{"id":1450,"date":"2019-09-20T10:18:23","date_gmt":"2019-09-20T10:18:23","guid":{"rendered":"https:\/\/paybis.com\/blog\/?p=1450"},"modified":"2025-12-23T10:34:53","modified_gmt":"2025-12-23T10:34:53","slug":"bitcoin-miner","status":"publish","type":"post","link":"https:\/\/paybis.com\/blog\/bitcoin-miner\/","title":{"rendered":"Becoming a Bitcoin Miner – A Step by Step Guide"},"content":{"rendered":"

Bitcoin Mining is the backbone of the Bitcoin network. Without it, there would be no coins and no transactions. Aside from that, being a Bitcoin miner has also proven to be a very profitable \u201cjob\u201d, helping some amass fortunes along the way.\u00a0<\/span><\/p>\n

Today, depending on your location and equipment, mining bitcoins in your free time can help you grow an additional source of income while helping the network improve and grow.<\/span><\/p>\n

For that reason, this article will primarily explore Bitcoin Mining and how you can become a miner yourself, so you can start acquiring Bitcoin through utilizing this process.\u00a0\u00a0<\/span><\/p>\n

How Bitcoin is Acquired<\/span><\/h2>\n

Bitcoin is the first, most popular and most valuable cryptocurrency. It has proven to be a great investment opportunity for your hard earned money and is even used as an alternative currency for online purchases.<\/span><\/p>\n

Since its release in early 2009, it has been steadily gaining value over time. The first recorded traded value of Bitcoin was $0.03 and at the time of writing, it is worth more than $10.000. Bluntly put, this is a x300.000 gain in just over 10 years. Not a single asset in any market can claim such growth in such a short time span.\u00a0<\/span><\/p>\n

Therefore, it is no surprise that more and more people are starting to gain interest in acquiring some Bitcoin as either short or long term investments.\u00a0<\/span><\/p>\n

But where do new Bitcoins come from and how are they created? How can someone get access to this asset?\u00a0<\/span><\/p>\n

Well, there are two main sources to acquire Bitcoin. The first one is to purchase some of those already in circulation from a cryptocurrency exchange, like <\/span>Paybis<\/span><\/a>, for example. The second option is to participate in creating new ones! This appealing option for acquiring Bitcoin is called <\/span>Mining<\/i><\/b>.\u00a0<\/span><\/p>\n

If you\u2019ve ever heard about cryptocurrencies, you must also have come across information about how they can be mined out of thin air using computers or other machines.\u00a0<\/span><\/p>\n

However, before we delve into more technical matters, let\u2019s cover some basics and a short history of Bitcoin mining.\u00a0<\/span><\/p>\n

The Bitcoin Protocol<\/span><\/h2>\n

First of all, we need to understand what Bitcoin is and where it comes from.\u00a0<\/span><\/p>\n

Let\u2019s start with a short explanation on how our traditional monetary system works and how Bitcoin differs from it.\u00a0<\/span><\/p>\n

For example, when we are talking about financial institutions and paper money (also known as fiat currency) the government decides when to print and distribute more of it. With a central authority like this, it is easy to put new money into circulation.\u00a0<\/span><\/p>\n

Moreover, if you want to transfer $50 from one person to another you just need to tell your trusted central authority, the bank, to do it. In this case they are the only ones that have the power to update the ledger that holds everyone\u2019s balances in the system.\u00a0<\/span><\/p>\n

\"bitcoin<\/path><\/svg><\/a><\/picture><\/p>\n

On the other hand, Bitcoin and the technology behind it, the Blockchain, were created to eliminate the reliance on this central authority.\u00a0<\/span><\/p>\n

Instead of a central bank, everyone that uses Bitcoin participates in updating the public ledger that is on the Blockchain network, where all of the Bitcoin transactions ever processed are stored.\u00a0<\/span><\/p>\n

In order to avoid giving someone too much power to update and manipulate the ledger, rewards of Bitcoin are given to people that will verify the transactions on the network. These people are called <\/span>Miners<\/i><\/b>.\u00a0<\/span><\/p>\n

Additionally, the network relies on these <\/span>Bitcoin Miners <\/i><\/b>to issue new coins that will become available on the network. Let\u2019s find out how new Bitcoins are created and who can get access to them.\u00a0<\/span><\/p>\n

