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In 2017 it was "the thing" to buy and sell Bitcoin and other cryptocurrencies like Ethereum, Litecoin and XRP (Ripple).
It was also "the thing" to get into bitcoin mining in order to make bitcoin (or other cryptocurrencies) for yourself.
However, in 2018, the bottom fell out of the cryptocurrency market for a few months, and everything went a bit calm.
However, it hasn't gone away, and in my opinion, cryptocurrencies are the future. I don't know how far in the future, but I believe they are the future.
Bitcoin mining is still going on, although the rewards go up and down. At its peak, a single bitcoin was worth around $ 20,000, then it went back to $ 4,000, now it's back to $ 19,000. At any moment it could fall back down again, so don't think about a steady earner!
What does "Bitcoin Mining" mean?
To understand what Bitcoin mining is, you first need to know what Bitcoin is and how it works. So let's go! …
What is bitcoin
Before you dive into the idea of bitcoin or cryptocurrencies in general, take a moment and remind yourself that you are at least quite used to digital money.
You may have cash in your wallet right now, but you may also have credit and debit cards. In fact, it is very likely that you are now using your cards more than your money. If you're under 45 or a townie, chances are you have no cash in your wallet at all and you can't even remember the last time you went to an ATM!
Now that you've decided on digital money, moving on to cryptocurrency isn't too big a step. And that's exactly what Bitcoin is: it's a cryptocurrency – the original one – and has spawned hundreds and hundreds of other cryptocurrencies (commonly known as altcoins) that most people have never heard of (and in most cases probably never).
The next most popular cryptocurrency is Ethereum, followed by a few other favorites like LItecoin, Zcash, Dash, Ripple, Monero, Bitcoin Cash, and NEO.
When we talk about Bitcoin mining we are actually talking about mining for a few different currencies. If you get into this activity, you may be more likely to mine Ethereum or Litecoin than Bitcoin.
It's actually not a coin
You've probably worked that out by now, but cryptocurrencies aren't a real thing.
You can't see or feel them the way you would when folding money or credit cards.
They can hardly be seen on a screen.
They're pretty much just numbers, but they're numbers that can buy you things. Some companies – especially internet companies – offer you goods and services in exchange for cryptocurrency payments (mainly Bitcoin or Ethereum). However, it is more likely that you will exchange these "coins" for FIAT currency (i.e. pounds, dollars, euros, etc.). .
The first thing you need to know about Bitcoin is that it is decentralized.
- This means that unlike all other normal currencies (or FIAT currencies) there is no central organization like a bank or government that produces the currency and tells everyone what it is worth.
- There is also no organization that monitors their payments and transactions. These are all carried out on a computer network around the world – in other words, the transactions are all distributed over that computer network. When you send Bitcoin to a company or person, it is not processed by a single organization like Visa or Worldpay, but rather over a large, distributed computer network.
- This distributed network is really spread all over the world and is stored on individual PCs. This means that when you become a bitcoin miner, you actually become a part of the bitcoin bank.
What is Bitcoin Mining?
It sounds like you're digging those fun bitcoins like gold, zinc or diamonds out of the ground.
In fact, the "mining" element means using powerful computers to solve very, very complicated cryptographic puzzles that protect the transactions.
The way the Bitcoin network was set up means that only 21 million Bitcoin exist. Many of them have not seen the light of day. What "miners" do is use them broadly a few times at a time.
You can do this by solving the intricate puzzles that make transactions safe. Every time you solve one of these puzzles and thereby ratify transactions, you will be “rewarded” with a bit of Bitcoin.
So, a bitcoin miner is someone who can earn bitcoin by running one or more powerful computers to unlock these clever puzzles around the clock.
Check out this video to learn more about what a Bitcoin miner does
It helps to know about blockchain
Bitcoin runs on the "blockchain" technology.
Some people confuse Bitcoin and Blockchain, but they are completely different entities.
Blockchain is the decentralized technology on which cryptocurrencies like Bitcoin are executed. However, it is also the platform for all types of transactions, not just cryptocurrencies. In fact, blockchain could revolutionize the way we live our lives. It can be used in all possible areas of life, e.g. B. in the areas of voting, medicine, education, real estate transactions and much more.
The blockchain stores information on millions of PCs around the world and records transactions in real time. With the blockchain, you cannot delete transactions, only add them. So if you want to cancel a transaction, you have to do it again in reverse order. Nobody can change a transaction. Everyone can see what is being done, making it impossible to commit fraud (at least that's the theory).
There's a nice two minute explanation of what blockchain is here if you want to know more:
and it helps to know about "knots".
… a little anyway.
Nodes are essentially hardware that the blockchain stores. So if you choose to become a miner, your computer is a node. It's supposed to store the entire blockchain (and that's a lot of GB by the way) and check the information blocks as they are added.
It's all very energy hungry so be warned!
Is it worth getting into Bitcoin mining now?
Actually it could be, depending on how cheap you can get your power and hardware.
I often quote multi-billionaire investor Warren Buffett, who famously said of investors that "be afraid when others are greedy and greedy when others are afraid". In other words, be contrary, be different. Go against the crowd. This is usually the best way to make money.
