Cryptocurrency is the currency of the future. It’s decentralized, private, and easy to use. But did you know that Bitcoin technology lets you mine it from the comfort of your home?
Bitcoin mining is what makes the cryptocurrency world go round. It’s the only means of processing transactions and updating the ledger. Thanks to the fact that cryptocurrency mining is decentralized, anyone can participate in Bitcoin mining and earn a pretty penny besides.
If you don’t know how to mine Bitcoin at home, you’ve come to the right place. Keep reading as we teach you the basics.
How Does Bitcoin Mining Work, Anyway?
Bitcoin mining is built upon the bedrock of blockchain technology. A blockchain is a string of transactions in ten-minute intervals up to the present day. This blockchain creates what people refer to as the “ledger.”
To keep a record of transactions, Bitcoin incentivizes miners to process transactions and maintain the ledger in the process. There are therefore two ways to earn Bitcoin:
- Transaction fees (also known as “gas”) that users pay to complete a transaction
- Newly-minted Bitcoin, awarded to one miner (or mining pool) for solving the operation for the current block
To have the best chance at mining Bitcoin, you’ll have to outcompete other miners in solving operations. This will require the biggest hardware investment, but pays the biggest dividends. Processing transactions alone will still earn you coin, but just not as much.
How to Mine Bitcoin at Home
For starters, you need to create a Bitcoin wallet. You can do this through a third-party service. Make sure to keep a backup of your wallet in cold storage, and keep the seed phrase in a safe place!
Let’s go step by step through the process of creating a Bitcoin mining operation.
1. Purchase the Right Hardware
For a long time, the best way to mine Bitcoin was with a GPU (a graphics card). However, those days are over, and GPUs cannot keep up with other options. You should invest instead in an ASIC.
An ASIC is a type of “system on a chip” that is designed specifically for Bitcoin mining. Unlike graphic cards, it can process trillions of calculations per second. This gives you the best chance of obtaining newly-minted Bitcoin.
However, since this is specialized hardware, an ASIC won’t be cheap. Know that the Bitcoin market is a competitive one, and ASIC manufacturers charge exorbitant prices.
Your best bet is to buy a used ASIC. Used electronics still have high efficiency, but save you a lot of money. To have the best chance of getting Bitcoin, you will need as many ASICs as you can afford.
2. Choose Bitcoin Software
Now you need an OS and program to mine Bitcoin. Like the ASIC, these are custom-made programs that handle the mining for you.
There are open-source (free options) and paid options. The open-source ones are a great place to start to save money. You may choose a closed-sourced one in the future to maximize earnings.
3. Work Alone, or Join a Mining Pool
Bitcoin mining works best for large collectives of miners who compete together. This is because the complex operations that you need to solve take time. With a larger pool of ASICs, you stand a better chance of getting new Bitcoin.
Keep in mind that mining Bitcoin in a pool will reduce your payout. The pool will have its own rules, and will likely have an even split among your colleagues.
You’ll have to invest more if you work alone, but you will earn more when you succeed in getting a new Bitcoin.
4. Maximize Energy Efficiency and Cooling
You have two big enemies as a Bitcoin miner: the cost of electricity, and how well you cool your ASIC array.
Bitcoin mining is energy-intensive and can run your electricity bill through the roof. Find the cheapest electric plan you can. Consider mining during off-peak hours to pay less for your operation.
You may choose to relocate your Bitcoin mining operation to a country with cheaper electricity rates. If you can work abroad in East Asia, for example, you could cut your costs significantly. Residential electric rates tend to be higher than in commercial areas, too.
Your ASICs will be less efficient if they get too hot. You need to keep them as cool as possible to get maximum efficiency. Make sure you have proper ventilation and consider higher-efficiency water cooling systems.
5. Be Patient
You won’t strike gold in the first week of mining. Know that this is a game of patience. You will need to tweak your mining operation over time, finding ways to maximize efficiency and improve your chances of minting new coins.
Windfalls can happen when you least expect them. A new Bitcoin could net you several thousands of dollars worth of coin. This may not happen often, but it could do a lot to pay for your operation.
Scaling up over time will increase your earnings. The more ASICs you have, the better you are able to compete against other miners. You may choose to join different mining pools and stick with one that gives you the best earnings.
Earn Free Bitcoin
Now you know how to mine Bitcoin at home. This can be a lucrative venture if you have the patience and are willing to invest in high upfront costs. Make sure to use the right hardware, prioritize efficiency, and stay consistent until your heyday comes.
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