With its significant market capitalization, Bitcoin is by far the most prominent cryptocurrency powered by a Proof-of-Work-based blockchain. Forming the basis of this PoW protocol is ‘Bitcoin-mining,’ a process where miners solve complex mathematical puzzles to validate transactions. The miner who succeeds in finding the correct hash receives a BTC reward for creating a new block.
Although bitcoin mining may appear daunting, it is not that complex, provided you own the right equipment and knowledge to proceed with this endeavor. Here is a step-by-step guide to getting started with Bitcoin mining.
1. Decide whether you want to become a solo miner or join a pool
At the very start, you must decide if you prefer to mine Bitcoin solely or wish to become a part of a bigger mining pool. Although solo mining can deliver much higher rewards, keep in mind that it is an expensive venture not suited for everyone. To mine independently, you need high-cost mining equipment, and don’t be surprised when you receive a hefty electricity bill.
In contrast, you can join a Bitcoin mining pool, a forum where many people contribute to the mining procedure. Pool mining is more suitable for those who want to take advantage of mining rewards even with limited resources.
2. Determine the viability of your bitcoin mining operation
Another thing you should do before starting is to carefully estimate the profitability and sustainability of your Bitcoin mining setup. It will help if you learn more about bitcoin trading and mining essentials to establish a practical idea of the possible implications.
An important factor worth considering is the “electricity costs” you would have to bear for running machines. If your electricity bills outrun the mining rewards, you can be put at a total loss instead of profitability.
3. Select the hardware
Next, you must select a crypto mining hardware, mostly called a mining “rig,” which is the foundation of Bitcoin mining. Mainly, two types of computer equipment can be used for Bitcoin mining: GPU and ASIC. With the surging complexity of the Bitcoin algorithm, the previously used CPU mining is now labeled “non-feasible” for solving Bitcoin puzzles.
A general mining rig is composed of a line-up of many GPUs – the minimum possible requirement for running Bitcoin software. On the other hand, ASIC miner (application-specific integrated circuit) is the professional and most efficient option for running complex PoW algorithms. It is built of powerful chips, optimized to deliver enhanced performance with low power consumption.
However, if you are going to become a part of a mining pool, the hardware requirements are mostly not this strict.
4. Download mining software and start mining
Lastly, you have to download the Bitcoin mining software that will link you to the Bitcoin blockchain. The software is powered automatically and does not require specific skills from miners.
Finally, you can start mining and earn rewards in your linked crypto wallet. In the case of joining a pool, you will receive only a portion of the block reward corresponding to your system’s contributed computational power.