I have recently gotten involved in BitCoin mining, after being introduced by a former colleague, and I thought I would give a brief overview of BitCoin mining and related concepts.
To start out let us take a look at what a BitCoin is. BitCoin is a digital currency, also referred to as a cryptocurrency, were encryption techniques are utilised to verify the transfer of funds and regulate the generation of units of the currency, which is referred to as mining or more specifically BitCoin Mining.
A main differentiating factor of BitCoin compared to other traditional currencies, such as the US Dollar, is that BitCoin operates independently of a central bank, which means its value is purely based on market demand and supply.
The underlying technology used with BitCoin is called BlockChain. In a nutshell, a BlockChain is a distributed database that contains a continuously growing set of data record that is hardened against tampering and modification. A BlockChain is utilised for a public ledger of all BitCoin transactions.
So now that the basic concepts have been explained, let us get started mining some BitCoins.
Firstly you will need a BitCoin wallet to hold your BitCoins. There are various options available, falling in 3 main categories, hardware wallets, software wallets and online wallets. Do some research and see what option suits your requirements best, then set up the wallet of your choice. I used an online wallet called XAPO (www.xapo.com), which has several great features, including the ability to order a debit card linked to your BitCoin wallet. The only negative thing I experienced with XAPO is the very long verification process, which took approximately 3 weeks, before I could use my wallet.
Now that we have a wallet setup and ready, we can get busy mining some BitCoins. As with the wallet there are a few options available when it comes to mining BitCoins which are contained in 2 main categories, i.e. Mining on hardware you own or Mining in the Cloud. Once again you will have to evaluate which option is best suited for your specific situation.
There are a vast amount of hardware options available, from relatively cheap to extremely expensive. The main difference between the different options are the different levels of processing power on offer and the efficiency by which that processing power is offered (i.e. Amount of electricity used etc.). The most expensive options thus offer the highest processing power at the greatest efficiency, i.e. at the lowest relative running costs.
Just note, when considering the hardware option keep in mind the cost of the hardware purchase as well as the costs of running the hardware, which include costs such as electricity (which differs greatly between countries and even regions inside countries), as these costs can erode a lot or even all of the potential profits to be made.
For Cloud based mining options you pay to mine BitCoins in a data centre or data centres owned and maintained for by someone else. There are numerous different companies available offering the service of BitCoin mining in the Cloud and each company usually offers a few different packages, usually consisting of monthly subscriptions services to once off fee based packages. I use Genesis Mining (www.genesis-mining.com) and have to date not had any issues.
Once you have selected a mining option or options (you can utilise multiple miners at the same time), remember to link the miner/miners to your wallet so that your mined BitCoins can be stored there.
All that is left to do now is sit back and wait for the BitCoins to be mined.
It is important to that you realise this is not a get rich quick scheme, do not expect to put in $10 and make $1000 in a year, be realistic. I expect to recover my initial investment in approximately 6-7 months and thereafter I will make a profit.