Many people are eager to get in on the cryptocurrency craze. Some of them are also interested in mining their own Bitcoin. We’ll say right up front that Bitcoin mining can be an expensive enterprise. It requires specialized computer equipment and large resources of electricity. It is not as popular today as it once was for the crypto hobbyist, but it can still be profitable for those who are willing to make an investment of time and money.
Generate Bitcoins Yourself
Mining is a part of the process by which new Bitcoins are created. It involves solving complex mathematical problems on the blockchain, the distributed ledger that is a core part of Bitcoin’s architecture. This may sound confusing. It helps to compare the process to the creation of fiat currencies like the USD or the EUR.
Tangible money like a quarter or a dollar bill is printed, or minted, by the government when there is a decision to create more money and introduce it into circulation. Bitcoin, on the other hand, has no physical existence. It also has no government to decide when new money should be created. All of this is accomplished in a somewhat automatic fashion with Bitcoin mining.
A mining rig is used by an individual to solve a math problem which is related to transactions on the blockchain. As a reward for solving the problem, the miner is given a certain number of Bitcoins in exchange. This process serves multiple purposes:
- A more secure way to distribute or “mint” new Bitcoins
- An incentive to those who are willing to mine
- The verification of transactions on the blockchain
It also helps to create a contained system of treasury operations which helps Bitcoin to maintain its deregulated nature. There are no need for third-party banking institutions.
Selecting a Mining Rig
The major investment that you will have to make as a Bitcoin miner is the mining rig itself. A mining rig is a specialized piece of computing equipment that will only be used for mining Bitcoins. The mining rig can cost between $1,100 and $15,000 or more, depending on the amount of power that you want.
One of the considerations that factors into buying a mining rig is how long it will take you to recoup your investment based on cryptocurrency values. With some mining rigs you could make back your money very soon. With others it could take a year or more to mine enough coins to justify the investment.
Miners require a vast power supply, some as many as 1,500w. You’ll need to make sure you have an adequate power supply before you begin the process of mining. This is one of the reasons that Bitcoin mining is no longer done with a regular computer system like it was in the early days of the token. Using a regular computer today would use a lot of electricity, and your mining results would be substandard.
Some people assemble their own mining rigs while others buy one that is already assembled and ready to mine coins. You can check Amazon and other retailers for deals on complete mining rigs. Some of the most popular mining rigs today include these models:
- The Shark Mini. It has four graphics cards, and it is capable of mining up to $300 per month of Ethereum.
- Bitcoin Gold GPU Miner. This one is very expensive but will offer you a good return on your investment. The company that develops it sells it as a pre-built system, and it shouldn’t take long to pay for itself.
- The Antminer D3. ASIC miners can be more complex to figure out, but they are also much more affordable. Many people have chosen this model of miner for their work, especially hobbyists.
The Advantages and Disadvantages of ASIC Miners
ASIC stands for Application-specific Integrated Circuit. ASIC miners do not use GPUs like more expensive mining rigs. This allows them to be purchased more affordably than other systems. An ASIC miner can also be somewhat faster in solving a Bitcoin block, and they can also use less power than GPU systems.
Another good advantage of ASIC miners is space. They don’t take up much of it. The primary disadvantage of an ASIC miner is that it can only be used to mine a specific coin. Many GPU miners can mine a variety of digital tokens like Bitcoin, Litecoin, and Ethereum.
Getting Your Mining Rig Up and Running
Once you have the necessary equipment that is needed to mine Bitcoin you will have to follow a couple of steps to start the mining process.
First you will need to download the full Bitcoin open-source client. This could take as long as a couple of days depending on the speed of your Internet connection. Needing to download this client is one reason why it is a must to have dedicated equipment. Unless you have a great high-speed connection, don’t even bother trying to download the client.
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Next, you will also have to download mining software. This will tell your mining rig how to proceed. Mining software can range from fairly simple to very complex. Some miners are very hard to configure while others can be mastered by almost anyone.
All that remains now is to fire up your rig and begin mining Bitcoin. As the coins are mined they will be deposited in your Bitcoin wallet. Hopefully you will soon have a vast trove of Bitcoin in your cryptocurrency portfolio.
An Alternative to Mining Bitcoin
Instead of mining, many people today are looking at alternatives like Bitcoin mining pools. Joining a pool like the one offered by Genesis Mining can give you the thrill of mining Bitcoin at a fraction of the cost. All you need to do is purchase a contract. You will then be grouped with other miners and share the proceeds of the mining work.
Mining pools can be much more affordable than buying expensive mining equipment. They also mean that you are not responsible for the upkeep of mining equipment, nor do you have to pay for the resources it will use.