As bitcoin’s popularity grows, more and more people aren’t simply content to purchase it—they want to help run the system. This is part of what makes bitcoin such a unique currency, and it’s part of the draw for many cryptocurrency enthusiasts. Helping run the system benefits both the general bitcoin community and the individual miner, but is it actually worth the time it takes?
Let’s look at what it takes to get set up as a miner.
First, you’ll need to buy hardware. It is impossible to mine bitcoin on a regular computer with nothing added to it. You need specialized equipment, and this is going to cost money. Getting started as a bitcoin miner is just like setting up any other business. You’re an entrepreneur now, and it’s going to take an initial investment to kick start your new self-run business.
Primarily, miners use custom devices who run on ASIC custom chips. Miners warn against using anything of lesser quality because it will likely drain more electricity than it’s paying for—and that’s something else to keep in mind. Your mining machine will be something you probably want to run 24/7, and make no mistake, it will suck up electricity, taking away from your profits.
Here’s the purchase price on some popular mining machines, according to Bitcoinx.com:
- The Monarch—$2,196
- The Axon Synapse Terra-1—$9,999
- The TerraMiner IV—$5,999
- Xtreme Miners Leopard—$5,800
There are machines that cost less, but consider the electricity, and consider what it will cost to replace cheaply made machines if and when they break.
Once you have your hardware, you’ll also need software. Bitcoinmining.com suggests EasyMiner by Butterfly Labs, BFGMiner, or CGMiner.
Your software will complement your hardware, getting you completely set up with the digital capability to start mining.
In order to receive payment for your mining, you need to have a bitcoin wallet. You’ll be paid for your services entirely in bitcoin, so having a digital wallet to receive the coins is a necessity. Wallets are usually free. You can choose a variety of types of bitcoin wallets, such as . . .
- Web-based wallets
- Software wallets
- Mobile phone wallets
- Hardware wallets
Web-based wallets are usually considered the most convenient.
Here’s where the business sense part of mining comes in. Once you have everything—hardware, software, wallet—set up to let you begin mining, you have to start actually mining, and this can be daunting. It’s hard to make money mining on your own; the amount of people mining is growing every day, and as such, mining has become less of a “join and you automatically have work to do” venture and more of a “try to get lucky.”
In order to make profits, many miners suggest newbies join mining pools. A mining pool is a group of miners with mining machines who join forces in order to find and confirm more transactions. As a pool with grouped-together power, you’ll be able to move through batches of bitcoins more quickly, earning all the pool’s members more bitcoins in reward.
StartBitcoin explains that bitcoins are usually given to miners in lump sums—50 coins, for example—and then the miners’ machines will work out the algorithms. In a pool, these algorithms can be broken up, and individual miners will have smaller, less complicated ones to solve.
Forum commenters from early last year show solo miners making about $0.10 per day from mining, varying with their computing power. Because the system has become even more clogged, with hardware and software readily available, pools have become the way for new miners to leap into the mining business and earn money with the help of more experienced miners.
Joining a pool also allows individual miners to buy less expensive software. You won’t necessarily have to have a machine anymore if you’re combining forces—you can purchase a USB ASIC miner, which can range from $20 to $50. But, as always, going cheaper means more risk. How much bitcoin you make by mining is reliant on how fast your mining goes, and if it’s slow, that’s less profit for you.
With all this talk of algorithms and number-crunching, you may be wondering just how much time you’re going to spend sitting in front of the computer. The answer is: not much. The hardware and software you’re downloading is going to do the mathematical work for you, and while it will be helpful for you to understand what the machine is doing, you don’t need to be a calculus whiz. Mining machines will do the work for you.
So, in the end, is mining bitcoin profitable?
And the answer is, well . . . it can be. Purchasing a mining rig and spending on the power to run it will definitely be a drain on your budget, and judging by most bitcoin mining beginners’ guides, mining can be profitable if you hit a profitable period and you join a profitable pool and you’re able to churn out bitcoin confirmations. That’s a lot of “ifs.”
Doing research before you leap into purchasing hardware and joining a specific pool can save you time and money. Know what to do before you do it—and be sure to use bitcoin calculators, where you can input your start-up costs, the amount of processing power your new machine has, and your expected spending amount for power, and it will spit back, based on current market costs and circulation, an estimated profit for you.Social tagging: bitcoins > How to buy bitcoins with credit cards > Is bitcoin mining profitable? > What is bitcoin mining? > where to buy bitcoin mining rig