Currently, cryptocurrencies – and Bitcoin in particular – are still viewed as crooked by traditional investors (albeit less than before). In cities like in the past, you don't always hear people talking about it. In 2017, although they have become of interest again in recent months. That means things have calmed down a bit. Equipment prices aren't quite that crazy and many of the scammers who got into this sector have either gotten bored and moved to another industry or have been found out and closed.
While the rewards are up and down (currently up, but they could go down anytime) they are still not bad and I think they are likely to increase over the next few years.
If you are genuinely interested in this idea and have the equipment room, now is the perfect time to get into bitcoin mining.
How do you establish yourself as a Bitcoin miner?
Get a stack of computing power
For ordinary people like you and me, the best thing to do is to source a machine from Coinmine.com that is a plug and play product for home mining. It looks a bit like an Xbox, and it only takes five minutes to set up.
It's a fancy product that you can put anywhere – they say their customers put it in their garage, bedroom, living room, or their mother's basement. It works wherever there is WiFi and a power source.
You can use it to mine Bitcoin and Altcoin Etherium, Monero, Zcash and Grin. If you want, you can convert alt coins to bitcoin on the go.
It costs $ 699 and ships all over the world.
But if you really mean it – do this …
If you are really serious about setting up your "node", you will need a lot of processing power as you will have to store and act on the blockchain in order to unlock the transactions you need
- CPUs (Central Processing Units – the brain of the computer where most of the calculations take place)
- GPUs (Graphics Processing Unit – a single-chip processor that performs math-intensive tasks that would otherwise place a heavy load on the CPU)
It is so difficult to mine cryptocurrencies now (i.e. it takes so much energy to do it) that you need a computer called an ASIC to help you.
A bitcoin ASIC is a specialized bitcoin mining computer or "bitcoin generator". All serious bitcoin mining operations are performed on dedicated bitcoin mining hardware ASICs, usually in specially cooled data centers with inexpensive electricity.
Quite a few companies make ASICs. Some recommended are:
You'll also need some other pieces of gear if you're serious:
- A power supply. Bitcoin machines require special power supplies that efficiently direct electricity into them.
- Fans – this is really important for the machines to work and for you to be safe!
- Backup generators – this is a nice thing, and you can wait until you are more clear about how much power you are actually using before going for one of these generators.
The above is what serious miners have and they tend to store everything in a large shed or in an industrial park somewhere.
For you and me, the Coinmine solution is probably the best.
Get a Bitcoin Address
This is how you get paid.
Get a Bitcoin wallet like "Bitcoin Wallet" or "Bitcoin Core".
Or you can just set it up on a cryptocurrency exchange like Luo.com as this makes it easier to transfer the bitcoin in sterling, dollars or euros.
Get the right software
You need software on your computer to do the mining for you. Once you have everything hooked up, it will figure out which cryptocurrencies in your room are best to mine for you and then it will move on.
Good mining programs include:
Let the machine do its thing
Once you have the machines set up to process the transactions, you can pretty much let them get on with it.
It is important that they stay cool. Overheating creates a fire hazard and of course the machines themselves will fail if they get too hot.
Otherwise, however, you can leave them to their work.
How much does it cost to be a bitcoin miner?
The main cost to you is
- The price of hardware – basic cost
- The hourly cost of the electricity that runs them around the clock – basic cost
Unsurprisingly, Bitcoin mining is particularly popular in countries where electricity is cheap and ideally also in cold weather so that machines can be kept cool.
Quite strange, about a year ago in Iran some locals set up bitcoin mining operations in their mosques because they get their electricity for free. Clever how?
How Much Can You Earn From Bitcoin Mining?
You are paid in Bitcoin yourself. As for sterling or US dollars, the actual amount you earn depends on the current value of bitcoin, which changes daily.
However, if we are only talking in Bitcoin in the UK, where electricity is relatively expensive, it won't be a big earner for you right now. However, once you've got the machines up and running, it won't be a lot of work for you either.
The profit you make will depend on the current value of Bitcoin (or the other cryptocurrencies you mine) minus the cost of the machines you bought and the hourly cost of electricity. And it is these electricity costs (especially in the UK) that can be a real downer when it comes to your bottom line.
By the way, see here if you can get your electricity much cheaper.
This guy says he makes $ 35 a day (around £ 1,000 a month) just mining cryptocurrencies, but then managed to keep his costs down.
He also found that it takes around 2-3 months to pay the cost of his machines by mining bitcoin alone.
The big question – and the one that most miners rely on – is what value will Bitcoin and other major cryptocurrencies have in the future.
It is possible that the currencies you are “mining” in the near future will appreciate in value over the next few years. You don't know – nobody knows – and it's quite a gamble. However, if you can manage to at least cover your costs now – and even make a profit – it could really be worth keeping the currencies as a potential future investment.
I repeat, it is quite a gamble. Nobody knows what will happen to cryptocurrencies in the future. But for me it's the future. We are in the fetal stage of this very interesting financial development, just like in the beginning of credit cards.
Ultimately, however, it's up to you!