The popularity of Bitcoin is increasing. More and more people are exploring different ways to get hold of the currency.
But when a Bitcoin is worth more than a few thousand dollars, not everyone can afford a large chunk of Bitcoin investment.
But the protocol for Bitcoin is such that it allows alternative methods to invest in it.
I’m talking about Bitcoin mining.
In this comprehensive Bitcoin mining guide, we will explore what Bitcoin mining is, why it is needed and how to mine Bitcoins.
So, how do you mine Bitcoin?
Mining of cryptocurrencies is carried out by a so-called miner, ie a person who has one or more computers with sufficiently powerful processors to be able to locate and mine new coins.
These basically function as an excavator for cryptocurrency. The mining process is based on one of the algorithms Proof-of-Work – a consensus algorithm or Proof-of-Stake.
With the Proof-of Work method, the mining of cryptocurrency means that your computer performs a variety of complex mathematical calculations.
Gains in the form of the coins they find along with a commission from their block transactions.
The Proof-of-Stake method is the most popular option because Proof-of-Work requires expensive investments of computers and accessories before you can get started.
With Proof-of-Stake you can extract your cryptocurrency on a regular desktop computer, your laptop or even an Android smartphone!
It is enough that you have a certain amount of coins – and the more cryptocurrencies you have, the greater your chances of breaking more coins.
The algorithm tracks a specific group of miners and rewards them depending on how many cryptocurrencies they have collected so far.
Can You Make Money Mining Cryptocurrencies?
Now that you know what cryptocurrency mining is all about, it’s time to answer the key question – is mining really profitable?
Many users who have purchased professional equipment and taken virtual mining seriously have come to the conclusion that cryptocurrency mining does not always pay off.
It is a very demanding job that requires a lot of computing power and costs a lot to get started with.
If you are not convinced that Bitcoin mining is an investment for you, start with the Proof-of-Stake method.
It’s a much cheaper and safer way to break coins, even if it does not yield the spectacular gains that Proof-of-Work can bring.
Begginers guide to mining Bitcoins:
Step 1: Create a Bitcoin Wallet
The first step is to get a digital wallet where you can safely and securely store your Bitcoins.
A Bitcoin wallet allows you to send and receive Bitcoins to and from your wallet address.
A wallet is accompanied by a public and private key that allows you to access the Bitcoins stored inside.
Your public key is a series of letters and numbers that represent the address of your Bitcoin wallet. In the same way as a bank account number, you hand out your public key when you want to receive Bitcoins.
A private key is basically your Bitcoins.
You lose your private key or if it falls into the hands of someone who is shady, they are as good as gone.
There are a variety of wallet options currently available in the market for you to store your Bitcoins.
Hardware wallets, such as Trezor or Ledger, allow you to store your Bitcoins securely offline. Alternatively, if you want easy access, you can consider storing your Bitcoins in a software wallet, such as Exodus.
Step 2: Choose a graphics card or join a mining pool
Bitcoin mining at the beginning of the invention was done with the help of domestic computers in the home.
But today you will not acquire any Bitcoins through these methods and low processing power.
To get higher computing power, GPU cards (graphics processing unit) have become popular.
These graphics cards are commonly used for video games and provide better functionality and higher speed for Bitcoin mining compared to processors (CPUs).
Nowadays, Bitcoin mining is conducted through specialized hardware equipment called ASIC (Application Specific Integrated Circuit) chips.
These functional chips are designed specifically for the mining of Bitcoins. They have enormous processing power and are much faster than regular processors.
In addition, they are also expensive hardware to invest in.
In addition, you must also take into account the cost of electricity. An efficient power supply unit (PSU) will effectively reduce electricity costs.
Step 3: Install mining software
Once you have your wallet, hardware equipment and the selected mining pool in place, the next step is to install software that basically connects you to the Bitcoin network.
This program runs on your computer.
The software creates a connection to the network and thus delivers work to the miners, collects results and adds the information to the Bitcoin blockchain.
In addition, the software enables additional monitoring of miners, hash speed, processing power, temperature, etc.
Depending on your operating system, you will need to download and install an application client that creates a successful connection to the Bitcoin network.
When the download is complete, you are basically a node, among thousands of nodes, in the Bitcoin ecosystem.
One of the available Bitcoin software clients on the market includes Easy Miner. It is easy to set up and is compatible with Windows and Linux.
Finally, you need to test your connection and mining capacity by further creating a private connection.
Step 4: Start mining Bitcoins
With all the systems in place, you can effectively start mining your own Bitcoins.
If you have joined a mining pool, fill in your wallet address information and you can start earning stable rewards from Bitcoins.
Can anyone become a bitcoin miner?
Working to “dig out” cryptocurrencies is growing in popularity.
Pool mining means that several people share the prize, but the technology behind it is the same: computer power is used to create new blocks and at the same time generate new coins.
Companies invest millions in developing technology and / or buying equipment to dig up coins.
As an individual, you can be part of a mining pool. You then lend your computer to a network of computers that dig together.
Another option in pool mining is to buy computing power from bitcoin cloud mining, which in most cases are large central computer systems.
Be sure to do a thorough investigation before you start mining – there is a risk of fraud.
In this guide on Bitcoin mining, we have explored the basics of Bitcoin mining, its role in the network, how to mine Bitcoins and the available options.
Aside from a miner’s perspective of acquiring Bitcoins through this process, Bitcoin mining also ensures that the network remains honest.
The more miners, the more secure the Bitcoin network.