Make Money Mining Bitcoin for Beginners

If you want to join in the bitcoin frenzy without just buying the digital currency at today's inflated prices, then bitcoin mining is another way to get involved. However, mining bitcoins does come with expenses -- and risks -- of its own. And the more popular bitcoins become, the harder it is to mine them profitably. .

Unlike paper currency, which can be printed by governments and issued by banks, bitcoins do not arrive in any physical type. This makes a major risk, as hackers can theoretically produce bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions secure.

Bitcoin transactions are secured with blockchains, which compose a public ledger of transactions. Because of how blockchain transactions are structured, they are extremely tough to change or undermine, even from the best hackers. But in order to protect these transactions, someone needs to dedicate computing power to verifying the action and packaging the facts in a block which goes into the bitcoin ledger.

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As a reward for doing the job to track and secure transactions, miners earn bitcoins for each block that they successfully process. .

The bitcoin founders have put a limit of 21 million bitcoins offered for mining. Once that amount is reached, miners will continue to have the ability to benefit from transaction fees, but they won't be granted bitcoins as a reward for their work. As of mid-January 2018, approximately 16.8 million of those 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change dramatically, it seems like we won't reach the 21 million-bitcoin limit until the year 2140. .

During the early days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that's no longer practical, because solving bitcoin transactions has become too difficult for your average computer to manage.

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The bitcoin network is designed to make a certain number of new bitcoins every 10 minutes. If only a couple men and women are bitcoin mining at any given time, then the network will probably be generous and share bitcoins easily in order to reach the predetermined number. But now this bitcoin mining has become so widespread, the network is now much stingier about handing out bitcoins to miners.

These days, in order to have a chance at being profitable, miners need to adopt one of two approaches: 1) purchase technical hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To begin with your own mining rig, you purchase hardware designed for mining bitcoin (or some other virtual currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady flow of payments without your needing to get involved.

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While it's fairly easy to establish and utilize a bitcoin mining rig, really blog here making money on the process is something of a challenge. Because more and more people are signing up to mine bitcoins, the mining process continues to get more difficult and will probably keep doing so for a while.

And because bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for your hardware, or even several times that to get a top-quality rig -- having to replace it every year or 2 takes a massive bite from any gains you earn from mining. Plus, most mining rigs consume enormous amounts of electricity, which means you also have to subtract expense from the bitcoins you earn to determine your profits. .

When buying and maintaining your own mining gear doesn't appeal to you, then cloud mining may be the best way to go. Cloud mining companies invest in enormous mining channels, often filling entire data centers with the hardware, and then sell subscriptions to individuals interested in dipping a toe into bitcoin mining.

The largest challenge facing cloud mining readers is avoiding fraud. The area is rife with pseudo-companies that sell thousands of multiyear subscriptions, pay out for a few months, and then vanish into the sunset. If you choose to try cloud mining, do your homework in advance and confirm that the company you're dealing with is a true cloud miner and not a scheme.

Avoid companies with anonymous domain registration (you can look up their registration info Network Solutions), in addition to any mining company that"guarantees" profits or provides huge incentives for referring new clients; anything above a 10% referral commission is profoundly suspicious, because legitimate mining pools just don't generate a high enough profit margin to pay big commissions. .