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                                        Bitcoin Mining Requirements for Beginners

Bitcoin Mining Requirements for Beginners

21 Oct 2021

Bitcoin currency (BTC) is the first blockchain that successfully rolled out cryptocurrency. The Bitcoin evolution began in 2008 when an anonymous identity named Satoshi Nakamoto released a white paper that detailed their idea of decentralized currency. It was introduced as an alternative currency that isn’t controlled by a central authority, which means that the ideal BTC doesn’t rely on banks, governments, and institutions to function. Bitcoin came to life in 2009 and appeared in cryptocurrency exchanges in 2010. Bitcoin has had its fair share of ups and downs since then, spiking to $20,000 in 2017, dipping to $4,000 shortly after, and making a legendary comeback in 2020. Now, BTC sits at the $30,000 to $40,000 range and more and more crypto fans are looking at Bitcoin Price Prediction 2040 and Beyond. These big numbers may tempt you to start getting into cryptocurrency investments and start bitcoin mining. After all, who wouldn’t want to with such a promising market? But before you do, it’s important to know that there’s an alternative way you can earn BTC. Some blockchains, including Bitcoin, will pay anyone tokens to help create blocks and verify transactions on their network as long as they pass the Bitcoin mining requirements.

Basics of Bitcoin Mining

You might ask what Bitcoin mining is. Here is the answer: mining Bitcoin is a process where you offer computer processing power in exchange for token rewards. Essentially, your computer will be in charge of securing and verifying transactions and adding Bitcoin transaction data onto the network’s public ledger. Think of it as creating new blocks to keep Bitcoin running and ensure that all exchanges are successfully processed. There isn’t a single rule to crypto mining–each blockchain does it differently. Bitcoin’s network uses the Proof-of-Work (PoW) model, which means that all Bitcoin miners would have to “race” to decrypt a complex mathematical equation every 10 minutes. The first to finish will have successfully created the new block and will receive a token reward of 6.25 BTC. This value is halved every 4 years, so in 2024, the reward will be down to 3.125 BTC. Before you mine Bitcoin in hopes of getting that sweet 6.25 BTC reward (currently valued at over $229,000), note that it isn’t as easy as it sounds. Because the minefield is competitive, your computer will have to be powerful enough to beat high-end rigs, most of which were created specifically for large-scale Bitcoin mining. As a cryptocurrency beginner, you might have to join a mining pool to stand a chance. These are groups that pool together computer power to increase their chances of winning the block reward, which will then be split amongst members.

Did Bitcoin Mining Get Easier?

Did Bitcoin Mining Get Easier

As cryptocurrency enters into a more mainstream crowd, the accessibility of mining becomes easier, but - at the same time - also more difficult. Just about anybody with a decent graphics card can begin mining BTC although the process is still slow. The logic is simple: the more miners, the fewer the extraction of Bitcoin. The fewer the extraction, the more valuable it becomes (even for just a small quantity). Over time, the interest rate of Bitcoin mining also got higher, meaning you would profit less if you successfully mine a portion. The ongoing large BTC mines in China keep on hogging the resources from the rest of the world. Even after the crackdown of these mining facilities back in June, that still does not completely stop several groups from continuing their operations. There is no such thing as free Bitcoin mining without investment. If you are planning to mine Bitcoin yourself, you can buy a computer mining rig in an online shop. Take note that these mining rigs are expensive and will also increase your electricity bills. However, if you have the budget to do so, there are plenty of options such as the latest RTX graphics cards from Nvidia and a discounted price on Bitmain Antminers.

How to Mine Bitcoin

Firstly, it is important to know that mining bitcoin is very different from buying or investing in Bitcoin like you would invest in stocks . Having that in mind, if you’re interested in earning BTC, here’s a rundown of the Bitcoin mining hardware requirements, and some tips you may ask yourself "how do I start bitcoin mining". This is an updated version from our article last year. Read the following procedures and you should get yourself ready to go.

1. Internet Connection

Believe it or not, Bitcoin mining isn’t a very bandwidth-heavy activity. An average rig only uses up approximately 0.5-2MB per hour, so all you need to secure is a reliable connection for 100% uptime. For quick reference, a 6 GPU rig should cost you no more than 2MB per hour. 

