Bitcoin is the oldest cryptocurrency. In other words, it is the currency of the Internet by the Internet. This digital money can’t be printed like regular money as it is actually a peer-to-peer network that’s controlled by no single entity. It can also never be created. Only 21 million Bitcoins can ever be created, and this cryptocurrency has to be mined.
What does Mining Mean?
Each Bitcoin transaction is stored in a public ledger called the Blockchain. This is publicly distributed, and thus, all transactions are completely transparent.
Mining is just the process of adding Bitcoin transaction records to this public ledger of Blockchain, which is literally a chain of blocks.
Not getting too technical here, let’s just say that mining is also the process of introducing a new Bitcoin into the network. It basically makes new Bitcoins available to anybody who wishes to be a part of the Bitcoin community.
What the miners are essentially doing is that they confirm every Bitcoin transaction and ensure that every single one of them is above-board. And the miner gets a reward once every block in the Blockchain is ‘sealed off’.
If you want to mine Bitcoin, here are a few things you’ll need to keep in mind:
Hash rate of the hardware
You need to consider something called the hash rate. It is the number of calculations that the hardware can do in a second. A higher hash rate will give your system the ability to mine Bitcoin faster by solving mathematical problems and ‘sealing off’ the block. The hash rate that you should look for is in the range of 336 MH/s to 14,000,000 MH/s.
How much energy will the hardware consume?
Your powerful hardware will require more electricity. So before buying it, calculate how many hashes you will be getting for every watt of electricity used by the proposed hardware.
High-end graphics cards
These can boost your hardware’s Bitcoin mining power. They also consume less power per unit of work.
These graphics cards lead to the development of dedicated mining devices, which increased mining capabilities almost five times and commercialized Bitcoin mining.
The Graphical Processing Unit or GPU is a feature of high-end graphics cards. These can help you hashing mathematics for Bitcoin mining and earning profits. Look for a GPU like ATI 5970, which is one of the most popular graphics cards for mining.
Or better still go for the Field Programmable Gate Array mining or FPGA. These are specially customized for Bitcoin mining.
Do keep in mind though that the graphics cards, GPU and even the ASIC are largely obsolete these days. The next in line for the job is Application-Specific Integrated Circuit (ASIC). This is a microchip designed for the purpose of mining Bitcoins at really fast speeds. It reduces electricity consumption too. And this is what you should focus on if you want to mine Bitcoin today.
After choosing the hardware, you come to the stage where you need the right software to mine Bitcoin. You also need the Bitcoin client. This is necessary to take the information between your miner software and the larger Bitcoin network.
The Bitcoin mining software instructs the hardware to do the actual mining work, solving savage mathematical problems, in short.
If you are ordering in ASIC miners, you may get everything pre-configured. This will save you the time. We suggest you go for this option.
A few important mining software are-
- Bitcoin miner
- CG Miner
- BFG Miner
- Easy Miner
- RPC Miner
All of them are compatible with windows(except for the last two) and have several features that will make Bitcoin mining easy and profitable.
Deciding on which Mining pool to join
You can go solo or join a Bitcoin mining pool to compete with large corporations mining Bitcoin.
Pooled mining helps you work with multiple users who contribute their computing power to the generation of the block in a blockchain.
This is why a mining pool has a bigger chance of ‘solving’ a block and getting a reward. The flipside is that the reward will get split between all the members.
Go for this option if you want to create a steady stream of income.
How do you join a mining pool?
Joining a mining pool is really easy. It’s like signing up for a web service. Just create an account on the pool’s website. Once you do this, you’ll need to create a single or multiple ‘worker(s)’.
You can create multiple workers and assign them to a specific piece of hardware.
But, be aware of how much the pool will deduct from your mining payments. This normally ranges in value between 1 % and 10 %. A few pools charge nothing at all, too.
Mining for Bitcoins is possible, but it may not really be profitable. We suggest that you also check out crowd mining, which doesn’t require you to buy hardware and software, and you can share processing power from remote data centers. All the best.