How to mine Bitcoin

It's not all free money. Here's what to know before you try to mine Bitcoin

If you want to know how to mine Bitcoin, you have two different steps you can take: Go through a company, or buy and use your own hardware. Let’s look at both options, and why going through a company is currently the best way to mine Bitcoins for profit.

Remember, research is important! Just as when it comes to buying bitcoins, you need to be aware that nothing in the world of cryptocurrencies is guaranteed. Any investment could be lost, so make sure you do your reading before pulling out your credit card and have a secure Bitcoin wallet standing by.

Mining vs. investment

When Bitcoin was first introduced in 2009, mining the world’s first and premier cryptocurrency needed little more than a home PC — and not even a fast one at that. Today, the barrier for entry is far higher if you want to make any kind of profit doing it. That doesn’t mean it’s impossible, but it’s not the homebrew industry it once was.

Before we discuss how to mine Bitcoins yourself, it’s important to note that although there is uncertainty in everything cryptocurrency related, mining is arguably the most volatile. Hardware price fluctuations, changes in Bitcoin-mining difficulty and even the lack of a guarantee of a payout at the end of all your hard work, make it a riskier investment than even buying Bitcoins directly.

Because of this and general market volatility, it can be difficult to know how much profit you will make from mining. 2018 saw the mining market plummet in regards to profit and shoot up when it comes to barriers to entry. Unless there’s a significant Bitcoin tech change, this is likely to stay the same. A single Bitcoin is valued at around $3,800, but a recent report suggested it could cost as much as $2,400 to mine it. That report is disputed by some miners, though.

In the end, buying bitcoin directly at least gives you something for your money immediately. It’s certainly worth considering before you go down the mining route.

STEP 1: PICK YOUR MINING COMPANY

Cloud mining is the practice of renting mining hardware (or a portion of their hashing power) and having someone else do the mining for you. You are typically ‘paid’ for your investment with Bitcoin. Even if the hardware isn’t used for mining Bitcoin. As with general investing, it’s important to do your research, because there are a lot of companies out there which purport to be the best and even the largest have their detractors.

Genesis Mining is arguably the largest and most reputable of the bunch. hashflare told  in an interview that every one of its customers has turned a profit using its service. It did say though, that if many of them had invested in Bitcoin at the right time they may have made more money.

For a broader range of options, CryptoCompare maintains a list of mining companies with user reviews and ratings, though be aware there are a lot of reviewers looking to shill their referral codes in the comment section.

STEP 2: CHOOSE A MINING PACKAGE

Once you have picked a cloud mining provider and signed up, you need to pick a mining package. That will typically involve choosing a certain amount of hashing power and cross-referencing that with how much you can afford to pay. Typically, paying more will give you a better return or you will turn a profit quicker, but that’s not always the case.

Most cloud mining companies will help you decide by giving you a calculation based on the current market value of Bitcoin, the difficulty of Bitcoin mining, and cross-referencing that with the hashing power you’re renting. However, it’s important to note that those numbers can and do change, so it is important to look at market trends and estimate where Bitcoin may be going before choosing your contract. What may be profitable now, may not be if Bitcoin’s value crashes.

Some cloud mining companies will sell you a contract on a “pre-sale” basis. That is effectively asking you to pay upfront for a contract that won’t begin for weeks or months when new hardware becomes available. In most circumstances that is not advisable because there is no way to guarantee those contracts will be profitable when they start and not even a concrete indication of when that will happen.

STEP 3: PICK A MINING POOL

After choosing your contract, most cloud mining companies will ask you to pick a mining pool. That’s where you choose a global mining team to join.

It’s a method of increasing the chance of earning Bitcoin through mining and it’s a standard practice in the cloud and personal mining. There are pros and cons of different pools that go beyond the scope of this article, but joining an established and proven pool with low fees is likely to be your best bet.

One of the most popular and dependable pools for new miners is Slush Pool, but you should always do your own research. Like companies, many pools aren’t trustworthy.

STEP 4: SELECT A WALLET

Once you’ve completed that step your cloud mining can begin and within a few days or weeks, you should start to see your cloud mining account begin to fill with Bitcoin. Withdrawing it and putting it into a secure wallet of your owns  is a good plan as soon as you have a small holding, though some cloud miners will allow you to reinvest your earnings for greater hashing power.

Of course, then you need to decide what you’re going to do with your bitcoins in the long term. While there are many products and services you can purchase with bitcoins, prices can fluctuate, and you may have to do even more research to see if you’re getting a good deal. We can also help you trade your bitcoin for a different cryptocurency or sell it directly for cash.

What if I want to mine with my own hardware?

Due to the high costs involved, mining Bitcoin yourself is only recommendable if you have ready access to plentiful and more importantly, cheap electricity and a powerful network connection. Before investing in any hardware or mining setups, it is imperative you use a Bitcoin mining calculator to see if you can actually turn a profit with all costs considered.

If you can, you’ll need to pick the right ASIC miner to do it with. The best method is to consult mining machine profitability to see which miners are currently turning a profit. The site Asicminervalue.com is particularly helpful here, showing a constantly updated list of miners and how profitable they are. Note that the most profitable machines make between $10 and $30 profit per day.