Beginner’s Guide to Mining Bitcoins
One of the fattest problems I ran into when I was looking to begin mining Bitcoin for investment and profit was most of the sites were written for the advanced user. I am not a professional coder, I have no practice with Ubuntu, Linux and minimal practice with Mac. So, this is for the individual or group that wants to get commenced the effortless way.
1. Get a Bitcoin mining equipment
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Bitcoin mining is a very competitive niche to get into. As more and more miners come on board with the latest mining hardware the difficulty to mine increases each day. Before even beginning out with Bitcoin mining you need to do your due diligence. This means you need to find out if Bitcoin mining is even profitable for you.
The best way to do this is through the use of a Bitcoin mining calculator. Just inject the data of the Bitcoin miner you are planning on buying and see how long it will take you to break even or make a profit. However, I can tell you from the get go that if you don’t have a few hundred dollars to spare you most likely won’t be able to mine any Bitcoins.
Once you’ve finished with your calculations it’s time to get your miner. Make sure to go over our different Bitcoin mining hardware reviews to understand which miner is best for you. Today, the Antminer S9 is the newest and most powerful miner.
As a side note it’s significant to state that in the past it was possible to mine Bitcoins with your computer or with a graphics card (also known as GPU mining). Today however, the mining niche has become so competitive that you’ll need to use ASIC miners – special computers built stringently for mining Bitcoins.
Two. Get a Bitcoin wallet
Very first thing you need to do is get a “Bitcoin Wallet“. Because Bitcoin is an internet based currency, you need a place to keep your Bitcoins. Once you have a wallet make sure to get your wallet address. It will be a long sequence of letters and numbers. Each wallet has a different way to get the public Bitcoin address but most wallets are pretty straight forward about it. Notice that you’ll need your PUBLIC bitcoin address and not your PRIVATE KEY (which is like a password for your wallet).
If you’re using a self hosted wallet (i.e. you downloaded a program to your computer and are not using an internet based service) there’s one extra very significant step. Make sure you have a copy of the wallet.dat file on a thumb drive and print a copy out and keep it in a safe location. You can view a tutorial on how to create a secure wallet here. The reason is that if you computer crashes and you do not have a copy of your wallet.dat file, you will lose all of your Bitcoins. They won’t go to someone else, they will vanish forever. It is like searing cash.
Three. Find a mining pool
Now that you have a wallet you are very likely roaring to go, but if you actually want to make Bitcoin (money), you most likely need to join a mining pool. A mining pool is a group of Bitcoin miners that combines their computing power to make more Bitcoins. The reason you shouldn’t go it alone is that Bitcoins are awarded in blocks, usually 12.Five at a time, and unless you get utterly fortunate, you will not be getting any of those coins.
In a pool, you are given smaller and lighter algorithms to solve and all of your combined work will make you more likely to solve the thicker algorithm and earn Bitcoins that are spread out via the pool based on your contribution. Basically, you will make a more consistent amount of Bitcoins and will be more likely to receive a good comeback on your investment.
When choosing which mining pool to join you will need to ask several questions:
- What is the prize method? – Proportional/Pay Per Share/Score Based/PPLNS
- What fee they charge for mining and withdrawal of funds?
- How frequently they find a block (means how frequently I get rewarded)?
- How effortless it is to withdraw funds?
- What kind of stats they provide?
- How stable is the pool?
To reaction most of these questions you can use this excellent post from BitcoinTalk. You can also find a accomplish comparison of mining pools inwards the Bitcoin wiki. For the purpose of demonstration I will use Slush’s Pool when mining for Bitcoins. Once you are signed up with a pool you will get a username and password for that specific pool which we will use later on.
Go after the link to go to their site and click the “Sign up here” link at the top of their site and go after their step by step instructions. After you have your account set up, you will need to add a “Worker”. Basically, for every miner that you have running, you will need to have a worker ID so the pool can keep track of your contributions.
Four. Get a mining program for your computer
Now that you’ve got the basics covered we’re almost ready to mine. You will need a mining client to run on your computer to that you will be able to control and monitor your mining equipment. Depending on what mining equipment you got you will need to find the right software. Many mining pools have their own software like Bitminer but some don’t. You can find a list of Bitcoin mining software here.
I’m using a mac so I will use a program called MacMiner. The most popular program I’ve found for a PC are BFGMiner and 50Miner . If you want to compare different mining software you can do this here.
Five. Begin mining
OK, so hopefully now everything is ready to go. Connect you miner to a power outlet and fire it up. Make sure to connect it also to your computer (usually via USB) and open up your mining software. The very first thing you’ll need to do is to inject your mining pool, username and password.
Once this is configured you’ll basically commence mining for Bitcoins. You will actually commence collections shares which represent your part of the work in finding the next block. According to the pool you’ve chosen you will be paid for your share of coins – just make sure that you inject your address in the required fields when signing up to the pool. Here’s a utter movie of me mining in act:
Conclusion – perhaps it’s better just to buy the coins?
To conclude this article here’s something to consider. Perhaps it would be more profitable for you to just buy Bitcoins with the money you plan to spend on Bitcoin mining. Many times just buying the coins will yield a higher ROI (comeback on investment) than mining. If you want to dig into this a bit deeper here’s a post about exactly that.