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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.
Coin name | Ticker symbol | Mining algorithm |
---|---|---|
Bitcoin | BTC | SHA-256 |
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:
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 $5,000. 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.
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.
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.
Those are your two main options for mining bitcoin:
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.
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