Bitcoin, established in the year 2009, is currently the most popular and valuable cryptocurrency in the world. The crypto asset can be volatile in the short term, but it has continued to dominate the market, boosting the investors’ confidence in it.
If you want to know how to mine Bitcoin, then continue reading the article.
What is the Mining Process?
Mining is the process that introduces new Bitcoins in the circulation market. Blockchain technology uses a public ledger to keep track of transactions made on the peer-to-peer network. For a transaction to be complete, it has to be confirmed.
A miner confirms the transaction by solving a computational math problem created using the cryptographic protocol. A hash code adds to the privacy of the transactions by securely masking the data present within.
Once the miner solves the hash code and the transaction is confirmed, the miners are rewarded with Bitcoin.
How to Mine Bitcoin on Your Own?
According to a survey, 25% of Australians have shown an interest or are already investing in cryptocurrency. As a miner, you will be spending considerable time, effort and resources in the mining process.
There are two different ways to mine Bitcoin:
- Personal Mining
- Cloud Mining
If you plan to mine Bitcoin on your own, you can do so using your personal computer. Initially, competing for blocks utilising a home computer was a possibility. But with the difficulty of mining involved, as a miner, you will now have to invest in GPU (graphics processing unit) or an ASIC (application-specific integrated circuit).
The cost of purchasing these cards and chips could run anywhere from $500 to thousands of dollars depending on the standard of the equipment you buy. These chips help you achieve greater power for the hashing mechanism as compared to your personal computer.
You can choose to mine individually or join a Bitcoin pool. As the Bitcoin mining scene is competitive, a pool wherein multiple miners work alongside has a better chance of earning a reward than an individual miner working independently.
There are many mining pools available in Australia. Do your due diligence and understand the payout structure before joining a Bitcoin pool.
If you do not want to invest in personal resources or purchase new equipment, cloud mining would be the way to go. With cloud mining, you will be renting resources such as physical hardware from a mining farm.
As you are renting resources, you do not have the overhead of the physical hardware or installing any software. Also, since the resources are on the cloud, costs such as maintenance, electricity, etc., reduces.
As cloud miners, you will be purchasing a certain amount of hash power from a third party responsible for maintaining the setup. You will be rewarded a cut from the overall profit made after deducting maintenance costs. The reward amount will also decrease over time.
You need to be careful when signing contracts for cloud mining, read and understand the terms clearly.
Tips on Mining Bitcoin on Your Own
- Use a Bitcoin mining calculator to understand the effort involved and decide if the mining process is worth your time.
- Invest in the best possible hardware you can afford. Consider factors such as GPU or ASIC prices, power consumption vs. hash output.
- Research mining pools, look for reviews in the Bitcoin community and understand contractual obligations.
Bitcoin mining is legal in Australia. In terms of global market capitalisation, Bitcoin is the largest cryptocurrency available out there. The mining process may seem like a fun mathematical challenge, but do understand the process is resource-intensive and highly competitive.
Hopefully, this article helped you understand how to mine Bitcoin, and the various mining options available in Australia.