We talk a lot about games and critpocurrencies in general, but if you want to go after them without having to play games or keep creating little monsters, then let's talk about mining bitcoins directly from the source. Mining is the process of using a computer to perform complex calculations on blocks of data that maintain the Bitcoin network. Miners are rewarded for their efforts with a certain amount of cryptocurrencies Bitcoin. But how exactly to mine bitcoins and other cryptocurrencies?
Bitcoin (BTC) is quickly dominating use by people using specialized ASIC (Application Specific Integrated Circuit) devices, although if you have one or more powerful graphics cards, you can still generate a small profit by building your own mining device. You will learn more about mining bitcoins in the following steps.
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How to mine Bitcoins and profit from it
The actual profit you make depends on several factors. The first is its 'hash rate' - in other words, the real processing power of your machine. Computers designed for mining, or 'platforms', as they are commonly known, require large amounts of electricity, which will increase the operating costs of how to mine Bitcoins. Mining complexity also increases over time.
Bitcoin itself is a very volatile virtual currency and, although it has made big gains recently, its value can also plummet. Keep this in mind if you plan to keep any BTC that you mine, instead of selling it right away. If you want a rough idea of how much you can earn from mining, use one of the many online profitability calculators, like 99 Bitcoins.
Although you can try to extract Bitcoin on your own, it is very unlikely that your equipment alone will solve the complex operations necessary to receive a reward. Instead, you will need to join a mining pool. As the name suggests, this is a tank of several machines connected together, involved in a collaborative mining effort. The reaped Bitcoin rewards are shared among everyone who contributed processing power.
However, note that the way profits are shared can vary from pool to pool. You can learn more about pool mining at Bitcoin Wiki. Check out our guide to what is Bitcoin, as well as a list of best Bitcoin exchanges of 2021.
Choose your miner
An easy - but not cheap - way to get started on how to mine Bitcoins is to buy an ASIC device like the AntMiner S9. These devices were designed specifically for Bitcoin mining, which means that they generally provide the greatest return on your investment.
However, as mentioned, these ASIC devices are expensive. The S9, for example, is currently sold for around R $ 5.000,00. Typically, you will need to purchase a separate power supply. These devices are generally designed specifically for how to mine Bitcoins and will not work well if you try to use them to extract other cryptocurrencies (if, say, Bitcoin's value drops dramatically).
Alternatively, you can build your own Bitcoin mining platform. Although they are not as energy and hash rate efficient, they require less upfront expenses and can mine currencies other than BTC. In simpler terms, they are computers with several powerful graphics cards installed. These GPUs can be designed primarily to render complex graphics during games, but they also lend themselves well to dealing with the complex calculations involved in Bitcoin mining.
To get started, you will need to buy a case for the machine. Most of them are a simple metal frame to allow heat to be dissipated easily. Next, you'll need to choose a mining motherboard and graphics cards like the AMD Radeon RX 580. You will need to assemble the machine, install the operating system and mining software yourself, so you should only go this route if you are tech savvy and familiar with computers and how to mine Bitcoins.
If none of these options suit you, you can rent the hash power from cloud mining companies. These companies have data centers dedicated to mining Bitcoins. Because they are centralized, they can buy machines in bulk and use efficient methods of generating electricity.
Most companies offer a fixed amount of Gigahash per second (GH / s) of mining energy for a fee. The advantage of this approach is that you don't have to buy any expensive hardware. Fees for cloud mining vary, however, and another point to be cautious of is scammers posing as cloud mining equipment. See the Bitcoin Wiki for a list of reputable cloud mining companies on how to mine Bitcoins.
Set up your Bitcoin wallet
Once you've made a decision as to which mining is right for you, you'll also need to set up a Bitcoin wallet to store your profits. If you’re mining as an investment and don’t plan to spend any of your coins anytime soon, consider using a site like Bitcoin Paper Wallet Generator to create a 'paper' portfolio. Make a note of the 'public' address that you can use to receive payments.
You can securely check your Bitcoin wallet balance at any time by visiting Blockchain.info and entering your payment address in the search bar at the top right. Don't let anyone see your private keys, as anyone with access to your paper wallet can control your virtual money.
If you plan to withdraw your BTC regularly or make payments, consider using a software wallet. THE Electrum wallet lightweight is available for all major desktop and Android operating systems. When you create your wallet, Electrum will generate a 'seed' of a dozen random words to use as a private key. This means that you can restore your Bitcoin wallet if something happens to your computer.
If you use a software portfolio like Electrum, try to do it on a machine that is not connected to the internet so that your BTC cannot be hacked. This is known as 'cold storage'. The Electrum website has instructions for setting up a 'surveillance' wallet for daily use, which can show your balance but cannot make payments on its own.
To learn more about mining Bitcoins and their wallets, read our article on The Best Bitcoin Wallets of 2021.
Choose a Bitcoin mining pool
The next step on how to mine Bitcoins is to sign up for a pool. You can mine by yourself, but you need some serious hardware to make it worthwhile. You can find a list of pools at Bitcoin Wiki. We will guide you through the registration process Slush's Pool, because it is one that they use a lot, but the same procedure can be used for any of the main pools.
Access the Slush Pool website and click on 'Sign up here' in the upper right corner. On the registration page, choose a username and enter your email address and password. The Slush Pool website will send a confirmation email. Click the link to validate your email address. You will see that a 'worker' has been created for you, so you can start mining. Although it is not mandatory, it is ideal that you have one worker per device. Visit Slush Pool workers at any time to view and create workers.
