Bitcoin mining is a complex computational process using a special algorithm for generating new cryptocurrency blocks. ( Bitcoin’s algorithm is called SHA-256.) To put it in simpler terms, mining is creating new Bitcoins using the computational power of your video card. The concept of Bitcoin mining is similar to the concept of, let’s say, gold mining, as you have to work to gain something. The only difference is that Bitcoin coins are mined in the virtual world where they have also been called “digital gold” for a long time.
It is important to understand that mining algorithm works in a way that the more miners there are in the Bitcoin network, the lower Bitcoin mining profitability corresponds to every new block. Every day, mining is becoming more difficult due to the growth of the network’s hashrate.
“If the cost of cryptocurrency goes up faster than its complexity, then what is the downside of Bitcoin mining,” you ask? It seems that the Bitcoin mining hardware works and earns money. Miners get passive income and this is almost a dream for anyone. The problem here is that on average with the existing Bitcoin mining profitability, in one hour even a specially prepared powerful computer will be able to earn about 10–30 cents per hour.
The main (but not the only one) reason for such poor performance is directly related to the cost of electricity. Also, do not forget that the best Bitcoin mining hardware must be equipped with a variety of Radeon video cards (and these are additional costs for initial investments) since only they are able to provide efficient mining. And Bitcoin mining difficulty grows every day.
One more important thing to remember before jumping into Bitcoin mining world is that it is almost impossible to mine Bitcoins independently. You almost definitely wouldn’t be able to make it without joining a Bitcoin mining rig or Bitcoin mining pool due to the high complexity and popularity of Bitcoin mining. Only by joining large Bitcoin mining rig you can earn block rewards. At the moment, the block reward is 12.5 BTC, which is then shared proportionally among all the pool members. In 2020, the reward will be half as much, 6.25 BTC. “How to make money with Bitcoin mining”, you ask. Well, bigger Bitcoin mining farms have more rewards and with the price on the raise Bitcoin mining is still profitable. You can check some Bitcoin mining calculators to see it yourself.
How To Mine Bitcoins
Cryptocurrency (and specifically Bitcoin) mining is the process of gaining electronic currencies using modern equipment and special Bitcoin mining software that little by little allow accumulating Bitcoins.
The algorithm for finding new Bitcoin blocks is called SHA-256. Production efficiency depends on hashrate and network complexity. Hashrate is computational power (the number of hashes per second). The larger it is, the higher the profit (or rather the chances of getting a reward for a new block). Best (i.d. most powerful) Bitcoin mining pools have more chances to get a reward.
The process of mining is the calculation of hashes (which is similar to solving a difficult puzzle) to find a new block. Those puzzles include random numbers, links to previous blocks, etc. The point is to solve a hash that has the greatest number of zeros at the beginning. The one closest to the result will receive a reward. On average, this happens every 10 minutes. If you had asked, “How long does it take to mine a bitcoin” in 2016, the answer would have been only one block every two weeks. The faster the computer lists all possible hashes, the more likely it is to be the first in this race.
The whole process of mining is performed by Bitcoin mining hardware automatically and without your participation. It looks like a very attractive and promising source of passive income because all you need is a computer connected to the Internet with special drivers and Bitcoin mining software on it. Internet traffic during mining is spent minimally, but a lot of electricity is needed. That’s why so many people don’t stop asking the question, “is Bitcoin mining profitable?”. It really depends on the electricity costs in your region but you must understand that there’s no such thing as free Bitcoin mining.
How To Start Bitcoin Mining
If you are seriously asking (yourself or Google) how to mine Bitcoin, the best answer would be to join a well-known and trust-worthy Bitcoin mining pool. A mining pool is a group of miners who combine their computing resources to get more Bitcoins. The power of such collective work means that nowadays a lone user has to be very lucky to get a reward in the Bitcoin blockchain.
In the pool, you will need to run small and less difficult algorithms, and thanks to collective efforts you will have more chances to complete a large algorithm and earn Bitcoins, which will be distributed among the pool members in proportion to their contribution to the common cause. As a result of this online Bitcoin mining, you will be able to earn more Bitcoins, and your investments will soon begin to make a profit.
Bitcoin Mining Hardware
Bitcoin mining is a very competitive activity. The crypto world works in a way that every day more and more users with the latest equipment appear and it is increasingly difficult to mine Bitcoin. Therefore, before you begin, you need to be well prepared. It is necessary to make calculations and understand whether you will be able to make a profit from this occupation. For this task, it is best to use one of the many Bitcoin mining calculators. Find one, enter the specs of the Bitcoin mining machine that you are going to buy and it will show you how soon you will be able to beat the costs and get a profit.
In the past, it was conceivable to perform Bitcoin mining on a regular computer or using a regular video card (this was called GPU mining). However, today mining is so competitive and aggressive that you will need specialised ASIC miners, i.e. computers designed exclusively for mining Bitcoins.
Bitcoin Mining Software
Cryptocurrency mining software is a specialized program (there are even Bitcoin mining apps) designed for the mining cryptocurrency out of the blockchain. Such programs are based on the algorithms that these currencies use. There are many algorithms and they all differ not only in the mining process itself but also in various functional features that affect the use of the currency.
As widely known, the mining process comes down to performing mathematical operations that are necessary to create new blocks of the network. This is a classic approach that is used by most cryptocurrencies.
If you have already built a powerful Bitcoin mining farm or just want to try mining, then the next step you need to accomplish is to download install the appropriate software. This is how to do bitcoin mining.
Before you start configuring the software, do not forget to create a cryptocurrency wallet. The mined coins must be credited to the account. It can be an online wallet, a full-node desktop wallet or simply an account on the exchange. There you can see how many bitcoins have been mined from your computer.
Next, you need to configure the program by specifying the necessary parameters. Among them may be the choice of a coin for mining, if the program supports several algorithms, data on the mining pool, equipment used, and the cooling system settings, and in some cases even the power allowed to be consumed.
Originally published at https://changenow.io on May 8, 2019.