How Are New Bitcoins Created? A Brief Guide to Bitcoin Mining 2017

New Bitcoins are created via the process called �mining.�

Mining can be quite a competitive task as new Bitcoins are created at a predictable and fixed rate. Those rates have been defined by Satoshi Nakamoto, the creator of Bitcoin, in the white paper published in 2008.

Bitcoin mining is the process of adding records of a new transaction to the Blockchain - the public ledger of all transactions that have ever taken place in the Bitcoin network.

Every 210,000 blocks, or, roughly, every four years, the block reward is halved. It started at 50 Bitcoin per block in 2009, and in 2014 it was halved to 25 Bitcoins per block.

The first ASICs - or Application-Specific Integrated Circuits - were introduced in 2013, designed specifically for the purpose of mining from the start.

Mining on personal computers has only been feasible in the early years of Bitcoin. By now, the network is so competitive, that using specialized hardware is the only way to make a profit.

Bitcoin uses a cryptographic hash function SHA-256 for encryption. This algorithm allows you to take data of any size and turn it into a string of a specific, predefined size. The resulting string is called a �hash,� and the process of applying the hash function to random inputs is called �hashing.�

Let�s take a closer look at some mistakes usually made by newbie miners:

You shouldn�t start mining without preparations. Given that it is a highly competitive sphere, profitable mining requires thorough planning and preparation. Many examples can be found of people, who had bought too much hardware equipment without calculating all the costs of running it and the likely profit rates. After finding out that they can�t maintain profitable operations with their equipment, these unfortunate miners usually have to re-sell it at a large discount.

You also shouldn�t follow the hype and mine whatever coin that is the most trendy at the moment. From time to time, one coin or another will get overhyped, and a lot of new miners will start pouring in, driving the difficulty of its network up. As a result, mining becomes very hard for everyone, and almost no one manages to make a profit. This scenario has taken place recently with Ethereum, for example.

What you should do, is take good care of your PC. Mining places a huge load on the computer�s processors, which have to run at full capacity all the time. If done without proper care, it might cause hardware malfunctions.
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