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What is Bitcoin?

Bitcoin is a digital, decentralised asset. Unlike traditional assets controlled by governments and Institutions, Bitcoin operates on a peer-to-peer network secured by cryptography. This translates to several key features: Transparency and Immutability: Every Bitcoin transaction is recorded on a public ledger (blockchain) verifiable by anyone. This ensures transparency and eliminates the risk of counterfeiting Scarcity: Only 21 million Bitcoins will ever be created, making it a scarce asset with predictable inflation. This characteristic is particularly attractive in an environment of potential fiat currency devaluation Security: The blockchain network is secured by complex cryptography, making it virtually impossible to hack or manipulate Store of Value: Bitcoin's limited supply and divisibility make it a compelling store of value in the digital age. It can be a hedge against inflation and currency devaluation.


What is Bitcoin Mining?

Imagine a giant, public record book (the blockchain) where every Bitcoin transaction is meticulously documented. Miners are like the network's accountants, responsible for verifying these transactions are legitimate and haven't been tampered with. Here's how it works: •Securing the Network: Miners compete to solve complex mathematical puzzles, validating transactions and adding new blocks to the public ledger (blockchain) •Creating New Bitcoins: Each successfully mined block rewards the miner with a predetermined amount of Bitcoin, currently 6.25 BTC per block. •Maintaining Decentralisation: Anyone with a computer can participate in mining, preventing any single entity from controlling the network.


What is Bitcoin Halving?

Bitcoin halving is an event that halves the rate at which new bitcoins are created. It occurs once every 210,000 blocks, which is approximately every four years. This mechanism was embedded into the Bitcoin protocol by Satoshi Nakamoto, the creator of Bitcoin, to ensure that Bitcoin remains deflationary . The next halving event is expected to occur in 2024, when the block reward will decrease to 3.125 bitcoins. This deflationary mechanism will continue until around the year 2140, at which point all 21 million bitcoins will have been mined, and no new bitcoins will be created.


What are the factors that influence Bitcoin Mining?

Electricity Costs: Key determinant of profitability due to high energy consumption. Mining Hardware: Efficiency and power of the hardware impacts mining operations. Bitcoin Price: Market value affects the financial viability of mining operations. Mining Difficulty: Adjusts based on total network hashing power, affecting rewards. Block Reward: Halves approximately every four years, reducing miner income. Operational Costs: Includes cooling, maintenance, and setup expenses. Network Hash Rate: Higher competition reduces the chance of earning rewards.


As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.

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