Over the last few years, the Bitcoin mining process has become more difficult. Earlier, anybody with a PC or laptop could mine new Bitcoins, and they’d receive a mining reward of 50 BTC after verifying a new block of transactions by solving complicated mathematical problems. Now, Bitcoin mining is not as easy as it used to be since the block reward has been halved every 4 years; the Bitcoins that are in circulation have gone down to 6.25 BTC a block. By mining Bitcoin, you can earn some cryptocurrencies, and you can also earn some money by investing in Bitcoin. If you are planning to invest or trade in Bitcoin, you can check Bitcoin Future App. Bitcoin Future App is an automated trading platform which is available for all investors in the crypto market.
What is Bitcoin Mining?
Bitcoin Mining can be explained as a process of adding transaction records digitally to the blockchain, also known as distributed ledger technology, that holds the history of each transaction of Bitcoin. It is also a record-keeping process that is executed using high computing power.
How does Bitcoin Mining work?
- Bitcoin Mining is a process that uses blockchain technology, which is an online decentralized public ledger that records the transactions through a network called the blockchain. If you want to mine Bitcoins, you need to check several factors before you proceed with the actual mining process.
- The miner’s goal in the Bitcoin network is to add a few individual blocks to the blockchain. This needs more electrical and computational power even though several miners take part in adding blocks. The miner who solves the mathematical problem will add the block, which happens when the hash is generated. Miners receive 6.25 Bitcoins as a reward for this.
- For a profitable Bitcoin mining process, you must consider all expenses like software, hardware, and electricity costs.
Mining Bitcoin: A step-by-step process
Here’s a step-by-step process of mining Bitcoin.
Get a Bitcoin Mining Rig
The first step to start mining Bitcoin would be to own a Bitcoin mining rig. Presently, special hardware like the ASIC miner is used to mine Bitcoins. An application-specific integrated circuit (ASIC) miner is a device that is designed for the sole purpose of mining—not coal, but rather Bitcoin.
Get a Bitcoin wallet
The next step would be to set up a Bitcoin wallet where you can store your Bitcoins in a wallet. This helps you to manage the Bitcoin addresses that are stored in the blockchain. Your Bitcoin address has a public key and a private key; a public key works like a bank account number, and it helps in receiving Bitcoins from others. But, the private key is a secret key, and it can be used to send Bitcoins; if the private key is lost, the Bitcoins are lost forever on that particular address. Wallets require you to use or download a fairly large blockchain file – about 6GB – so downloading and updating a local wallet may be a non-starter. Like all wealth storage mediums, keeping your bitcoins “local” is probably a better idea than trusting a web service, but that’s a matter of private preference. There is no preferred wallet type, and there are obvious trade-offs to both. Privacy advocates would probably say a local wallet is best.
Join a Mining pool
Even with the best ASIC miner, you cannot compete with large mining farms; mining Bitcoins might not always be profitable. This can be sorted out by joining a mining pool. Miners offer their computing power to a group, where they collectively try to generate a hash. Once the pool finds a block, you get a payout based on the percent of hash rate contributed to the pool. If you contributed 1% of the pool’s hash rate, you’d get .125 bitcoins out of the current 12.5 bitcoin block reward.
Pool members pay the operator fees that are usually around 0 to 2% of the reward received.
Get Mining software
After having the required hardware setup and joining a mining pool, you need to use the software to point your hash rate at the pool. This helps you to connect with the Bitcoin network and blockchain mining; the software can be used to deliver work to the miners, check the result, and add the information on the blockchain. It also monitors the activity of the miners and shows cooling temperature, hash rate, and mining speed. Beginners will appreciate the Nice Hash Miner. It is very easy to use, mines multiple cryptocurrencies, and automatically chooses the most profitable algorithm at a time.
And now you can start mining and earning Bitcoins! Connect your miner to a power outlet, link it with a computer and install mining software. Add information about your wallet and mining pool into the mining software, choose a device, and let the mining begin!
Some advice to send you off: if you want to mine profitably, keep track of the news from the crypto world. The development goes ahead very fast, and it changes on a day to day basis.
Mining bitcoin is not profitable for most people as mining is a highly specialized industry. Most Bitcoin mining is done in large warehouses where there is cheap electricity. You could purchase thousands of dollars worth of mining equipment to mine Bitcoins, but there is no guarantee of ROI. As more and more bitcoins are found, they become scarcer and consequently more difficult to find. A profitability calculator like the one on bitcoinx.com can help you understand what you’re up against, but this isn’t a certainty. You could run your systems for a weekend and make a mere $1.50 – enough for a coke – but with sophisticated hardware and efficient methods, you might just wind up with a reward. One thing to keep in mind is that it shouldn’t cost you more to run your hardware than gain in bitcoins.