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If you want to join in the bitcoin frenzy with no just buying the digital currency in the inflated prices, then bitcoin mining is another way to get involved. But, mining bitcoins does come with expenses -- and dangers -- of its own. And also the more popular bitcoins become, the more difficult it would be to mine profitably. .

Unlike paper currency, which can be printed by both governments and issued by banks, bitcoins do not arrive in any physical type. That makes a major risk, as hackers can theoretically create bitcoins from nothing. Bitcoin mining is how the bitcoin network keeps its transactions protected.

Bitcoin transactions are secured by blockchains, which compose a public ledger of transactions. Due to how blockchain transactions are structured, they're extremely difficult to change or compromise, even by the best hackers. But in order to secure those transactions, someone needs to dedicate computing power to verifying the activity and packaging the facts 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 each block that they successfully process. .

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

During the early days of bitcoin mining, miners would often download a software bundle designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that is no longer sensible, because solving bitcoin transactions has become too hard for your computer to manage.

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

Nowadays, in order to have a chance at being rewarding, 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 any other virtual currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a continuous have a peek at these guys stream of payments without your needing to get involved.

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As soon as it's fairly simple to set up and utilize a bitcoin mining rig, really making money on the process is something of a challenge. Since more and more people are signing up for mine bitcoins, this hyperlink the mining process continues to have more difficult and will probably keep doing so for some time.

And since bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for your hardware, or even several times that for a top-quality rig -- having to replace it every year or 2 takes a massive bite from any gains you earn from mining. Plus, most mining channels consume enormous amounts of electricity, so you also need to subtract expense from the bitcoins you earn to determine your profits. .

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

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

Avoid companies with anonymous domain registration (you can look up their registration info Network Solutions), as well as any mining company that"guarantees" profits or offers huge incentives for referring new customers; anything above a 10% referral commission is profoundly suspicious, because legitimate mining pools just don't generate a large enough profit margin to pay my website big commissions. .