Bitcoin mining has been a lucrative way of earning Bitcoin without buying since 2009 when the technology was invented. Mining is done by a set of miners who crack “mathematical puzzles” to verify transactions.
As the Bitcoin blockchain grew, the methods of mining have also evolved. In this guide, we’ll highlight the different methods used for mining Bitcoin, but first, what is mining?
What Is Bitcoin Mining?
Mining is the process through which new BTC enter into circulation. Miners help to verify transactions on the blockchain and in return receive new BTC as incentive. Anyone with a full node – a computer with the complete Bitcoin blockchain – can be a miner.
There are thousands of miners spread all over the world, and they help to maintain the integrity of the Bitcoin blockchain. It is however becoming challenging as the process has become quite complex. Therefore, new methods have evolved for mining that were hitherto not needed.
How Do You Mine Bitcoin?
As stated earlier, Bitcoin mining involves the use of computers to solve mathematical puzzles that add transactions to the blockhain and produces new BTC. There are few ways to do this, but some are more rewarding than others, depending on how much hashing power you generate. The following are the types of mining.
- CPU mining
When Bitcoin first started, it did not require so much computer power to mine. It was therefore possible to mine it with just your computer’s central processing unit (CPU). It is no longer popular because the Bitcoin network has gotten more complex and more computer power is required to mine profitably.
Unless you’re mining for fun and not to profit, this method is not advisable as you can go for months without seeing any revenue. It can also take a toll on your computer because Bitcoin has a large network now and so much power is required to handle it.
2. GPU mining
This is more advanced than CPU mining, in that you get to use graphic cards with mining rigs to mine Bitcoin. This is a very popular way of mining since it generates more power and is relatively cheap. While you’ll spend more than you would if you used your computer, GPU rigs also bring more returns than CPU.
A GPU rig is made up of a processor, a motherboard, cooling, rig frame and graphics cards. All you need is a mining software and you’re good to go.
3. ASIC mining
Application-Specific Integrated Circuits (ASICs) are devices created specifically for mining Bitcoin. They are most efficient for mining Bitcoin because of their hash power which brings more returns than CPU or GPU. In fact, ASICs have put lots of miners using CPU and GPU out of business.
If you’re serious about mining, you might wish to consider getting one. Of course, they’re more expensive to set up, but the returns are worth it.
4. Cloud mining
Cloud mining is the big new thing in Bitcoin mining. Because CPU and GPU don’t bring much in terms of returns and ASICs are crazy expensive for most individuals, they can participate in cloud mining where everyone contributes their hash power.
Revenue is then shared among the participants based on how much power they contribute. If you wish to mine Bitcoin profitably but you can’t afford an ASIC, cloud mining will be perfect for you. There are many Bitcoin mining pools to choose from, pick one and get started with mining immediately.
Which Should You Use?
Cloud mining. It is one method anyone can participate in with very little hash power. Although there’s a minimum required hash power you need to contribute, it wouldn’t cost as much as setting up an ASIC or GPU. All you have to do is make a payment for the amount of hash power you can afford.
At the end of the day, you’ll get your share of the revenue based on your contribution to the pool. The good thing is, you can start now.
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