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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. However, mining bitcoins will include expenses -- and risks -- of its own. And the more popular bitcoins become, the harder it would be to mine profitably. .

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

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Because of the way blockchain transactions are structured, they're extremely tough to alter or compromise, even by the top hackers. However, in order to secure these transactions, someone needs to dedicate computing power to verifying the activity and packaging the details in a block that goes into the bitcoin ledger.

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As a reward for doing the job to track and secure transactions, miners earn bitcoins for every block they successfully procedure. .

The bitcoin founders have put a limit of 21 million bitcoins offered for mining. Once that amount 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 work. As of mid-January 2018, roughly 16.8 million of the 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change radically, it seems like we won't reach the 21 million-bitcoin limit until the year 2140. .

During the early 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 has become too hard for your computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins every 10 minutes. If only a couple people 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. But now this bitcoin mining has become so widespread, the network is now much stingier about handing out bitcoins to miners.

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

To get started 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 simple to establish and utilize a bitcoin mining rig, really making money on the course of action is something of a challenge. Since more and more people are signing up for mine bitcoins, the mining procedure continues to get more difficult and will probably keep doing this for some time.

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

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

The biggest challenge facing cloud mining readers is avoiding fraud. The field is rife with pseudo-companies that sell thousands of multiyear subscriptions, cover for a couple visit this site right here of months, and then disappear into the sunset. If you choose to try cloud mining, do your homework in advance and confirm that the company you're dealing with is a true cloud miner and not a scheme.

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 huge incentives for referring new clients; anything above a 10% referral commission is profoundly suspicious, because valid mining pools simply don't generate a large enough profit margin to pay big commissions. .