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If you want to join in the bitcoin frenzy without just buying the digital currency at the inflated prices, then bitcoin mining is another way to become involved. But, mining bitcoins will come with expenses -- and risks -- of its own. And the more popular bitcoins become, the more difficult it would be to mine profitably. .

Unlike paper currency, which is printed by governments and issued by banks, bitcoins do not come in any physical form. This makes a significant hazard, as hackers could theoretically create bitcoins from nothing. Bitcoin mining is how the bitcoin network retains its transactions secure.

Bitcoin transactions are secured by blockchains, which make up a public ledger of transactions. Because of the way blockchain transactions are structured, they are extremely difficult to change or compromise, even from the top hackers. However, in order to protect these transactions, someone needs to dedicate computing power to verifying the action and packaging the details in a block that goes into the bitcoin ledger.

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As a reward for doing the job to monitor and secure transactions, miners earn bitcoins for every block that they successfully procedure. .

The bitcoin founders have set a limit of 21 million bitcoins available for mining. Once that amount is reached, miners will still be able to benefit from transaction fees, however they won't be granted bitcoins as a reward for their work. As of mid-January 2018, approximately 16.8 million of the 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change dramatically, it seems like we won't hit the 21 million-bitcoin restrict until the year 2140. .

During the first days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that's no longer sensible, because solving bitcoin transactions is becoming too difficult Related Site for your computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins each 10 minutes. If only a couple people are bitcoin mining at any given time, then the network will probably be generous and share bitcoins easily in order to attain the predetermined number. But now this bitcoin mining has become so widespread, the network has become much stingier about handing out bitcoins into miners.

Nowadays, in order to have a chance at being profitable, miners need to adopt one of two strategies: 1) purchase specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To begin with your own mining rig, you purchase hardware designed for mining bitcoin (or some other virtual currency), set it up, and let it her comment is here run 24/7 solving bitcoin transactions. Ideally, this will result in a steady stream of payments without your needing to get involved.

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As soon as it's fairly easy to establish and use a bitcoin mining rig, really making money on the process is something of a challenge. Because more and more people are signing up for mine bitcoins, the mining process continues to have more difficult and will likely keep doing this for a while.

And because bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for your hardware, or even several times that to get a top-quality rig -- having to replace it every year or two takes a huge bite out of any profits you make from mining. Plus, most mining rigs consume enormous amounts of electricity, which means you also have to subtract expense in the bitcoins you earn to determine your own profits. .

If buying and maintaining your own mining gear doesn't appeal to you, then cloud mining might be the way to go. Cloud mining companies invest in huge mining channels, often filling entire data centers together with the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining readers is avoiding fraud. The field is rife with pseudo-companies which sell thousands of multiyear subscriptions, pay out for a couple of months, and then disappear into the sunset. In case you decide to try out cloud mining, do your homework in advance and confirm that the company you're dealing with is a real cloud miner and not a strategy.

Avoid companies with anonymous domain registration (you can look up their registration info Network Solutions), in addition to any mining company that"guarantees" profits or provides enormous incentives for referring new customers; anything go to my blog over a 10% referral commission is deeply suspicious, because valid mining pools simply don't generate a large enough profit margin to pay huge commissions. .