FINANCE
Here are the reasons why Bitcoin mining is on the rise
Bitcoin mining has picked up, especially by some of the biggest actors in the game. What is driving them to continue mining?
Bitcoin was created in 2009 after its mysterious creator, Satoshi Nakamoto, presented the concept of a decentralized digital currency. Since then, it has become the standard for other cryptocurrencies that use peer-to-peer networks to keep a ledger of all transactions. This decentralized system, which uses cryptography and numerous servers to record and store the account book of all transactions, provides the means by which miners get paid and underpins the security of the currency.
However, the value of Bitcoin has fluctuated widely over the last four years (and before) as the use cases presented by early adopters failed to materialize. Additionally, the arrest of Sam Bankman Fried, the head of one of the world’s largest crypto exchanges, has shown that the industry is not as clean as those who had followed the FTX leader had hoped.
What is Bitcoin mining?
The peer-to-peer software that allows people around the globe to send Bitcoin money to each other also lets people provide their servers to process the transactions. The people who perform this service are known as “miners,” and their computers synchronize the record of transactions, establishing a consensus and thus securing the network.
Miners receive a transaction fee for collecting information and placing it on the blockchain. However, they can also get Bitcoin for adding a new block onto the blockchain. This is done by completing a cryptographic calculation. The first miner to broadcast the next block is rewarded with Bitcoin. However, over time, it gets harder to mine new coins, which are limited to 21 million in total.
This is an extremely energy-intensive process. The US Energy Information Administration reported that the energy demand was similar to that of entire countries like Australia and Greece. This means that the miners require access to cheap energy to make their work profitable.
Why is Bitcoin mining increasing?
There are now larger mining operations run through companies like Marathon Digital Holdings, which happens to be the largest in the business. The company’s leaders say they are expanding their Bitcoin holdings. Zoltan Vardai, writing for Coin Telegraph, reported that Marathon has increased their mining operation by seventeen percent since July in hopes that the price of the digital currency will continue to rise.
On social media, Marathon touted that overall, they helped miners increase production by nearly 11 percent last month. With so much uncertainty in the market, whether or not they will be able to convince miners to take the “hold on for deal life” approach will be enough to continue increasing output.