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Secret of Bitcoin mining: How miners really act around a price floor

Secrets of Bitcoin mining

From the basics of Bitcoin mining made clear and simple, to its ‘secret’ dynamics which even some experts are not aware of: How miners really interact with Bitcoin’s price floor, miners’ seasonal migration and ‘bullish’ miners’ natural selection

If you are familier with Bitcoin mining you can scroll down to the blue line.

Mining is a crucial part of the Bitcoin network. But to most Bitcoin holders it’s a relatively mysterious business. Mining is where Bitcoin connects the internet to the real world. A lot of electricity is needed for mining, and it’s crucial for the protection of the 18 million Bitcoins, worth today $180 billion, stored using Bitcoin’s decentralized financial records.

Mining is a very competitive business. Every 10 minutes, approximately, hundreds of thousands of mining computers around the world start competing for a new batch of 6.25 Bitcoins. The greater the quantity of mining chips that they are running, and the stronger they are, the higher the chances their owner have to win new Bitcoins.

While in 2010 you could mine Bitcoin with your personal computer’s regular chip, since 2013, mining has become much more competitive and requires specialized chips, called ASICs (Application-specific integrated circuit). Today, getting into Bitcoin mining is a serious business, mostly done in large warehouses full of computers with ASIC mining chips — nicknamed miners.

Mining rigs in a mining warehouse, nicknamed a mining farm. Source: Bitcoin Wiki

Bitcoin ASIC companies such as Bitmain and Canaan, compete to produce increasingly more powerful and efficient ASICs for Bitcoin.

The percentage of Bitcoin mining power by country. Source:CBCI Source: Global Patrol Prices

Electricity is 95% of the operation expense of a mining farm. That’s why most Bitcoin mining is done in areas with cheaper electricity, with 74.1% or more of Bitcoin miners depending on renewable energy. Some mining farms ...

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