Bitcoin as a decentralized cryptocurrency is utterly independent of intermediaries such as banks or governments, in the sense that no outside body controls the issuance of Bitcoin. Its creation is based on one principle: mining. And mining can be a source of profit for many people interested in it.
How does Bitcoin mining work?
Crypto mining, in general, means putting computing power at the specific cryptocurrency network service in different ways. The principle of Bitcoin mining is based on “Proof of Work.” It is this principle that ensures the strong security of Bitcoin.
Crypto mining is a process that works in three stages:
- Miners check the incoming data on the register and validate the authenticity of transactions
- After verification, they create the new block of the chain
- The Proof of Work is determined by a certain number of rules, including which miners can generate the next block and how the Bitcoin fragments distributions go between the different miners involved on this bitcoin network.
One of the strengths of the system is that it is precisely visible to everyone. Everyone can take action and detect possible fraud. The system is based on very high transparency.
Mining is doable in several ways: using some company’s cloud computing system, individually from home, or joining a mining pool. Let’s see what these involve.
If you want to mine bitcoin solo, you have to put in place a mining rig system. You’ll need to equip yourself with an ASIC device first. The increasing difficulty of mining over time makes the use of these machines almost essential. To start mining Bitcoin at home, you will need to install the Bitcoin software and configure it for JSON-RPC.
CGminer or BFGminer software is trendy. You can start mining on your own other currencies besides bitcoin. Some cryptocurrencies have high potential and still have low mining difficulty compared to Bitcoin.
Bitcoin Cloud mining
The easiest and most economical way to mine Bitcoin is to do bitcoin cloud mining.
Bitcoin cloud mining involves using the computational capacity of a company specializing in Bitcoin mining. In a way, you are leasing the business’s computer and storage capacity involved.
There is no need for specific technical knowledge or to purchase expensive mining equipment to mine with cloud mining. You will not risk damaging your computer’s processor either, and you will avoid the electricity costs that apply in individual mining.
Cloud mining is also faster and allows you to mine bitcoins and your other first cryptocurrencies in just a few hours. Some cloud mining platforms also enable you to purchase Bitcoin on their platform.
However, some platforms have a dependency on a middleman. And it decreases your earnings when you mine. Also, many cloud mining platforms are new to the market. So be sure to choose a reputable cloud mining platform.
Join a mining pool
It is a solution for pooling expenses and maximizing the chances of mining Bitcoin. A mining pool is particularly suitable for novice miners. This solution will generate more regular profits since the profit redistribution covers all the miners. One of the advantages of Bitcoin mining pools is the faster processing.
By having multiple nodes on the same network, the discovery process will be faster, and you will be in a position to mine faster than if you were alone.
Another advantage of using a mining pool is that the income you generate will be more stable because blocks will be accepted faster and more often. However, keep in mind that the profits will be distributed among all members of the Bitcoin network.