Bitcoin is a crypto-currency and worldwide payment system and it is the first decentralized digital currency, as the system works without a central bank or single administrator. Meanwhile, to keep it stronger and available, Bitcoin is mined in many methods. We will be writing on mining bitcoins, mine bitcoins. mining cloud mining etc.
How to mine Bitcoins (Methods)
1. Choose your miner
One of the easy way to get started with Bitcoin mining is to buy an ASIC device such as the AntMiner S9. These devices have been specifically designed for mining Bitcoins which means they’ll generally give you the greatest return on your investment.
However, as mentioned, these ASIC devices are expensive. The S9 for instance currently retails for around €2,100 (about £1,860, $2,490).
You will usually need to buy a separate power supply unit which will set you back something like another €300 (£265, $360). These devices are usually designed specifically to mine Bitcoin and will not function well if you try to use them to mine other cryptocurrencies (if, say, Bitcoin should happen to fall drastically in value).
Alternatively you can build your own Bitcoin mining rig. While these aren’t as efficient in terms of power and hash rate, they require less upfront expense and can mine other currencies besides BTC. In the simplest terms these are computers with multiple powerful graphics cards installed.
These GPUs might be primarily designed to render complex graphics when playing games, but they also lend themselves well to coping with the complex calculations involved in Bitcoin mining.
To get started, you’ll need to purchase a case for the machine. Most of these are a simple metal frame to allow heat to dissipate easily. You’ll then need to choose a motherboard and graphics cards for mining, such as the AMD Radeon RX 580.
If you need some more advice, see our guides on choosing the best graphics cards and motherboards for mining. You’ll need to assemble the machine and install the OS and mining software yourself, so you should only go down this route if you are tech-savvy and familiar with computers.
If neither of these options appeals, you can rent hash power from cloud mining companies. These firms have dedicated data centers devoted to mining Bitcoins. As they are centralized they can buy machines in bulk and use efficient methods to generate electricity.
Most companies will offer you a fixed amount of Gigahash Seconds (GH/s) of mining power for a fee. The advantage of this approach is that you don’t need to buy any expensive hardware.
The fees for cloud mining will vary, however, and another point to be wary of is scammers posing as cloud mining outfits. See the Bitcoin Wiki for a list of reputable cloud mining companies.
Setting up your Bitcoin wallet
If you’re mining as an investment and don’t plan on spending any of your coins soon, consider using a website like Bitcoin Paper Wallet Generator to create a ‘paper’ wallet. Make a note of the ‘public’ address which you can use to receive payments.
You can check the balance of your Bitcoin wallet safely at any time by visiting Blockchain.info and entering your payment address into the search bar at the top-right. Don’t let anyone see your private keys as anyone with access to your paper wallet can control your virtual cash.
If you plan to regularly cash out your BTC or make payments, consider using a software wallet instead. The lightweight Electrum wallet is available for all major desktop operating systems and Android. When you create your wallet, Electrum will generate a ‘seed’ of a dozen random words to use as a private key. This means you can restore your Bitcoin wallet if anything happens to your computer.
If you use a software wallet like Electrum, try to do it on a machine that isn’t connected to the internet so your BTC can’t be hacked. This is known as ‘cold storage’. The Electrum website has instructions for setting up a ‘watching’ wallet for day-to-day use which can show your balance but cannot make payments itself.
Pick a Bitcoin mining pool
The next stage is to sign up to a pool; you can solo mine, but you need some serious hardware to make it worthwhile. You can find a list of pools on the Bitcoin wiki.
We’ll walk you through the process of signing up for Slush’s Pool because it’s one we’ve used a lot, but the same procedure can be used for any of the major pools.
Head over to the Slush Pool website and click on ‘Sign up here’ at the top-right. On the registration page choose a username, then enter your email address and password. The Slush Pool website will send you a confirmation email. Click the link to validate your email address. You’ll see that a ‘worker’ has been created for you, so you can begin mining. Although it’s not compulsory, you should ideally have one worker per device. Visit https://slushpool.com/workers/ at any time to view and create workers.
You need to tell your mining pool where and when to send the funds from your mining exploits. On the Slush Pool website you can do this by clicking ‘Settings’ at the top-right, then click ‘Bitcoin’ on the left. Choose ‘Payouts’ then click the ‘New Wallet’ button. Paste in your public address for Bitcoin payouts here. If you’re using a paper wallet this should be clearly marked. In Electrum you can view your current receiving address by clicking on the ‘Receive’ tab. Click ‘Submit’ when you’re done.
Some miners also allow you to choose the payout threshold – in other words, how many BTC you need to have mined before the Pool sends funds to your wallet. This is important as while it’s risky to leave large amounts of BTC in an online wallet, transaction fees for sending BTC across the network are currently very high, so you could end up paying a lot for multiple smaller payments. Choose freely and wisely.
Mining pools are a popular target for hackers for obvious reasons. To make sure no one can potentially pilfer your Bitcoins, first check that your pool uses SSL. This means your connection is secure – in most web browsers you’ll see a padlock icon (in the address bar) if this is the case.
Certain mining pools such as Slush Pool also allow you to secure access to your account by using two-factor authentication. This introduces a second step for a successful login and is, therefore, another hurdle to prevent hackers from breaking into your account. In order to use this, you’ll need access to a mobile device and an app such as Google Authenticator or FreeOTP.
Grab Bitcoin mining software
Now you need to download the mining software to your PC. You have a few options here, but to get started we’d recommend using GUIMiner, if only because it has such a straightforward interface.
It comes as a self-extracting archive and runs straight from the folder to which it’s extracted.
Launch GUIMiner and select ‘Slush’s pool’ from the Server menu. Type in the name of the worker that was created when you registered your account – it’ll be [username].worker1 – and enter the password for the worker.
