What is Bitcoin Mining?

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What is Bitcoin Mining? Have you ever wondered how Bitcoin is generated? This short video is an animated introduction to Bitcoin Mining.

Credits:
Voice – Chris Rice (www.ricevoice.com)
Motion Graphics – Fabian Rühle (www.fabianruehle.de)
Music/Sound Design – Christian Barth (www.akkord-arbeiter.de)
Andrew Mottl (www.andrewmottl.com)

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About the Author: rr1455

60 Comments

    1. No, silly, you don’t use a standard PC, they are very inefficient, and you won’t be able to use it for much else while mining. You would buy a dedicated unit, they can cost between $400- $1500.

    2. +Adman Buckfast a lot of people mine with gaming rigs and not dedicated units. And yet, that doesn’t mean that hardware doesn’t become weary over time, because it will. And btw, the OP said he didn’t want to fry his pc, and the answer was that he wouldn’t. I’m willing to guess that his pc is not a dedicated unit, so the argument falls short right there.

  1. Funny reading the comments, nobody understands what the heck bitcoin is, but they all belive the hype. And that is what bitcoin is, hype. The greater fool theory, read about it.

    1. The reason Bitcoin / crypto currencies exist is because they have certain attributes that normal currency does not.
      As to the hype – something is only worth what someone else is willing to pay for it, and widely accepted value is only what large sections of a population think it should be! As an example, look at the crazy increases in value of SOME classic cars – but not others. You can’t say that a car – ANY car’s INHERENT value is $20 MILLION, right? But as the views of the market change over time, so other cars, previously not considered particularly valuable, start increasing in worth – mass acceptance, herd mentality, public opinion – call it whatever, but this is the driving phenomenon at work.
      Right now, Bitcoin is very volatile, and has been increasing at an unrealistic, unsustainable and over-inflated pace (IMO) due to speculators getting in on the action, chasing a quick, big profit, but – like the dotcom bubble a couple of decades ago, and many other economic bubbles – it WILL stabilize (after the bubble will burst and many people will lose a lot in the process, as well as 99% of all these OTHER crypto currencies falling by the wayside – there will be Bitcoin and one, MAYBE two others left standing) and it will eventually become a much more widely accepted currency, with MUCH smaller, more predictable fluctuations. How about paper cash? It has no inherent value, yet is accepted and exchanged every second of the day, and ITS worth technically fluctuates too, as a representation of one country’s currency in relation to other countries’ currencies, you just don’t feel it if you operate just ONE currency within ONE country – unless there is devastating inflation occurring.

    2. a classic car is a tangible asset, a bit coin is a little piece of nothingness. this has been done before with the south sea bubble and Dutch tulips. its a hyped get rich quick Ponzi scheme designed by computer geeks to sucker the stupid public. They will unload their nothingness for a high price at the right time and the players at the bottom will be left with err nothing.

    1. by using your gpu’s power, you can create a random Algorithms with the mining program, most of them will be wrong but not all, when you create a correct Algorithm, you earn 1 dollar from the ones who want this Algorithm to solve their own math problems.

    2. CONTACT WELL AND RELIABLE CERTIFIED HACKER HIS NAME IS MATVEINIKOLAY HE HIS GOOD IN HACKING WESTERN UNION MONEYGRAM PAYPAL BANKS ACCOUNTS CREDIT CARD BTC ETC HE HAS REALLY HELPED ME AND HE HIS A GURU FROM RUSSIA TRY YOUR LUCK AND THANK ME LATER CONTACT HIM ON MATVEINIKOLAY029 at gmail dot com or text him on his number if you are in United States or Canada +12315776845 but if you are out of the United States contact via email

    1. Check the GRC coin, GridCoin. You can mine gridcoin using BOINC. This project allows anyone to offer his computer resources for science projects. So you earn money by helping science. And there is a lot of different projects on BOINC, so you can chose what you want to support (astronomy, mathematics, medicine, ect).

