It can seem difficult to get started with cryptocurrency. The new currency is such a strange and attractive beast, that knowing how to take advantage of its many benefits can seem confusing to many new traders.
Bitcoin mining is a term that’s often thrown around, without many traders fully understanding what it means.
All traders need to understand the process that Bitcoin and other cryptocurrencies go through, to go onto the trading market. We’re going to cover everything you need to know about Bitcoin mining, and how you can take full advantage of the process.
What Is Bitcoin Mining? – A Brief Explanation
Bitcoin mining is simply the process that new Bitcoins must go through to be circulated in the trading market. The process of ‘mining’ itself is a lot more complex than it sounds, as it involves the right software and the correct amount of work put into producing the Bitcoin.
Mining essentially involves specialized software that is tasked with solving extremely complicated math equations. If the software solves the equations, the user gets rewarded a block of Bitcoins.
It’s often used as an alternative way to get your hands on some Bitcoin without buying any. But, in most cases, you’re trading off money with a lot of time and work to solve the right maths equations.
The mining process in itself takes an individual who is dedicated and knowledgeable.
You have to know your stuff and be able to access the right software so that you see regular Bitcoin returns from your mining. However, the likes of entrepreneurs or analytical people will often see value in Bitcoin mining.
Once it pays off, it does pay off. You get a huge amount of Bitcoin for your troubles, which you can easily trade off and make a much larger profit than the cost you put into the mining process.
In most cases, it suits the individual trader that is a tech guru – if you have a comprehensive understanding of the right kinds of software, you’ll get the hang of Bitcoin mining fairly quickly.
What Do I Need to Start Bitcoin Mining? – A Quick List of the Necessary Equipment/software
There’s plenty of different software or tech components you can use when Bitcoin mining. But, we want to start things off simple. There are three essential components you’ll need to have on your computer before you start Bitcoin mining, so make sure you invest in the right components.
Before you start mining, you’ll need somewhere for your Bitcoins to go. A Bitcoin wallet does that; it stores your mined Bitcoins somewhere safe and secure so only you can access them. Think of it as a bank account, only exclusively for Bitcoin and cryptocurrencies.
There are many different types of crypto wallets, including a ‘cold storage’ wallet, which can be stored offline and is easier to access. Make sure to choose a crypto wallet that suits your mining habits and your Bitcoin returns.
Choosing the right Bitcoin mining software is essential. There’s plenty of free-to-download apps out there that all have the basic functions that all mining software provides, but it’s important to choose one that is comprehensive, but also easy to use.
The most popular Bitcoin mining software apps include CGMiner, EasyMiner, and ECOS.
This is the toughest, and likely the most expensive cost, to Bitcoin mining. Using your everyday or work PC likely won’t be efficient enough for your Bitcoin mining needs.
You’ll need to invest in something more sturdy and powerful, and alongside that, all the other hardware components. There are specialized hardware components called ASICs, that function as a kind of mining hard drive that is a must-have for all Bitcoin miners.
Safety Precautions – Dealing With the Drawbacks
Now, you have all the basics to get started on your Bitcoin mining venture. The great thing about Bitcoin mining is that if you have great software, the Bitcoin mining app will do most of the work for you. While the software is running, you must take a few cautionary steps to make your life easier as a Bitcoin miner.
Even having one computer with a Bitcoin mining setup can be costly. If you’re running at home, prepare yourself for your electricity to be drained and a high electricity bill.
We’d recommend joining a mining pool at a data center, or if you’re serious about Bitcoin mining, renting out an industrial unit to do your Bitcoin mining at.
That much electricity running at once means you’ll be living in a sauna, essentially. So, there are a few more investments you need to make if you’re mining at home, to lessen the heat your Bitcoin mining setup causes.
Get a dehumidifier; that’s a must to reduce the moisture in the air which could mess up your mining setup. Plenty of fans should be considered to keep the room temperature as well.
Believe it or not, ASICs and a Bitcoin mining setup can reach up to 80 decibels. For comparison, that’s about the same noise as a lawnmower!
