Bitcoin is one of the most eminent cryptocurrencies in the world. It is a decentralized digital currency developed in January 2009 by anonymous and pseudonymous Satoshi Nakamoto.
Bitcoin is a new-age currency that assures people of lower transaction fees than traditional online payment mechanisms. It is decentralized so there is no direct or indirect control of the government involved in the circulation of the bitcoin cryptocurrency.
In 2018, a massive increment has been seen in the overall user base of Bitcoin. Bitcoin has observed a price increase during the U.S. presidential elections of 2020.
In 2020, bitcoin mining has observed great profitability. Although the profitability was increasing rapidly, during March 2021 it stopped seeing similar growth.
Why?
Mining Bitcoin is as hard as it has been ever with the mining difficulty lying on its all-time high of nearly 22 trillion. This mining difficulty will further reach its higher range by 2024, while almost 90% of the total bitcoin supply has already been achieved in march 2021.
The mining of cryptocurrencies is a process that solves complicated logical puzzles to verify different transactions connected to a network using blockchain technology.
Once the miner completes this process, he receives cryptocurrency as a block reward. You can understand bitcoin mining as the same as mining gold or any other essential metal.
Although these processes are different from each other in terms of their extraction process, the concept and objective are the same. To get new coins or metals.
In this blog, we are going to give you a step-by-step guide on how to mine bitcoin, along with other important questions and their answers in one place.
How to Mine Bitcoin?
As we have discussed above, Bitcoin mining is a process to develop new bitcoin by solving logical puzzles with the help of computer systems.
These computer systems have specialized chips, which are competent to solve complex mathematical puzzles.
It supports the bitcoin network and compensates participants with bitcoin currency. It is a highly technical process that requires great expertise.
The mining process works on computing power. If you are thinking about the accumulation of computing power to generate new bitcoin, you can do it without even worrying about setting up high-end technical equipment.
All you need to have is the dedicated Bitcoin mining equipment and the knowledge of how to use that setup.
Voila, that’s what it takes to start the bitcoin mining process.
It may sound a bit technical but it is not that hard. One more thing that you need to understand before drafting your expectations on Bitcoin is that the bitcoin mining system is expensive and consumes a significant amount of electricity.
So, if there is profit, you can also lose money by mining bitcoin too.
As the entire mining process will work on electricity, you may end up being in financial crisis because of high electric bills.
So, these are some things you should keep in mind before entering the bitcoin mining industry. With an efficient strategy, you can even make a lot of bucks.
Is Bitcoin Mining Legal?
We already know that Bitcoin is a new-age method of payment. This method has neither been authorized nor been regulated by any government or any central authority (mostly around the world).
Here, there are no set regulations and guidelines that have been laid down for resolving conflicts that could arise while dealing with transactions consisting of bitcoins.
Hence, bitcoin transactions come with risks.
Although there are a definite set of risks involved in bitcoin transactions, it is not right to say that bitcoin or its mining is illegal.
Most jurisdictions and central authorities are focusing on making crypto regulated by a supreme authority. These are just interpretations, no direct information is received by authority yet.
As per the Financial Crimes Enforcement Network (FinCEN), crypto miners are said to be money transmitters, so it should be mandatory that they may be subject to the laws laid by the higher authorities under the supervision of the Government.
For example, in Israel, the crypto miners are treated as a separate venture and this venture is subjected to income tax levied under the head of corporate taxation.
Similarly, in other countries such as India, there is a lack of regulation in terms of bitcoin mining. Canada and the United States are still looking ahead to crypto mining with more friendliness.
Ultimately, it is not illegal, but also not subject to any regulations. So, we can not say directly or indirectly that mining bitcoin is illegal. Although the required regulations are still in hands of the higher authorities, some nations have started taking crypto mining casually.
How to Mine Bitcoin? (Complete Step By Step Guide)
Step 1: Setup Your Bitcoin Mining Hardware
Understanding your mining platform is an important step in setting up your Bitcoin Mining Hardware. Before starting with the mining process, choose the hardware that you want to use for mining bitcoin.
Yes, an old computer or laptop can be a starting mining equipment but subsequently you would require a powerful setup designed specifically for Bitcoin mining.
