However, it’s important to temper your expectations for how much you can earn. Bitcoin mining equipment is expensive and Bitcoin miners require a lot of electricity. It’s possible to lose money by mining Bitcoin depending on your equipment, internet connection, and power costs. But if you approach Bitcoin mining strategically, you can perhaps make a little money while supporting the Bitcoin ecosystem.
What Is Bitcoin Mining?
Mining is the technological process that processes Bitcoin transactions and mints new Bitcoins. Bitcoin mining adds new blocks to the Bitcoin blockchain, which is an electronic public ledger that tracks every Bitcoin transaction. The Bitcoin blockchain is operated and maintained by Bitcoin miners. Bitcoin miners in possession of extensive computing power compete against one another to verify the next block of Bitcoin transactions. The winner gets paid a small amount of Bitcoin for successfully solving a complex mathematical equation in the shortest period of time. Bitcoin miners can work alone or in mining pools to earn Bitcoin rewards. Bitcoin mining requires extensive computing power, and organizing into groups of miners is a way to mine crypto more successfully. Bitcoin mining pools connect many computers into a single network of miners, and when the network validates a block, the Bitcoin rewards are divided among the pool’s participants.
How To Mine Bitcoin
Bitcoin miners use mining hardware to generate a new Bitcoin block every 10 minutes. For solo Bitcoin mining, these are the basic steps to follow:
Should You Mine Bitcoin?
You can mine Bitcoin at home, but that doesn’t mean you should. Bitcoin’s supply is fixed at 21 million, and as more of it is mined, mining will get harder and more expensive. Large Bitcoin mining operations are generally the most successful and profitable. Your old desktop or laptop is likely no match against these sophisticated operators. Start by choosing the hardware you’ll use to mine Bitcoin. While you can use an old computer or laptop, you’re unlikely to earn any Bitcoin unless you invest in a more powerful setup designed specifically for Bitcoin mining. Antminer, made by Bitmain, is an example of a popular cryptocurrency mining hardware. You may be able to find used mining hardware online to save money. Note that many mining rigs run on the Linux operating system and require extensive computer knowledge to set up and operate. If you’re new to advanced computing, plan on extra time for learning and troubleshooting. If or when you successfully validate a Bitcoin block, you need a valid Bitcoin wallet to get paid. Consider creating a dedicated wallet for your crypto mining activities, separate from any other Bitcoin investments. You can create one or more different types of Bitcoin wallets, all with varying levels of convenience and security. As a Bitcoin miner, you may want to establish a hardware wallet—the safest kind—for additional security. Once your mining hardware is in place and you have a Bitcoin wallet, you can install and configure your Bitcoin mining software. This, too, requires some technical knowledge, particularly if you’re linking together multiple hardware miners to boost your Bitcoin mining capacity. Some mining hardware has a software component in the form of a graphical user interface (GUI) that allows you to use a mouse to configure the hardware. Other mining hardware requires command-line knowledge—another advanced computer skill commonly used by programmers and developers. Spend some time looking at what works best for you needs as you select the Bitcoin mining software for your hardware. You can start mining as soon as you download a local copy of the blockchain for the cryptocurrency that you want to mine. Once you click the right button to officially start mining, you can go take a break. Your mining setup, known as your rig, does the hard work of mining crypto for you. You should still check in periodically to make sure that your rig is still mining, but you don’t have to do any more work yourself. Your mining hardware can mine crypto 24/7, even while you’re at another job or asleep. Many miners consider the mining pool fees to be worth the expense, although you still need to purchase and operate mining hardware. Or you can decide to skip Bitcoin mining altogether.
Alternatives to Mining Bitcoin at Home
You don’t necessarily need to set up your own Bitcoin mining rig to benefit from mining. There are other ways to gain portfolio exposure to mining.
Cloud Mining
With cloud mining, you can pay someone else to do the mining for you via cloud computing technology. Cloud miners contract with mining companies that enable access to mining hardware located remotely in data centers. Some cloud mining companies also manage the mining operations for you.
Invest in a Bitcoin Mining Company
You may also consider investing in public companies dedicated to Bitcoin mining. Riot Blockchain is an example of a Bitcoin mining company that trades publicly in the stock market.
Mine a Different Cryptocurrency
Bitcoin is not the only cryptocurrency that is mined. You can opt to mine Ethereum, Monero, Litecoin, and many others. Each coin has its own mining rules but varying economics and competition, which may produce greater cryptocurrency rewards than Bitcoin mining.
