- Bitcoin mining helps to keep the Bitcoin network secure against attacks.
- With the right combination of equipment, electricity costs, and a few other considerations, Bitcoin mining can be profitable.
- Bitcoin mining profitability has increased as a result of the 2020-21 bull run—but there are shortages of mining hardware.
Bitcoin mining is the process of participating in Bitcoin’s proof-of-work (POW) consensus mechanism to discover new blocks and help with transaction validation. The combined efforts of all the blockchain, and ensures that transactions remain essentially irreversible. miners is responsible for the integrity of the
Each time a new block is discovered, the miner receives a reward, known as the Bitcoin block reward. Following the 2020 halving, this is currently set at 6.25 BTC per block, but most miners generally receive much less due to working together as part of a mining pool.
Rather than buying or trading Bitcoin, many individuals choose to simply mine their own, since it often costs less to mine Bitcoin than it does to buy it on the open market. As a result, mining and selling Bitcoin can be a profitable business endeavor, under the right conditions.
Here’s how to get involved.
What you need to mine Bitcoin
If you’re looking to get involved in Bitcoin mining, then you’re going to need to get to grips with a few things first.
First and foremost, you will need a . The exact type of wallet you use doesn’t really matter, so long as it’s secure. This will be used to receive your mining proceeds, which, depending on your mining setup, could be substantial. are widely considered to be the gold standard in security, but they’re more cumbersome to use. Many miners instead use software wallets like Electrum, due to their convenience.
Next up, you’re going to need your mining hardware. We’ll cover this in greater depth in the next section, but this is the machine you will use to actually participate in the Bitcoin mining process. In general, the more powerful your machine (in terms of hash rate), the greater your rewards—but there are other considerations too (more on this later).
Lastly, there’s the mining software. This is software that you run on your computer which tells your mining hardware how to perform, such as which mining algorithm it should work on, when it should operate, and which mining rewards should be sent to. This can affect your mining yields, so it’s wise to choose carefully.
Types of mining hardware
When Bitcoin mining first began in 2009, the difficulty was so low that low-power devices could participate in the mining process using their CPU resources. At the time, even individual miners using their regular computer could discover blocks—earning 50 BTC apiece by doing so.
However, as the popularity of Bitcoin…