How to mine Bitcoin
It's not all free money. What to know before you try to mine Bitcoin
When Bitcoin was first introduced 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.
Still, if you want to know how to mine Bitcoin, there are a few steps you can take. One involves much more risk and monetary investment than the other, but the potential rewards are greater. So 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.
Mining vs. investment
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 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.
Nobody can say whether Bitcoins will be worth more tomorrow than they are today, nor can they give you any concrete answer as to whether you’ll receive a return on your investment, but 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
Genesis Mining is arguably the largest and most reputable of the bunch. HashFlare recently told Digital Trends in an interview that every one of its customers has turned a profit using its service. It did say though, that if many of them had invested in Bitcoin at the right time they may have made more money.
If neither of those companies strikes your fancy, 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, 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. Typically paying more will give you a better return, or you’ll 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 important 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.
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 choose 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 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 is likely to be your best bet.
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 begin 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 greater hashing power.
Beware of “pre-sale”
Some cloud mining companies will sell you a contract on a “pre-sale” basis. That is effectively asking you to pay upfront for a contract that won’t begin for weeks or months when new hardware becomes available. In most circumstances, it 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.
