Diamond is the hardest material that you can find on this earth and hence it is no chance that diamond is used as a material to make sure that bits are made of diamonds for various commercial or industrial uses.
Then comes the poly crystalline diamonds which are the actually special diamonds used only for making drilling bits.
Since diamond is expensive the only thing that of diamond in a diamond drill bit is the tip which is brazed to a tungsten carbide drill bit. Water is used to cool these while cutting tiles etc to avoid the heat from damaging the bit as well as the surface.
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