What is Bitcoin Mining?
Bitcoin is a peer to peer network that operates as a form of currency. Everyone who uses Bitcoin is a tiny fraction of the “bank of Bitcoin.” Bitcoins are tracked using a global ledger (called the bitcoin blockchain) that anyone can download.
Bitcoin uses software that answers math problems to “mine for Bitcoins.” Then, when these problems are answered correctly, bitcoins are released to the users and recorded in the global ledger where everyone can see it.
As more bitcoin are created by more users solving the math problems correctly, the difficulty of the problems becomes higher. The idea is that as computers became more powerful, the problems get harder and the average time to create bitcoin will remain constant.
Getting the right software/hardware for bitcoin mining.
When bitcoin mining was first developed, users could mine for bitcoins using their personal computer CPU or a high speed video processor card. Today, with the attention that bitcoin is getting there is a large network of bitcoin miners trying to solve the problems. As a result, the problems can be very difficult for an individual to solve on their own with personal computers or a high speed video processor card.
Instead many miners must buy custom Bitcoin ASIC chips to successfully mine for bitcoins. Mining with anything less powerful will use more electricity than you are likely earning from the bitcoins you successfully create. The most successful miners use the best mining hardware. Today, many different companies offer products and services that help users mine efficiently.
Bitcoin Mining Services
To become familiar with bitcoin mining, it may be useful to sign up for a cloud mining contract. The following companies offer services for someone who wants to get started in Bitcoin mining. These companies buy mining hardware and rent the processing power out to people. People usually buy processing time on a $/Hash. Although they started selling MHash (1000 hashes/second), to remain competitive, most cloud bitcoin mining is sold in GH (1,000,000 Hashes/second).
Examples of Cloud Mining (no recommendations are being suggested – use at your own risk) are below:
- Genesis Mining
Joining a “Bitcoin Mining Pool”
Because the math problems, and software required to successfully mine for bitcoins can be difficult for individuals, most people recommend joining a Bitcoin Mining Pool when first starting. These are groups of users who join together to solve the math problems and distribute the rewards. It is very possible that without joining a Bitcoin mining pool that you could mine for a year and not successfully mine any coins.
Storing Bitcoins in a Bitcoin Wallet
Your Bitcoin wallet will be the place where all of your bitcoins that you successfully mine are stored. Bitcoins will be sent to your wallet via a specific address for your user. For safely, it is important to keep this wallet on an a computer that does not have access to the internet and is strictly offline. This will prevent any threats or someone hacking your mined bitcoins. With your wallet and collected bitcoins you may also want to sell your bitcoins. There are several services that Bitcoin do this including: Coinbase, Kraken, Buy Bitcoin Worldwide, and Local Bitcoins.