The cryptocurrency was introduced to the world in 2008. More than ten years later, the phenomenon remains baffling and intriguing to many. Cryptocurrencies are created on a blockchain concept that is regarded as the most secure way of doing transactions.
The Bitcoin blockchain can have only 21 million BTC created by a mining process. The transaction time usually varies from 10 minutes to hours or days and is dependent on various factors, as discussed later in this guide. This time determines how fast you can do a block.
In 2017, Bitcoin peaked when one BTC was valued at 20,000 USD, which resulted from continuous trading and mining. The developers of Bitcoin came up with various ways of obtaining it. You can purchase them on an exchange, accept them in exchange for goods or services and mine a new one.
Bitcoin Mining is among the most lucrative ways of obtaining Bitcoins and has many similarities to other element mining. You'll learn more about it in the following sections.
If you desire to learn how to mine Bitcoins, the different types of mining, and the tools you can use in the Bitcoin mining process, you're in the right place. Read further to find out more.
What is Bitcoin Mining?
Bitcoin mining is the process of developing new Bitcoin by solving a computational puzzle and delivering the coins in a block. The mining is done by powerful computers that solve complex computational math problems. The problems are usually very complicated that you cannot solve them by hand.
Bitcoin miners get Bitcoin as a reward for finishing each "block" of verified transactions added to the Blockchain. You'll get mining rewards if you discover a solution to a complex hashing puzzle.
The rewards are used to motivate miners to help in the main aim of mining, which is to support, legitimize, and monitor the Bitcoin network and its Blockchain. Since these responsibilities are shared among many users worldwide, Bitcoin is regarded as a decentralized cryptocurrency. It does not depend on a central government to supervise its regulation.
There are two outcomes of Bitcoin Mining. First, when computers solve complicated math problems on the Bitcoin network, new Bitcoins are produced. Second, when miners solve the computational math problems, they make the Bitcoin payment network trustworthy and secure by confirming each block transaction information.
When you send a bitcoin anywhere, that's called a transaction. Bitcoin miners clump these transactions together in a "block" and add each block to a public ledger known as the "blockchain." Nodes maintain the records of each block for future verification. Since a block can be verified, it adds integrity to the transactions.
As Bitcoin miners, one of your responsibility when adding a new block of transactions to the Blockchain is to make sure the transactions are accurate. The miners also have to ensure that Bitcoin is not being duplicated to prevent double-spending. This illicit act occurs when a Bitcoin owner spends the same Bitcoin more than once.
How to Mine Bitcoins
1. Get a Bitcoin mining rig
Before you begin mining, you must own a mining rig. Initially, miners used typical domestic computers and graphic cards. However, currently, it might take you a very long time with ordinary computers to gain something minimal.
These days, you need special hardware specially designed for Bitcoin mining. The hardware is called ASIC (Application-Specific Integrated Circuit chips), which consume less energy and mine Bitcoins faster. The mining hardware is costly and takes time to be manufactured but operates at an astonishing speed.
The most powerful ASIC machine can solve up to 14 terahashes every second. This means that it makes 1012 attempts to solve a Bitcoin block per second. When selecting an ASIC mining rig, you should consider:
Its performance in hash rate. Electricity consumption Price Read other miners' reviews It would be best if you placed your mining hardware in a professional data center as it requires a lot of electric power, emits lots of heat, and is noisy. A professional data center will provide you with reasonably priced energy, a cooled environment, monitoring, and the noise won't be a problem. Under such conditions, you can get the optimum hash rate from your rig.
2. Get a Bitcoin wallet
After acquiring a mining rig, it's time to set up a Bitcoin wallet. It is at the wallet that you'll receive your Bitcoins and manipulate them. Your Bitcoin wallet will help you manage your Bitcoin addresses.
Every Bitcoin address has a public key and a corresponding private key. The public key is a special combination of characters and operates like a bank account. Therefore, to receive bitcoins from someone, you must reveal to them your public key. All the Bitcoin addresses are public, and you can trace back all the transactions that went through it.
The private key is secret. You'll use the private key to send off transactions. If you lose your private key, you'll lose your Bitcoins on that address forever. There are several types of wallets, including simple online wallets, hardware wallets, and paper wallets. Every wallet has its merits and demerits.
If you are a newbie to Bitcoin mining, it is advisable to begin with a software wallet. A software wallet is secure and easy to manage. It is also best suited for frequent manipulation with mined currency. All you need is to download the wallet to your computer. You'll keep your coins here out of reach of others. For miners looking for a place where to store altcoins, this would be a great option.
3. Join a mining pool
Even if you bought the best ASIC miner, it would be nearly impossible to gain Bitcoin in the current age. Your single machine will not stand a chance against numerous mining farms (several rigs grouped and working together) worldwide. Furthermore, mining Bitcoins alone is not profitable. The solution is to collaborate with other miners in mining pools.
Miners offer their computing power to a group. Then, when Bitcoins are mined, the profits are shared among members as per the power they contributed. In a mining pool, the income is smaller but much more regular. Members of the mining pools must pay a fee to the pool operator. The cost ranges from 0 %- 2% of the block rewards.
There are many mining pools you can choose from. Therefore, it is your responsibility to find out which one best suits your mining venture. Find out their rates per block and other factors as you choose. Once you identify a mining pool that interests you, register on their website, and set up your account. After that, the pool will offer you a new worker ID for your miner.
