Bitcoin miners are responsible for validating transactions and ensuring the security of the bitcoin network, and miners are rewarded with BTC for their efforts. However, if you want to make a profit mining bitcoin, you’ll need access to some specialised hardware.
Let’s take a closer look at how you can mine bitcoin and where to start.
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What can I use to mine bitcoin?
Cloud mining warning
Cloud mining will almost never be profitable. This is because the “break-even point,” where you make as much money from cloud mining as you put into it, will keep moving backwards and you’ll typically never be able to reach it.
The reason it moves back is because Bitcoin mining difficulty tends to rise over time, especially as Bitcoin prices do. This means the amount of Bitcoin you get from cloud mining will usually decrease over time, which pushes back the break-even point. Bitcoin mining difficulty will usually only drop if Bitcoin prices do, but if that happens then your Bitcoin is worth less, which also pushes back the break-even point.
As such, even if a cloud mining contract looks like it will be profitable, you’re still more likely to lose more than you earn.
In the rare cases where a cloud mining contract turns out to be profitable, it will have been more profitable to simply buy cryptocurrency instead of cloud mining.
Though it was once possible to mine bitcoin with your personal computer’s CPU or a high-speed graphics card, that’s no longer the case. With the advent of increasingly sophisticated mining hardware, specifically ASIC (application-specific integrated circuit) chips designed for the sole purpose of mining bitcoin, digging for digital gold via your desktop PC is a thing of the past.
These days there are two main options for mining bitcoin:
To make a profit mining bitcoin, you’ll need access to the best hardware built specifically for that purpose. However, this hardware doesn’t come cheap, so some users opt to use a bitcoin cloud mining service. These services, such as Genesis Mining and Hashflare, allow you to rent sophisticated mining hardware and have someone else do the hard work for you.
The biggest advantage of cloud mining is that the initial outlay is much smaller than it is with personal mining. On the downside, the fact that you don’t physically control the hardware means there’s an increased level of risk, and there have been numerous examples of cloud mining scams over the years.
With this in mind, it’s essential to do your research and choose a reputable provider.
The specialised ASIC hardware needed to mine bitcoin is expensive to buy and run. This means you’ll need to be willing to make a significant investment, and also have access to cheap electricity and a fast network connection if you want to mine bitcoin at home.
The first thing you’ll need to do is to purchase an ASIC miner. Prices vary depending on the device you choose and whether you buy new or used, but prices can range from $500 to upwards of $3,000. This will also need to be paired with the right bitcoin mining software.
Rather than forging ahead on your own, which would make you highly unlikely to turn a profit, it’s recommended that you join a bitcoin mining pool. These mining collectives allow you to combine your resources with other miners and receive regular rewards based on how much mining power you contribute.
You’ll need to pay a fee from your earnings to be part of the mining pool, and it’s also essential that you choose an established, reputable pool.
How to start mining bitcoin
Those are your two main options for mining bitcoin:
Method 1: How to mine bitcoin with a cloud mining service
Choose a mining company. If you want to lease mining has power and time, you’ll first need to compare cloud mining services. Compare the contracts they offer, the fees they charge and their overall reputation before making your decision.
Select a mining package. Next, review the contracts on offer from your chosen mining company. How long is the contract? How much does it cost? What mining hardware will be used? Are the terms of the lease set in stone or can you customise a contract to meet your needs?
Pick a mining pool. Once you’ve purchased a plan, most cloud mining services will require you to choose a mining pool. Compare a range of pools and choose one with a proven track record.
Start mining. With these steps completed, cloud mining of bitcoin can begin. Your cloud mining account should start filling up with BTC in the coming weeks, so it’s a good idea to transfer your earnings into a secure bitcoin wallet of your own.
Method 2: How to mine bitcoin at home with your own hardware or software
Use a mining profitability calculator. Before going any further, use an online mining profitability calculator to work out the likelihood that you’ll be able to make bitcoin mining worth your while.
Choose your mining hardware. Next, compare the features and cost of ASIC mining devices before choosing one you want to use. Keep in mind that you’ll most likely also need to buy a separate power supply unit to support the hardware.
Join a mining pool. To have a better chance of turning a profit, it’s recommended that you pool your resources with other miners in a mining pool. Compare a variety of pools before selecting one that’s well established and reputable.
Download mining software. There are several programs available designed for bitcoin mining. Some are command line programs while others offer a GUI for increased ease of use. It’s also worth pointing out that some mining pools will offer their own software.
Start mining. Set up a secure wallet for storing your BTC and link it to your mining rig. Make sure you stay abreast of bitcoin price developments and mining difficulty adjustments to ensure that your mining setup remains profitable.
If you want to dig for this digital gold, be aware that bitcoin mining is a complicated and costly process, and it’s no longer possible for hobby miners to compete with large mining pools and firms. However, with the right setup and approach, either by joining a pool or using a cloud mining service, it is still possible to make a profit.
Yes. The number of bitcoins generated per block halves every 210,000 blocks, which is roughly every 4 years. At time of writing (June 2018) the number of BTC awarded per block is 12.5, but this will halve in 2020.
The amount of power consumed varies depending on the mining hardware you use. However, one study has shown that the average energy cost of mining in Australia is $9,913 per bitcoin mined.
Yes, there are many other Proof of Work cryptocurrencies that can be mined, and most of them are more accessible to the average enthusiast than bitcoin.
Tim Falk is a freelance writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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