Note: The following article should not be treated as financial advice. Never invest money that you are not willing to potentially lose, as profits are not guaranteed.
If you’re new to the world of cryptocurrency, you’ve still likely heard one person or another mention bitcoin mining or some other sort of mining, at least in passing. But that can sound kind of tough, not to mention a bit time intensive if you don’t have the time available that everyone else seems to have, or any time at all.
While mining cryptocurrency likely isn’t as profitable as it might have been in the past, at least as something that was originally just a hobby, there are still plenty of opportunities to go bitcoin mining, as well as mining for other kinds of crypto.
But what is the mining process exactly? How do you go bitcoin mining? And what can you do to make cryptocurrency and bitcoin mining profitable for you?
What is Bitcoin Mining?
Bitcoin mining, or blockchain mining would be a more accurate name, is actually a very interesting concept. Blockchains are essentially tokens that are hidden and must be searched for through computational labor. “Mining” is that act of searching through the networks in order to find those new tokens.
According to Investopedia, blockchain is comprised entirely of digital records. And those digital records would normally come with a risk because of copying a coin, counterfeiting those coins, or even spending the same coin or coins more than once. Mining has been made so essential because it prevents hacking.
How does Mining Prevent Hacking?
Mining prevents hacking, pretty simply, by making hacking less efficient and more expensive than the alternative. It costs far less to purchase the required hardware and just join the mining community than it would to try and scam someone out of the blockchain token that they just mined.
In a lot of ways, this makes it much easier to protect your digital findings. And, as more people become interested in crypto, the more money your original, digital tokens are worth. So it’s a bit of a win-win for everyone this way.
This doesn’t mean that the hacking never happens, only that it’s much rarer than it otherwise might be.
How do You Mine Crypto?
Mining for crypto, including bitcoin mining, can be incredibly intense on your electricity bills and on your computer hardware, especially if you don’t have expansive knowledge on the best steps forward to take. Because of this, it’s extremely important to make sure that you have the correct hardware to get going.
More extensive and descriptive guides on the hardware you should choose can be found on the internet, and your research should be guided based on your personal crypto goals and the amount of time and energy you’ll be able to spend on mining.
Additionally, you’ll need to set up an account or wallet with the blockchain tokens you want to mine. You’re also going to need to download a miner that works for the particular crypto that you’re going after, if that’s applicable to you. From there, you’ll likely need to follow the particular processes that are mapped out by each type of token.
This means the first step in actually mining crypto is to determine the kind of coin that you would like to mine. There are many opinions regarding which coins are the best ones to go after based on the current climate of the community, as well as which tokens support the best causes that deserve more backers.
How Can Blockchain Mining be Profitable?
Depending on how you decide to mine for your coins, you’re going to be able to find various levels of profits. For example, some express the opinion that pool mining is more profitable and simple for beginners than something like solo mining might be.
That is largely because the process is less intense on the resources that you may have, meaning you can spend less on electricity (expanding your profits there) as well as spend somewhat less on the upkeep of your hardware.
However, solo mining and cloud mining are also options and, depending on your experience level and preferences, one of these may appear to be more interesting, exciting, or profitable to you and your goals.
Blockchain mining also doesn’t have to be limited to just one kind of coin or token, meaning that you have the opportunity to diversify your portfolio. This is a similar idea to investing in the stock market, only bitcoin mining requires a little bit more processing power on the trader’s end.
Diversifying your portfolio could mean that you’ll also be able to get a better read on the overall environment in the mining community. Further, mining alternative or less popular coins may allow you to buy low and sell high, especially if you start scooping with that alternative token early on.
Getting in on something early, while occasionally risky, could allow you to profit off of others finding out about that token later on.