      About bitcoin, your last sentence is not completely true: once a bitcoin is mined, it still need to be exchangeable. So it still needs mining to secure transactions. The creation of new bitcoin for miners is only a method to encourage more people to mine, and by this way, increase decentralization and security of the network. It’s not the fundamental goal of mining.

      Also, there are new consensus algorithms, which allow faster transactions, with much less resources required, as XRB (RaiBlocks) for example.

    2. @Adman – so what is the purpose of making the math problems harder to solve as you get closer to the end of the supply – which is a big part of the problem in using up our natural resources. Why does it have to drag out so long? If there’s a finite supply then fine, just let it hit the max more quickly. That would be a massive energy savings. Users can still earn a small fee for each transaction they verify right?

  2. Now we all understand why we had the wrestle through Algebra, Trig, and Calculus in Highschool. The future is here and its time for us to do some mining by solving some basic algebra math. I can’t wait to see what questions I get today !

  3. So why are people solving these math problems? Who or what benefits from the solving of these math problems. Is there a big purpose to these math problems (like unlocking some kind of secret to quantum computing or something) or is it just an arbitrary thing that Satoshi chose that people had to do? When a math problem is solved is a new bitcoin created or is someone really paying them? If a new bitcoin is created then doesn’t that devalue the whole thing?

    1. Damn, people… it’s not generating any value, minning is what blockchain and bitcoin or some other crypto make secure and anonymous. When i send some btc to you, you won’t get it instantly. Transaction and the bitcoins need to be verified and processed. COmputer power is used to secure all this, to convert transactions to special hash codes etc… after minning the block of informations(transactions) minners are rewarded, new bitcoins are created.

    2. I would have been impressed if all these math problems did something like say map the human genome type of thing. But as it is it’s just a completely useless and arbitrary thing that wastes a ton of natural resources on our planet. Oh and bitcoin is now worth only 8500. I get the value in blockchain, but it’s not unique to bitcoin, it does require quite a load on the system to keep running and what happens when the lights go out? The earths magnetic poles may shift soon, what kind of trouble will this cause our electronics etc. And what will bitcoin be worth when quantum and molecular computing becomes mainstream?

    3. There is almost no math problems man. That’s just simplified, they are just generating random unique hashes to secure transactions and verify them… That’s easy task for gpu, network made mining hard, they created difficulty rate and defined how much blocks can be mined for some exact time, that’s prevent coins to be mined too fast… So there is no math problems that will do something special. Bitcoin and other coins will probably eventually change system of creation of new coins because of most problems and because it became too much hard to mine, a lot of energy is used… Current system that btc use is POW or proof of work, most coins use this system but like i said, there are other systems as well. I believe ethereum will use in near future POS, or proof of stake. System is a lot of more secure than POW, “miners” would not be able to make 51% attack etc…so there would be no need for GPU’s, search for it to learn what is POS. And i think that is also bitcoin new way, so quantinum computers won’t affect prices if they all move to pos or other system.

  4. Do I have to buy like a specific pick axe ? Like from Home Depot or does someone provide me with one? Also is it safe to work inside bitcoin caves? I hear some mining places have toxic fumes that go unnoticed till it’s too late unless you have a special detector for the gases

    1. I wouldn´t call it currency right now, but not because of its flucturation but because there are so little things you can buy with it. Everybody has a own definition of currency but if you can´t buy most of the stuff, than it seems not really like a currency for me. But I don´t know what i would call it. But it´s totaly fine f your definition of curreny has a broader approach and the stuff you can buy with it doesn´t matter for something to be a currency.
      Excuse my bad english, I´m no native.

    2. What problems? Whos math problems? Is it a company that post this problems and pays people to solve them? Why would they pay to solve them? Where do they get the money to pay people?

  5. This is a terrible explanation. “They solve math problems and are given Bitcoin in exchange.” Okay…I went through 12 years of public school and solved plenty of math problems, where’s my pile of Bitcoins? Saying “math problems” is incredibly ambiguous.

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