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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 will come with expenses -- and dangers -- of its own. And also the more popular bitcoins become, the harder it is to mine them profitably. .

Unlike paper currency, which is printed by governments and issued by banks, bitcoins do not arrive in any physical type. This creates a significant hazard, as hackers can theoretically produce bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions secure.

Bitcoin transactions are secured by blockchains, which make up a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely tough to change or compromise, even by the top hackers. However, in order to protect those transactions, someone needs to dedicate computing power to verifying the activity and packaging the facts in a block which goes into the bitcoin ledger.

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As a reward for doing the work to track and secure transactions, miners earn bitcoins for each block they effectively procedure. .

The bitcoin founders have set a limit of 21 million bitcoins available for mining. Once that amount is reached, miners will still be able to benefit from transaction fees, however they won't be granted bitcoins as a reward for their work. As of mid-January 2018, roughly 16.8 million of those 21 million bitcoins have already been mined.  Assuming that the bitcoin mining industry doesn't change dramatically, 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 package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that is no longer practical, because solving bitcoin transactions is becoming too hard for your average computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins each 10 minutes. If only a few people have been bitcoin mining at any given time, then the network will probably be generous and discuss bitcoins readily in order to reach the predetermined number. However, now that bitcoin mining has become so widespread, the network has become much stingier about handing out bitcoins into miners.

Nowadays, in order to have a chance in 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 get started with your own mining rig, you purchase hardware designed for mining bitcoin (or any other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady stream of payments without your needing to get involved.

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While it's fairly simple to set up and utilize a bitcoin mining why not look here rig, really making money on the process is something of a challenge. Because more and more people are signing up for mine bitcoins, the mining site here process continues to have more difficult and will probably keep doing so for a while.

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

When buying and maintaining your own mining gear doesn't attract you, then cloud mining might be the way to go. Cloud mining companies invest in huge mining rigs, often filling entire data centers together with all 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, pay out for a few months, and then vanish into the try this website sunset. If you decide to try out cloud mining, do your homework in advance and confirm that the company that you're dealing with is a true cloud miner and not a strategy.

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