Bitcoin and other cryptocurrencies have become increasingly popular in 2021, but that has also made it far harder to get a decent foothold in the market. While the price may have dropped, it is still far higher than anybody could have expected, and that means that each coin is valuable.

What are Bitcoins?

Bitcoins are a cryptocurrency, an encrypted digital currency that uses blockchain technology. This technology confirms all transactions in a ledger and is meant to provide incredible security, all without being in the hands of any large companies or banks.

The only way to earn Bitcoin (aside from being paid in Bitcoin) is to ‘mine’ it. Mining bitcoin involves using your computer or another device as part of that blockchain like you are a bystander confirming that the transaction took place. As a reward, you will start to earn Bitcoin profits.

How Do I Mine Bitcoin?

Confirming the transactions does not mean looking at your computer and hitting one button for ‘yes’ or one button for ‘no.’ The miners (more accurately, the miners’ devices) are made to solve a hash code, a cryptographically encoded code that acts as an algorithm for securing other data.

These hash codes are part of the process for transferring Bitcoin and contain information on both the current transfer and the last transfer that happened. 

Once the hash is solved by your device, the transaction is complete, meaning that the recipient gets their money – and you get one step closer to a reward.

Does My Device Matter?

The more powerful a device is, the faster it can complete these mining jobs. Many miners create “mining rigs” that are computers specifically built to complete the confirmations as fast as possible, earning them plenty of Bitcoin.

There are two types of mining, personal and cloud mining. Personal mining uses your own computer, more specifically the GPU (graphics card unit) and any mining-specific hardware. Some miners even form ‘pools’ where they collaborate to get rewards faster by solving hashes more frequently.

Cloud mining has a lower barrier to entry – you either contract or buy some hardware in a facility (a ‘mining farm’) and get a share of the profits, although not all of these are that profitable. However, it can be better than buying an entirely new computer just to mine bitcoin.

Is Bitcoin Mining Profitable?

The amount of profit you make from mining all depends on your situation. 

Using a weak computer for personal mining is not going to earn you that much, and the Bitcoin reward may not even pay for the power you have used. However, this all depends on the current price of Bitcoin compared to local currency.

Mining Bitcoin can have a lot of nuance to it, and each user may be willing to invest a different amount. This could be upgrading to a better system, turning to cloud mining to save themselves costs for PC parts, or some other method entirely.

Whether you are sure you want to mine or just considering it, it is important to look into how it works and what you would need to do. The more you know about the process, the more informed your decisions can be.