Originally published in Farsi as «استخراج بیت کوین» on بلاک فارسی (BlockFarsi) — the blockchain news & education outlet I ran — on December 6, 2018; translated to English for this site. Original text recovered via the Wayback Machine.

Abstract

Bitcoin mining is a computational process used to verify the validity of transactions made with Bitcoin. Mining bitcoins is, in effect, the process of checking other Bitcoin transactions — work that users are rewarded for. Mining is what keeps transactions secure and earns investors' trust. Over time the mining process keeps ramping up; today, mining is done on specialized hardware called ASICs.

Bitcoin mining

Bitcoins are sent between users over the Bitcoin network, and the records of these transactions over a time window are kept in a list called a block. Mining is the mechanism for confirming those transactions, and every miner receives a reward for it.

When a block of transactions is created, miners take that block and apply mathematical formulas to it, producing a short pattern of letters & numbers called the Bitcoin hash. Each new block is produced using the hash of the block before it. This process — also called sealing the blocks — is how a block's validity is detected & confirmed.

Overall, the Bitcoin mining flow consists of:

• A completed transaction is added to a block.
• Miners verify the transaction's validity.
• After mining, the header of the newest block is picked up by miners and the new bitcoin enters the new block as a hash.
• Miners obtain a new bitcoin by solving the mathematical puzzles.
• When the solution is found, the new block is appended to the chain of blocks and then propagated across the Bitcoin network.

Technologies used for mining Bitcoin

Bitcoin mining has boomed as a profitable venture, and its returns scale with the power of the hardware used to solve the math. Classic computers used to be enough; today, given the fierce competition, technologies like CPUs, ATI graphics cards and FPGA chips are obsolete — you can no longer mine bitcoin profitably with them.

So ASIC is the only technology that can still bring you meaningful returns. An ASIC is a chip specialized for one particular computation.

How to choose the right mining hardware

Before picking the best ASIC for Bitcoin mining, evaluate the following and choose hardware that fits your needs:

Hash rate

Hashes per second matter enormously and directly drive how fast the computation runs.

Efficiency

The efficiency of mining hardware also depends on its power draw.

Price

Hardware price is a major factor in your initial investment and your final profit. By working out the profitability of a given unit you can estimate your required costs and choose suitable hardware.

Always remember: for investing in any field, studying every angle & every factor involved in how that business operates and performs is critical — as the saying goes, never wade into water without knowing its depth!