INTRODUCTION
Mining is an age-long practice and business that was survived over 40,000 years ago. The early history of mining can be traced to Africa. Miners dug several feet deep in search of precious metals such as gold, silver, and copper amongst others. Over the centuries, the techniques, methods, and technologies applied in the industry have continued to evolve.
However, there are lots of innovations in the mining process which has reduced some stress. Moreover, when it comes to Bitcoin mining, the concept and method are entirely different, complex, and sophisticated, but this lecture has been able to give us a clearer picture of what is involved in Bitcoin mining, without further ado, I will giving attention to the six (6) questions below.
- In your own words, explain mining and block reward.
MINING
Mining in its simplest definition refers to a process whereby new Bitcoins are being created by miners after solving mathematical problems. Transaction records are being added digitally to the blockchain. In order to securely add to the blockchain, Directory Bitcoin Mining computer solves complex mathematic problems. The next link in the blockchain is the last confirmed block of transactions once a solution is found.
However, the miner who solved this problem has been given a Bitcoin block to encourage him and to help the network. Over time we do see links here and there shared by different persons claiming you can mine Bitcoin by just clicking on a link. It is very important that we clear the air on the requirements and processes involved in the mining of Bitcoin.
For you to be a bitcoin miner, you will need some tools which include highly sophisticated computer systems that can handle complex mathematical problems.
The following is a list of things you will need to carry out mining of Bitcoin.
- Low-cost energy supply for competitive mining computers.
- Software for mining
- Membership in the mining pool
Block reward.
Every worker deserves his/her pay be it in form of wages or salary. In the Blockchain world, the compensation you receive for participating and solving a mathematical problem is what is usually referred to as Block Reward. This is done to compensate miners for their time and effort. There are specially designed hard wares such as Application-specific integrated circuits (ASICs) that are being used by miners which can cost thousands of dollars.
However, this reward or compensation given to a miner for solving a mathematical is usually divided into two and half of it is the miner's reward. This takes us to the next question.
- What do you understand by the Bitcoin Halving?
Money is one commodity that is not always, and scarcity gives it the value it enjoys. Halving is the total number of coins miners receive for adding new transactions to the Blockchain, and these coins are usually split into two. Available data shows that the most recent halving of Bitcoin occurred on 11th May 2020. This is a situation whereby a miner’s reward for mining Bitcoin is being divided in half. The halving process usually occurs after every four years just like the world cup. Within this four-year period, about 210,000 blocks are being mined. The cuts are a necessary measure being put in place to ensure that the number of Bitcoin supplied into the economy does not exceed the demand for it. The total number of Bitcoin in circulation does not exceed 21 million dollars. This is also an inflation control mechanism.
- What are the effects of Halving on miners?
Meager funds:
the reward or coin given to miners is very meager, considering the fact that their mined coin would be slashed into two halves. Considering the time and resources invested into this task by miners.
Inflation control:
with the regulation on the amount of Bitcoin supplied into the market, the demand for Bitcoin will always be higher than supply, which is to the advantage of the Miners who are producers of Bitcoin.
High cost of production:
the cost of electricity needed in powering computers carrying out the mining process is very expensive and so miners would need to sell their Bitcoin at higher rates to enable them to recover the cost.
Loss of funds:
there is a possibility that miners might be forced out of business if the profit or coins rewarded to them are not commiserate with the funds invested into mining to enable them to withstand the force of business competition.
- What is the current block height on the Bitcoin blockchain? How many more blocks before the next halving? (Screenshots and Full working)
Haven has been taught that halving of bitcoins occurs in every 210,000 blocks and a total of three halves have been recorded so far.
Therefore, calculating the block height for the halving will 210,000 x 4 = 840,000
The current height of block at the time of carrying out this task = 696574
No. of blocks until next halving = 840,000 – 696,574 = 143,426
Conclusively, 143,426 will be our number of blocks until the next halving.
- Do you think Steem’s inflation rate reduction can affect other coins? Why?
Well, I would say no. This is because the popularity and ranking of a coin determine its effect on others. Bitcoin, for example, is a force in the crypto market and it literally determines the price of other coins. Steem on the other hand is an altcoin and has a handful of users mainly on the steemit platform who benefit from every positive move on the market. However, inflation within the system has proven to be very helpful in ensuring the coin maintains its value.
- What is the current block height on the Steem blockchain? How many more blocks before the next 0.01% reduction?(Screenshots and Full working)
The screenshot above shows the height of steem at the time of my writing this report.
The inflation rate reduces by 0.01% every 250,000 blocks.
Current block height= 56,512,618
No. of reductions = 56, 512,618/250,000 =226.050
Rounding it off to 3 s.f figures = 226
Therefore there has been 226 reductions so far
Finding the block height for next reduction = 226 x 250,000 = 56,500,000
No. of blocks until next reduction = 56,500,000 – 56,512,618 = -12618 Blocks
Conclusion.
My calculation gave me a negative figure.
Continuation of last week’s work:
- What is the current value of BTC on the day you are performing this task? If you made a purchase of $2,500 then,
From the screenshot above, the price of BTC was $47,195.51 as the time of my completing this home work.
a.) how many satoshis would you have?
Given that 1 satoshi = 0.00000001 BTC
1 satoshi = 1/100000000 x 1 BTC
1 BTC = $ 47,195.51
∴ 1 satoshi = 1/100000000 x 47,195.51
= 0.0004719551
1 satoshi = 0.000472(3 s.f )
So assuming 2,500USD was bought. The value of satoshi will be
= 2,500/0.000472
= 5,296,610.
a.) how many satoshis would you have?
1 satoshi = 0.000472(3 s.f )
b.) what is the value of a satoshi for that day?
= 5,296,610.
What is the current value of BNB on the day you are performing this task? If you made a purchase of $30 then,a.) what is the value of a Jager for that day?
(Show full working and correct to 3 s.f)
(1 jager = 0.00000001 BN)
As at the time of performing this task, the price of BNB was 434.32
a.) how many Jagers would you have?
1 jager = 1/100,000,000 x 1BNB
1 BNB = 434.32
1 jager =1/100,000,000 x 434.32
=0.0000043432 (0.00000434) 3s.f
1 jager = 0.00000434
b.) what is the value of a Jager for that day?
$30 = 6,912,442.39
If I did a purchase of $30, I would have 30/0.00000434
= 6,912,442.39.
CONCLUSION
Completion of this week’s task has helped me understand fully what is involved in the Bitcoin mining process. I have come to understand that there are several pieces of equipment that miners use in mining and also how synthetic inflation helps in protecting Bitcoin from losing value. Lastly, I have also come to learn how miners get compensated by means of the block reward system.
cc;
@awesononso