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If you want to join in the bitcoin frenzy without just buying the digital currency in the 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 them profitably. .

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

Bitcoin transactions are secured with blockchains, which compose 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 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 monitor and secure transactions, miners earn bitcoins for each block they successfully process. .

The bitcoin founders have set a limit of 21 million bitcoins available for mining. Once that total is reached, miners will still be able to benefit from transaction fees, but they won't be granted bitcoins as a reward for their work. 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 radically, it seems like we won't reach on the 21 million-bitcoin limit until the year 2140. .

During the first 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 is no longer practical, because solving bitcoin transactions is becoming too difficult for your 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 men and women have been 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 is now much stingier about handing out bitcoins into miners.

These days, in order to have a chance in being rewarding, 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 begin with your own mining rig, you purchase hardware designed for mining bitcoin (or any other virtual currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady stream of payments with no needing to get involved.

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As soon as it's fairly easy to set up and utilize a bitcoin mining rig, really making money on the process is something of a challenge. Because more and more people browse around this site are signing up to mine bitcoins, the mining process continues to have more more tips here difficult and will probably keep doing this for a while.

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

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

The largest challenge facing cloud mining subscribers is avoiding fraud. The area is rife with pseudo-companies which sell thousands of multiyear subscriptions, cover for a couple of months, and then vanish into the sunset. In case you choose to try out cloud mining, do your homework in advance and confirm that the company 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), in addition to any mining company that"guarantees" gains or provides enormous incentives for referring new clients; anything over a 10% referral commission is deeply suspicious, because valid mining pools simply don't generate a large enough profit margin to pay huge commissions. .