Bitcoin has been one of the central topics for investors, tech enthusiasts, and even skeptics for over a decade. Whatever your opinion is, there is no doubt that the number one cryptocurrency is gaining institutional adoption with legislation allowing traditional financial institutions to provide BTC-related services. However, there is still one area of Bitcoin where you can participate independently from financial institutions or cryptocurrency exchanges, and that’s BTC mining.
What is Bitcoin Mining?
In simple terms, Bitcoin mining is a process of verifying BTC transactions before they are added to the blockchain. Mining is done by specialized computers designed only to process Bitcoin transactions. They eliminate the need for having a trusted third party like a bank to process the transaction.
Bitcoin’s decentralized network of computers handles more than 300,000 transactions per day, and that’s without taking into account the Lightning Network (a layer-2 upgrade of the cryptocurrency that can handle up to a trillion transactions per day).
Bitcoin mining is done with ASIC miners. ASIC stands for Application-Specific Integrated Circuit. These machines consist of computer chips designed for the sole purpose of mining Bitcoin. Unlike regular PCs, they are not capable of handling multiple tasks, and for that reason, they can’t be used for anything else. These computers efficiently solve the mathematical problems associated with each new block set to be added to the Bitcoin blockchain.
How to Start Bitcoin Mining?
We’ve mentioned that you need to buy an ASIC miner to start mining Bitcoin. The best way of getting one of these machines is to purchase them directly from manufacturers in China. Presuming that you’ve already managed to get your hands on one, here are some steps you will need to take to set up your mining operation.
Power Supply
These computers are power-hungry and require 2,500 W or more to run. Therefore, you’ll have to keep the power requirements in mind as multiple miners can be taxing on a non-industrial grade power installation.
Internet Connection
Each ASIC miner needs an internet connection. The best practice is to hook up ASICs directly to your router with LAN cables. While it’s technically possible to connect them wirelessly, it’s not recommended. Direct cable connection reduces latency and is more stable and efficient.
Miner Setup
To access the ASIC miner, you will have to find its IP address. You can easily find the information in your router settings, as you can see all connected devices and their associated local IP addresses.
Copy and paste the IP address into your browser’s search bar when you find the IP address. You’ll be prompted to enter your username and password, which you can locate in the manufacturer’s instructions that you’ve received with the ASIC.
Setting Up a Mining Pool and Wallet Address
ASIC requires some information to start working: the mining pool it will be a part of and the wallet address where your mining rewards will be deposited.
A mining pool represents a joint effort of a group of miners working together to find new blocks. Since each miner has a measurable computing power output, everyone in the group gets a reward proportional to the imported computing power. The performance of ASIC miners is expressed in Gh/s or Th/s, and profit is directly proportional to the computing power you are adding to the pool.
The computing output of ASIC miners is expressed in hashes per second. The more hashes the miner can process, the faster it can get to a solution and be rewarded before other miners. That’s why miners often join mining pools, as they can get profit more consistently than by trying to mine solo.
If you already don’t have one, you’ll need to create a Bitcoin wallet. There are plenty of wallet options available, and you can choose from multiple different hardware and software solutions.
The mining pool you chose will have information on how to add a pool username and password for your miner.
Is Bitcoin Mining Profitable?
There isn’t a simple answer to this question. The price of electricity is the main factor in determining how profitable mining can be for your operation (or whether it is profitable at all). Some larger mining operations use renewable energy sources such as solar, wind, or other sources with a smaller carbon footprint. Besides lowering the environmental impact of mining, their main advantage is a better return on investment.
With the current mining difficulty, Antminer S19 Pro earns around $660 per month before adding the pool fee and power costs. Since the ASIC miner draws 3,250 W, the cost of KWh will be the main factor determining whether something like this is profitable for you to do.
Source: Plato Data Intelligence: PlatoData.io
