How are Bitcoins generated? How can I mine Bitcoins?

By | January 13, 2017

Imagine that we sit 9 persons in the same room. And then we tell them to find a prime number (a number that you can only divide exactly between one and the number itself). So each of them get one number and tries to divide that number by all the numbers before it to see if it is prime or not.

After a little while, one of them raises his hand and claims to have find one, and then he sends the number to everybody else.

From here everybody checks the solution, and if it is correct, they send to everybody else a message that it is confirmed. After at least 3 persons have confirm it, then everyone agrees that the solver of the problem has Bitcoins, and everybody starts working on finding the next prime number.

Eventually all of them will have Bitcoins of course, but as the numbers grow, more and more divisions are needed to see if the number is prime. If you want to determine if 97 is prime, it would take almost 50 divisions. But if you want to determine if 1,345,873 is prime, that one would take a lot of divisions to find out.

This is a simplification of the process that has been occurring for years now. It is not finding prime numbers, it is solving a mathematical problem that grows in complexity, and the problems to solve to generate one Bitcoin now are so complex that you would need an ungodly amount of computer power to solve even one of them. Back at the start you could use a normal computer to get yourself some Bitcoins, but now, it could take decades for a normal computer to solve even one of them. And those are decades of you paying the electrical bill.

How can I mine Bitcoins?

You basically need a computer known as a Bitcoin miner, examples of these can be seen at the manufactures websites such as https://www.bitmain.com/ and http://www.rigwarz.com/

Antminer S9-B22

Antminer S9-B22

You can also join a collective effort to mine them, and if you join one of these efforts, whenever a Bitcoin gets generated, it is distributed among all of those participating. But I don’t think this is worth it, it is better to save that money in the electrical bill and use it to buy a Bitcoin instead.

A third option is to rent some Bitcoin mining power in a cloud service. But this is a big risk I have to say. The one with the best reputation is Genesis-Mining, here you simply pay a little and you get a life-time contract to be mining. The price starts at USD$30 payable with a credit card, or 0.03 Bitcoins, then you decide whether you want to mine Bitcoins, Unobtanium, Litecoin, Dash or any of the options they offer.

Genesis-Mining Banner

The thing here is that it may take about 16 months to get back your investment. And how much what you get is worth depends of course of the price of Bitcoin, the complexity to generate Bitcoins at that point. Genesis-Mining operates since 2013, it has been around for a little while.

My advice? Stay away of cloud mining, about all of them are ponzi schemes, scams pretending to be nice but that only take your money and then dissapear. I mentioned Genesis-Mining because it is the only one that has been around for a little while and it seems to do what it promises. If you have some spare money you can try it, it’s actually nice to see the numbers and everything, just don’t bet your entire life on it.

That’s about it. Mining Bitcoins now is not easy at all, but in a way is an investment.