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The Basics Of Bitcoin Mining

Bitcoin-Mining-Basics
4 Minute Read
Key Points
  • Mining Bitcoin and other cryptocurrency takes equipment
  • Adding to the blockchain increases cryptos
  • Knowing what you need to get started is key

Bitcoin has become the new gold rush over recent years and the basics of Bitcoin mining are remarkably similar to the gold rush, and also wildly different. Even though it is not the only cryptocurrency, with a market capitalization of $845.98 as of September 13, 2021, it remains a central attraction. One of the ways to take advantage of this promising currency is through a process called “mining”.

Bitcoin mining is one of the means through which Bitcoins are introduced into circulation. By adding to the Bitcoin blockchain through mining, the Bitcoin network rewards you with a predetermined amount of Bitcoin. Truth is, you can practically earn a large quantity of Bitcoin with committed efforts to mining.

However, you need sufficient knowledge to mine Bitcoin profitably. Here are the basics of Bitcoin mining. You will discover how Bitcoin mining works and learn the steps you need to take to mine Bitcoin.

How Bitcoin Mining Works

Before you start mining Bitcoin, it’s essential to understand the concept.

Bitcoin mining is not illegal. Generally, Bitcoin is either created or mined. This happens when computers on the network validate and process transactions, adding security to the Bitcoin network. What you practically do when you mine bitcoin is that you add it to the blockchain.

And, when you successfully do this, the Bitcoin network compensates with a certain amount of bitcoin. The more computing power you contribute then the greater reward you stand to get.

Bitcoin mining requires you to solve extremely complex math problems. And, you can only do this with the use of high-powered computers. The application-specific integrated circuits (ASICs) are computer hardware that can serve such a purpose.

This hardware is usually expensive and can cost up to $10,000. Your Bitcoin mining speed is measured in hashes per second.

How To Start Bitcoin Mining

Here is a step-by-step guide on how you can start mining Bitcoin.

#1. Get a Hardware

First of all, you need to understand that Bitcoin mining requires specialized hardware. It was possible to use your computer CPU or high speed video processor card to mine Bitcoin during the early days of bitcoin. But, today, you can only mine Bitcoin using Custom Bitcoin ASIC.

This computer hardware is designed to meet the high-current need for Bitcoin mining. It outperforms the older system by up to 100× and therefore has gained dominance for Bitcoin mining. You can get this software from companies like Avalon.

Some of the excellent Bitcoin Mining Hardware based on price per hash and electrical efficiency include:

  • AntMiner S7

Capacity: 4.73 Th/s

Power efficiency: 0.25 W/Gh

Average Bitcoin earned per month: 0.1645

  • AntMiner S9

Capacity: 13.5 Th/s

Power efficiency:  0.098 W/Gh

Average Bitcoin earned per month: 0.3603

  • Avalon6

Capacity: 3.5 Th/s

Power efficiency:  0.29 W/Gh

Average Bitcoin earned per month: 0.1232

An easier alternative to purchasing custom Bitcoin mining hardware is Bitcoin Cloud Mining Services. Some of the best bitcoin mining cloud contracts include:

  • Hashflare Review: This contract is an SHA-256 mining contract.  It also allows you to mine more profitable SHA-256 coins while automatic payouts are still in BTC.
  • Hashing 24 Review: Hashing24 started mining Bitcoin in 2012. They use modern ASIC chips from BitFury to deliver the utmost performance and efficiency. Hashing24 has facilities in Georgia and Iceland.
  • Genesis Mining Review: One of the largest Bitcoin and scrypt cloud mining providers. Genesis Mining offers three Bitcoin cloud mining plans that are quite affordable.
  • Minergate Review: Provide both Bitcoin pools and merged mining as well as cloud mining services.
  • NiceHash Review: NiceHash is distinct for using order books to match mining buyers and sellers. You can check its website for its current prices.
  • MineOnCloud Review: MineOnCloud presently has approximately 35 TH/s of mining equipment in the cloud for rent. Some of them include AntMiner S4s and S5s.

Other recommended cloud mining contracts are Harshnet review, Minex review, Eobot review. However, this process implies more risk since you are not controlling the physical hardware yourself.

#2. Download Bitcoin Mining Software

With your bitcoin mining hardware on the ground, the next thing you need to do is to download the Bitcoin mining program into your hardware. BFGminer and CGminer stand out as the best amongst tons of Bitcoin mining programs online. Another program that you may find interesting due to its ease of use is EasyMiner, a windows/Linux/Android program.

#3. Join a Bitcoin Mining Pool

Most times working together with people of the same interest produces a better result. Mining Bitcoin on your own might take you up to a year to achieve a tangible amount of Bitcoin. Bitcoin mining pools make it easier and faster to mine Bitcoin.

Individual Bitcoin miners come together, pull their resources to solve a block, and share the rewards amongst them. Mining Bitcoin comes with some huge costs, and joining a mining pool can significantly reduce this cost. You most likely will spend much more if you are mining alone. Here are some recommended decentralized pools:

  • CK Pool
  • BitMinter
  • Slush Pool
  • Eligius

#4.  Set Up A Bitcoin Wallet

The next step to take is to set up a Bitcoin wallet, that’s if you do not have any existing one.

You can send the Bitcoins you’ve mined to your wallet using your unique address. This is not a hard task, just go online and download a Bitcoin wallet. You may consider SpectroCoin or Kraken. You must ensure you secure your Bitcoin wallet by enabling two-factor authentication.

Conclusion

Knowing the basics of Bitcoin mining is one of the ways you can tap into the great potential of the popular cryptocurrency, Bitcoin. However, in addition to getting high-power hardware, you must stay updated on Bitcoin news to make a profit.

Also, bear in mind that Bitcoin mining comes with a lot of costs. From the high upfront cost of facilities that enable efficient mining to the electricity costs of running an ASIC, your profit may be little. Also, the price of Bitcoin swings, ensuring that your efforts will provide a substantial amount after you’ve subtracted your costs.

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