Fort Worth is the first city in the United States to mine bitcoin, but what exactly does that mean?
The City Council voted unanimously Tuesday to move forward with mining after three machines were donated by the Texas Blockchain Council. The machines will run 24/7 for the next six months.
Mayor Mattie Parker said the goal is to not make money from bitcoin mining, but to try out the new technology and see how it works for the city. The energy costs of running the three machines will be offset by revenues generated from mining bitcoin, the city said.
Bitcoin has been around for years, but many don’t know how the cryptocurrency works. Here’s what we know about bitcoin:
What is bitcoin?
Bitcoin is a digital currency that has no central authority or bank oversight.
No one entity owns bitcoin, instead it operates on a peer-to-peer system meaning that it is powered by its users. Another big factor with bitcoin is a blockchain, which serves as a decentralized ledger that marks all digital transactions.
Bitcoins are mined by computers that are racing against one another to solve complex mathematic equations with the digital currency as a reward.
Only 21 million bitcoins can be issued or mined, driving the price of the limited supply up, and over 19 million bitcoins have been mined so far. Even though it seems close, it’s likely that the last coin of bitcoin won’t be mined until 2140.
Since bitcoin has no central oversight, it uses a proof-of-work model to verify and confirm transactions. In this model, when a computer mines for bitcoin it has to prove it worked for it, essentially showing its work on a solved math problem.
The first bitcoin proof of concept was published in 2009 by Satoshi Nakamoto, a name that many believe to be a pseudonym. Nakamoto laid out the initial specs for bitcoin, stating the desire to create a decentralized system that would shake up financial institutions like banks.
Nakamoto left the bitcoin project in 2010, but that didn’t stop the community from growing from the niche market. Now, bitcoin is the world’s leading cryptocurrency and is accepted by many businesses and individuals across the world.
One bitcoin is valued at around $40,000.
How do people receive bitcoin?
Bitcoin can be received three ways: mining, trading with other users or by purchasing it with other currencies.
Companies such as Coinbase and Kraken allow people to purchase bitcoins through bank transfers, credit card charges or other digital payment formats. Users can also use the websites to trade bitcoin with other parties.
Mining bitcoin might be the most expensive but rewarding endeavor.
For one, users need the right high-powered computer equipment to mine for bitcoins, which could set them back hundreds if not thousands of dollars. Another big factor is how much electricity the computer takes to solve the complex math problems and the amount of energy it produces.
The amount of energy it takes to mine bitcoin ranks up there with that of a small country, according to Forbes. This isn’t anything new with cryptocurrency but experts say an mining produces an estimated 34 megatons of carbon emissions.
Still, bitcoin mining can be profitable for those who offset their costs for electricity and time, with earnings produced from mining. Or, some users band together in a mining pool to put their resources together to accomplish the same digital currency goal.
What can bitcoin be used for?
Paying for items or services with bitcoin might be daunting, but its as easy as using a traditional debit or credit card, according to Bitcoin Org.
Bitcoin earnings are transferred to a digital wallet-like app that can send payments. People can also even get physical bitcoin credit cards to use when buying things if they don’t want to use their phone or computer.
Locally, bitcoin and cryptocurrency are all the rage with Metroplex sports teams.
The Dallas Mavericks have been accepting bitcoin as payment since 2019 on tickets and merchandise, and the Dallas Cowboys recently entered into the world of cryptocurrency with its partnership with Blockchain.com.