Bitcoin Mining Explained Simply

How to Start Bitcoin Mining and How does it Works ?

So do you want to mine Bitcoin ? And interested in bitcoin mining. Well than you are at the right place to learn where to start. 

In order to understand what Bitcoin mining methods are, I will explain some basics about cryptocurrency itself.

  • Bitcoin (BTC) is an encrypted program code, and prices are affected by market demand.
  • The number of BTC coins is limited and the amount of the coin is 21 million.
  • The cryoto issue is not regulated by any organization or country, so no one but you can control it.
bitcoin mining

Bitcoin was first introduced in 2009, it was first of its kind and bitcoin mining was so easy that you could even mine it with your PC. 

But today the situation is total different if you want to make any profit you have to invest in costly hardware to do so. 

Similar : KNOW About GPU MINING RIG.….

Bitcoin Mining FAQs :

  • What is Bitcoin mining ?
  • How to start bitcoin mining ?
  • What is Cloud mining ?
  • What is Pool Mining ?
  • What is Alone Bitcoin mining ?

What is Bitcoin Mining ?

BTC is blockchain based cryptocurrency. Bitcoin is like a virtual currency which breaks the monopoly of banks world. It doesn’t have a central government. It works in a blockchain network with some algorithem program. 

The network is secured by miners, here comes the role of miner who help to check the completion of your bitcoin transactions by solving the BTC blocks. This process is also known as blockchain mining.

how to mine bitcoin
A Bitmain Antminer S9-Hydro ASIC miner

All the transaction are grouped into blocks on network. Miner needs good hashing power to solve the block chain transaction. Miners must guess the hash means the string of characters for blocks. Once miner guessed correct hash it can be added to blockchain. This is called POW “Power of work”.

In simple words miners uses a software to solve a math problem and in rewards get a certain number of bitcoin. And this makes it worthwhile to spend money on mining. 

So when it comes to mining or buying bitcoin than you should know the risks that nothing in this world is guaranteed. So make sure before investment that you have enough knowledge about mining and cryptoworld. 

How to Start Mining Bitcoin ?

Lets starts for what you all came here for – there are three methods to start mining bitcoins :

1. Cloud Bitcoin Mining

2.Bitcoin Pool Mining 

3.Solo Mining 

Cloud Bitcoin Mining

What is Bitcoin Cloud Mining? Block Cloud mining is a process in which you buy hashing power on rent from the mining company who has a big mining farm setup. Its simply having someone else to do mining for you.

You are paid for the investment you made with the regular income in BTC. Here you can also invest a less amount. Cloud mining for bitcoin with joining a good company plan. 

As there are many companies claiming to provide best returns in cloud mining, you should well research before investing.

Similar : To know best GPUs in Market…

Step 1  

Finding a good Mining Company, below are the names of some good cloud mining providers:

  • Genesis mining
  • Minergate 
  • Hashflare 
  • Nicehash
  • Hashing24
  • Minex
  • MineOnCloud
  • Eobot

Above mention are the giants and most profitable companies in the market.

You can check the rating, price, hash rate etc for different companies on CryptoCompare Website.

Step 2

Once you find a good cloud company with good mining contract, you need to choose a package which gives you maximum profit. Better choose a high value package which gives you maximum profit quickly.

But there is also a risk factor, if the mining difficulty of bitcoin increases the BTC profit given by company will decreases. So its better to understand the market trend before investing.     

Step 3

After you join with a cloud mining package, most of the companies will ask you for joining a mining pool. You should join best global mining team to increase the chance earning bitcoins.

After completion of all these steps your cloud mining will be started with in a few days and you will see your account starts filling with bitcoins. Every thing has some advantages and disadvantages, same goes with cloud mining.

Join a Bitcoin Mining Pool

Pool bitcoin mining is a process in which BTC miners mines together to solve a single block of blockchain to get the rewards which will be shared with all miners as per their contribution in solving the block.

how to mine bitcoin

And to do so you need to get into a bitcoin miner pool. Without joining mining pool if you go for mining on your own then it might takes years or even impossible to solve a single block for you. 

That’s why it is good to mine in group so that block can be solved quicker and you can have your share of rewards.

Similar : Find out Best bitcoin mining software

There are some steps you need to follow :

1. Get Bitcoin Mining Hardware  

Due to the popularity of cryptocurrency mining special chips has been created. Such devices are called ASICs. Thanks to this latest bitcoin device, the speed of the mining process has been improved.

This procedure is made more secure because it protects the system from hacker interference and ensures the operation of long blockchains.

In 2020, a full line of ASIC models has already been developed, offering tremendous performance over traditional computers.

The ASIC chip only releases specific crypto algorithms for certain cryptocurrencies, such as SHA-256 (Bitcoin) and SCRYPT (Litecoin), and some independent developers have released cryptocurrencies with other algorithms where ASIC devices do not exist.

This is done to ensure that the network capacity and complexity of new fork production does not grow to high value. However, this does not apply to Bitcoin and it has been mined for years only by ASIC miners.

If you are in bitcoin mining then you need to find and buy yourself a good hardware to mine bitcoin. Purchase a powerful ASIC miner. There are many ASIC miner in market provided by bitmain

  • Antminer S9 -Hydro
  • Antminer S9i -14.5 TH/s
  • Antminer S9j -14.5 TH/s
  • Antminer T9+ 10.5T
  • Antminer S7

Currently Bitmain’s Antminer S9 and S7 ASIC miners are best in the market.

