Setting up a Bitcoin miner can be quite a complex task. But with a bit of effort and time it should be easy to get the hang of. Bitcoin mining is a tech activity that can help you earn some extra cash on the side — as long as you’re ready for the challenge.
1. Understand the amount of effort involved bitcoin mining
Mining for bitcoins is not a casual undertaking. The idea seems simple enough, but the practice of bitcoin mining takes a lot of work. You need to invest a significant amount of money when first starting up, be willing to upgrade your equipment regularly, and constantly monitor the conditions of the bitcoin market — and that’s just the beginning. To earn any appreciable money while mining bitcoins, you have to work at it. Additionally, earning money via bitcoin is more difficult than ever now that the monetary reward for mining bitcoins has been essentially cut in half, a process that’s supposed to occur every four years.
Bitcoin mining is the process of authenticating and legitimizing bitcoin transactions. Every time a new transaction comes along, it needs to be added to the final bitcoin ledger or blockchain, which records every bitcoin exchange. Transactions are added up until they reach “block” status, and the block is sent to miners. The miners use their specialized hardware and data keys called “nonces” to encrypt the block of transaction data into a “hash,” or an identification sequence that also includes all the block data (the hash has many useful properties, but this is its basic function). This hash is then added to the block, authenticating it, and the block is officially added to the blockchain. Miners are typically paid when they complete a block, but the rate of work can fluctuate based on how many people around the world are making bitcoin transactions. At the time of this writing, the rate of pay is about 12.5 bitcoins for every hash that’s successfully implemented.
2. Choose your mining hardware
The heart of bitcoin mining is the bitcoin miner or mining rig, which is essentially a separate computer that handles all the mining work. There are many, many types of miners that span a host different shapes and sizes. If you have the tech skills, you may also be able to build your own.
ou want the best of the best here: Buying or creating a bitcoin miner is inherently competitive. Think of how serious gamers always want the best displays, the fastest GPUs, the twitchiest controls, and the most customizable keyboards, all to give them slight advantages during gameplay. Choosing your bitcoin miner is a very similar process, but in this case, you’re competing to see who can make the most money. And a slower, less capable miner will earn you less money.
We recommend you visit a bitcoin calculator to help examine how much money any specific miner will earn you. These calculators are useful for two reasons. First, they help you judge miners based on profitability, which is always the most important spec. Second, they provide a crash course in miner specifications, which you may not be familiar with. This includes the “difficulty factor” (a rough measure of how easily the miner can mine), the “hash rate” which is an indication of speed, and the power use/cost, an important spec that shows how expensive a given miner is to operate. After all, you don’t want to be spending more on electricity than you’ll make in bitcoins.
The costs vary, but the best miners tend to be priced above $500, sometimes well above that. Returns vary greatly, but with a good-to-average miner and the right setup, you could be looking at around a $100 profit in a robust month — that should give you an idea of how long it will take to recoup the initial cost.
3. Choose your crypto wallet
Unless you already have one, you will also need a wallet to help manage your bitcoin transactions. There are an assortment of bitcoin wallets, both online and software-based. They come with different features, including amount limits and payment frequencies, all of which you should consider when choosing a wallet. Take some time to learn how they work, and make sure that you know both your private key and your public bitcoin address after you’ve signed up. You’ll need them for this next part.
4. Download the mining software
Now you need to pick out your mining software, or a client that allows you to control the mining process and check out the specs on your mining rig to make sure everything is optimal. Here’s another area where tech experience comes in handy. If you’ve ever experimented with overclocking your processor before, some of features here may seem familiar. It’s best to pick software based on your particular situation.
5. Join a mining pool
Mining pools are communities of bitcoin miners who work together and share the reward. At least, that’s how they’re supposed to work. Even official bitcoin organizations usually refrain from recommending any specific mining pool, because they might be scams or at least cheat you out of some money. It’s hard to know which pools do it until it’s too late.
The benefits to a reliable pool can be considerable. They typically make it quicker to find blocks, which means payouts occur more regularly and everyone gets more money.
6. Always update
Bitcoin mining has an unfortunate feature — if you don’t change, you’ll make less and less money over time. This isn’t just because of the four-year inflation prevention, but because all the other miners will be improving their equipment and nabbing blocks faster than you can keep up. You need to consistently update your software, wallet, and yes, even your hardware, if you want to keep making money. Stay on top of any important news or developments, watch how bitcoins compare to other currencies and cryptocurrencies, and don’t be afraid to change