To be successful in any field, you must know the terminology in the niche. This will help you stay on the same page with stakeholders, experts, and customers in the field. Knowing the terminology is even more important in the technology niche because using the wrong term could change the meaning of something or make people misunderstand your message. That said; here is the common Bitcoin terminology you need to know:
Bitcoin Mining Terminology #1: Electricity rate
Running a Bitcoin mining rig requires massive amounts of power. When the time comes to calculate your profitability; you’ll need to take into account the electricity rate. You can find your electricity rate on your monthly electricity bill.
Bitcoin Mining Terminology # 2: Hash rate
A hash refers to the mathematical problem a miner solves using their computer to earn Bitcoins. Therefore, hash rate refers to the rate at which Bitcoin miners can solve those mathematical problems. The hash rate will increase if more Bitcoin miners join the Bitcoin network. Hash rate can also be defined as the performance of a Bitcoin mining computer. These days, the supercomputers that mine Bitcoins posses different hash rates. Smart miners go for higher hash rate computers to mine Bitcoins because they increase the possibilities of discovering the next block and reaping the rewards.
Bitcoin Mining Terminology # 3: Conversion rate
Up until now, nobody can predict what the price of Bitcoin/USD will be moving forward. Therefore it’s a bit difficult to figure out if Bitcoin will be profitable in the future. If you’ve indulged in Bitcoin mining just to accumulate the coins, then conversion rate is a non-issue to you. But if you’re acquiring Bitcoins to convert them in currencies in future, then you should be very worried about the conversation rate.
Bitcoin Mining Terminology # 4; Timeframe
At a certain point, you’ll have to take a step back and calculate whether Bitcoin mining is profitable. To do that, you’ll have to draw up a time frame to base your calculations. This is because the more you mine Bitcoins, the more you earn them.
Bitcoin Mining Terminology #5: Pool Fees
If you do not have the resources to mine Bitcoin yourself, an alternative is to join a Bitcoin Mining pool. A Bitcoin mining pool is where miners come together to increase their mining efficiency. The platform that brings these miners together is what we call a mining pool. To maintain the operations of the mining pool, the owners deduct a certain percentage from every miner’s earnings. At the end of each mining day, the owner of the mining pool combines the total Bitcoins mined, deducts a certain percentage to take care of the mining pool’s operations and then shares out the profit among the miners depending on their output or hash rate.
Bitcoin Mining Terminology #6: Power consumption
Every mining system is designed to consume a certain amount of energy. Make a point to find out exactly what your mining system is designed to consume before you start any mining operations. The information about the amount of power consumption will help you when calculating your profitability. You can find this information by performing a Google search.
Bitcoin Mining Terminology # 7: Bitcoins per block
A specific amount of Bitcoins are generated when a mathematical problem is solved. 50 is the total number of Bitcoins created per block. But after reaching 210, 000 blocks, it’s halved. The halving takes place every 4 years. 12.5 bitcoins are awarded for each block.
To shorten your learning curve when just starting out in the Bitcoin mining space, it’s a good idea to learn these terminologies off by heart. Once you do so, you will always sound like a Pro when communicating with Bitcoin investors and customers.