What is Bitcoin mining? We can understand it by the analogy Like we evaluate the value of the paper money by the gold reserve of the specific country. The Bitcoin miners validate the transaction performed on the blockchain system and they get a reward for every successful validation. As we can see in the given block diagram.
Miners install and keep running mining hard wares. In order to keep running the hardware, they have to bear electricity expenses on their own. This hardware is equipped with ASCII chips. The proposed new block(POW) is stored on ASCII chips. Miners evaluate the POW and get rewards for every successfully solved block. The Bitcoin network releases one Bitcoin at every ten minutes.
Bitcoin cloud mining: There are so many data centers that provide space on their hardware for a certain fee. there are multiple advantages of cloud mining. With cloud mining, miners can earn bitcoins without taking the pain of managing hardware operation and maintenance. But there are multiple drawbacks also like the first issue is that it’s difficult to verify the legitimacy of the data center and you have a lower profit margin than those miners who own mining hardware. We have mentioned the process of Bitcoin mining by a given block diagram. Bitcoin mining calculator shows that electricity cost to produce a Bitcoin is minimum in Venezuela and maximum in South Korea. Bitcoin mining difficulty varies with the number of competitions. Higher competition leads to more difficulty in mining. As the difficulty increases the number of competition decreases and the difficulty of mining the Bitcoin decreases. Less difficulty in mining attracts more competitors towards mining and competition increases along with difficulty. It’s a cyclic process that is running endlessly.