Now should also make a digital wallet for storing your bitcoins.

2. Joining Mining Pool

Once you find a good ASIC miner and finished setting up your hardware. Now its time to join a good mining pool which have plenty of miners, trustworthy, low fee and have more smaller regular payouts.   

Bitcoin Mining Pool have people who mine together and get rewarded for solving block as per their contributions.

Following pools are trustworthy :

3. Downloading the right software

This is last step to start mining, so its very important to download the right software and synchronize with hardware correctly. 

Select software which supports ASIC Mining below mention are the list of software :

Bitminter

Features: The application, which is also a pool, runs on video cards, has ASIC support and is compatible with all operating systems.

Pros: Suitable for both beginners and experienced miners and easy to install.

Cons: No possibility to earn, the cost of a coin mined within 24 hours is equal to $ 0.5.

BitMiner

Features: console client supporting video card and FPGA devices, encryption, RPC support.

Pros: easy adjustment of the pool, the ability to control the cooling elements of the computer.

Cons: High hardware requirements (ASIC only).

Start Mining….. 

  1. Connect PC to Miner
  2. Log in to mining pool
  3. Start mining with software. 

Mining Alone

Mining alone is for big miners where complete mining is done without any other miner’s involvement. It Means mining without going into a mining pool. 

Solving blocks without any helping hand is not an easy task but all rewards are yours.

What is Mining Alone or Solo Mining ?

Mining Alone is a solo mining process. When you connects yourself to mining pools what happens is all pool miners connected to same bitcoin block to solve the mathematical problem. 

It helps to solve the block more quicker, more people in pool means more power to solve the bitcoin blocks and the incentives are also shares in between the pool miners.

But if you are doing solo mining, The best option for finding a block is to connect miner to the local btc client. The probability will decrease but you will keep all the rewards.

If you have hardware with several tons of hashing power then it can be used to get more rewards from solo mining but if you have small hardware with small hash rates then you could use pool mining to get your rewards.

How bitcoin Solo mining works ? 

  • First you need is Installation of Bitcoin-core (both GUI and Daemon). Bitcoin core is full node software program
  • Start and it will download complete blockchain with approx. 20 GB.
  • Create a file named as ” bitcoin.conf ” for mining bitcoin. On window file location would be                C:\User\yourusername\AppData\Roaming\Bitcoin\
  • Set your username and password, replace X with username and Q with password
  • Download ASIC miner like CGMiner or  BFGMiner.
  • Finally launch miner software with local host : 127.0.0.1, rpcport : 8332, username, password as you set in bitcoin.conf file.

Starting Bitcoin Mining In 2020

Was mining relevance maintained in 2020? On the one hand, the profit to get bitcoin blocks is decreasing, and the amount of resources and energy consumed is increasing. On the other hand, the technology development process does not stop. New hardware comes in, costs are reduced, and chips with unprecedented performance are produced. So Lot depends on the entry point.

The short answer to the relevance of Bitcoin mining in 2020 will all depend on the amount of money you want to invest. Indeed, profitability depends on many factors, including the cost of electricity and equipment, but large-scale farms can not only purchase ASICs in bulk, but also allocate a fraction of the cost and time spent independently, regardless of capacity. When Larger paybacks are higher.

It is much more profitable to invest in cloud mining when you have a small investment.

To understand, it is better to look at the opinions of experts on this issue. They claim that by the end of 2020, one bitcoin cost could reach $ 15,000 and grow to $ 25-55,000 by 2020.

Subsequent predictions seem completely unrealistic. Some claim that by 2030, one bitcoin will cost up to $ 500,000. You can predict forever, but as a result bitcoin ratios depend only on one factor-demand.

Bad scenario is For example, cryptocurrency may be banned in large states, making it illegal. And this trend is already evident in many countries.

Basic Concept for Bitcoin Mining

Hash rate is the force used in the specific mathematical calculations that make up the block generation process. Miner programs have different hash rates. This value is measured in mega, giga, and tera hash per second. 

BTC per Block (Bitcoin per Block) -A certain number of bitcoins are formed while solving a specific problem. Initially there were 50, and after 210,000 blocks were formed, the number became half, i.e. 25, 12, half, etc. (it takes 4 years to generate this block number, after which the number of queues is doubled). 

Bitcoin difficulty-increases with increasing network capacity. In other words, the increase in the number of miners directly affects the complexity of solving mathematical problems. 

Electricity Prices (Electricity Rates)-Costs are an important indicator of future profitability, as they vary from region to region and the process requires very high electricity costs. 

Power Consumption-Because the “adaptability” of different devices is different, future earnings cannot be calculated without the information about the miner’s power consumption. 

Pool cost-for work you should be part of one of many pools (group of same crypto miners like you). Certain Service fees is also liable to different platforms. 

Period-time dedicated to mining. 

Declining production profitability during the year is an important but difficult to determine indicator. This is because no one can accurately predict how many participants will increase and how much production complexity will increase over the months.

Conversion rate-another variable that cannot accurately determine future profitability. If you can save coins for the time being, the value of the quotes doesn’t matter much, and it’s very important if you prefer to instantly convert all mined crypto to normal money.

 

Hope this information gives you an idea how bitcoin mining works and helps you to get start with mining . 

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