You need to tell your mining reservoir where and when to send the funds from your mining holdings. On the Slush Pool website, you can do this by clicking 'Settings' in the upper right corner and then clicking 'Bitcoin' in the left side. Choose 'Payments' and click on the 'New Wallet' button. Paste your public address for Bitcoin payments here. If you are using a paper wallet, this should be clearly marked. At Electrum, you can see your current receiving address by clicking the 'Receive' tab. Click 'Submit' when finished.
Some miners also allow you to choose the payment limit - in other words, how many BTC you need to withdraw before the Pool sends funds to your wallet. This is important because, although it is risky to leave large amounts of BTC in an online wallet, the transaction fees for sending BTC over the network are currently very high, so you may end up paying a lot for several smaller payments. Choose freely and wisely.
A secure pool
Mining pools are a popular target for hackers for obvious reasons. To make sure that no one can steal your Bitcoins, first make sure your pool uses SSL. This means that your connection is secure - in most web browsers, you will see a lock icon (in the address bar), if applicable.
Certain mining pools, such as the Slush Pool, also allow you to secure access to your account using two-factor authentication. This introduces a second step towards a successful login and is therefore another obstacle to preventing hackers from breaking into your account. To use this, you will need to access a mobile device and an application such as Google Authenticator or FreeOTP.
Dive to the bottom of the mine
Once you know the first few how to mine Bitcoins, now you need to download the mining software to your PC. You have a few options here, but to start, we recommend using the GUIMiner, just because it has a very simple interface. It comes as a self-extracting file and runs directly from the folder it was extracted to.
Open GUIMiner and select 'Slush's pool' from the Server menu. Enter the name of the worker that was created when you registered your account - it will be [username] .worker1 - and enter the password for the worker. Select your graphics card in the Device menu and click the 'Start mining' button to begin.
GUIMiner will now communicate with the servers to obtain shares for your machine to work. You will see your hash rate in the bottom right corner and the current status of your work in the bottom bar. You can also view the console (useful if you have connection problems) or a summary page (great if you have multiple cards) via the View menu.
If you are operating a mining platform instead of using specialized hardware, you can make some minor adjustments to ensure that it is operating at peak efficiency. To do this, you need to do a quick search to see what are the recommended flags for your graphics card. Take a look at the mining hardware comparison and look for your sign on the table.
The information you want from this table is in the Observations column. This is where you'll find switches that push your video card a little harder, making them better at mining Bitcoins.
The important ones are those related to the workload (-w) and the use of vectors (-v). Enter these values in the Extra Flags block in the GUIMiner, stop mining and restart it.
Beat the heat
Whether you are using a specialized ASIC Miner or your own equipment, the device will get very hot when trying to mine BTC for you. So be sure to place your mining hardware somewhere with good ventilation so that the heat can easily dissipate. In general, the colder your mining machine, the more efficient it will perform.
Be sure to factor in air conditioning and/or fan costs in your mining calculations to make sure you're still running a profitable venture. If you live in a cold place, you can follow in the footsteps of the Siberians and use the excess heat from mining as a 'data furnace' to heat your home. Watch a video of a tour of a cryptocurrency farm in Iceland (which is a great place to keep the machines cool).
Keep mining profitable
As research continues on specialized mining equipment and the difficulty of how to mine Bitcoins is only increasing, the biggest mining profits are generally made by data centers located in places where energy is cheap, such as China. As an amateur miner, you can maximize your profits by following their example using ASIC miners and keeping electricity costs low.
While moving to China may not be in the cards, you can increase the efficiency of your equipment using an efficient PSU. You can get help with this in the Pools section of BitcoinTalk forums.
An alternative way to overcome the miners 'big bully' is to use renewable energy to power your mining machine - for example, by installing solar panels on your property.
If you do, remember that the advertised power for devices is usually the optimal amount that you will receive under optimal conditions. Solar panels, in particular, are affected not only by the amount of sunlight they receive, but by the surface area, the angle at which they are placed and the direction in which they are facing. Talk to a qualified installer, fully explain your needs and get things right.
To begin, consider using an electricity usage monitor to measure your mining device's energy consumption in kWh (kilowatt-hours). They are very inexpensive and are available at any hardware store.
Remember that the reward for mining decreases by half every 210.000 blocks. You can find a more detailed explanation of this at Bitcoin Wiki, but essentially, it means that mining becomes less profitable over time, unless you can increase your hash rate - or Bitcoin's value increases.
What is ASIC in bitcoin mining?
ASIC describes a range of computer hardware, parts, and equipment designed to provide maximum performance in cryptocurrency mining tasks.
What is a mining pool?
The pool is a way for people who don't have a dedicated mining computer to mine in a mining collective, where everyone shares the processing power and profits,
How long does it take to extract 1 bitcoin?
At today's difficulty rate, it can take a solo miner nearly five years to extract just one cryptocurrency. This is the average rate for miners, even for those using the most efficient mining hardware.
How much do bitcoin miners get paid?
If a miner manages to add a block to the blockchain, he will receive 6,25 bitcoins as a reward. The reward amount is halved approximately every four years, or every 210.000 blocks. In November 2021, bitcoin was trading around $66.000, making 6,25 bitcoins worth over $400.000.
How many Bitcoins are left to be mined?
There are currently about 2,134 million Bitcoins remaining that are not yet in circulation. With only 21 million Bitcoins that will exist, that means there are around 18,86 million Bitcoins currently available.