There are lots of ways to earn Bitcoins:
- You can work at a company that offers Bitcoin payments
- You can trade goods or services for them; or
- You can create your own company that accepts Bitcoins
However, aside from buying them on an exchange, cloud mining is one of the few methods that allows anyone who owns some computing hardware to earn Bitcoins without doing anything else.
What is Bitcoin Mining?
Bitcoin mining is the process of adding transaction records to the Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the blockchain as it is a chain of blocks. The blockchain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
While some have made a fortune off of Bitcoin and other digital assets such as LUNC crypto, there are many things to consider before taking this route. You’ll need access to cheap electricity and hard drive space, which could cost you thousands of dollars upfront, and you’ll have no control over your profit margins.
While there are many reasons to use bitcoin, one reason to avoid using it, or any crypto for that matter, is because of the high volatility associated with the currency. You can still make money using bitcoin mining even though the price of bitcoin has fallen quite a bit in recent years along with other assets that experience price fluctuations including the LUNC price.
How Does Bitcoin Mining Work?
Bitcoin mining is the process of creating new bitcoins. Mining involves solving a complex mathematical problem to confirm bitcoin transactions and ensure that there is no double spending. The successful solution results in new bitcoins being added to the system, while also rewarding the cloud miner with some amount of these newly minted coins.
The analogy of gold mining can be used to describe this process: gold miners must expend large amounts of energy in order to find gold deposits beneath Earth’s surface, extract them from the ground, and then purify that raw material into its final form.
In just the same way, Bitcoin miners must expend large amounts of electricity – and therefore money – in order find blocks containing coins worth mining. Once they’ve done so, they must also invest significant resources into processing those blocks into usable forms like digital currency assets such as tokens found on the Ethereum network.
Things to Consider Before Mining Bitcoin
Mining Bitcoin is the process by which new Bitcoins are released. It’s a competition with considerable technological requirements, which means that, generally speaking, it will be profitable only for people with the latest, greatest, fastest computers and access to cheap electricity.
The latest, greatest, fastest computers cost a lot of money.
Bitcoin mining is not easy. It requires specialized hardware and consumes a lot of energy. Even if you did start mining Bitcoin through your computer (which would be very slow), you’d probably find that your computer’s hardware has become obsolete within a year or two. It’s also possible that the power company will think you’re using too much energy for whatever reason and shut off your power – or local law enforcement will find out you’re mining and make you stop.
Mining Bitcoin is a 24-hour, 7 days a week, 365 days in a year undertaking only to find that you’ll only earn a fraction of what you put in. In addition, it may very well be that your power company charges you more per kilowatt-hour than it costs to run the machine.
There’s also the matter of the price of Bitcoin itself. If Bitcoin prices crash, which is entirely possible given its high volatility, you won’t be making any profit at all and could lose money just for running the machine. So before you start mining Bitcoin, consider whether you have enough investment capital that could get lost in such an experiment.
If so, go ahead, if not, maybe it’s better to invest that money elsewhere rather than gamble with it on Bitcoin.
Ways to Make Money Through Bitcoin Mining
1.) Get Bitcoin Mining Hardware
The next step is to get the hardware you need to mine Bitcoin. You will need a computer with a good graphics card as well as an ASIC miner if you want to mine solo (or with others).
If you don’t have the money or time to invest in these items yourself, there are other options available – renting hash power from companies like Genesis Mining can be an effective way of earning money while also avoiding having to buy expensive equipment yourself.
2.) Download Bitcoin mining software
You’ll need specialized Bitcoin mining software installed on your PC to get started. There are several options available but we recommend GUIMiner due to its intuitive interface, portability (it can be run off of a portable drive), and ease of use when compared to some of its competitors.
GUIMiner acts as a graphical user interface for mining applications – in this case, BFGMiner (a modular ASIC/FPGA miner) and CGMiner (a GPU miner). The program will automatically detect the devices installed in your computer and start mining instantly.
3.) Solo Mining
The other way to mine is through solo mining. This means that you alone have all of the computing power working for you to mine bitcoins, so there’s no splitting of profits with other miners or cloud mining companies. Solo mining requires a large amount of computing power and it’s not uncommon for people who go this route to join pools where they combine their resources with other miners and share rewards based on their contributions as well as the amount of shares they contributed during that time period.
4.) Join a Bitcoin mining pool
Mining pools are groups of miners who work together to mine Bitcoin and share the rewards. The pools come in different sizes, from large ones with thousands of members to smaller ones with just a few dozen.
The most important thing to remember when joining a mining pool is that you will have to trust it with your money. This means you must make sure the pool has enough hash power to find blocks regularly and reliably as well as keeping track of how much money has been invested in order for payouts to be made at all times.
Set Up a Bitcoin wallet
Bitcoin wallets are the equivalent of a bank account. They store your bitcoins and allow you to send them to other people.
There are many types of wallets, but we’ll focus on two:
- Software wallets
- Hardware wallets
Hardware wallets are physical devices that store your private key(s) for offline use so they are more secure than software wallets (though not entirely theft-proof). Some examples include Ledger Nano S and Trezor One.
Software wallets are apps that store your private keys online through a company’s servers or your computer’s hard drive. This can make them vulnerable to hackers who could access the information if they find out how it’s stored. Some companies however offer insurance against losses due to their own negligence in case something goes wrong with one of their servers.
Takeaway
You might think that making money with Bitcoin mining sounds too good to be true, but as more people get involved in the system, this opportunity is less and less profitable as you have to compete with more people by using more powerful hardware.
Hopefully, this guide helps you make the right decisions when it comes to Bitcoin mining.
_____________________________________
Follow us on Twitter for the latest posts and updates
Join and interact with our Telegram community
_____________________________________
This is a sponsored post
