Step-by-step guide to mining bitcoin

Mining, farm, cryptocurrencies

Bitcoin mining can be quite intimidating at first. It does require a technical savvy, and a solid initial investment, but also provides an interesting ROI. However, mining bitcoin with a laptop is like mining sulfur with a fork, barefoot, while your facebook aunt that likes all your posts is asking you how to invest in bitcoin. First things first, let’s make sure we understand mining.

Simply put, Bitcoin mining is the process by which transactions are verified and added to the blockchain. It also encompasses the process of releasing a new bitcoin. Anyone with access to the internet and suitable hardware can participate in mining. Participants are asked to compile and verify transactions, and rewarded, as a mining incentive, through transaction fees and newly released bitcoins. Let’s quit the chit-chat, and get you up and running.

1. Determine how to mine

Basically, you have 3 options to chose from: solo-mining, pool mining or cloud mining. The first two options are technically different in concept but similar in terms of needed hardware. Cloud mining, however, only requires miners to purchase mining contracts online, without having to buy hardware. Mining alone or in a pool lets you be in control of the rig and the software and stay on top of the operation. Cloud mining means a mitigated risk of hardware investment, and no electricity bill. If you chose the latter option, major service providers are Hashflare, Genesis, Minex, Minergate, Nicehash name a few. If you chose to solo or pool mining, let’s go to step 2.

2. Purchase your mining hardware

ASIC chips are regarded to be the best hardware on Bitcoin mining duties. It offers performance that registers up to 100x the power of the older systems like CPU, GPU, and FPGA. It’s interesting to select top-shelf quality equipment, to make up for the increasingly difficult blocks offered for miners. Depending on the allocated budget, Avalon and Antminer seem to lead the market, and offer several options (in terms of hash rate, and energy efficiency). It’s highly recommended to check, and get an idea of the ROI expected.

Mining rig
Bictoin Mining Rig (pixabay)

3. Get a Bitcoin wallet

Plenty of Bitcoin wallets, coming with distinct features, are available. I personally use an app based wallet, jaxx, to store most of my cryptocoins. It’s important to treat your hardly earned coins like you would treat your valuables. For a simple and easy to use bitcoin wallet, there’s the proprietary wallet, that is widely used. More information in this guide as well.

4. Pool miners, solo miners

Mining alone isn’t advisable, unless you’re planning on investing hundreds of thousands of dollars. The increasing mining difficulty ipso facto promotes pool mining, which involves several miners combining their hardware capabilities to mine faster and solve bigger blocks than competitors. When mining in a pool, the profits are shared among the miners based on the hash rate contributed in solving the algorithms. As such, it’s important to check your mining pool functions, its fees, and its stability. Antpool (based in China) is the largest Bitcoin mining pool in terms of network hash rate. It holds roughly 15% of the total hash rate of mining throughput worldwide. iF YOU

5. Mining software

If you are a solo miner: the mining software connects your Bitcoin miner to the blockchain. If you mine with a pool: the software will connect you to your mining pool.

You need a special program to mine Bitcoin on your computer. This software allows you to control and monitor the mining rig, but it must be compatible with the hardware for the two to reach optimum performance. It also depends on which computer you use since there are different mining software designed for Windows, Mac, and Ubuntu platforms.

Widely used software are: CGMiner, BFGMiner, Bitminer and BTCMiner.

6. Configuring your miner

Connecting the mining rig to the computer and setting up the mining software should initiate the process. When joining a pool, see to it that you enter the pool details correctly, especially your wallet address.

Author: Mehdi Mezni