What is Bitcoin mining ?

Updated: Sep 9, 2021

Bitcoin is a decentralized cryptocurrency that is entirely autonomous of bodies such as banks or governments, in the sense that no third party regulates its issuance. It is designed on a common principle: mining. The blockchain protocol is the cornerstone of Bitcoin. It is possible to mine Bitcoin in this way. So how do you go about mining Bitcoin?

We can learn what bitcoin mining is, how to mine bitcoins, the benefits and drawbacks of bitcoin mining, and if it is still profitable throughout this post.

In 2021, there are three ways to mine bitcoin

  • You can use a wallet to do cloud mining, and we suggest ICM Wallet.

  • You will mine Bitcoin by joining a Bitcoin mining pool.

  • With a mining rig, you can mine bitcoin from the convenience of your own house.

What are the approaches to mining Bitcoin? The three most effective options

Mining Bitcoins may be achieved in a number of forms, like alone at home or as part of a mining pool.

1. Mine bitcoins in the cloud

Bitcoin cloud mining is the simplest and most cost-effective way to mine Bitcoin.

mining bitcoin

Bitcoin cloud mining entails using the computational resources of a Bitcoin mining business. In a sense, you are renting the computing and storage resources of the organization involved.

Cloud mining removes the need for technological experience or the procurement of costly mining machinery.

You also won't risk crippling your computer's parts, and you won't have to pay the high energy costs associated with individual mining.

Cloud mining is even more effective, allowing you to mine bitcoin and other cryptocurrencies in as little as a few hours. Few cloud mining services also provide the option of purchasing Bitcoin.

However, some platforms depend on an intermediary, which reduces the mining earnings, and many cloud mining platforms are fresh to the industry, so pick a reliable cloud mining platform (one example is Genesis mining, a reference for mining bitcoins).

How to do bitcoin cloud mining?

We'll show you how to do bitcoin cloud mining phase by step in the tutorial below.

Step 1: Create an InstantCloudMining Account

One of the first things you'll need to do if you want to mine Bitcoin is open an ICM Account and get an ICM Wallet to keep your Bitcoins secure. There are a variety of options:

  • Use a virtual wallet: A virtual wallet is one that you can run on your machine or mobile device. They enable you to track the progress of your wallet in real time. Some wallets, such as the one provided by InstantCloudMining is extremely effective and secured.

  • Use a physical wallet: This may be in the form of USB keys or physical storage spaces that hold private keys.

how create InstantCloudMining account

As a result, you can store your crypto currencies in the most secured online wallet with ICM wallet. You would be able to easily purchase, sell, and exchange your crypto-currencies.

Open an InstantCloudMining Account

Step 2: Buy a mining contract

You'll need to purchase a mining contract to begin mining bitcoins.

What you'll benefit from a paid contract:

  • Instant Access after payment

  • 24 hours to receive your first payment

  • App potential fully unleashed

How To Buy a mining contract with ICM

Step 3: Choose "Mining" from the app menu

After you've established your account, go to the cloud mining platform's "Miner" tab to start mining Bitcoin for free.

You can start mining Bitcoins from your phone if the site of your choosing has a mobile mining app.

Step 4: Start mining Bitcoin

In certain instances, the broker is in charge of all activities. To mine Bitcoins, you simply need to return to the application or website. To begin the mining, simply slide your allocation features to 100%. You're done, of course you need a mining contract to run this.

Mining proceeds are typically deposited into your account every 24 hours. The gains from mining will then be used to exchange commodities on the exchange.

how to allocate mining

2. Mining Bitcoin with a mining rig

bitcoin hardware mining

You'll need an ASIC first if you want to mine Bitcoin on your own. With the growing difficulties of mining, these devices have been virtually indispensable.

We recommend that you keep the following conditions in mind before purchasing an ASIC:

  • The cost: The following two factors would have a significant impact on it. Machines for beginners cost about 100 dollars, whereas more efficient machines will cost up to 3,000 dollars.

  • Hash rate: a higher hash rate actually helps you to mine more Bitcoin so you can solve the technical problem posed even quicker.

  • Power Consumption: This is a critical parameter to consider. It might not be the right option if your rig helps you to mine twice as quickly but uses three times as much energy. To mine Bitcoin at its peak, it's a question of working out the best combination of mining pace and power usage.