2. PC or Laptop 

You don’t need a high-spec machine to mine Bitcoin on a PC. Apart from a hefty Graphics Processing Unit , the rest of your rig can consist of just the basic framework–you don’t even need to install an OS! While you can purchase a pre-built ASIC mining rig or gaming PC, you can also build your own for a little less. Note that the more powerful your GPU is, the greater your chances of winning BTC. 

Keep in mind that if you plan to mine with an ASIC rig, you don’t need to build a PC at all. You just need a basic computer that can connect to the internet and manage your mine. 

3. A Wallet

This is where you can store any Bitcoin you find, and while there are many options you could choose from. You have two choices: a cold wallet or a hot wallet. 

A cold wallet is cryptocurrency storage that you can use offline. This usually comes as  hardware or even paper. We recommend the Ledger wallet since it has good security, easy user interface and support on over thousands of tokens. 

Meanwhile, a hot wallet is cloud storage that commonly comes for free to make up for the limited supported coins. We recommend Exodus  as it's free, simple, and user-friendly.

 

4. A Bitcoin Mining ASIC 

The only way you can stand a chance to make a decent profit from Bitcoin mining is if you fork out an extra $1,000-$3,000 for a Bitcoin Mining ASIC which is a machine designed to mine Bitcoin. All the serious miners use these now as they are more efficient than general GPUs.

 

5. Cheap Electricity 

Mining Bitcoin is not cheap and comes with some external costs, the most significant being electricity . If you're going to mine Bitcoin, then make sure you have a decent deal on your power. This process consumes as much electricity as you wouldn't believe.

 

6. Patience is Key When Mining Bitcoin

You need to be patient and realize that this isn’t a get-rich-quick scheme. This will take time and money to really make any kind of profit. This is not for everyone but if you are committed to it, then good luck to you. Bitcoins price is currently $59,741 AUD at the time of writing but is expected to rise over the next 5-10 years.

The Best Bitcoin Mining Hardware

Let’s talk about the difference between the ASIC and the GPU miners. To keep it simple, ASIC miners are specialized bitcoin mining rigs that provide fast hash rates. The faster the hashrate, the more successful your results. Also known as Application Specific Integrated Circuits, an ASIC hardware is made only for harvesting bitcoin with a more efficient and eco-friendlier technology than a GPU. Arguably, it is the superior technology and is considered the best bitcoin mining hardware. A GPU miner is simply a powerful gaming PC converted into a crypto miner. GPU stands for Graphics Processing Unit. In other words, the graphics card of the PC does the mining. This is favorable for crypto hobbyists looking to get a small portion of Bitcoin or any altcoin from mining. It’s not as fast or efficient as an ASIC miner but it still gets the job done as long as the GPU is powerful. An example is the NVIDIA GeForce 3090. If you are looking to make a good profit out of mining, you will need an ASIC miner. Just keep in mind that the best kind of ASIC mining rig is one that keeps power consumption and hash rates consistent. To keep your PC rig safe, you also need a high-grade Bitcoin mining case as well. This protects all the internal hardware of the PC and has good ventilation scattered on the edges. It should not be a nuisance in purchasing one because buying a case is as simple as ordering a gaming PC online. 

The Best Bitcoin Mining Hardware

Also, don’t forget that you need to have both a Bitcoin mining software and a Bitcoin mining pool before you buy an ASIC miner. A good example of a Bitcoin mining app is Braiins OS+ . A mining pool is a group of miners who cooperate to share block rewards in relation to each person’s contributed mining hash power. Examples include F2pool and Poolin - both of which are Chinese-based.

The Immediate Rise and Fall of the GPU Market

The most basic hardware to mine Bitcoin is a graphics card or GPU. But, it has to be a top-notch type with powerful specifications. This is why a strong GPU capable of playing video games at its highest settings is required to do mining. During the BTC rush of 2017, there was a huge crash in the PC gaming market since plenty of inexperienced people wanted to get in on the Bit-craze. 

