Most people run into big problems when trying to mine Bitcoins. If you are a newbie, it is very hard to know what is what when you are just starting so you will surely run into some problems. In this article, we will show you how to mine Bitcoins step by step. This guide is meant to help you get a basic understanding of the process.
Get a Bitcoin Mining Rig.
First things first; get a mining rig. Bitcoin mining is a super competitive niche to get into. The more miners that come on board with the latest mining hardware, the more difficult it becomes to mine. Even before you start Bitcoin mining, you need to do your research. What I mean is that you need to find out if Bitcoin mining is profitable for you. You don’t want to go through the difficulty associated with Bitcoin mining, just to discover that Bitcoin mining is not profitable for you.
The best way to find out if Bitcoin mining is profitable for you is by using the Bitcoin mining calculator. Enter the data of the Bitcoin miner which you want to buy and see how long it will take you to make a profit. However, all I can say is that if you don’t have a few hundred dollars to spare you won’t be able to mine any Bitcoins. Once you have finished with your calculations, it is time to get your miner. Do your research to know which miner is best for you.
You should know that in the past it was very possible to mine Bitcoins with your computer or with a graphics card, which is also known as GPU is mining. Today, the mining niche has become so competitive that you have to use ASIC miners; a special computer that is built strictly for mining Bitcoins.
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Get a Bitcoin Wallet.
After you have gotten a miner, the next thing to do is to get a Bitcoin Wallet. Because Bitcoin is an internet-based currency, you need a place to safe keep your Bitcoins. Once you have gotten a wallet, make sure you get your wallet address. Your wallet address will be a long sequence of letters and numbers. Each wallet has a different way to get the Bitcoin address, but most wallets are straightforward about it.
Note. You will definitely need your PUBLIC Bitcoin address and not your Private Key (which is like a password for your wallet).
If you are using a self-hosted wallet (for instance you just downloaded a program to your computer, and it’s not using an Internet-based service), there is one additional very important step that you must know. You have to be sure that you have a copy of the wallet.dat file on a thumb drive, and they print a copy out and keep it in a safe location. The main reason you should print a copy of the wallet.dat file and keep it in a safe location is to safe yourself and your Bitcoin in case your computer crashes. If your computer crashes without you having a copy of your wallet.dat file, you will lose all your Bitcoins. Although they won’t go to someone else, they will disappear forever.
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Find a mining pool.
Now that you have gotten a wallet, you are probably roaring to go, but if you want to make money from Bitcoin, you need to join a mining pool. A mining pool is a group of Bitcoin miners that combines all their computing to make more Bitcoins.
In a mining pool, you are given smaller and easier algorithms to solve, and all of the miners combined work will make you likely to solve the bigger algorithm and earns Bitcoins that are shared throughout the pool based on any contributions each member of the makes. Basically, you will make a consistent amount of Bitcoin and you will be more likely to receive a good return on your investment.
However, when choosing a mining pool, you will need to ask yourself several questions:
- How stable is the mining pool?
- What is the reward method of the mining pool; is it proportional/score based/pay per share/PPLNS?
- How easy is it withdrawing funds?
- What fees do they charge for mining and withdrawal of funds?
- How frequently do they find a block (it means how frequently do they get rewarded)?
- What kind do stats do they provide?
Once you are able to answer all these questions, you can move on to choosing a mining pool. Immediately you have set up your account for the mining pool; you will have to add a “worker.” You will have to have a worker ID for every miner you have so that the pool can keep track of contributions.
Get a mining program for your computer
Now that you have got the basics covered, we are almost ready to start rolling (I mean mining). You definitely need a mining client to run on your computer so that you will be able to manage and monitor your mining rig. You will need to find the right software depending on the mining rig you have. Most mining pools have their software, but some mining pools don’t. There are lots of Bitcoin mining software like BFGMiner, MacMiner, but Cgminer is the most common.
So hopefully, everything is ready to go. The one last thing left for you to do is to start mining. So to start mining, you have to connect your miner to a power outlet and fire it up. Make sure you also connect the miner to your computer (usually via USB) and start up your mining software. Once you start up your mining software, enter your mining pool details (username and password). Once it has configured, you will immediately start mining for Bitcoins. You will start collections shares which will stand in for your part of the word in finding the next block. Depending on the mining pool you have chosen, you will be paid or your share of coins; just to make sure that you enter your address in required fields when signing up to the pool.
Always stay updated
Bitcoin mining has a very unfortunate feature; if you don’t stay updated in the Bitcoin industry, you will make less and less money over time. This is not just because of the four-year inflation prevention; it is because all other miners will be busy improving their nabbing blocks and improving their equipment faster than you have done. To keep up with other miners and make more money, you need to update your software wallet and even your hardware. You also have to stay on top of any important development or news and watch how Bitcoins compare to other cryptocurrencies and currencies. And most importantly, don’t be afraid to change anytime.
Last update on 2019-10-31 / Affiliate links / Images from Amazon Product Advertising API