You'll need to update Bitcoin program and setup it for JSON-RPC until you can start mining Bitcoin at home. The program CGminer or BFGminer is especially common among Bitcoin miners.

The most effective bitcoin mining rigs

The following rigs can be used to mine Bitcoins:

  • Bitmain Antminer S9i

  • Halong Mining DragonMint T1

  • Bitmain Antminer T9

  • Pangolin Whatsminer M3X

3. Join a mining pool

mining pool

This is a way to pool expenditures and increase the chances of mining Bitcoin. A mining pool is mostly for novice miners. As a result, there is mutualization among all Bitcoin network users.

Since the benefit generated by one member of the mining pool is redistributed to all miners, this approach would produce and maintain income more reliably. One of the benefits of Bitcoin mining pools is the speed at which they handle transactions. The exploration phase would be quicker and you will be able to mine faster than if you were alone as you have multiple nodes on the same network.

Another benefit of utilizing a mining pool is that the earnings would be more consistent since blocks will be approved quicker and more often. Bear in mind, though, that the gains would be split by all Bitcoin network users.

Three of the biggest bitcoin mining pools (mining software)

Here are three applications for bitcoin mining that you can trust.

  • Poolin: a piece of mining software that mines about 18% of all blocks

  • F2pool: one of the most venerable mine ponds

  • BTC.com: 15 percent of the blocks in the Bitcoin network are mined using mining tools.

What is bitcoin mining?

Bitcoin mining has little to do with Bitcoin ownership. Mining Bitcoins entails placing the computer's processing capacity to use on the Bitcoin network. Computing power may be delivered in a number of ways:

  • Via a computer

  • RIGs and ASICs are dedicated Bitcoin mining equipment.

The computational resources gained would be placed to a variety of uses, the most critical of which is to ensure the protection and authentication of Bitcoin transactions. Through checking that the blocks obey each other, this computational capacity would also guarantee the blockchain's functionality.

Bitcoin is based on the premise that a block must be mined every ten minutes. Bitcoin, unlike fiat currencies like the euro or the dollar, is created by users. Mining is a method in which incredibly efficient machines utilize their processing capacity to support the blockchain.

The following are several main events in the Bitcoin world: :

  • 2009: Bitcoin's first year of life

  • 2141: We would hit the full amount of Bitcoins in existence in the year 2141.

  • More than 18 million: The current amount of Bitcoins in circulation

  • 21 million: In the year2141, it is the highest amount of Bitcoins that will be in circulation.

Although more than 18 million of the 21 million tokens have been created since the launch in 2009, the rate of Bitcoin mining is slowing. In truth, every 210,000 blocks solved, the rate of Bitcoin formation is divided by two.

It is regarded as halving. If 50 Bitcoin were generated every 10 minutes in 2009, just 6.25 Bitcoin are created every 10 minutes today. The Bitcoin source code explains everything.

How does Bitcoin mining work?

how does bitcoin works

Bitcoin mining is based on the "Evidence of Work" theory. This theory is responsible for Bitcoin's high level of security. The Proof of Work is an idea that has been used since the mid-1990s. It was about developing and enforcing an anti-spam system to combat fraudulent emails at the time.

The miners are responsible for making the Proof of Job theory work.

This approach is split down into three steps:

1- The miners verify the transactions' validity by checking the incoming data on the ledger.

2- They build a new block of the chain after authentication.

3 - Bitcoin is sent to miners as a reward. The Proof of Work would decide which miner would be able to create the next block and how the Bitcoin fragments will be allocated among the numerous miners participating in this Bitcoin network based on a collection of rules (consensus).

One of the system's benefits is that it is easily visible to all. This gives everybody the ability to take measures to detect possible fraud. The system is focused on the highest level of integrity.

The following measures are taken in the creation of a new block on the blockchain:

  1. A block is made up of transactions.

  2. Both miners will verify the transaction's legitimacy and validate it if appropriate.

  3. The miners choose the header from the previous (most recent) block to use as a "hash" in the current block. A graphics card will help speed up the operation dramatically.

  4. The miners must solve a technical problem that can only be solved by highly strong computers. Bitcoin was developed with the goal of rendering mining and therefore calculations more challenging.