The thought of “Buy a gaming PC and get rich quickly from mining” became the bandwagon of that year, causing a huge demand for graphics cards such as the Nvidia RTX series and the AMD Ryzen series. The demand was so high, the prices for such hardware soared higher than its regular price. 

Normal PC gamers saw this as a bad time to buy and upgrade their PCs because non-gaming miners caused such huge inflation in the market. However, it all soon crashed for the rest of 2018 as Bitcoin made it to the mainstream media and plenty of FUDs (Fear, Uncertainty, Doubt) were spreading across the internet. 

Consequently, the people who feared missing out on Bitcoin found themselves selling their GPUs at questionable prices. This caused a huge outrage in the gaming community since the scalpers during the Bitcoin rush hoarded the GPUs and resold them at high prices. 

In the fourth quarter of 2018, it was not long before the PC gaming market would restore to its original prices while the hoarders who thought they could make a quick buck on mining got themselves wrecked. 

GPU Mining Rigs

Even after the Bitcoin craze of 2018, there are still people around the world who want to get into the mining community. If you are one of those people, you will need to invest big if you want a chance for better mining results. 

Basically, you will need to buy a powerful GPU - either an Nvidia RTX card or an AMD Ryzen series. You will need to look at the following:

  • VRAM
  • CUDA Cores
  • Power
  • Hash Rate
  • Overclocking

VRAM (Video RAM) determines the overall performance of the GPU. The most optimal VRAM is GDDR6 with at least 6GB of memory. This ensures your PC runs smoothly while mining.  CUDA cores run multiple numbers at the same time. The higher the cores, the faster the GPU’s performance. The best numbers are between 2000 to 4000. Power is the general wattage that the GPU consumes and overclocking is a mode where the GPU can perform more than its original state at the cost of more power consumption. Hash rate is the speed that determines how much Bitcoin it can accumulate. The higher the numbers, the higher the chances of earning BTC.

Making Money From Mining Bitcoin

Making Money From Mining Bitcoin

If you’re interested in earning BTC, here’s a rundown of the Bitcoin mining hardware requirements, and some tips you may ask yourself "how do I start bitcoin mining".

1. How Bitcoin miners are paid

Bitcoin miners get paid through rewards. In just 24 hours, there are over 300,000 buy and sell orders, which makes it good for miners. Think of it as farmers harvesting their produce and selling it in the market for a good price. If more people find their products worth the price, more demands flow in, resulting in more customers for the farmers - given that they have the ample number of resources to keep the demands supplied. 

Same thing goes for BTC miners. As long as there is a demand for digital money, they will keep on harvesting blocks. These blocks determine the overall supply of Bitcoin and for every 210,000 blocks mined, it gets halved and rewarded equally throughout all registered miners. 

Additionally, they also have mobile apps to check the progress of their mining. For example, Bitcoin mining iPhone apps help the miners remotely check their mining status from the PC rig. However, actions are limited on the mobile app since it serves primarily as a status checker more than a remote control. 

Miners also join pools. A mining pool is a group of crypto participants that combine their computational resources. That way, it heightens the probability of successfully mining a block. In exchange, this success is divided among the voluntary miners and they receive rewards. These rewards are mostly percentage bonuses. They are usually free Bitcoin mining sites with good reputations although you need to do your own research to know which pool is most suitable for you. 

Another way for miners to earn is through Bitcoin mining hosting sites. Unlike having a rig of your own, you pay other miners instead so you can get a fraction of what they earn. It is paid through royalties mostly from pool communities too. This is only favorable if you have a lot of money to burn since this is one of the most expensive ways to mine Bitcoin and expect huge profits

2. Top 3 things Bitcoin miners need to understand 

  1. Bitcoin mining is not an easy profit    

If Bitcoin mining was as easy as using a GPU and register in a mining pool, a lot of people would be millionaires right now. The problem with being an independent miner these days is the oversaturation of miners - especially those that come in groups. If you do manage to get rewarded with BTC, you can only get a pinch of Bitcoin. In short, Bitcoin mining has simultaneously become more convenient yet less profitable.