If you have a low budget, you can also go for second-hand bitcoin mining hardware to save a few bucks.
You need to remember one thing that the mining rigs work on Linux operating systems. Also, they demand extensive computing knowledge to set up and operate.
So, keep an eye on learning some basic troubleshooting and advanced techniques if you’re not familiar with these things.
Step 2: Create a Wallet to Store Your Bitcoins
Once you have set up your bitcoin mining hardware, you need to create a wallet to store your mined bitcoin. Don’t worry!
The process is simple, though it looks a bit complex. You can create your bitcoin wallet using different wallet providers.
Firstly, you need to sign up on the respective application that you are going to utilize for the wallet. Use your email to sign up and verify it as per the application’s directions.
Always remember to create a strong password with at least 10 different characters (don’t forget to include upper and lower letters, and symbols). Once you are finished with the process, keep the password safe for future use. If possible, you can write the password in your notebook.
Step 3: Install And Configure Your Mining Hardware With Software
Now, you have set up the bitcoin mining hardware and create a bitcoin wallet to store mined coins. It is time to install and configure your Bitcoin mining software on your mining hardware.
To configure the hardware with the software, you need to have some technical knowledge (especially in the case, you are linking multiple hardware miners to enhance your bitcoin mining strength).
Some mining hardware occupies a software component in the form of a GUE (Graphical User Interface) that enables you to use a hardware device like a mouse to link the hardware with the software using the component.
Other mining hardware uses command-line knowledge, which is a popularly used computer skill. You can spend some time figuring out what works best for you before directly choosing a Bitcoin mining software for your hardware.
Step 4: Start The Work
Once you are done with the preliminary process, you can start mining.
To start with the process, you would need to download a local copy of the blockchain for the cryptocurrency that you want to mine. Now, click on the right button to officially start the mining process.
Your mining process is known as your rig, which deals with mining crypto for you.
You need to check periodically whether your mining rig is working or not, this would be the only work you will be doing. Generally, good mining hardware can mine 24×7.
3 Best Bitcoin Mining Software
You have already set up your mining software. Also, you have understood the process of producing new bitcoins. Now, let’s discuss the top 3 Bitcoin Mining Software that you can utilize for mining bitcoin.
#1 MultiMiner
MultiMiner is an amazing mining software. It was created in 2013 by BFGMiner. This software offers an easy-to-understand graphical user interface (GUI) and a quick-start mining feature. These specifications make this software the first choice for both beginner and advanced level miners.
MultiMiner is a mining software for novice miners. Unlike other mining software, this software is free from custom coding, so even if you are not a coder, you can use this easily.
It guides miners to connect to a bitcoin mining pool, including where to enter the details aligned with the pool. If you are using MultiMiner, then you can control mining rigs remotely. It helps beginner miners to mine the most profitable and lowest-difficulty cryptocurrency.
#2 CGMiner
CGMiner was invented in 2011 by an Australian programmer Con Kolivas for mining cryptocurrencies such as Ethereum and Bitcoin. It’s one of the most prominent cryptocurrency mining software available in the world right now. It also has a simple interface with direct controls, and cross-platform and hardware adaptability.
This also comes with command-line-based interface that enables users to mine their rigs remotely and control the speed of fans and other attachments with the help of simple keyboard commands. It helps in scaling up the hashing power without any delays.
You can use this software on cross-platforms such as Mac and Windows computers. As being open-source software, it allows users to utilize its features to work with different mining hardware like ASICs, FPGAs, GPUs, and CPUs.
#3 Shamining
SHAMINING was developed in 2018, relatively newer than the other two mining software. It is a cloud mining platform that allows beginner miners to start mining cryptocurrency even without having technical knowledge.
This company has its mining farm, equipped with powerful computers, that offers miners for rent for everyone to generate some good profit from mining crypto. It has data centers located in London (the UK), Capetown (South Africa), and San Jose(California).
You can use this mining software with a minimum deposit of $150 to start mining cryptocurrencies and earn profit. This is one of the most effective mining software that helps you mine the most profitable cryptocurrencies.
