With Bitcoin gaining more interest and momentum, everyone is wondering what is meant by the process of “mining” the cryptocurrency, especially after one of its biggest supporters, Tesla President Elon Musk, suddenly criticized the consumption of Bitcoin generation of enormous energy, mostly from non-renewable sources.
Mining is the process of verifying batches of Bitcoin payments, and adding those transactions to a massive ‘general ledger’ is the main record.
The mining process looks like a data center, as miners don’t sit behind computers, instead, devices independently verify transactions, as they are programmed to solve increasingly difficult cryptographic puzzles.
The puzzles generated by the Bitcoin software are difficult to solve using a lot of the combined computing power. Miners also compete against each other to solve puzzles because the reward is a certain number of new Bitcoins.
Once the mining computer solves the cryptographic puzzle, it becomes easy for the Bitcoin network to verify the answer and agree to adding a block of transactions to a shared “ledger”. And there has to be consensus from the network that provides Bitcoin decentralization.
How can solving a puzzle be so difficult … but extremely easy to verify the answer?
Think of the cipher puzzle as an attempt to find the lock code, there are no shortcuts when trying to find the code that unlocks it .. You have to try every possible combination until you find the right combination sometime by chance.
Once you find the code, it’s easy to validate the combination, because the lock is now open! This is how Bitcoin mining works.
The self-styled programmer Satoshi Nakamoto, who invented the Bitcoin system, wanted to ensure that supply could be limited to prevent inflation. It has created a “digital scarcity”, in which there will only be 21 million bitcoins, and the last bitcoin unit is expected to be mined somewhere around the world around the year 2140.
“Something that cannot be overproduced or suffers from an expansion of supply is more resistant to devaluation … Do you know how much of the US dollar has depreciated in your pocket in the past five to ten years?” Says a mining expert for Spectrum News1.
Bitcoin critics say it is a huge, speculative-driven bubble that cannot outgrow or replace real cash, also known as “government money”.
There is also concern about energy consumption, says University of Southern California economics professor Larry Harris.
Harris said, “What I understand is that they consume about 0.3% of the total electricity produced in the entire world … so people who use Bitcoin must bear this cost, and this makes Bitcoin very expensive … there are a lot of losers in the cryptocurrency.”
However, according to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes about 110 terawatt hours per year, which is 0.55% of global electricity production, or roughly equivalent to the annual energy consumption of small countries like Malaysia or Sweden.
A bill introduced in the New York State Senate seeks to stop Bitcoin mining for a period of three years, until the state assesses its impact on the environment.
In contrast, the mining expert indicated that he is concerned about energy consumption as well, but feels that the technology in particular should not be distinguished.
He said, “I support all of those conversations … I think the point where I might differ in opinion and approach is to look at industries and other activities that consume electricity and energy metrics, and see if we can take a global and comprehensive approach, instead of saying that Bitcoin is horrific for humanity and it should be.” Destroy it. “
He added that it supports green energy sources for mining, which are actually more profitable for astrologers. This is because the lower the cost of energy, the more profit they will make when creating new Bitcoins.
But he believes that most importantly, Bitcoin offers “an opportunity for a more sustainable financial network,” which he sees as an open-source alternative “to the monopolistic global monetary system run by banks and politicians, which he does not necessarily trust to preserve the value of his money.”
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