4. Get mining software for your computer
The fourth thing you must do is get a mining client to run on your personal computer. This program will connect you to the Blockchain and Bitcoin network. The mining software will deliver work to you, collect complete results of your work, and add all the information to the Blockchain.
There are several free software for mining bitcoin you can choose from. The best software is compatible with most operating systems, but each has its strengths and weaknesses. You can also find a mining pool that has its own software.
5. Start Mining
Once you go through the steps mentioned above, you're ready to start mining.
Connect your miner to a power source and link it to your computer. Install the mining software to your computer. Fill in your wallet and mining pool details into the mining software. Select a device and let the mining start. Note that you must stay up to date with the emerging trends in the crypto world to mine profitably. The industry is dynamic, and there are new developments each day.
Different Kinds of Mining
There are several ways you can use to mine bitcoin. Here is a discussion of the most prevalent ways.
In Cloud mining, a miner pays someone or a big corporation a certain amount of cash and rent out their mining hardware, typically known as a rig and the mining process. The rent will last for the time you'll agree upon. During this period, all the profits the rig makes will be transferred to your Bitcoin wallet. However, electricity and maintenance costs will be deducted.
Cloud mining providers usually own enormous mining facilities with many farms and understand how to mine bitcoin. This form of mining Bitcoins is the most prevalent as it offers people who can't afford their own rigs to participate in Bitcoin mining and crypto arbitrage.
You can choose between free and paid cloud mining. Many people run to the free options, which have their challenges. They usually have slow mining speeds and several additional conditions.
Paid cloud mining comes in packages that range from cheap to expensive. Other hosts offer miners the ability to come up with their cloud mining plan.
CPU mining uses processors to mine Bitcoin. It was the go-to method in the past. However, nowadays, fewer people use this option to mine bitcoin.
One of the reasons people are running away from this method is that it is prolonged. You can mine a block for months without getting any profits.
Also, you end up making less compared to what you've spent on electricity and cooling. However, many people still use it because anyone with a desktop computer can do it. You don't need sophisticated mining hardware to use this method.
Application-Specific Integrated Circuits are unique devices specially designed to perform a single task - for this case; it is Bitcoin mining. They are popular because they have greater block rewards than the CPU and GPU options.
However, they have received a lot of backlash from other miners using CPUs and GPUs. This is because they deny them the ability to keep up with the hash rate and earnings.
Tools to Use When Bitcoin Mining
To successfully mine Bitcoin, you'll need both proper hardware and software.
When it all started, miners could comfortably use their laptops and powerful computers to mine bitcoin. Later, they discovered that high-end graphic cards could increase bitcoin mining power. They consumed less power for each Bitcoin block and produced better results.
Bitcoin mining has become a very lucrative venture, with several entrepreneurs making money by running massive Bitcoin mining farms. You'll have to compete with corporations to make money in the industry right now. You can buy this hardware from Amazon alternative stores. Here are some of the hardware you could use to mine bitcoin:
CPU is an abbreviation for Central Processing Unit. You can use your personal computer to mine Bitcoins. It was the most economical way of mining bitcoins in the past but is now obsolete and takes a long to mine one Bitcoin. Today, you might have to mine 1 Bitcoin for decades to get a fraction of 1 Bitcoin.
GPU is the Graphical Processing Unit. It is a feature of top graphics cards. They were specially designed to calculate the complicated polygons required in high-end video games. This capability made them suitable for hashing the computational mathematics necessary to solve one Bitcoin block.
Despite being costly, they offered miners an advantage over CPU hashing. It offered the miners a higher hash rate. The GPU prevalence paved the way for mining rigs, which were computers developed with complex calculations in mind.
But as Bitcoin mining becomes more sophisticated, the GPUs have become outdated as they take longer to mine a block of bitcoin.
Field Programmable Array or FPGA is an integrated circuit that is configured after being built. The FPGA devices transformed the Bitcoin mining landscape. The machines were more efficient, providing miners with a higher hash rate and led to the creation of mining farms.
As mentioned earlier, this is a microchip explicitly developed for Bitcoin mining at very high speeds. With this technology, you achieve a hash rate that's 100x the previous speeds. The devices also consume less electric power and seem irreplaceable at the moment. However, they are available at very high costs. But they significantly reduce how long it would take to mine one bitcoin.
The software you need is dependent on the equipment you choose. If you are using GPUs and FPGAs, you'll require to run several programs on the host computer.
How long does it take to mine 1 Bitcoin?
It could take 10 minutes to discover each block. But, the whole Bitcoin network is usually competing in the block discovery process. It will take a long time to try to find 1 Bitcoin single-handedly, and that's why miners join a pool. So, how long does it take to mine a Bitcoin? It depends on your approach; it could be 10 minutes or 1200 days.
Is Bitcoin mining profitable in 2020?
Profitability is affected by several factors. Suppose you adopt an approach that reduces what you spend to mine 1 bitcoin. It is also about how long does it take to mine 1 coin: is it 10 minutes or 1200 days?
How long does it take to mine a Bitcoin with GTX 1080?
It would take a long time, close to 5000 days. Reviews reveal that pools would reject you if you are using GTX 1080 because it is slow. It would take you forever to create a block.
How much does it cost to mine 1 Bitcoin?
The current rates to mine 1 Bitcoin are between 5,000 USD and 8,500 USD. The cost depends on whether you're using a center or you're doing it individually.