Are you intrigued by bitcoin and how people are making money out of it?
Want to learn how you could mine bitcoins rather than buying them with your hard-earned money?
If you have no clue how mining works, rest assured there are plenty of ways you could get them up and running in a matter a minutes.
With the increasing attention bitcoin is getting, mining has become somewhat like a tech nerds wet dream. Geeking off while making money around the clock. Â
If you had started mining since 2010, you would’ve earned tens of thousands of dollars worth of bitcoin by now.
However, the current setup for mining bitcoins profitably has just passed. It would probably be best to buy bitcoins or ether from an exchange or a site that allows you to buy with your credit card.
If you live in China, where the electricity is dirt cheap and you have access to warehouses filled with professional grade hardware, you could make a decent return on your investment.
Mining cryptocurrencies is an arms race that incentivizes early adopters.
If you’re a beginner, you could still earn anywhere from $0.50 to $10 per day mining Litecoins, Feathercoins, Peercoins or Dogecoins with consumer grade mining hardware.
Given the time and money needed to setup and the daily consumption of electricity, Peercoins and Litecoins may give the most decent ROI.
Bitcoin mining involves verifying ledger based bitcoin transactions. After verifying a set number of transactions, a miner earns rewards in their respective cryptocurrency.
The hashing algorithm of the machine verifies the blockchain based transactions.
Once you are able to verify a certain number of transactions, you would be able to earn a Bitcoin. Hashes per second is the unit to measure the speed of transaction verification. The mining rig uses the hashing algorithm to verify the ledger based transactions.
Here are the basic Steps to Get Started:
- Getting the Bitcoin mining hardware:
Bitcoin mining gets more and more difficult as more Bitcoins get mined. For this reason alone, your laptop or computer will not be enough to mine profitably.
You also need a rig that has a high hashing that so that you can mine profitably. This is the reason that the 1st thing which you need to do is to get the right hardware. Some of the rig options which you can opt for are:
There are also a few cloud-based mining services whose resources you can rent in order to mine the Bitcoins. This would mean that you need not buy the hardware yourself. Some such cloud-based mining services include:
The hardware or the resource pooling service which you are using can make or break the mining operation. This is the reason why you should compare the different resource options carefully and also take into account the hashing rate and the electricity consumption.
- Downloading the mining software:
The hardware can only start the Bitcoin mining operation once you have downloaded the Bitcoin mining software. The 2 most popular options among the software for mining Bitcoins are:
- CGminer
- BFGminer
These are command line programs and therefore, the graphic user interface is not that great. If you’re looking for a program with the graphic user interface as well you can opt for the EasyMiner program which can run on Windows, Linux, Android.
- Bitcoin mining pool:
The difficulty levels in mining Bitcoins have risen so much that if you mine on an individual basis, you would have to wait for at least one year in order to earn a Bitcoin. On the other hand, if you are joining the Bitcoin mining pool, you would be verifying the transactions in a pool which will ensure that you are able to get a small denomination of Bitcoin on a regular basis.
This would help you handle the associated costs of running the mining rig. Even though the amount of bitcoins which you would earn annually is almost the same, the pool would help you earn it on a regular basis.
Some of the popular Bitcoin mining pools are:
- Opting for a Bitcoin wallet:
A wallet is a hardware or software address to collect or accumulate the bitcoins which you mine. You can either opt for the digital wallet or you can opt for the hardware one as well.
You have to enter your wallet address while mining bitcoins. The bitcoins would automatically accumulate in the given wallet. This is the reason that you need to set up a wallet at the start. You have to also opt for 2-factor authentication.
If you are opting for the digital wallet, you can either keep the wallet online or you can download it on your computer as well. If you want to keep it off-line, you can opt for the hardware wallet like the Ledger Nano S. (Your safest bet to store bitcoins)
The off-line wallet would provide an enhanced security as it is not susceptible to hacking. In case you need to sell your Bitcoins, you would need to do so via an exchange. Some of the popular exchanges are:
Most of the people leave this step to the last when they actually earn a particular denomination of the Bitcoin. Rather than making this mistake, it is a better idea to think about the wallet options and choose one in advance.
- Keeping up-to-date with the latest developments:
Many times, the changes in the blockchain technology or news about Bitcoin can change the dynamics of mining. You have to keep yourself up-to-date with these changes to know how it would impact your mining operation.
Example:
A recent fork in Bitcoin generated Bitcoin cash(new cryptocurrency) for Bitcoin holders. This significantly increased the value created for all Bitcoin holders.
In addition to that, in anticipation of the fork, the price of Bitcoin also increased significantly. This was a huge positive for people who are mining Bitcoins.
As a matter of fact, when you’re running a mining operation it is important to check the price of Bitcoins on a regular basis. You need to understand that there are certain fixed costs while running the mining rig like the cost of the hardware as well as electricity.
You have to constantly track the price of Bitcoins as below a certain threshold, mining is just not profitable. This is one of the main reasons why you should always keep up-to-date with the latest developments related to Bitcoin.
If you are serious about mining Bitcoins, you have to follow these 5 steps in order to set up your own mining operation or to pool your resources for better liquidity.
We would also share with you a few tips which you have to follow when it comes to mining Bitcoins.
- Increased difficulty:
With each and every Bitcoin mined, the difficulty of mining Bitcoins would increase exponentially. Therefore, over a period of time; you would have to constantly upgrade your hardware. This adds to the cost.
- Keeping your Bitcoins in different wallets:
I personally always keep the Bitcoins in smaller denominations across different wallets. This protects you in case of hacking of any single wallet.
- Keeping the cost down:
In my opinion, 2 of the biggest factors which affect your profitability when it comes to mining Bitcoins are the hardware cost as well as the electricity cost. You have to monitor both of these consistently in order to run a profitable Bitcoin mining operation.
Conclusion:
With Bitcoin mining, you would indeed be able to generate a side income but you have to always keep a strong watch on the variables involved.
Only when you are able to keep the hardware cost as well as electricity cost down, you would be able to generate a profit.
It is important to follow the above Basic Steps to Get Started with Crypto Mining which we have highlighted if you want to set up a successful Bitcoin mining operation. The current environment is one of the best when it comes to mining Bitcoins as the value of Bitcoin is rising exponentially.
