How to mine bitcoin has always attracted many people for the rewards but the mining idiom had initially perplexed some not of the space. Bitcoin miners achieve mining by solving a computational problem that allows them to chain together blocks of transactions (hence Bitcoin’s famous “blockchain”). Bitcoin mining is deemed to be equivalent in difficulty to actual underground mining and the rewards are both outstanding.
What is Bitcoin Mining?
Mining is a very old trade, for centuries humans have mined resources like gold, tin, coal, diamonds, and diverse precious stones. Essentially mining is the act of extracting valuable minerals from the earth. This term is borrowed into the crypto currency world to refer to the process of generating Bitcoins.
Unlike minerals mining that requires the drilling of the earth, Bitcoin mining is more abstract. It requires solving complex mathematical problems. Before you can understand bitcoin’s mining procedure, you’ll have to know what blockchain technology is.
Blockchain is an open-source system for recording information, and each information recorded cannot be manipulated.
In simple terms, it is a chain of blocks. Each block is filled with transaction information. A crypto miner generates new Bitcoin coins by solving complex mathematical problems with the use of high-capacity computers. Once a problem is successfully solved, a new block will be added to the chain. The miner then would be rewarded with Bitcoins for his effort.
Factors considered in Bitcoin Mining
Many people are keen to learn, who wouldn’t want to, considering its current value. However, mining seems very technical and increasingly difficult, especially for individual mining. There’s a lot of doubt whether or not mining is really profitable.
If you want to learn how to mine bitcoin, the first thing you need to put at the back of your mind is hashrate, cost of electricity, device expenses, time, and maintenance.
The hash rate of bitcoin (otherwise referred to as hashing power) is used to describe the total computational power which is used in the mining and processing of transactions on bitcoin’s network
Not just any computer can mine, so you should be ready to spend a computer that doubles as a pre-built cloud mining app. Such devices will give you information on the machine’s hashrate execution.
The measurement for device performance is called “terahashes” this influences every calculation solved per second. The terahashes will determine the Bitcoin difficulty, which means how long it would take for you to find a hash. Placing the terahashes side by side with the device difficulty, you will be able to measure the performance of the machine. The difficulty is programmed to change after every 2016 block.
This is the first thing to consider and it is like starting a new business, every new business puts their daily cost into consideration, for cloud mining, electricity is your major daily cost. Except if you are getting electricity for free or stealing one, powering a mining rig is something that you should worry about. Once you divide the total cost of electricity by hash execution performance, you will have a clue of what your Return on Investment (ROI) will be.
Many mega-mining facilities have found alternative ways of reducing the cost of electricity by turning to other electricity sources like geothermal power and hydropower.
Overall, the cost of electricity varies from country to country. In the United States, you’ll be spending at least 12 cents per kilowatt-hour. In other parts of the world like India and China, it is less expensive.
The cost of acquiring a mining device is another factor that you need to put into consideration. Getting a Pre-manufactured mining rig will cost you between US$500 to $2,000 depending on its efficiency and if it is new or used.
Before you get a mining rig, you should be sure that you will be able to mine enough Bitcoins to cover the cost of the machine and daily costs, only then can you make a profit. Another expense to consider after buying the machine is setting up an office. You need racks for multiple machines, tether to ensure all the computers are connected in unison.
Time and Maintenance
Before you start crypto mining, you should ask yourself, ‘am I going into mine bitcoin full time or just part-time’. This question is important because setting up a machine, maintenance, and the cryptocurrency mining process is time-consuming. Also, since the computer will the in constant use, expect to maintain factory parts from time to time especially the device fan because the devices run so hot. All this consumes a lot of time.
How long does it take to mine 1 Bitcoin?
A lot of other factors contribute to determining how long it would take you to successfully mine 1 Bitcoin. These factors include the type of equipment used, computing power, and your competitors. However, if you have a supercomputer and little or no competition, it should take you only 10 minutes to mine 1 BTC.
With the current competition, it is impossible to mine in 10 minutes, it would even take large mining power rigs up to 30 days to mine 1 BTC.
How much does it cost to mine 1 Bitcoin?
What it would cost you to mine one Bitcoin is dependent on several factors. However, the major determining factor is the type of rig that you are using, the country you are mining from, and the cost of the crypto mining software that you are using.
Just like I explained earlier, the county that you choose to mine from is a huge determiner in the total cost. Countries in Asia and South America, for instance, have very low power consumption rates compared to the US or UK, so it would cost you 10 times more to mine one BTC in the US than let’s say Columbia. No wonder digital currency miners are flooding those continents.
A research carried out by Elite Fixtures stated that the total cost varies between countries around the world. It can cost as little as $531 and as much as $26,170.
The Elite Fixtures report did an analysis of the cost in 115 different countries putting electricity rate, utility rate, and other data into consideration.
The outcome of the report showed that the U.S. ranks 41st among countries with $4,758 as cost for a BTC. In Russia, it costs $4,675, and $4,746 in Iceland.
What are Bitcoin Mining Pools?
A mining pool is the coming together of cryptocurrency miners who combine efforts to finding a block. Each miner contributes manpower, computational resources, and finance over a network to strengthen the chance of finding a block.
After BTC has been successfully mined, the reward would be shared between every member of the pool based on the individual’s processing power, so members of the group are paid per work done. Soon pools require individuals to present proof of work as evidence before they are rewarded.
