Many people already know that mining is the means by which Bitcoin is “created”. Yet, few are fully aware of what that activity entails. Up until only a few years ago, miners were seen as belonging to a very tightly restricted and difficult to identify group operating on the verge of legality. Though facilitating money laundering was never one of the objectives of cryptocurrencies, some did think that the self-professed quest for decentralization could only point to disreputable intents. Fortunately, things have changed. The enthusiasm now felt towards digital assets is very real and arouses genuine curiosity from an ever more diversified public wishing to know how to mine Bitcoin.
What is Bitcoin mining?
The decentralized payment systems around which cryptocurrencies were built, as their name indicates, allow currencies to be exchanged without the need for a central authority. In practice, this means that banks, governments and other official actors play no part in the creation of Bitcoin tokens.
The addition of transactions onto Bitcoin’s blockchain, made possible through solving very complex equations, produces immutable blocks which possess an inherent value. The latter is issued in the form of tokens for the benefit of the mines responsible for adding them to the chain. Historically, miners have been competing against one another. Thus, the first miner whose computer was able to add a new block received compensation. If this system continues to be widely used, we will see that there now exist mutualized solutions through which people who don’t own a super-powerful computer may still participate. So long as they know how to mine Bitcoin using alternative methods!
How does mining work?
As is the case with many cryptocurrencies, Bitcoin is mined by means of “Proof of Work Validation”. This ensures the blockchain is properly maintained. Every transaction ever carried out on the network is added to the blockchain which constitutes an immutable and unfalsifiable ledger. To validate said transactions, the miners are in charge of calculating what is called the “hash”. To that end, the participants must follow a strict, one-way cryptographic protocol which reveals a single hash through being applied to a portion of data. As there only exists a single iteration of each hash, the latter may never be used twice. Finding the same hash twice within the string of blocks would prove that the data was altered. Similarly, any incorrect digit within the hash denotes an irregularity which would be spotted immediately.
In practice, to find a hash, the miners’ computers test random strings of numbers – nonces – until they find one that’s lower than the target. That’s why the faster their equipment can go through the strings of incorrect numbers, the higher their chances are to come across a hash.
What’s the necessary equipment to mine Bitcoin?
As the years go by, mining Bitcoin requires more and more computing power. This was decided in order to slow down the release of tokens – of which there are only 21 million altogether. Once all the Bitcoins have been mined, producing more won’t be possible ever again. When the currency first launched, releasing the tokens quickly used to be coherent as it helped Bitcoin gather up some speed. Over 18 million tokens have now been mined, though, so they need to be released less rapidly.
The best way to reduce mining speed is to make the mining process more complicated! At this point, Bitcoin mining requires extremely powerful equipment and consumes enormous amounts of electricity.
Those who truly want to go into Bitcoin mining alone can invest in dedicated peripherals, as combining GPUs in the hopes of achieving the necessary computing power is now less cost-effective. ASIC circuits were created to replace them in this highly specific application. Several Antminer and Bitmain models, for instance, are especially popular. So much so that they are worth a small fortune (easily over €2,000). You may be able to find ASIC miners for about €1,500 but hashing capabilities and processing power on these models are much less impressive. These peripherals require between 1,200 W and 2,000 W to function depending on the brand. They also need to be running constantly, supported by a computer. They too should operate at full capacity, implying a higher power consumption as well as heat and sound pollution.
This is the reason why mining Bitcoin in the same capacity as people could in the early days is no longer cost-effective for individuals. Which doesn’t mean that those who are wondering how to mine Bitcoin on a smaller scale should give up all hope!
How to mine Bitcoin using a PC?
In that case, how to mine Bitcoin using a PC without having to rely on a mining farm-worthy setup?
Unless you have at your disposal a large surplus of energy (solar, for instance) which you are unable to sell, there exist two main options to mine Bitcoin directly from your computer. Both feature slightly different characteristics.
The main benefit of cloud mining is the absence of material constraints. How to mine Bitcoin without any equipment, you might ask? By relying on the gear a specialized company puts at your disposal, allowing you to rent their computing power remotely. To offer such a service, mining farms operate from countries where the price of electricity is lower than it is in our parts of the world… or that’s the case in theory.
In practice, however, very few of these cloud mining establishments are truly reliable, if any. As their activities are governed by few to no regulations, contract prices may fluctuate significantly and gains typically don’t counterbalance the expensive fees they deduct. Unfortunately, more often than not, mining farms operate within no legal framework and have little more to offer than scams.
Mining pools represent a strategy which finds itself at the crossroads between solitary mining and cloud mining. In a way, it’s a form of mutualized mining. Miners operate as teams and share the reward every time one of their team members manages to add a block to the blockchain.
To achieve this, each participant contributes their own computing power. Every time a compensation is gained, pool maintenance fees are covered (usually 1 to 2%) and the gains divided… which may initially not sound particularly interesting.
In actuality, it is important to realize that the number of miners spread across the entire world is immense. Thus, even if you owned the most powerful equipment on the planet, your chances of pocketing in a reward by operating solo would be slim to none. Yourself along with several million other miners would be attempting to find one single correct hash every ten minutes. Some miners therefore prefer to come together and multiply the probabilities that they might get a reward on a regular basis.
You may join these mining pools by downloading their dedicated clients, though Windows Bitcoin Miner will also grant you access to mutualized mining.
It is worth noting, however, that you still need to own the necessary equipment. Though you will be able to participate even if it isn’t top-of-the-range gear.
What are some other Bitcoin mining solutions?
You may have heard about such solutions as iOS or Android Bitcoin Miners which would supposedly allow you to get into mining using a smartphone. But, is it truly possible to find a hash relying on nothing but a cell phone?
In two words: not really! In fact, your chances are negligible when it comes to such a popular and difficult to mine currency as Bitcoin. You may encounter solutions marketed as Bitcoin mining apps, but they are very often scams designed to make you believe that you may, one day, stand a chance to find a hash. Meanwhile, you will certainly see a whole lot of ads.
The simple truth is that the processing power of a smartphone is far from sufficient to get much more out of the operation than a completely fried device in the space or a few weeks.
The strategy may become more interesting if you wish to mine currencies that are easier to get, and which you may perhaps exchange for Bitcoin afterwards.
How to mine Bitcoin quickly?
If you’re still wondering about how to mine Bitcoin quickly and cheaply, know that this has unfortunately not been possible for several years.
The solution on which those who want to start their own Bitcoin adventure fall back onto simply consists in buying Bitcoin. For individuals, mining has indeed become much less profitable than purchasing this crypto asset. Its volatility means that your investment isn’t guaranteed, but it is important to note that the tokens obtained through mining do not benefit from a more stable price. The cost of ASIC equipment and that of electricity, however, is not about to go down! If your objective was to procure Bitcoin cheaply and to speculate on it gaining in value over a few months or years, mining probably doesn’t constitute the best solution.
The latter now only really concerns those who nourish a true passion for decentralized currencies and who wish to personally play a part in the development of blockchain.
To get Bitcoin quickly, the most appropriate solution is to select a platform you can purchase it from, such as Bitit, where you can retrieve your Bitcoins in just a few minutes. You may then store them onto your favorite form of secure wallet for as long as you wish or exchange your tokens based on how the market evolves.