  5. The block is attached to the chain and spread to the whole network until the answer is sought.

The advantages of Bitcoin mining

  • Being awarded with Bitcoin, whose value can also grow as a result of surviving the health crisis

  • Participate in the concept's mutual defense. One of Bitcoin's best characteristics is its fully decentralized transaction management framework.

  • Solve a mathematical puzzle to raise money when sitting at home.

  • Participate in a decentralized concept that is distinct from conventional payment schemes.

  • You have more chances to get Bitcoins whether you mine in a group, in a mining pool, or through cloud mining.

The drawbacks of Bitcoin mining

Mining Bitcoin on your own has a range of pitfalls, which are compounded if you are doing it from the USA. The below are the big drawbacks:

  • High cost of energy: Since electricity in France is far more costly than in other countries across the world, such as China or certain Asian countries, mining profitability is significantly reduced.

  • High-tech equipment is required: Bitcoin mining is not just energy-intensive, but it also necessitates the usage of high-tech facilities, which may be very costly. Another argument that limits profitability is this.

  • In a global scale, bitcoin mining requires a lot of resources. According to certain estimates, mining uses more resources than countries like Israel, Switzerland, or Greece.

  • Each 2016 blocks, the complexity of mining is increased, theoretically making mining machinery redundant earlier.

  • If you mine alone, you have a small chance of being credited with the formation of a new block.

What is the highest amount of money I will earn mining bitcoin?

Bitcoin mining is no longer profitable for a person. Mining via cloud mining systems may be more fun.

money you can make with bitcoin mining

If miner operation was entirely voluntary at the time of Bitcoin's launch in 2009, and worked solely to grow the crypto-currency, the increase in the price of the crypto-currency has completely changed the activity. The blocks that would be used in the blockchain at the time were incredibly basic and much smaller than they are now.

As a consequence, someone might mine Bitcoin using machinery that would be totally redundant today.

However using InstantCloudMining Bitcoin Cloud Mining software will get you a huge amount everyday.

Fees on transactions

Transactions must be validated by miners. The network charges an extra cost any time a Bitcoin transaction is made. This extra payments include the miners' authentication of the transaction. Miners are paid in this way.

To find out how much money you can earn mining Bitcoin, you must first know where you are. If you live in a country where energy is inexpensive, it could be more cost efficient to start mining, assuming you have a strong enough machine. Miners are being forced to invest in more efficient, yet also more costly machines as mining becomes more challenging. This is why the mining sector is shifting toward mining conglomerates.

Nonetheless, several people are able to risk capital for the time being by mining Bitcoin in the expectation that the price will increase in the future.

What factors influence Bitcoin mining profits?

As you can see, mining Bitcoin is based on a variety of factors, including

  • Where do you reside

  • Your computer's or mining system's computing ability

For miners, each Bitcoin block currently generates 6.25 BTC. Since a block is produced every 10 minutes, this implies 6.25 * $10,260 (price of one BTC) = $64,125 would be spread among the miners every 10 minutes at the price of August 18, 2020. Although this can seem to be a huge sum of money, as a miner, you would actually obtain a small portion of it. Bitcoin fragments are the term for this.

According to several studies performed in 2017, while the Bitcoin price was still below $1,000, a miner might gain between $20 and $40 per year if they mined continuously during the year. The price of Bitcoin has soared 10-fold since then, but it cannot be a living wage for a single miner. Given the current state of the energy market, there is a fair risk that the benefit is simply a loss.

Thanks to ICM Corp you can now earn up to 0.05 BTC daily. See how.

The biggest issue with Bitcoin mining is that it is very competitive, and after halving the payout, there are still a large number of miners.

Should you mine Bitcoin or buy it?

As previously said, the two operations are extremely distinct. You can not become the master of the Bitcoins you mine by mining. Your option of whether to mine or purchase will be decided by your profile. Bear in mind that the Bitcoin price is $54,210 per BTC at the time of publishing. Going with InstantCloudMining cloud mining contract is the better option to start as it is fast and profitable.

The amount of Bitcoin miners continues to increase amid the halving. So much so that acquiring a slice of the pie is becoming more challenging. If you want to mine instead of buying, we recommend using a cloud mining solution as InstantCloudMining.

If you're more of a trader, purchasing Bitcoin is likely to be a safer choice. Platforms like eToro, for example, enable you to exchange crypto-currencies like Bitcoin.