Do you have a severe case of FOMO, and you want to know how to mine bitcoins?
The cryptocurrency market has seen incredible gains in 2021. According to CNBC, a person who invested $1,000 in July 2020 would have $3,525.65 one year later. And that’s despite a 50% drop in its price in March 2020!
With numbers like that, how could you not want to get into mining Bitcoins? There may be some wild rides in price along the way, but the cryptocurrency market has proven itself to be resilient.
Discover what you need to know in the Bitcoin mining guide below!
What’s the Point of Mining Bitcoin?
Have you ever been able to use the same $20 bill twice? Of course not! But in the digital age, you could get tempted to try and spend your Bitcoin more than once.
And this is where Bitcoin mining software comes into play. To prevent what’s known as double-spend, transactions need verification. Individual users down the blockchain lend their computing power to make this happen, and they get rewarded with a percentage of the cryptocurrency.
What Makes Bitcoin Mining Difficult?
Unfortunately, the amount of processing power needed to make a reasonable profit from Bitcoin mining is extravagant. It’s possible to do this from home today, but you’re also competing against people with racks full of processors working away at this task.
In total, only one Bitcoin comes into existence every 10 minutes. The algorithm puzzle gets harder to solve to produce at this rate.
As a result of this dynamic, mining Bitcoin is far from a democratic process. People and businesses that can afford stacks of computers will make more money.
How Do You Get Started?
Now that you understand the challenges ahead, it’s time to find out how to tackle them.
The first step is to join a Bitcoin mining pool. This resource allows the necessary software to share in the enormous burden. Additionally, a group of computational power has a much better chance of solving the puzzle of Bitcoin transactions.
Each member of the pool receives a percentage of the profit according to the level of their effort. Joining others to take on those with more significant resources is the only way to take them on in this digital competition.
What Are the Types of Mining Pools?
Now that joining a mining pool is a given, which type is the right one for you?
If you want to increase your odds of making money in this endeavor, you need to find the right one. The size of the pool doesn’t always mean that you’re going to have a better chance.
The gains are consistent with a large mining pool, but you’ll make less with the payouts. On the other side of Bitcoin, the rewards for being in a smaller pool will pay more.
Companies like Byte Federal offer some fascinating alternatives to the options listed below, and it’s worth your time to check them out.
Along with Bitcoin, Binance allows users to store more than 150 cryptocurrencies in their wallets. This platform is easily the most popular on the market, but its mining pool is not friendly for most beginners.
How would you like to mine Bitcoin from your phone? Slush Pool gives you the ability to mine BTC and ZEC. It doesn’t have the same variety of cryptocurrencies, and its fees can be burdensome to entry-level users.
F2pool offers the ability to mine over 40 digital currencies, and it has live chat support also. The fees can get high, but you will have access to medium or large-size pools.
What Happens During the Mining Process?
Because of its status as a decentralized currency, transactions get secured through the blockchain.
The approval of a group of transactions creates what’s known as a “block.” These get tied together using a “chain,” hence the term “blockchain.”
Miners create new blocks in the chain by allowing their PCs to complete complex math problems. As a result of this dynamic, the more computational power you can bring to the process, the more you will get out of it.
Solving these intricate math problems results in a “proof of work.” The tangible result is a 64-digit hexadecimal number that’s referred to as a “hash.”
The difficulty increases with every 2016 block added to the chain. This process happens around every two weeks or so. The increase in difficulty is to keep the rate of coins mined at a constant rate.
Are There Risks to Mining Bitcoin?
First and foremost, mining Bitcoin requires power and plenty of it! Miners often leave their systems running 24 hours a day, seven days a week. You can’t participate in this process without needing an incredible amount of electricity, and a Bitcoin mining calculator is also a good idea.
If you decide to invest in multiple rigs, you can expect to pay out more for utilities. Accordingly, you’ll need to calculate your margin based on how much you mine versus what you have to spend.
And then there’s the volatility to take into careful consideration. Cryptocurrencies make the news for rocketing gains as frequently as they do for crashing into the ground. The amount of reward that you’re calculating today could change drastically before long, and that can make for a frustrating experience.
Advice on How to Mine Bitcoins
While you may find yourself competing against people or corporations with deep pockets, you can leap into this world headfirst. However, after you learn how to mine Bitcoins, you need to remain clear-eyed about how much you can profit. The odds may not be in your favor, but that doesn’t mean that you can’t claim your piece of this lucrative pie.
Do you want more Bitcoin mining tips from us today? Check out all of the top-tier content we have for beginners and veterans alike!