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If you want to join in the bitcoin frenzy without just buying the digital currency at today's inflated prices, then bitcoin mining is another way to become involved. But, mining bitcoins does come with expenses -- and dangers -- of its own. And also the more popular bitcoins become, the harder it is to mine profitably. .

Unlike paper currency, which is printed by governments and issued by banks, bitcoins do not come in any physical type. That creates a significant risk, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions secure.

Bitcoin transactions are secured with blockchains, which compose a public ledger of transactions. Because of how blockchain transactions are structured, they're extremely tough to change or compromise, even from the best hackers. However, in order to protect those transactions, someone needs to dedicate computing power to verifying the activity and packaging the facts 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 that they effectively procedure. .

The bitcoin founders have put a limit of 21 million bitcoins available for mining. Once that total is reached, miners will continue to be able to benefit from transaction fees, but they won't be granted bitcoins as a reward for their job. As of mid-January 2018, approximately 16.8 million of the 21 million bitcoins have already been mined.  Assuming the bitcoin mining industry doesn't change radically, it seems like we won't hit 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 has become too difficult for your computer to manage.

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The bitcoin network is designed to make a certain number of new bitcoins each 10 minutes. If only a few men and women are bitcoin mining at any given time, then the network will probably be generous and discuss bitcoins readily in order to reach the predetermined number. But now that 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 at being rewarding, miners need to adopt one of two approaches: 1) purchase specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To begin with your own mining rig, you buy hardware designed for mining bitcoin (or any other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady flow of payments with no needing to get involved.

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While it's fairly easy to establish and use a bitcoin mining rig, really making money on the course of action is something of a challenge. Because more and more people are signing up for mine bitcoins, the mining procedure continues to get more difficult and will probably keep doing so for some time.

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

If buying and maintaining your own mining gear doesn't appeal to you, then cloud mining may be the best way to go. Cloud Get More Information 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 field is rife with pseudo-companies that sell thousands of multiyear subscriptions, pay out for a couple of months, and then vanish into the sunset. In case you choose to try cloud mining, do your homework in advance and confirm that the company that 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 Network Solutions), in addition to any mining company that"guarantees" profits or provides enormous incentives for referring new clients; anything above a 10% referral commission is deeply suspicious, because legitimate mining pools simply don't generate a large enough profit margin to pay huge commissions. .