Heads up: This article was commissioned as a part of the Adam Rush Project. It was an experiment I did a few years ago to see if having books written by ghostwriters would be commercially viable. It wasn't. That said, the following article was written by someone else and not yet edited to my standards. I hope to find time to rewrite it myself in the future, but for now, read with caution.
Disclaimer: In this article, I discuss financial topics. These are my personal thoughts and opinions. I am not a financial advisor, and none of what you read here is financial advice.
Have you ever wondered where bitcoins come from? The best answer is that they are mined. Like anything of value, bitcoin mining is competitive and requires a lot of hard work and patience. But, if you have access to affordable electricity and cutting edge computer equipment, you are ready to go! If you don’t have the capacity to mine bitcoins yourself, you can also buy a mining contract that can run the mining hardware for you.
What is Bitcoin Mining?
Bitcoin mining is like solving a complicated puzzle. Like an Olympic marathon where runners compete to earn a medal, in bitcoin mining, you compete with everyone on the network to earn bitcoins. If you have hardware that combines both speed and efficiency, you get the lion’s share. This means that the fastest hardware draws the user more trials every second, which translates to claiming more rewards. With bitcoin mining, the user can secure transactions that are recorded on the blockchain. There are only two things that determine the price of admission to bitcoin mining: electricity and equipment.
Hardware for Effective Bitcoin Mining
The Central Processing Unit (CPU)
In the early days of bitcoin, the Central Processing Unit (CPU) was the only hardware that you could use for mining. The first Satoshi client used a CPU to mine bitcoins. You can use this hardware as well. But, its use is not secure and you might not earn bitcoins using it. CPU bitcoin mining is relatively futile. You can mine using your personal computer for years and not earn a single bitcoin.
The Graphical Processing Unit (GPU)
A Graphical Processing Unit (GPU) is much better for mining bitcoins. The GPU provides over a hundred times more bitcoin mining power and uses less electricity than a CPU. The modern GPU is effective at mining bitcoins. You can use any GPU to mine, but some do the job faster than others.
The Field Programmable Gateway Array (FPGA)
The usage and cost of electricity is a major factor in the profitability of bitcoin mining. Having more energy-efficient hardware can make a big difference on the bottom line. Field Programmable Gateway Array was developed to cut operational costs and increase profitability.
The Application Specific Integrated Circuit (ASIC)
The best hardware for mining bitcoins is the Application Specific Integrated Circuit (ASIC). The sole purpose of an ASIC is to mine bitcoins. If you are serious about mining bitcoins, get ASIC hardware and master it. If you start out by using ASIC devices, you likely will not have to buy new hardware for many years to come.
How to Mine Bitcoins
Bitcoin mining is a complex process that involves solving difficult math problems with computers. The more powerful your computer is, the faster it will be able to solve the problems. The faster your computer can solve the math problems, the more chance it will successfully mine bitcoin.
The process of mining bitcoin serves two functions. It processes a bitcoin transaction and also secures it on the bitcoin blockchain. Since miners compete with each other and competition is increasing, it’s getting harder to mine new bitcoins over time.
Most people using bitcoins today don’t mine them and have no idea about how to do it. Not everyone should venture into mining bitcoins. It is an expensive venture that requires a hefty investment of both time and money. If you’re willing to take the risk, here is a brief guide on how to get started mining bitcoins.
Mine in a Country That Allows Bitcoin Mining
Bitcoin miners come from many countries that each have differing laws. Bitcoin mining is legal in most countries as long as the miner abides by the tax policies of the country. However, some countries forbid the practice. You should always look into your local laws to see if your area permits bitcoin mining. If it does, you are good to go. If it doesn’t, look for a different way to profit from the bitcoin trend.
Determine How Profitable Mining Will Be for You
The main reason to venture into bitcoin mining is that you want to profit from it. Before you start, do a few calculations. Write down the costs of the equipment you need and determine whether it will be profitable for you in the long run. Luckily, there are bitcoin calculators that will help you do the calculations. Search “bitcoin mining calculator” on Google or your favorite search engine.
Choose the Right Bitcoin Mining Hardware
Bitcoin mining is like a rally car competition. You need the best engine to win. Like with racing, you need the right hardware to get the most rewards in bitcoin mining. Having the right hardware will determine how profitable your mining operations will be. To run a profitable bitcoin mining venture, you must use ASIC hardware. If you use a normal laptop or desktop computer, you can go for years without earning a single bitcoin. Your best hope for worthwhile mining is with ASIC computers. You don’t want to do business in an environment where you waste your time and run up your power bills for nothing, right? Be wise.
Choose a Quality Mining Pool
A mining pool can help you receive a mining payout without having to complete a block on your own. The advantage of joining a mining pool is that you can earn a payout depending on the number of hash rates you have contributed to the pool. This increases the possibility of you making a profit.
Choose Bitcoin Mining Software
Bitcoin mining software controls the hardware. The software acts as a bridge to connect your hardware with the mining pool of your choice. Bitcoin mining software lets you set the bitcoin addresses that the pool sends payouts to. Mining software is available for all operating systems.
It is impossible to do profitable bitcoin mining without bitcoin mining software. The software delivers the work of the hardware to the bitcoin network and receives completed work from other miners. Before using any mining software, you will need a bitcoin wallet. The software needs a wallet address to deliver payouts and mining rewards to. As discussed previously, there are a wide range of bitcoin wallets to choose from.
Bitcoin Mining Software
This software is only compatible with windows 8.1 and windows 10. Its graphical user interface makes it one of the easiest-to-use bitcoin mining packages available. It also has reliable mining pool support, can switch to power saving mode, and has fast share submission capability. It also comes with a profit reports feature that lets you track the profitability of your mining business.
The CGMiner might be the most commonly used software among bitcoin miners of today. It has innovative features such as CPU mining and multi-GPU support, new blocks self-detection, and remote interface capabilities.
EasyMiner is a graphical bitcoin mining software that supports the Stratum mining protocol and the getwork protocol. It can configure your miner and provide graphs that enable you to track and visualize your mining activity.
Summary
- Bitcoin mining allows you to earn bitcoins in exchange for providing computing power for processing transactions
- Application Specific Integrated Circuit (ASIC) is the best type of equipment for mining cryptocurrencies.
- Bitcoin mining may or may not be profitable depending on where you live, the cost of equipment, the cost of electricity, and the price of bitcoin.
- The bitcoin mining process is controlled by bitcoin mining software.