How Long Will It Take You to Mine 1 BTC?
If you are using powerful mining hardware, it will barely take you 15 minutes to generate one bitcoin. But for moderate hardware, this time could increase. The entire process of generating new bitcoins depends upon the hardware that you are using.
In the case of your home computer as mining hardware, it will take years to mine one single block because there is much powerful hardware such as ASICs and GPUs on the same network.
Yearly, new mining rigs are created and launched with higher performance and better computing abilities. It is like using a low HP engine in front of a better HP engine. The powerful ASICs and advanced mining rigs can beat the conventional PC or home computer (Linux or Windows). It is impossible to switch the capacity of ASICs.
With that said, you should also be knowing that it is not possible to mine one single bitcoin. When you mine bitcoin, you mine a block instead of a single bitcoin. A block reward has 6.25 BTC, which used to be 12.5 BTC until May 2020.
Long story short, you either win the entire block reward with 6.25 BTC or get nothing. Sadly, 99.99999% of miners land up with the second option (with nothing).
Hypothetically, there are more than 1 Million ASIC miners (specialized devices built for mining cryptocurrencies) securing the BTC network. Only one ASIC gets the block reward at a time. So, only 1 in a million can win the block reward.
How Much do Bitcoin Miners Make a Day?
Bitcoin price collapsed in late 2017 and early 2018. This crash made bitcoin stand with just 1 third of its total valuation at that time. Needless to say that this crash ruined miners’ ability to make profits.
With that said, even in 2021, crypto mining is a crowded and competitive place. Earlier when bitcoin was released, mining bitcoin was a lucrative process.
Why?
Because the blockchain’s mathematical problems were not as complex as they have become now.
Now, you would need more computing power to generate bitcoin. The competition has also grown rapidly and only those will make good profits who own thousands of mining equipment than an individual miner.
Miners get block rewards every four years, this process is also known as bitcoin halving. When bitcoin was first mined around 2009, mining one block would make you 50 BTC. In 2012, the halving made bitcoin to 25 BTC. Subsequently, in 2016. This was halved again to 12.5 BTC. Now, it is halved to the current block reward of 6.25 BTC.
Can You Mine Bitcoin at Home?
If you are thinking of earning rewards by mining BTC but are confused about whether it is possible to mine bitcoin at home? To answer this question, you should know that you can start mining even with your home computer.
Although the mining process requires high computing power, you can utilize your PC (window, macOS, or Linux) at the beginning.
The processing power of a computer signifies hash rate or mining speed and immediately impacts profits. So, if your computer is not well-equipped and high-performing, the processor and GPU, the mining would be slow and you will not make enough Bitcoins.
To successfully mine or validate a crypto transaction, one has to compete with other miners on the network. One needs to perform complex mathematical calculations on blocks containing transactional data, which requires enormous processing power.
Therefore, it is possible to generate bitcoin at home. But as discussed earlier, you will need to have high-performing hardware which can mine profitable and low-competitive cryptocurrencies. If you can arrange high-end equipment at your home, its easier than you think.
How Much Investment Do You Need For Bitcoin Mining?
The mining process requires some capital. Miners need to invest money in mining hardware and pay internet and electricity (madly high) bills continuously. Although new mining hardware indeed costs thousands of dollars, you can set up your mining hardware with second-hand equipment.
The used hardware would cost less than the new hardware. The electricity and internet cost would remain the same (the amount may vary as per your geographical location).
If you use paid mining software, you can add an extra of $300-$500. We would suggest you go with high-end mining hardware, as it will help you mine bitcoin efficiently and effectively.
Conclusion
Bitcoin mining is a highly complicated process, and increasing competition makes it even more complicated. In this article, we have discussed that bitcoin mining is similar to the mining of precious metals like gold and silver.
The person mining gold and other precious metals extract them through excavation. Similarly, cryptocurrency miners extract bitcoin by utilizing high computing power. There are complex calculations that the miner needs to solve before supplying the bitcoin to the market.
Ultimately, we have discussed how to mine bitcoin and shared the top 3 bitcoin mining software available in the market that you can use.
Subsequently, we have also answered some of your questions regarding bitcoin mining.