So, we’d recommend putting forth the cash to soundproof your office if you plan on Bitcoin mining: for your peace of mind! Proper ear protection is also a must, so invest in good quality earmuffs to prevent any unnecessary ear loss.
Bitcoin Mining Strategy – Tips You Can Follow to Make the Most of Your Bitcoin Mining Experience
Now that you’ve got all the necessary safety precautions in place, you may be impatient to get to the actual Bitcoin mining!
Well, as we said previously, your Bitcoin mining software will do most of the work for you. But, here are a few tips that will give you an edge in getting your mined Bitcoins.
Mine what is available
Mining is a competitive business, especially if you’re working in a mining pool. If you see a large amount of Bitcoin available, make sure you take what you can and mine what’s available. It’s better to take the risk with the chance of a large profit than do nothing at all.
Balance profit with ASIC efficiency
Always do the maths on how much you can potentially make Bitcoin mining, to offset the cost of running your Bitcoin mining setup.
ASICs and other Bitcoin mining hardware in particular are so expensive, you need to make sure your profit from Bitcoin mining blockchains will be significantly more than the cost to run your mining hardware.
Calculate the hash rate, the electricity usage, and the overall cost that your Bitcoin mining hardware is monthly. Then, forecast how much profit you will need to make monthly to break even.
Sometimes, you may be making a loss – and that’s ok. Bitcoin mining is difficult to break into, and you can’t expect to suddenly win big on a profitable blockchain. As long as the forecast sees you breaking even three to six months, it won’t be a complete drain on your finances.
This is a must, especially if you’re getting adventurous with your Bitcoin mining. Make sure that you verify all your Bitcoin mining transactions, and record all your winnings in the right ‘blockchains’ – essentially, your public record of the transaction.
Otherwise, it’s easy to get caught up in double-spending. This is when a Bitcoin is duplicated and sold at the same price as the original. Doing this is essentially the digital version of counterfeit, and can see you get prosecuted.
Always protect your earnings
This is a must for all Bitcoin miners, but for those who want to make this a full-time gig, you need to fully protect your Bitcoins. This means investing in a reliable Bitcoin wallet that is as secure as your bank account can be.
Also, consider putting in several unique authentication methods. Such as scanning your fingerprint on your computer, security questions only you can answer. Take all these steps, and always put your Bitcoins directly into your wallet as soon as they’re yours.
Conclusion – Making it Easier to Wield the Crypto Pickaxe
We hope now you have a better idea about what makes Bitcoin mining so unique and different. It’s completely different from just trading Bitcoin – as it’s far more mathematical than standard trading. However, while you don’t have to do a lot of direct work mining Bitcoin, there’s plenty of indirect work.
You need to invest in the right equipment and the right safety measures. You also need to take the costs of running everything and balance that out with a potential profit. We’ve given you all the tools you need – now, you need to start mining while Bitcoin is still hot!
How do you mine Bitcoin? FAQ
🖥️ Can I mine Bitcoin safely on my PC?
You must have a basic understanding of Bitcoin, and cryptocurrency as a whole before you begin to consider mining. Bitcoin is currently the most popular form of cryptocurrency, and there’s a variety of methods you can use to collect/buy some. For more information, check out our ‘How do you collect Bitcoins?’ article.
💲 Is Bitcoin the best market to invest in?
Well, that depends. All the different trading markets have such different advantages and disadvantages, it can be difficult to differentiate which is better or worse. Forex, for example, is a great market to trade in, as there is plenty of volatility, and currencies will always see a profit. To see how Forex matches up with Bitcoin, check out our Bitcoin and Forex article.
🔒 What’s the safest way to buy Bitcoin?
That’s a difficult question to answer. Bitcoin is one cryptocurrency of many at the moment that is popping up all over the place. However, what makes Bitcoin so appealing is that it’s the standard-bearer, and it always seems to be on the rise in terms of profit. There’s plenty of more great facts to learn about Bitcoin, and you can learn them in our ‘What you need to know about Bitcoin’ article.