Bitcoin Mining – How does it work? A beginners guide

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Bitcoin Mining Beginners Guide

A Beginner’s Guide to Bitcoin Mining

With Bitcoin becoming more and more accepted, the mining of Bitcoin has become a widely sought after activity. With Bitcoin’s growing stage, there are a lot of opportunities for those who are willing to take a crack at navigating the blockchain ledgers and earning Bitcoins in between.

A note from my side: “Please always keep in mind, Bitcoin mining comes along with costs you have to carry and take care of. I am not mining myself but a good friend of mine did until he got some of the highest bills ever in his life for the power consumption of his self built miner, so always consider the costs rather than only the income you might generate”.

In order to learn how to mine Bitcoin, you need to learn the following:

  1. How mining for Bitcoin works
  2. How to start up
  3. The best hardware for mining
  4. The software that is best for mining
  5. How to find Bitcoin mining pools
  6. How to earn Bitcoins

How mining for Bitcoin works

First, you must understand how it works. The first thing to consider is that Bitcoin mining is definitely not illegal, so don’t be afraid to venture into it. It is done by running a SHA256 verification process to regulate the Bitcoin transactions in the blockchain network, which contains the public ledger that runs the Bitcoin network. Mining speed is measured by hashes per second or how many hashes are processed every second.

Next, you must understand how miners earn from what they do. Bitcoin miners are actually compensated by the network for lending their computing skills to maintain the blockchain ledger. They are paid newly issued bitcoins or from transaction fees whenever they manage each transaction. Those who contribute more will naturally earn more.

How to Start Mining

Now that you understand the activity, let’s see how you can start. First, you need a Bitcoin mining hardware, which is now available for purchase from Amazon or other places with Bitcoins. Moreover, utilizing the correct software for mining is also crucial. Let’s talk about mining hardware first.

The Best Hardware for Mining

Bitcoin GPU Mining HardwareBack when Bitcoin was small, you can mine Bitcoins with your regular PC as long as you have a really good CPU and a high-speed video card that can take the mining job. Now that Bitcoin is getting bigger, you can no longer use those simple home PCs anymore. Nowadays, custom-made computers with the chips that are optimized just for mining are much more preferred. The newer your model, the more efficiently you can mine your Bitcoins. Hence, you need to invest in a good computer. Companies like Avalon build exemplary systems that are specially made for mining.

If you are new at Bitcoin mining and have never come across any special computer for mining, there are two things that you must consider when looking for a computer. These are the price per hash and the electrical efficiency of the computer. Here is a list of some of the best mining hardware you can purchase:

AntMiner S7

Specs:

  • 73 Th/s
  • 25 W/Gh
  • 8 pounds
  • $479.95
  • 1645

AntMiner S9

Specs:

  • 5 Th/s
  • 098 W/Gh
  • 1 pounds
  • $1,987.95
  • 3603

Avalon6

Specs:

  • 5 Th/s
  • 29 W/Gh
  • 5 pounds
  • $499.95
  • 1232

Software that is Best for Bitcoin Mining

Once you’ve decided on your hardware, then you must also download a special software that is specially designed for mining Bitcoin. There are a lot of software out there that can be downloaded, but not all of them yield the same results. If you’re looking for the best ones, BFGminer and CGminer are recommended.

You can also try Easyminer which is a mining software that has GUI. It is a very easy to use software that you can use in Windows, Linux, and Android.

Bitcoin Mining Services

A second option when it comes to starting Bitcoin mining would be to purchase Bitcoin mining services through cloud mining contracts. Although this is the easy choice, this option is also considered risky since you won’t be in control of the mining hardware.

If you have already set your mind to get a mining service, these services are some of the best choices:

Hashflare

  • They feature mining contracts, specifically SHA-256.
  • The payouts are in BTC.
  • Customers have to purchase at least 10 GH/s.

Genesis Mining

  • They offer cloud mining plans, specifically for Bitcoins, in three options.
  • Genesis Mining services have a reasonable price.
  • Zcash mining contracts are available.

Hashing24

  • They use the latest ASIC chips (BitFury). This enables them to deliver the optimum performance and great efficiency.

Minex

  • Their services come in an economic simulation game format.
  • The users purchase Cloudpacks.

Minergate

  • Minergate offer pool and merged mining. They also offer cloud mining services.

HashNest

  • It is run by Bitmain.
  • HashNest currently has over 600 Antminer S7s for rent.

NiceHash

  • NiceHash utilizes an orderbook. This is to match the buyers and sellers’ mining contract.

Eobot

  • They offer mining services for as low as $10.

MineOnCloud

  • MineOnCloud has 35 TH/s of mining equipment for rent.

How to Find Mining Pools

Learning the ropes in mining and acquiring the hardware and software for mining Bitcoins, the next step would be to look for a mining pool. First, understand what exactly is a mining pool. A mining pool is a small group of miners that help each other and share the earnings. If you are a beginner, it’s good to join other miners so that you can get your earnings faster. There are a lot of pools that you can join. Here are a few suggested ones:

  • P2pool
  • Bitminter
  • Slush Pool
  • CK Pool
  • Eligius

How to Earn Bitcoins

Another crucial thing to consider when mining Bitcoins is how to earn  and where to keep them. In order to earn your Bitcoins, you need to have a Bitcoin wallet where you can store your earnings after you mine. There are Bitcoin wallets that you can find online, such as Copay, and there are also hardware wallets

To get an idea as to how you are paid, you must first understand how the wallet works. Your Bitcoin wallet has a unique address. When you send Bitcoins to your wallet, your Bitcoins will be sent to your address and verified by a two-factor authentication to secure it from potential information theft and other threats. To get a Bitcoin wallet, you have to download a software to your computer. You also need to start buying and selling Bitcoins through an exchange. These are some of the Bitcoin exchanges you can check out:

  • Coinbase
  • Kraken
  • SpectroCoin
  • Local Bitcoins
  • Buying Bitcoin Guide

Also check out our small trading platforms review -> Click here

Always Read the News

Staying up to date with the news on Bitcoin is very crucial when mining for your profits. This is so that you can monitor the value of your Bitcoins. Check out our website as I try to keep up with the educational but also the news stuff which might be pretty important. If you like this article, share it and follow us on Twitter & Facebook.

1 COMMENT

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