  1. ASIC mining does not mean faster mining    

The reason why miners prefer the ASIC rig is not because of faster mining but rather because there is a higher probability of getting more rewards as long as the hash rates are large. Even so, an ASIC rig does not guarantee large wins everytime. 

  1. Bitcoins gradually get scarce    

Just like the end of the gold rush period in 20th century America, the fresh Bitcoins extracted from mining are gradually becoming rarer. Due to more people joining the market, miners do not get to circulate the supply of Bitcoins as much as back in 2016. Everytime during a halving period, the circulation gets smaller too. 

In 2009, there were exactly 21,000,000 Bitcoins mined. In 2012, 10,500,000 coins were halved. And then 5,250,000 last 2016 and 2,625,000 in 2020. That means in 2024, the next halved number of Bitcoins will only be 1,312,000.

3. Is Bitcoin Mining Profitable?

Quite frankly, Bitcoin mining is not as profitable as it used to be back in the 2010s. The first batch of miners have now gone to make a fortune from their large number of extracted BTC. If you are looking to join the party, then we’re afraid it might be too late to join. That is, unless you join a big BTC pool in China or USA, of course. 

Is Bitcoin Mining Profitable

Is Bitcoin mining profitable? Yes, but if and only if you know which pool to join or having the money to pay for mining hosts.

4. Considerations and risks of Bitcoin mining

While Bitcoin mining may be arguably a safer approach to earn Bitcoin, it also has a high-risk low-reward ratio. The risks include your exposed IP address, energy consumption, PC maintenance and even cybersecurity. If you know what you are getting into but still would like to enter the mining world, keep your expectations low because you will have fierce competition with other miners all over the world.

Quite frankly, Bitcoin mining is not as exciting and profitable as it once was back in the mid 2010s. You might as well try Gold mining but that is a whole different story - however it is fair to say that Bitcoin and Gold   have some similarities Bitcoin enthusiasts must know. 

After all, there are so many BTC mining pools all over the world that it is hard to compete against them. The wisest choice right now is to become a member of these pools so you get a royalty for helping in the supply circulation.

That is why the newer miners are looking to find fresh supplies in other coins like ADA, BZZ, CLV, and PHB because these pools let you earn more than mining Bitcoin. Others prefer to go for forked BTC alternatives such as Bitcoin Cash cloud mining pools because of the higher percentages versus the original cryptocurrency. Of course, the value of these coins is not as precious as ETH or BTC. However, given that you find real value in these currencies, it will all pay off in the end once their prices go higher. 

That is why a lot of BTC and ETH miners found a huge good return on their mining investments especially during the crypto boom of 2020. Given that you are mining for altcoins with potential returns, you may find yourself a profitable entrepreneur in the end if you sell them at an optimal price. 

If you are to push through with mining altcoins, consider the ones with limited supply. Otherwise, mining altcoins with an unlimited supply such as Dogecoin may result in a waste of time. Remember, when there is a limited supply for a coin, there is a huge potential for a higher price value especially when the demand for such altcoin is at a high. 

Bottom Line

Bitcoin mining is now considered one of the largest and most controversial ways to profit without doing much effort. All you need is a good mining rig, a pool to join in and the right people to work with. However, only the biggest investors   benefit from such a way because the early miners of Bitcoin only came to fruition when the currency tripled its price in 2017. 

Latecomers in the crypto mining gig will not earn as much as the early miners but there is still a chance to do so, given that they invest in a powerful ASIC mining rig. Knowing the risks of Bitcoin mining should be taken into account because governments are not keen on such money-making tactics. For instance, the Chinese government deems cryptocurrency as a hoax, which is why they cracked down on multiple BTC mining sites   in the country, which caused a major correction back in June 2021. 

However, if you insist on joining the mining brigade, you should consider the bigger competition in this business. Alternatively, you can always mine for altcoins which you would think may come with high value in the future. 

Finally, there are other ways to invest in Bitcoin besides mining that you might want to consider since Bitcoin’s price ​​might reach new heights .

 

 

 

 

Trisha Reynolds

Written by Trisha Reynolds
on 21 Oct 2021

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