Not every cryptocurrency can be mined, but Bitcoin can. While producing new coins and releasing them in circulation isn’t as profitable as it was several years ago, many still see potential in it.
Becoming a Bitcoin miner is a lot more complicated than investing in Bitcoin. Not only does it require knowledge about blockchain technology, but it’s considerably more expensive upfront.
Still, if you already have an online Bitcoin wallet and would love to increase your balance through mining, here’s everything you need to know about getting started.
More About Process of Bitcoin Mining
Bitcoin mining explains two important activities on the Bitcoin blockchain. First and foremost, it is a process of creating new coins which users can buy and sell. However, it’s also a process of confirming Bitcoin transactions.
Miners charge a fee for every transaction because their devices solve complicated mathematical problems that enter new transactions into the blockchain ledger.
The term “mining” is symbolic of how Bitcoin is obtained – a slow, complex, and resource-intensive process.
Keep in mind that there are close to 19 million Bitcoins in existence right now, and there can only ever be 21 million. This cap on Bitcoin production was a part of the plan from the beginning.
As we come closer to the cap number, the Bitcoin mining rewards for the miners decrease due to the process called Bitcoin halving. That slows down the production significantly and makes it more challenging to earn through mining.
Not All Bitcoin Miners Are the Same
In the early days of Bitcoin, the solo miner was the norm. Individual miners and their equipment brought the first coins into existence.
But these days, solo mining is rare, as it’s not always worth the investment it requires. That’s why most Bitcoin miners join mining pools.
Essentially, it’s an effort to join forces, or hash rates, to mine Bitcoin faster and share the rewards. There are countless Bitcoin mining pools around the world, and they vary in size, the fees they charge, their payment cycles, and their reputation.
There is a third approach to Bitcoin mining called cloud mining. It’s the most affordable option, but it also brings the least rewards. If you want to avoid the hassle and expense of getting the mining equipment and monitoring the process, you can sign up for a cloud mining service.
These companies provide users with a mining infrastructure they never even have to see. All you need to do is sign a contract for a certain period and collect the profits.
Everything You Need to Become a Bitcoin Miner
We’ve established that starting a Bitcoin mining operation can be pricey, but what does that mean precisely? Depending on what type of mining rig you plan to build, the investment can range between $2,000 and $10,000, and sometimes even more.
The more powerful your mining computer is, the more rewards you’ll receive. You also need to think about the power capacity as many of these units require a 220V outlet.
Plus, Bitcoin mining consumes a lot of electricity, and your utility bills may increase significantly. That is one of the reasons people choose to join a mining pool. With the Bitcoin mining hardware usually comes the designated free software.
Thankfully, you can search and download different mining software as many options are available. You will need a reliable online Bitcoin wallet, desktop wallet, or even a hardware wallet.
Remember that Bitcoin mining equipment generates a lot of heat, so ensuring enough airflow and cooling around your equipment is crucial. This is why it’s not uncommon that many Bitcoin mining pools are located in colder areas.
Finally, a stable internet connection is a must. Wi-Fi is not the way to go. You’ll need a super-fast internet connection delivered via an ethernet cable.
Are You Ready to Become a Bitcoin Miner?
If we were to make a list of pros and cons about becoming a Bitcoin miner, the price tag would be at the top of the con column. Indeed, unless you opt for cloud mining, which is a relatively new occurrence, getting into Bitcoin mining can be pricey.
But the number of people joining the hunt for Bitcoin grows by the day, and Bitcoin miners are necessary. Even with Bitcoin halving and rewards that are less than before, it can still be a profitable endeavour.
Finally, the Bitcoin miners won’t go away when the last Bitcoin is released into circulation – they’ll be here to confirm the many transactions on the blockchain.