How to mine Bitcoin?
As we have seen on How does bitcoin works page, mining is an essential part of the bitcoin system and protocol. But let’s now see how to mine bitcoin and why is this an important step for those of you that want to learn more.
What do you need to mine Bitcoin?
If you are interested in how to Mine bitcoin, you will need to understand and learn the following things:
Bitcoin Mining Hardware
As you need to solve complex mathematical problems, you will need mining hardware to solve the complex computations. In the beginning, when the competition was not so tough, mining could be done on personal computers, but now there are high-end hardware requirements to fulfill the mining needs, which can be acquired (they are quite pricey).
Finding difficult words? Look on our Bitcoin glossary for more terms and definitions.
Once you set up the hardware, you will need to select a mining pool. A mining pool is virtual pool of miners that wants to solve the mathematical problems that need to validate transactions within a block.
Mining software is attached to mining hardware that is software used to run mining operations. You might need some development knowledge to perform such activities – but not really requested if you have time to learn. There are lots of resources on youtube and other valuable websites (we cannot suggest any because we never went into this).
Is Bitcoin Mining Still Profitable?
Bitcoin mining might seem to be an easy way to earn Bitcoin. In reality, it is not. When Bitcoin was first launched in 2009, the bitcoin mining process was simple as there were no such hardware requirements, due to letting people take part in the mining process. Also, the reward value was a lot higher than it is now.
Over time as the value of Bitcoin increased and it became popular, a lot of people, and companies started taking part in the mining process. This increased the competition, and some big businesses even set up complete warehouses just for mining purposes. You can understand that if big companies enter a market the competition for a person like me is completely pointless or close to that point.
Also, the cost of hardware kept on increasing seeing the increase in demand. All of this led to cases where even in the case of earning Bitcoins as a result of mining, the reward value might be less than the cost beard on hardware and power consumption. Look at the energy requested to perform such computations, the electricity, and all the factors that let you be at least at break-even on your investments.
This could mean that you make no profits at all. If you are someone with access to cheap hardware and low electricity cost mining could prove fruitful for you. Either you live in countries where electricity if cheap or you have lots of money to invest or better look for other ways to earn.
Concluding, there are sites where you could earn by cloud mining, but for that we have a specific page – check it out!