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If you want to join in the bitcoin frenzy without just buying the digital currency in today's 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 would be to mine them profitably. .

Unlike paper currency, that can be printed by governments and issued by banks, bitcoins do not arrive in any physical form. This makes a major hazard, as hackers could theoretically create bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions secure.

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely tough to alter or undermine, even by the top hackers. But in order to protect these transactions, someone needs to dedicate computing power to verifying the action and packaging the facts in a block that goes into the bitcoin ledger.

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As a reward for doing the job to monitor 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 total is reached, miners will continue to have the ability to benefit from transaction fees, however they won't be granted bitcoins as a reward for their job. As of mid-January 2018, roughly 16.8 million of those 21 million bitcoins have been mined.  Assuming that the bitcoin mining industry doesn't change radically, it looks like we won't hit on the 21 million-bitcoin restrict until the year 2140. .

During the first 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's 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 make a certain number of new bitcoins every 10 minutes. If only a couple men and women are bitcoin mining at any given time, then the network will probably be generous and share bitcoins easily in order to reach the predetermined number. However, now that bitcoin mining has become so prevalent, the network has become much stingier about handing out bitcoins into miners.

Nowadays, in order to have a chance in being profitable, miners need to adopt one of two approaches: 1) buy specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To begin 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 flow of payments without your needing to get involved.

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As soon as it's fairly easy to set up and use a bitcoin mining rig, really making money on the process is something of a challenge. Since more and more people are signing up for mine bitcoins, the mining process continues to get more difficult and will probably keep doing this for some time.

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

If buying and maintaining your own mining gear doesn't attract you, then cloud mining may be the best way to go. Cloud mining companies invest in huge mining channels, often filling entire information you can look here centers with all the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining subscribers is avoiding fraud. The area is rife with pseudo-companies that sell thousands of multiyear subscriptions, cover for a few months, and then vanish into the sunset. If you choose to try cloud mining, do your homework in advance and confirm that the company that you're dealing with is a real 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 provides huge incentives for referring new clients; anything above a 10% referral commission is profoundly suspicious, because legitimate mining pools just don't generate a high enough profit margin to pay huge commissions. .