocks have been mined, the network shares are reduced, so that if initially, it rewarded miners 40 new bitcoins, then they’d be reduced to 30 or 20.
In this sense, hardship waits in the future.
In order to keep the miners in business, transaction fees will perhaps increase, or developers will improve the protocol so that the blockchain is independent of verifiers.
Bitcoin Mining Pools
It’s the oldest bitcoin mining pool. Its miners have some the highest high ROI.
The US and Europe
If you’re interested in being a bitcoin miner, you must join a pool. The big pools are hard to get in, but if you manage, you are sure of quick results.