Bitcoin mining – introduction
If you’ve ever researched anything about bitcoin or cryptocurrency in general, then you’ve certainly heard something about “mining bitcoin” or “mining cryptocurrencies”. But, do you know exactly what that means?
Unfortunately, when it comes to mining cryptocurrencies, we can easily find lots of myths and truths on the internet. The problem, however, is that a newcomer to the cryptoworld will not be able to distinguish what is a fact from what is only a lie or exaggeration.
Therefore, in this post we will help you with all the important information you need to know about how to become a bitcoin miner or of any other cryptocurrency. You will learn what this means, how to start mining, what type of equipment is best suitable, whether it is worth mining bitcoin, and all other relevant information about this activity.
In addition to all this, you will also learn that as much as it is possible to read newspaper headlines like “10-year-old boy gets a millionaire mining bitcoin”, things are not that simple and demand a lot of effort to learn. Let’s get started!
What is bitcoin mining
All new cryptocoins, also bitcoin, are created through a process called mining. The term mining is used because the entire process is very similar to that of any mining company, that is, certain techniques are used to produce or find a particular mineral, ore or valuable object. (Want to learn more about the relationship between mining and cryptocurrencies? Check it out here.)
The same happens with cryptocoins. However, unlike the process of mining a physical resource, mining a cryptocurrency requires the use of electricity and computational resources.
The cryptominer is the one who managed to mine and produce data useful to the platform and therefore gets to be rewarded for it. The cryptominer is rewarded for having managed to produce new blocks of useful information for that asset. These informations blocks shall be used in transactions and other moves.
Just think of the case where someone manages to mine and find a nugget of gold and take it to the market to be sold. It’s the same with cryptocurrencies. In the case of cryptocurrencies, the mining process is nothing more than putting machines to solve certain computational problems that will serve as useful data blocks for transaction record and other activities.
So, as the machines find the solutions to these problems, the miner gets to receive a reward, a fraction of that coin as payment. Therefore, the goal of each miner is to have more powerful machines at their disposal so that they can increase their extraction capacity.
Once we’ve explained what mining bitcoin means, in order to help you with the curiosity about how to start mining bitcoins or any other coin, we’ll cover all of that in the next section.
How to start mining any cryptocoin
In order to become a bitcoin miner, or of any other cryptocoin, it is essential that you proceed through the following steps:
- Identify what type of currency you would like to start mining;
- Have the right equipment to start;
- Pay attention to the type of software or applications needed for mining;
- Have a cryptocurrency wallet;
- Find your mining pool;
- Start the mining process.
We shall talk in more detail about these points below.
1 – Identifying which type of coin to mine
The first step before starting to mine any cryptocurrency is to choose the coin you would like to mine.
In addition to Bitcoin, there are several other coins available to be mined in desktop computers, such as Monero (XMR), Ethereum (ETH), Dogecoin (DOGE), ZCash (ZEC), and several others. (Want to know more about Monero (XMR)? Click in this post.)
And how to identify which currency is suitable? In this case, everything will depend on analyzing the cost-benefit of mining your chosen currency. The most valuable coins will, naturally, have a greater chance of return. In the end, it all depends on the next steps
2 – Planning the adequate equipment
Yes, find out about the right equipment to start mining, especially the requirements and specifications of the mining softwares. Remember: mining cryptocurrencies should be seen as an investment activity, therefore it is essential that you take in consideration all the costs involved in the entire process.
For example, today there are special machines that are designed to mine in a much faster speed and with much more capacity, it’s a piece of equipment called ASIC (Application-Specific Integrated Circuit). With an ASIC machine, it is possible to mine much faster and use much less energy than an ordinary computer.
3 – Check the softwares and other necessary apps
Check out all the proper software and requirements to start mining crypto. It is important to check the version, the update and everything that is necessary to start running it. You don’t want to leave your computer on all the time without getting anything in return.
4 – Acquire your cryptowallet
In addition to the above, you must have a cryptocurrency wallet compatible with the currency you will be mining. The wallet will be needed in order to get paid for what you have produced. Without a wallet, it is not possible to transfer or manage your coins. (To learn more about how a cryptocurrency wallet works, we recommend you this text.)
5 – Find your mining pool
Nowadays, mining crypto is a very competitive activity. Even with the best mining equipment, it is still difficult to produce good profits on your own. Therefore, most miners decide to form “mining pools” in order to join forces and produce even more. That way, they can split the profits later with what’s earned.
After reviewing all these steps, you will get much more aware of how mining crypto works. You will finally be able to start the first steps in mining. We’ll talk more about how mining equipment works next:
The required equipment
Crypto-mining can be done on desktop computers, notebooks, or even mobile phones. However, as it is necessary that the equipment is constantly turned on and has certain hardware specifications, you need to invest in a machine solely dedicated to that task.
Furthermore, you have to be sure that your machine is capable to work well enough in order to guarantee you some profit. For example, as much as it’s possible to mine cryptocurrencies on mobile, the cost-benefit probably won’t pay off.
More basic equipment, for example, must have a good video board and a compatible processor. As we’ve said earlier, the most suitable machines are ASICs, as they are made specifically for this purpose.
In addition, you must inform yourself about the software most suitable for your goal. For bitcoin mining, for example, there are several softwares available, such as
- CGMINER: Compatible with different hardware and allow different functionalities;
- BFGMINER: Offers monitoring and other interesting features for mining,
- Awesome Miner: Compatible with Windows and Linux.
Do you want to know if bitcoin is a good investment? Check out this text.
Is it worth to mine crypto?
One of the most sensitive points in the entire cryptomining process is the consumption of electricity. There is no rule about how long your computer should be on mining. But, it is worth noting that the more time you mine, the more earnings you will have.
In other words, the entire process depends on the constant consumption of electricity. There are platforms that estimates how much you can earn from mining based on the equipment used.
Therefore, the choice of currency you would like to mine should be made by considering the costs with electricity. Have in mind that this is an investment, and therefore you should consider whether the costs worth the benefit.
Is it a felony to mine crypto?
Nowadays there are governmental attempts to regulate and tax the cryptocurrency mining in some countries. You should check whether there are any regulations about cryptomining in your country.
Bitcoin mining – Conclusion
After all we’ve said you should be much more informed about how the process of mining bitcoins, or any other cryptocoin, works. In order to help you recall the main points of the text, we highlight them below:
- Cryptomining means the process of earning cryptocoins through the use of computers to solve cryptographic equations;
- The equation solution process is used to generate blocks of data in the blockchain that will be used to record transactions;
- To mine any cryptocoin you must first find out what kind of coin you are going to mine, what kind of equipment is necessary, as well as the cost-effectiveness of the mining process;
- You must have in mind that cryptomining is an investment activity, and therefore it involves the purchase and use of suitable mining equipment;
- Cryptocurrency mining involves a high cost of equipment as well as a high consumption of electricity. Therefore, you must analyze the expected gains from mining;
- There is no felony related to the activity of mining crypto.
Thinking about mining crypto? Do not forget to inform yourself as much as possible about everything that is necessary before starting to invest into this form of generating income. As with any investment, it is necessary to be very careful not to make hasty decisions.
Did you enjoy learning about how cryptocurrency mining works? Keep following our blog with easy tips for every novice investor!
