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If you want to join in the bitcoin frenzy with no simply buying the digital currency at today's inflated prices, then bitcoin mining is another way to become involved. But, mining bitcoins will include expenses -- and risks -- of its own. And the more popular bitcoins become, the more difficult it would be to mine profitably. .

Unlike paper currency, that is printed by both governments and issued by banks, bitcoins do not come in any physical type. This creates a significant risk, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions protected.

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Because of how blockchain transactions are structured, they're extremely difficult to change or compromise, even from 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 every block that they effectively procedure. .

The bitcoin founders have put a limit of 21 million bitcoins available for mining. Once that total is reached, miners will continue to be able to benefit from transaction fees, however they won't be granted bitcoins as a reward for their job. As of mid-January 2018, approximately 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 reach on the 21 million-bitcoin limit until the year 2140. .

During the early days of bitcoin mining, miners would often download a software bundle 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 produce a certain number moved here of new bitcoins each 10 minutes. If only a few 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 to miners.

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

To get started with your own mining rig, you buy hardware designed for mining bitcoin (or some 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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As soon as it's fairly easy to establish and utilize a bitcoin mining rig, really making money on the process is something of a challenge. Because more and more people are signing up to mine bitcoins, the mining procedure continues to get more difficult and will likely keep doing this for some time.

And because bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for the hardware, or several times that for a top notch rig -- having to replace it every year or two takes a huge bite from any gains you make from mining. Plus, most mining channels consume enormous over here amounts of electricity, so you also need to subtract that expense in the bitcoins you earn to determine your own profits. .

If buying and maintaining your own mining hardware doesn't attract you, then cloud mining might be the way to go. Cloud mining companies invest in huge mining channels, often filling entire data centers together with the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining subscribers is More Info avoiding fraud. The area is rife with pseudo-companies that sell thousands of multiyear subscriptions, cover for a couple of 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), in addition to any mining company that"guarantees" profits or offers enormous incentives for referring new customers; anything over a 10% referral commission is deeply suspicious, because valid mining pools simply don't generate a high enough profit margin to pay big commissions. .