Bitcoin miners reaped more than $ 1 billion in consolidated profits last month. Here’s how they make money. | Currency News | Financial and business news

• Bitcoin mining is the process that allows new coins to enter into circulation, adding to the crypto ecosystem.
• Miners receive bitcoin as a reward for checking “blocks” of transactions on the blockchain.
• In the last month, they earned more than $ 1 billion in consolidated profits. Here’s how they do it.
• Visit Insider’s business section for more stories.

Bitcoin Created on a decentralized network called the blockchain, a vast network of digital “miners” operate to verify transactions at any time.

These are miners He got $ 1.1 billion combined In January, up 62% from December, when the bitcoin price rose to $ 42,000. The road to making this amount of money is not easy.

What do bitcoin miners do?

Miners have a responsibility to audit transactions on the blockchain to ensure network legitimacy. They also work to avoid a “double-spending” scenario, in which a Bitcoin owner can covertly spend the same currency twice through redundancy or fraud.

Miners don’t necessarily work as a team. They work to compete with one another to add the next “block,” or record of all Bitcoin transactions, to the chain. The block contains a partial record of most recent transactions and holds data of 1 megabyte (megabyte).

A miner who receives a bounty will be the first to run through legions of number combinations to solve a numerical problem, known as Proof of work, To access an accepted 64-character code. The token for this winning block helps keep the blockchain secure. It will usually look like the last line in this image:

By being the first to solve the equation and successfully adding the next block to the chain, the miner is rewarded for a certain amount of Bitcoin. Only one block can be added at a time, and each one takes about 10 minutes to check and attach.

Over the next twenty years, a total of 21 million coins Will be released.

How much are bonuses?

In 2009, the first time Bitcoin was created, miners were rewarded with 50 Bitcoins per block. But according to the mandate before Satoshi Nakamoto, Mining bonuses are halved every four years. The rewards have been reduced to 25 Bitcoin by 2012 and to 12.5 Bitcoin by 2016.

As of February 2021, miners earn 6.25 Bitcoins for each new block mined – equivalent to about $ 330,475 on a current value basis. They are also allowed to keep transaction fees of every trade made on that block, which is $ 20 per trade.

that It is estimated at a million Bitcoin miners are working nowadays.