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When Bitcoin was first introduced in 2009, mining the world’s first and premier cryptocurrency needed little more than a home PC — and not even a fast one at that. Today the barrier for entry is far higher if you want to make any kind of profit doing it. That doesn’t mean it’s impossible, but it’s not the homebrew industry it once was.
Still, if you want to know how to mine Bitcoin, there are a few steps you can take. One involves much more risk and monetary investment than the other, but the potential rewards are greater. So just as when it comes to buying Bitcoin or altcoins, you need to be aware that nothing in the world of cryptocurrencies is guaranteed. Any investment could be lost, so make sure you do your reading before pulling out your credit card and have a secure Bitcoin wallet standing by.
Mining vs. investment
Before we discuss how to mine Bitcoins yourself, it’s important to note that although there is uncertainty in everything cryptocurrency related, mining is arguably the most volatile. Hardware price fluctuations, changes in Bitcoin difficulty and even the lack of a guarantee of a payout at the end of all your hard work, make it a riskier investment than even buying Bitcoins directly.
Nobody can say whether Bitcoins will be worth more tomorrow than they are today, nor can they give you any concrete answer as to whether you’ll receive a return on your investment, but buying Bitcoin directly at least gives you something for your money immediately. It’s certainly worth considering before you go down the mining route.
Step 1: Pick your mining company
Cloud mining is the practice of renting mining hardware (or a portion of their hashing power) and having someone else do the mining for you. You are typically ‘paid’ for your investment with Bitcoin. Even if the hardware isn’t used for mining Bitcoin. As with general investing, it’s important to do your research, because there are a lot of companies out there which purport to be the best and even the largest have their detractors.
Genesis Mining is arguably the largest and most reputable of the bunch. HashFlare told Digital Trends in an interview that every one of its customers has turned a profit using its service. It did say though, that if many of them had invested in Bitcoin at the right time they may have made more money.
If neither of those companies strikes your fancy, CryptoCompare maintains a list of mining companies with user reviews and ratings, though be aware there are a lot of reviewers looking to shill their referral codes in the comment section.
Step 2: Choose a mining package
Once you have picked a cloud mining provider and signed up, you need to pick a mining package. That will typically involve choosing a certain amount of hashing power and cross-referencing that with how much you can afford to pay. Typically paying more will give you a better return, or you’ll turn a profit quicker, but that’s not always the case.
Most cloud mining companies will help you decide by giving you a calculation based on the current market value of Bitcoin, the difficulty of Bitcoin mining, and cross-referencing that with the hashing power you’re renting. However, it’s important to note that those numbers can and do change, so it is important to look at market trends and estimate where Bitcoin may be going before choosing your contract. What may be profitable now, may not be if Bitcoin’s value crashes.
Some cloud mining companies will sell you a contract on a “pre-sale” basis. That is effectively asking you to pay upfront for a contract that won’t begin for weeks or months when new hardware becomes available. In most circumstances that’s not advisable because there is no way to guarantee those contracts will be profitable when they start and not even a concrete indication of when that will happen.
Step 3: Pick a mining pool
After choosing your contract, most cloud mining companies will ask you to pick a mining pool. That’s where you choose a global mining team to join.
It’s a method of increasing the chance of earning Bitcoin through mining and it’s a standard practice in cloud and personal mining. There are pros and cons of different pools that go beyond the scope of this article, but joining an established and proven pool with low fees is likely to be your best bet.
Step 4: Select a wallet
Once you’ve completed that step your cloud mining can begin and within a few days or weeks, you should start to see your cloud mining account begin to fill with Bitcoin. Withdrawing it and putting it into a secure wallet of your own is a good plan as soon as you have a small holding, though some cloud miners will allow you to reinvest your earnings for greater hashing power.
Alternatively, you sell them. Or convert them into something else. It’s totally up to you.
What if I want to mine with my own hardware?
Due to the high costs involved, mining Bitcoin yourself is only recommendable if you have ready access to plentiful and more importantly, cheap electricity and a powerful network connection. Before investing in any hardware or mining set ups, it is imperative you use a Bitcoin mining calculator to see if you can actually turn a profit with all costs considered.
If you can, you’ll need to pick the right ASIC miner to do it with. While Bitmain’s Antminer S9i and S9j miners are some of the most praised, there is a lot of new competition worth considering too. The GMO miner B3 is considered the most efficient ASIC miner as of September 2018, with the Innosilicon T2 Turbo a close (and significantly cheaper) second.
Follow your fellow miners’ advice to download the right software and pick the right mining pool, but once that’s done, start everything up and get to mining. Just make sure you continue to check the Bitcoin calculator on a regular basis to make sure you’re remaining profitable.