How to Mine Bitcoin
Most of the sites that teach an in-depth way of mining Bitcoin are written for professional coders and people who have advanced into crypto mining. So you might not find them a lot more helpful if you are no experience or skills coding for Ubuntu, Linux and Mac.
For starters, given the high value of Bitcoin -- even a single coin -- it is a very competitive field. As more people get on-board, difficulty to mine -- which is determined by the difficulty algorithm -- increases each day. So the starting point is to determine if it will be profitable for you, even before you plan for a mining rig. This is very important because you might need to buy specialized hardware.
Is Bitcoin mining profitable for you and me?
A Bitcoin mining profitability calculator will save you many hours of doing the math. These calculators can tell you whether you are headed for profitability depending on the cost of electricity at your locality, hash rate the cost of hardware and other variables. Here is an example of a mining profit calculator to use.
Some terms are technical but which you need to be familiar with before or in the process of mining- Even using a calculator.
Hash rate: Hash is the mathematical problem in blockchain that the miner should solve to get rewards and the rate at which a miner solves them is called hash rate. Further, the hash rate refers to the hashing of the algorithm used to produce a checksum when users are verifying file's integrity.
Hash rate is also used to refer to miner's (the mining machine's) performance. In this case it could be MH/s (Mega hash per second), GH/s (Giga hash per second), TH/s (Terra hash per second) and even PH/s (Peta hash per second).
Bitcoins per block: The number of Bitcoins created when a mathematical problem is solved. Starting with 50 at the time Bitcoin was created, the number halves every four years and the last time it halved was July 2016. It will half again in 2020. The current number of Bitcoins awarded per block is 12.5.
Bitcoin difficulty: The Bitcoin difficulty increases to match the network's hash rate.
Electricity cost: Mining Bitcoin is power intensive and your bills will increase as you run the miners. It also depends on your miner's power consumption, which you can check on this list, in addition to the cost of power in your location.
Pool fees: Mining Bitcoins at home alone comes with its problems that affect profitability. You can join a mining pool where you pay some fees and then the miners in that pool divide profits among themselves depending on the miner hash rate of each member.
Profitability: This is one of the main factor s everyone wants to hear before starting to mine. And since it is hard to predict how difficult it will be to mine in future as no one knows how many people will join the network at any given moment, how much profitability to expect in Bitcoin mining is a very difficult question to answer. Therefore, you may want to keep evaluating profitability and profitability decline factor from time to time yearly.
Conversion rates: Conversion rate also varies from one market to another and with time.
Still on profitability, the other thing to consider before venturing in Bitcoin mining is the actual ROI or return on income. Compare it with ROI for buying and selling Bitcoin you might get surprised that buying and selling coins might be more profitable than actually mining, for which you might need to not spend the money on mining.
Bitcoin mining is profitable if you get it right but do not expect to get rich overnight. You also need good amount of investment. However, still on the question of profitability for Bitcoin mining, there is the alternative to mine Altcoins. There are a lot more of these, including the recently forked Bitcoin forks where you can even use GPU and CPU, but also can try mining others such as Monero, Peercoin, Litecoin and Dogecoin. You might also read an article about masternodes, a good alternative to mining these days and alternatives to proof of work.
Read this article on the top 10 crypto to mine right now and the ROI to expect on mining other cryptocurrencies.
Familiarize with the miner options
Simply put, it is hard to get profit on a CPU mining machine, the reason people have been running for GPU miners as the difficulty of mining went up on in the years, but these are less profitable these operations so ASIC miners are more specialized devices. Read this article on the to ASIC miners in the market.
While the Antminer S9 is the newest and most powerful miner, you can go through reviews to determine what's best for you. Miners differ in Hash Rates. Other options include Antiminer R4 released August 2016, AntMiner s9 released in June 2016 and Avalon released November 2016.
Their power efficiencies differ as does their power consumption, hash rate, dimensions and weight, revenue in a vacuum and certainly their price and overall rating among miners.
You can read this guide for more details on which miner to choose.
There is also the option of mining on the cloud. Cloud mining is a popular option for many people too. With it, you rent computing power from a different company and set up to mine. You avoid all the hassles of buying expensive equipment, storing it and cooling it. However, most of these are not profitable and there are scams that do not even own single equipment and will want you to rent.
If you want to try, a good company is Genesis Mining, which runs a cloud mining service but does your math first. Also, read more on top cloud mining companies here.
Get a Bitcoin wallet
This is the first to go for even before starting to mine because it is where you store the Bitcoins after mining.
Once this is done, all you need is the PUBLIC bitcoin address for the wallet and obviously the private key that serves as the password for the wallet. Once you download the wallet (for a self-hosted wallet), get a copy of your wallet.dat file on your thumb drive and print a copy. This prevents you from losing Bitcoins if the computer ever crashes.
Read this article on Bitcoin wallets.
Join a mining pool
Mining pools comprise of individual miners combining their computing power to make more Bitcoins. Going it all alone is tricky for making some money because Bitcoins are awarded in blocks, usually 12.5 at a time, and going it all alone might not make you any money at all.
In a pool, miners share out the algorithms such that everybody has smaller and easier algorithms to solve and then all the combined work makes it more likely to solve the bigger algorithm and earn Bitcoins that the people mining them share out, minus the fees for the pool. In a pool, you can make good returns for as long as it is a good pool.
Which immediately turns the focus on the question, which is the best mining pool?
You can go through Bitcoin mining pools to identify a good pool. Nevertheless, you evaluate one depending on the reward method (proportional/pay per share/score based/PPLNS); the fee they charge for mining and withdrawal of funds; the ease of withdrawing funds; the frequency of finding a block meaning how frequently they get rewarded; and the stability and the kind of stats they provide.
A mining pool gives you a worker ID after you sign up and add the "Worker."
Install a mining client and kick off the process
You miner needs a program to get started. The software to select depends on the mining rig you got. Most rigs come with their own software. You may come across some like MacMiner for mac and 50Miner or BFGMiner for PCs.
Connect the miner to power and to the computer via cable and locate the software and run! For a pool mining, set up a pool for Bitcoin, enter your username and password for the mining pool and your Bitcoin wallet address.