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If you want to join in the bitcoin frenzy with no simply buying the digital currency at the inflated prices, then bitcoin mining is another way to become involved. However, mining bitcoins does include expenses -- and risks -- of its own. And also the more popular bitcoins become, the more difficult it is to mine them profitably. .

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

Bitcoin transactions are secured by blockchains, which compose a public ledger of transactions. Because of the way blockchain transactions are structured, they're extremely difficult to alter or undermine, even by the best hackers. However, in order to secure those transactions, someone needs to dedicate computing power to verifying the activity and packaging the details in a block which 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 each block that they effectively procedure. .

The bitcoin founders have set a limit of 21 million bitcoins offered for mining. Once that amount is reached, miners will still be able to benefit from transaction fees, but they won't be granted bitcoins as a reward for their work. As of mid-January 2018, roughly 16.8 million of those 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change dramatically, it looks like we won't hit on the 21 million-bitcoin restrict until the year 2140. .

During the early 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's no longer sensible, because solving bitcoin transactions has become too hard for your average 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 have been bitcoin mining at any given time, then the network will be generous and share bitcoins readily in order to reach the predetermined number. However, now this bitcoin mining has become so prevalent, the network is now much stingier about handing out bitcoins into miners.

Nowadays, in order to have a chance in being profitable, miners need to adopt one more of two strategies: 1) purchase technical 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 some 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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As soon as it's fairly simple to establish and utilize a bitcoin mining rig, really making money on the process is something of a challenge. Since more and more people are signing up to mine bitcoins, the mining process continues to get more difficult and will likely keep doing this for some time.

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

If buying and maintaining your own mining hardware doesn't attract you, then cloud mining might be the way to go. Cloud 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 biggest challenge facing cloud mining subscribers is avoiding fraud. The area is rife with pseudo-companies which sell thousands of multiyear subscriptions, cover for a few months, and then disappear into the sunset. In case you choose to try out cloud mining, do your homework in advance and confirm that the company that you're dealing with is a real cloud miner and not a strategy.

Avoid companies with anonymous domain registration (you can look up their registration info at Network Solutions), in addition to any mining company that"guarantees" profits or provides huge incentives for referring new customers; anything over a 10% referral commission is deeply suspicious, because legitimate mining pools simply don't generate a high enough profit margin to pay huge commissions. .