How to mine Bitcoin
Are you interested but don’t know how to mine Bitcoin? Here is a step-by-step guide on how to go about it.
Get a Mining rig
Before you start you need equipment to set up a rig. Rigs have not always been the requirement for mining, in the early days ordinary PC could mine as time went by, graphic cards became the requirement. Today you won’t get a single BTC with any of those, and if you are lucky you may just earn something after years of trying. GPU mining means a higher bitcoin mining difficulty, CPU mining is worse. So you see, you have to pay attention to your bitcoin mining hardware for your mining operation.
You can only mine with special hardware designated just for mining cryptocurrency using a set algorithm. These customized machines with standard computer power like ASIC (Application-Specific Integrated Circuit chips), ASIC miner, were designed specifically to mine Bitcoins faster while consuming less energy. So you need a device like this if you want to profit in the long run. The device characteristics matter a lot.
Get a Bitcoin wallet
Once you have a rig, the next step is to set up a wallet. Your wallet is a medium where you receive your Bitcoins and transact.
Your Bitcoin wallet will come with a wallet that serves as a public key, the key is a combination of different unique characters.
You will also be given a private key that you must not share with anyone.
A wallet works like a bank, with it you will be able to send and receive Bitcoin. Once you mine, this is essential to help receive the mined BTC. Your wallet will help with Bitcoin transactions.
Become part of a mining pools
As more and more people indulge in mining cryptocurrency, it is becoming increasingly difficult, even if you are using the best ASIC machine. Going solo you will be competing with many mega mining farms globally. So, mining solo may not be profitable because you may not be able to generate the required hash rate alone. The best solution here would be for you to join a bitcoin mining pool also referred to as a cloud mining company (already explain).
In bitcoin mining pools, miners pull resources together to generate a faster mining process, and when the Bitcoin is mined, Users will get their share from the mining pools as a Bitcoin reward.
Get a mining program for your computer
Miners need to fill the privacy rights ads profile and content profile.
Now that you have a rig, a wallet, and already part of a pool, the next step is to get a mining program for your computer. The program serves as a bridge between you and the Blockchain and Bitcoin network. A good software will show you basic statistics, like mining speed, cooling, hash rate, and temperature. Other features include audience insight, partners process data, content measurement, can measure ad performance, and can measure content performance.
How much a Bitcoin miner earns
Bitcoin mining profitability has no fixed amount however, mining is still profitable, it all depends on how you go about it. It is important that you know that the reward for mining is cut by half after every four years. The earliest miners were rewarded 50 BTC for mining one block. In 2012, the reward for mining the same block was reduced to 25 BTC. By the turn of 2016, it was further reduced, to 12.5. In 2020 it was again halved to 6.25 BTC for mining one block. The halving doesn’t mean Bitcoin mining will become less profitable, as at November 2020, 1 BTC was equivalent to $17,900 this means you earn 6.25 x 17,900 for every block you complete. So block reward is miners profit.
What do you need to mine Bitcoins?
Graphics cards are rectangular blocks designed with whirring fans. Using just a graphics card to mine Bitcoin node solo is not advisable except if you are willing to mine in a pool. The right computer equipment from a reliable name is essential. Be cautious of your hash power (for the device you are going for), the cloud mining service, and the mining farm you are choosing
Is Bitcoin Mining Legal?
Mining Bitcoin is legal, however, some countries flag Bitcoin as an illegal activity. Over time there has been a battle for the acceptance of Bitcoin, the opposition by the central bank comes mainly because of the phobia that the Bitcoin network could take over from fiat, this reason and more is why Bitcoin continues to be illegal in some parts of the world.
However, owning and transactions with Bitcoin is legal in more countries than it is not. Countries, where mining Bitcoins is considered illegal, are Bolivia, Ecuador, Algeria, Nepal, Pakistan, Egypt, and Morocco. Overall more countries allow Bitcoin mining. So do research on the geolocation data, before you spend money on mining equipment.
What are the risks of Bitcoin mining?
There are potentially two risks when mining Bitcoin, first; financial risk, second regulatory risk. However, when we talk about its financial risk, it is not peculiar to only Bitcoin protocol because other businesses also fail to yield ROI. In the same way, you risk spending huge money on setting up a mining rig and at the end of the day fail to complete a single block, this means a huge loss.
That being said, you can play safer by joining one of the mining pools.
For regulatory risk, ensure that the geographical area you choose to set up your rig considers mining legal. If mining is illegal in your country, you can travel to another country where it is legal. Make sure you research your countries before you invest a single penny. The greatest enemy of a crypto-miner is malware.
How to mine Bitcoins on a PC?
Mining with PC is possible but not profitable because due to competition from other miners PC don’t have the computing power to compete.
How to mine Bitcoin at home?
You can mine Bitcoin at home if you have enough electricity and your equipment can fit into your home.
While Bitcoin mining can be a complicated and convoluted subject, hopefully, this guide has helped clear up a few sources of confusion. So, if you were thinking of getting into Bitcoin mining, doing so from your PC isn’t recommended. However, if you’ve got the cash for mining hardware, consider joining a pool or simply go at it alone if you feel you’re up to it. Otherwise, there’s always cloud mining. Whatever your decision, we wish you the best of luck in confirming those transactions!