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A Beginner’s Guide to Bitcoin Mining
For starters, Bitcoin mining is the process of creating or generating new bitcoin using special software processes. Those who mine are called miners. Mining is to bitcoin as printing is to paper money and it is a pretty efficient way to issue the digital currency. In addition, mining keeps the bitcoin transaction process orderly and stable by keeping transactions in something like a queue, removing old blocks (transactions) when finished and adding new ones as they come. There is a reward for mining bitcoin, which is agreed upon generally at a specific amount of remuneration to the miners. To keep the system of mining in check, there can’t be more than 21million bitcoins in circulation; therefore bitcoin mining becomes more difficult and more expensive (less profitable) to carry out as more and more coins are mined. This is, therefore, a very good time to mine. So, how can one mine bitcoin?
Step 1: Get a bitcoin wallet
This wallet is the most important thing to have before any other step. Every bitcoin mining software will require your bitcoin wallet address so that mining rewards can be received when the job is done successfully. A Bitcoin wallet is like a bank account, and it’s the only way to receive or send bitcoins. Among many others, bitcoin wallets such as electrum, mycelium, ledger Nanos, the blockchain, and bread wallet are very secure and will do.
Step 2: Decide whether to mine alone or join a community of miners
This decision will greatly influence the next step (step 3). Although individually, the reward for mining alone or belonging to a pool of miners is insignificant, mining with a pool of miners with greater experience is preferable for beginners. The cost of electricity is borne alone and may cut deep into one’s profit, which also decreases as earlier stated with increasing number of mined bitcoins. Almost half a million dollars is made daily from bitcoin mining and about half that amount to cover for electricity costs. Bitcoin software has been designed for both new and experienced miners. It helps them monitor the mining activity remotely and effectively.
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Step 3: get a bitcoin mining software and hardware
After getting a secure wallet, another important procedure is procuring an efficient and fast hardware. This is because as more coins are mined, more hash codes are generated, and there is an increasing need for a faster and more efficient mining hardware to keep up as mining becomes harder. At the earlier days, only desktops or even personal computers were required, but requirements have changed recently. Bitcoin mining software is also necessary to send instructions to the various mining hardware in the bitcoin network and to enable the different hardware to receive feedback. So the mining software basically controls the actual mining process, keeps an eye on the input and output of the miner while also sowing necessary statistics such as mining speed, hash rate and even keeps an eye on the hardware temperature. Examples of mining software are: coinmyne software, bitcoin miner, CG miner, BFG miner, easy miner and RPC miner
Step 4: Exchange for cash
Finally, after you are sure you have made enough bitcoins and profit after settling costs, you should cash out. Although some prefer to leave their returns in bitcoins, others prefer to exchange the bitcoin value for fiat money. Both decisions are good and since bitcoin mining will not be profitable forever, make sure you monitor your cost very closely so as to make the most out of it.
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