Bitcoin is by far the most popular cryptocurrency in the world. For many, the term crypto coins are synonymous with bitcoin and are used interchangeably. After all, Bitcoin is the first crypto coin and has pioneered the whole decentralized blockchain technology.
In this article, we will talk about Bitcoin mining, a process that supports the Bitcoin network by validating each transaction and rewards participants with Bitcoin currency. We will not go into the technical nitty-gritty of bitcoin mining but rather show you how to set up your dedicated Bitcoin mining rig and teach you how to run your own mining operation and earn money from it.
What Is Bitcoin Mining?
Bitcoin mining is the process of creating new bitcoins by solving complex cryptographic puzzles that verify each transaction. Because blockchain technology does not have an intermediary body to supervise each transaction, it is up to the bitcoin miners to validate the network.
Bitcoin mining is resource intensive and requires extensive computational power to compete against other miners. It is a race to be the first to verify the next block of Bitcoin transactions. Only the winner who is successful in solving the puzzle is rewarded, so to improve the chances, bitcoin miners group together to connect their computers in a single network known as a bitcoin mining pool. Once the network is validated and the bitcoin is added to the network, miners receive a small amount of Bitcoin which is then divided among members of the pool.
What is Bitcoin Mining Difficulty?
The Bitcoin Network Difficulty Metric adjusts every 2016 blocks, or approximately 2 weeks, to try and keep block creation time at an average of 10 minutes. The difficulty is adjusted by looking at the time it took to find the last 2 weeks worth of blocks and then using that information to estimate how much time it will take for the next 2 weeks worth of blocks. You can use a Bitcoin mining calculator to find if it is even worth mining Bitcoin.
Bitcoin Mining Calculator
The profitability of your Bitcoin mining rig depends on your system’s hash rate, power consumption, pool fees, and electricity costs. The easiest way to calculate the profitability is to use the Bitcoin mining calculator below
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A simplified step-by-step guide to bitcoin mining
Step 1: Bitcoin mining hardware: The first step to bitcoin mining is to invest in good hardware. Because bitcoin miners all compete with each other, you must have an updated system that is optimized for mining to increase your chances of winning a reward. You can explore the following options
- AntMiner S7: Advertised capacity 4.73 Th/s, power efficiency .25 W/Gh Appx. BTC Earned per Month: .1645
- AntMiner S9: Advertised capacity 13.5 Th/s, power efficiency .098 W/Gh Appx. BTC Earned per Month: .3603
- Avalon6: Advertised capacity 3.5 Th/s, power efficiency .29 W/Gh Appx. BTC Earned per Month: .1232
Step 2: Create a Dedicated Bitcoin Wallet: Next, you must create a bitcoin wallet, which is a crypto account to hold your earnings. If you manage to solve the cryptographic puzzles and add a block to the network, you will be rewarded with 6.25 BTC which will be directly sent to your wallet. There are several bitcoin wallets on the market; you can choose the one that best suits your needs. You may also consider creating a hardware wallet to maximize your security, but a hardware wallet is not a requirement if you are just starting out.
Step 3: Configuring equipment: Once you set up your hardware for mining and a blockchain wallet to hold your earnings, it’s time to configure the whole system. This involves connecting the computers if you wish to combine them and run in a pool, but this requires some advanced knowledge of computer hardware. Here is a detailed article to guide you. You also need to install the necessary software that will facilitate mining, one popular software for this is nicehash and is worth checking out.
Step 4: Start mining: Once you download a local copy of the blockchain for the cryptocurrency that you want to mine, you are all set to go. The mining will take care of itself and make you a stream of passive income. However, you should periodically check the rig and ensure the temperatures are controlled.
A Cheaper Alternative
If you are starting out or do not want to invest a large sum of money in setting up a mining rig, cloud mining is a cheaper alternative. It works exactly like cloud computers, and you essentially lend computational power from a third-party company that has already invested in creating optimized mining rigs. Check out the top 10 reliable cloud mining companies.
Bitcoin mining requires upfront investment and some technical knowledge to get started. It is not a get-rich-quick scheme, and because you compete with other miners to solve cryptographic puzzles, there is no guaranteed success. But there is always a demand for miners as they are responsible to verify the whole network and add new blocks to the blockchain. So, before investing in bitcoin mining, make sure to weigh out the pros and cons.