If you want to know how to mine Bitcoin, there are two different steps you can take – go through a cloud mining company or buy and use purpose-built hardware. We’ll look at both options, and why, though neither is cheap, cloud mining represents the safest investment for your money.
Remember, research is essential! Just as when it comes to buying Bitcoin or altcoins, you need to be aware that nothing in the world of cryptocurrencies is guaranteed. Any investment could be lost, so make sure you do your reading before pulling out your credit card and have a secure Bitcoin wallet standing by. As with all of our coverage of cryptocurrency here on Digital Trends, though, this should not be considered financial advice.
Mining vs. investment
When Bitcoin launched in 2009, mining the world’s first and premier cryptocurrency needed little more than a home PC — and not even a fast one at that. Today, the barrier for entry is far higher if you want to make any kind of profit doing it. That doesn’t mean it’s impossible, but it’s not the homebrew industry it once was.
Before we discuss how to mine Bitcoins yourself, it’s important to note that although there is uncertainty in everything cryptocurrency-related, mining is arguably the most volatile. Hardware price fluctuations, changes in Bitcoin-mining difficulty, and even the lack of a guarantee of a payout at the end of all your hard work make it a riskier investment than even buying Bitcoins directly.
Because of this and general market volatility, it can be challenging to know how much profit you will make from mining. 2018 saw the mining market plummet in regards to profit and shoot up when it comes to barriers to entry. Unless there’s a significant Bitcoin tech change, this is likely to stay the same. A single Bitcoin is valued at around $8,900 at present, but mining can cost about the same.
In the end, buying Bitcoin directly at least gives you something for your money immediately. It’s certainly worth considering before you go down the mining route.
Step 1: Pick your mining company
Cloud mining is the practice of renting mining hardware (or a portion of their hashing power) and having someone else do the mining for you. You are typically ‘paid’ for your investment with Bitcoin, even if the hardware isn’t used for mining Bitcoin. As with general investing, it’s essential to do your research -there are many companies out there which purport to be the best and even the largest have their detractors.
Several cloud mining companies have come and gone over the years, including ones we’ve spoken to and validated directly, like HashFlare, which told Digital Trends in an interview that every one of its customers has turned a profit using its service. In late-2019, you’re far better off going with a company like Bitcoin Pool, which is the cloud mining arm of Bitcoin.com, an established and respected cloud mining entity. It’s expensive to get started, but one of the best options out there.
For a broader range of options, CryptoCompare maintains a list of mining companies with user reviews and ratings, though be aware there are a lot of reviewers looking to shill their referral codes in the comment section.
Step 2: Choose a mining package
Once you have picked a cloud mining provider and signed up, you need to pick a mining package. That will typically involve choosing a certain amount of hashing power and cross-referencing that with how much you can afford to pay. Usually, paying more will give you a better return, or you will turn a profit quicker, but that’s not always the case.
Most cloud mining companies will help you decide by giving you a calculation based on the current market value of Bitcoin, the difficulty of Bitcoin mining, and cross-referencing that with the hashing power you’re renting. However, it’s important to note that those numbers can and do change, so it is vital to look at market trends and estimate where Bitcoin may be going before choosing your contract. What may be profitable now may not be if Bitcoin’s value crashes.
As much as companies like Bitcoin Pool offer their calculators too, we’d suggest using a third-party alternative just to alleviate the potential for any bias that might sneak into the calculation.
Some cloud mining companies will sell you a contract on a pre-sale basis – effectively asking you to pay upfront for an agreement that won’t begin for weeks or months when new hardware becomes available. In most circumstances, that is not advisable because there is no way to guarantee those contracts will be profitable when they start and not even a concrete indication of when that will happen.
Step 3: Pick a mining pool
After choosing your contract, most cloud mining companies will ask you to pick a mining pool. That’s where you select a global mining team to join.
It’s a method of increasing the chance of earning Bitcoin through mining, and it’s a standard practice in the cloud and personal mining. There are pros and cons of different pools that go beyond the scope of this article, but joining an established and proven pool with low fees is likely to be your best bet.
One of the most popular and dependable pools for new miners is Slush Pool, but you should always do your research. Like companies, many pools aren’t trustworthy.
Step 4: Select a wallet
Once you’ve completed that step, your cloud mining can begin, and within a few days or weeks, you should start to see your cloud mining account start to fill with Bitcoin. Withdrawing it and putting it into a secure wallet of your own is a good plan as soon as you have a small holding, though some cloud miners will allow you to reinvest your earnings for higher hashing power.
Whatever you do, though, you need to decide what you’re going to do with your bitcoins in the long term. While there are many products and services you can purchase with bitcoins, prices can fluctuate, and you may have to do even more research to see if you’re getting a good deal. We can also help you trade your bitcoin for a different cryptocurrency or sell it directly for cash.
“HODLing,” that is, holding your Bitcoin for dear life, is also a viable strategy for some people. HODLer’s are those who hold onto their Bitcoin because they believe that their value will go up over time. Unfortunately, there is no truly reliable way to predict future values for Bitcoin, though.
Of course, we aren’t financial advisors and wouldn’t suggest you do anything in particular with your Bitcoin. But, if you do decide you want to hold onto your Bitcoin, you should consider a secure, potentially even hardware-based, wallet to store it in.
What if I want to mine with my hardware?
Because it’s so costly to establish a proper setup, you should only mine Bitcoin if you have immediate access to lots of cheap electricity. You’ll also need a significant network connection if you want to use your personal hardware to mine Bitcoin.
We recommend using a Bitcoin mining calculator to estimate total costs before you commit to purchasing any hardware or mining setups. That way, you can make sure that it’s plausible for you to make a profit at the end of the day. Remember as well that prices can change considerably, as can power costs. Bitcoin mining is incredibly costly for most average people, and there’s not a huge chance that you’ll be able to make enough money to make running your own operation worthwhile.
If calculations do work out in your favor and you decide to use your own personal hardware to mine Bitcoin, you must choose the correct ASIC miner. We recommend checking mining machine profitability to find out which miners are regularly making money. You can use the site Asicminervalue.com to do this. It displays up-to-date lists of miners and their profitability. Notice that even the most profitable miners only bring in between $6 and $15 per day, which isn’t much when you compare it to the thousands of dollars you’ll need to spend to set up your system. It’s not promised that you’ll be able to make up for your costs, so make your calculations and go carefully from there. You might just decide that there are other more worthwhile pursuits than mining Bitcoin.
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