Bitcoin Mining The United States government has gathered bitcoins using various means and at times has put them up for auction. Bitcoins are not a government currency, but never the less do have a value and when confiscated from criminals they are added to the government’s hoard and often are put up for auction. It is being said the number of bitcoins being held by the government is one of the largest amounts of bitcoins in the world. I have no way to prove this however. I do know about a couple of auctions where bitcoins were sold by the government for very low prices and the winning bidders made a fortune on the purchases. I have to admit it, I do not understand bitcoins even though I have had the procedure explained to me many times, there are just so many questions about them. The first question I have is why are they allowed as currency by the government between citizens? We often hear there is nothing backing up our money except the good faith of the country. Bitcoins seem even more risky because they are digital and have nothing backing them up except the fact they are accepted as currency by many people. They seem to me to be more like stocks, except stocks have companies behind them. One of the biggest mysteries to me about bitcoins is bitcoin mining. I have had several people who claim to know everything about bitcoins who cannot explain this to my satisfaction. One of the craziest things to me is how do bitcoins get into the internet so they can be mined for free? If something is worth thousands of dollars no one would give it up so it can be mined. Of everything about bitcoins this puzzles me the most. I know the bitcoins are there to be mined because huge computer farms are built just for this purpose and they use the newest graphic cards which has caused a shortage in that area for the rest of us. It has gotten so bad; it is putting a strain on some of the electrical grids of the world. I saw an article on bitcoin mining which stated last year in 2020, one machine set up for bitcoin mining was making about eight dollars a day. That is 2920 dollars a year profit minus the electrical cost. I read a few articles about bitcoin mining and none state how the bitcoins become available for mining. Basically, they state mining allows for some kind of reward which equals 6.25 bitcoins. It goes on to say after 2024 the amount will be halved. Supposedly the process repeats every ten minutes. There is some kind of puzzle which equates to network difficulty which adjusts every 2016 block chains. Far from clearing things up, these statement seems to ignore how the bitcoins get there for mining in the first place. There are mining setups you can buy which cost thousands of dollars and for most people it would take a long time to recoup the cost. The wattage is also very high and you have to leave the devices on 24 hours a day if you are serious about mining. One person was talking about experience. He was mining from home using a machine he paid about $7000 for. After paying for electricity, he cleared around $350 in a year. That means it would take him about 20 years to break even. There are more powerful devices for sale, but they are even more expensive. It seems to me the only way to really get ahead is with a computer farm using the same software on all the machines and having many hundreds or thousands of computers. Since I still don’t get how the bitcoins become available for mining knowing mining is going on the basics of the setup still doesn’t help me to understand the entire picture. In order to understand some of this you have to know about the terms which are used and what they mean. One term is hashrate which is a measure of the computing power of your machine. The higher the hashrate, the higher the power and the more bitcoins you can mine. The hashrate goes all the way up to Petahash which is quadrillions of Hashes per second. One source claimed the daily revenue rate for the entire world mining community was 8.45 million dollars a day. This blows my mind that this much value can be floating around every day which is available for free. It seems to me the mining enterprise is a perfect candidate for solar power to cut down on electrical costs. One source states they know where everything comes from and here is what they say. Bitcoin miners are able to get bitcoins for free because as bitcoins are minted there is a reward given to them called the Block Reward and there are also fees paid by miners for safety and security. Every ten minutes the reward is given to the fastest machine to discover the new blockchain. A blockchain is a record of shared transactions in a cryptocurrency network. Have we found out where those bitcoins are coming from? It could be. At least we got an answer which seems to make sense. As to why rewards are given to people and fees shared, it still seems incredible. Why would companies creating bitcoins want to give money away like this? Afterall bitcoins are now equated with money and some are extremely valuable. Also why are things going to change on March 12, 2024 when the rewards will be halved? Bitcoins are a very mysterious venture to many of us. If someone would have told me years ago, they were going to create a digital form of money privately and people would make it very valuable, I would have laughed at them as would many others in the day. It just seemed to be so fraught with problems and against the constitution of the United States regarding the printing of money in this country. If they would have taken this a step further and said the government would be making money from this it would have been even harder to believe. Some have said bitcoins were developed by criminals who wanted to cover the money trail. They agreed on the value of the digital money and traded it among themselves and it became popular with others. I have to say I am not a fan, but understand under certain circumstances it can now be a valuable asset.
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