Select your graphics card from the Device menu and then hit the ‘Start mining’ button to get going.
- Real and Legitimate Ways to buy Bitcoins Successfully in 2018
View your progress
GUIMiner will now communicate with the servers to get shares for your machine to work with. You’ll see your hash rate at the bottom right and the current state of your work in the bottom bar.
You can also see the console (useful if you have connection problems) or a summary page (great if you’ve got multiple cards) via the View menu.
I hoped that the explanations above are clear to you. If not, feel free to ask me questions through the comment box.
Legitimate Way To Buy Bitcoin
There are multiple methods by which you can acquire Bitcoins, including setting up a PC to mine it yourself, paying for a professional mining contract, or trading another cryptocurrency for it. Or you can simply buy Bitcoins for cold, hard cash.
A popular digital wallet is Blockchain, and an account can be created there in which you can keep your digital money; it offers a web interface as well as smartphone apps. While some Bitcoin exchanges also provide a digital wallet feature, we do not recommend this route due to security concerns – exchanges focus more on currency trading, and less on keeping the user’s Bitcoins safe. Online digital wallets come at no cost to the user.
SEE ALSO: Bitcoin Exchange
Bitcoining it yourself
In order to purchase a Bitcoin (or more), the user needs to go to a Bitcoin exchange that deals in their own fiat tender (real currency). A popular one is Coinbase which has an excellent track record as it has exchanged over $20 billion (£15 billion) worth of cash into Bitcoins, with support in 32 countries.
In the latter case, the issue then becomes how best to change legal tender into Bitcoins. As Bitcoin is an all-digital virtual currency, the novice buyer might well be a little confused concerning where to start. As Bitcoin is not a physical currency, but a virtual one, it needs to be held in a digital wallet.
In order to perform a purchase on the Coinbase exchange, first, you must set up an account. This requires some basic information to be supplied: a name, email, password and location (to make sure your particular location is supported). You also need to be 18 years of age or older.
Once the account is created, the next step is to link it to a bank account. When selling Bitcoin on Coinbase, the proceeds can either go to this bank account, or to a PayPal account. Purchases can be made from the linked bank account, or with Mastercard or Visa credit cards.
Users then decide how much Bitcoin they would like to purchase. Initially, Coinbase imposes a limit of purchasing $1,000 (£750) worth of Bitcoin per day; when you’re fully verified this limit increases to $50,000 (£37,000) daily.
The value of Bitcoin is shown in US dollars. Once a purchase has been agreed, the user will transfer the Bitcoin to their digital wallet to keep the funds secure in what is called a ‘cold storage’ wallet. This is an important step as if it’s not taken, and the exchange goes out of business or has financial difficulty, the user will lose their funds.
While purchasing Bitcoin via a credit card is the most convenient method for the newbie, it also has a higher risk of transaction fraud, as well as higher processing fees. Using a credit card also limits the amount that can be purchased, for example, Spectrocoin limits users to $50 (£37) of Bitcoin for the initial four days, which then gets increased to $200 (£150) daily, and then $500 (£370) after seven days.
Users should be wary, though, and only deal with a regulated Bitcoin exchange (which fully displays its credentials on the site). Otherwise, there is little stopping a rogue Bitcoin exchange from taking your money and making off with it.
While an online exchange is a more common way to purchase Bitcoin, there are certainly other options, such as Bitcoin Depot. This is a series of ATMs across several states in the US that facilitate the purchase of the virtual currency. This is hard to beat for convenience if you happen to be located close to one of these Bitcoin ATMs, and the purchasing process is a breeze – it’s as easy as depositing your cash into the machine, then you own the Bitcoin an hour or so later.
However, users complain of high transaction costs of 9%, not to mention a lack of support when an issue arises, and furthermore, unfavourable dollar to Bitcoin exchange rates that are not disclosed upfront.
Despite these shortcomings, the Bitcoin ATM is a growing trend with 1,600 of these specialized ATMs installed worldwide, and over 900 in the US from various companies, according to Coin ATM Radar which tracks the numbers of these machines.
Furthermore, the number of Bitcoin ATMs is increasing at a healthy 2.86 additional machines installed daily across the globe, so chances are a machine could be near you in the not too distant future. This trend is likely being fueled less by investors, and more by regular folks looking to acquire Bitcoins for use as a currency for purchases.
LibertyX and investment funds
For those looking for something more personal than a Bitcoin ATM or online transaction, LibertyX offers Bitcoin purchases at retail stores, a service more akin to a Western Union Moneygram than virtual currency. So far this is limited to the US, but LibertyX has over 19,000 locations in the country. After users go through a verification process, including providing their mobile phone number, their cash can be changed to Bitcoin, with the reassurance that a clerk is there in case something goes awry. Users can search on the LibertyX website by zip code to find a local retailer near them.
Some folks prefer to invest with expert oversight, such as trading in shares of a pool of stocks or bonds, rather than owning them directly – which is better known as a mutual fund. Grayscale’s Bitcoin Investment Trust takes this approach to cryptocurrency trading, claiming to be the “first publicly quoted Bitcoin investment vehicle” according to its website. It gets traded on the OTCQX, which is the highest tier of the OTC Market’s Group for trading over-the-counter stocks.
This fund has been around since September 2013 and now has an $807 million (£600 million) valuation, a ticker of GBTC, and a 2% annual fee. While most would not recommend it as a safe investment, but rather consider it more speculative, the YTD performance of +312% is quite solid and would make any investor drool for that kind of return.
With so many options available, Bitcoin is easier to acquire than ever before. It is no wonder that people from all walks of life are buying, owning, and yes, even eventually spending Bitcoins.