Bitcoin Mining – How does it work?<\/span><\/h2>\n

Even though the name might suggest shovels, spades, dirt and rocks, Bitcoin Mining refers to a fully digital process of creating new Bitcoins on the Blockchain network.\u00a0<\/span><\/p>\n

As opposed to our traditional monetary system, there\u2019s no central government to issue new Bitcoins. Instead, it\u2019s the Bitcoin miners that create the cryptocurrency, much like traditional miners \u201cdig-up\u201d gold and silver.\u00a0<\/span><\/p>\n

But how does it happen digitally, you might ask?\u00a0<\/span><\/p>\n

This is done by using special software on their computers, which are used to solve complex mathematical equations that form <\/span>transaction blocks<\/span><\/a>. Every time an equation is solved, the miners are rewarded with a certain amount of newly created Bitcoins for their efforts.<\/span><\/p>\n

The process creates an incentive for more people to mine, putting more of the cryptocurrency into circulation. This is known as a<\/span> Proof-Of-Work<\/b><\/a>\u00a0system.\u00a0<\/span><\/p>\n

Additionally, miners are essential to the ecosystem as they are the ones who approve the transactions of Bitcoin on the network. More miners means a more secure network and faster transactions.\u00a0<\/span><\/p>\n

So, all of this sounds great and appealing! Free money, right? Who wouldn\u2019t want to be <\/span>rewarded Bitcoins<\/span><\/a> for running some software on their computer?\u00a0<\/span><\/p>\n

However, mining is far from being a simple venture. There are quite a few barriers that you need to be acquainted with before you start thinking of investing time and money into becoming a miner in 2019.<\/span><\/p>\n

Mining difficulty and the evolution of hardware<\/span>\"bitcoin<\/path><\/svg><\/a><\/picture><\/h3>\n

As we mentioned before, the mathematical equations that need to be solved have an innate complexity to them. The Bitcoin network automatically changes the difficulty of the math problems, depending on how fast they are being solved.\u00a0<\/span><\/p>\n

Back in the early days, miners were able to solve these problems with the processors that were in their computers, the central processing units or CPUs. As more miners joined the network, the problems were adapted accordingly and made them more difficult to solve, putting the creation of new Bitcoins almost to a halt.\u00a0<\/span><\/p>\n

This meant that miners needed to find an alternative to the hardware they were using before, so they turned to their graphics card processors, the GPUs. Gaming graphics cards were known to be more capable at solving complex algorithms and miners started to use them massively to mine Bitcoins. However, GPUs do come with another problem, they consume a lot of electricity and generate a lot of heat in the process.\u00a0<\/span><\/p>\n

Soon, Bitcoin became even more popular and the mining difficulty skyrocketed. As a result, mining with GPUs became obsolete. The cost of electricity and the increasing number of machines needed was too high to be able to make any kind of profit.\u00a0<\/span><\/p>\n

Instead of GPUs, the first commercial Bitcoin mining machines hit the market. Known as ASICs (application-specific integrated circuits), these were intended for specific use, in our case, high efficiency Bitcoin mining. Still used today, this technology has made Bitcoin mining even faster, while at the same time, power efficient.\u00a0<\/span><\/p>\n

The Reward Halving\u00a0<\/span><\/h3>\n

We briefly discussed that miners receive a \u201ccertain amount\u201d of Bitcoins for solving a problem. Well actually, that amount is fixed, and hard-coded into the software.<\/span><\/p>\n

In order to keep Bitcoin\u2019s value increasing through time, its creator,<\/span> Satoshi Nakamoto <\/span><\/a>wanted to make it a deflationary currency, one that doesn\u2019t lose value as time passes.\u00a0<\/span><\/p>\n

To do this, he hard coded the mining difficulty increase, but also something even more effective: the reward halving.\u00a0<\/span><\/p>\n

In fact, every 210,000 blocks (which is roughly 4 years), the number of Bitcoin that are rewarded for successfully mining a transaction block is cut by half. While, currently, miners receive 12.5 Bitcoin for each block they resolve, by the time of the next halving, this amount will drop to 6.25 rewarded coins.<\/span><\/p>\n

This results in less and less new Bitcoins being issued over time, creating a feeling of scarcity.<\/span><\/p>\n

\"Bitcoin<\/path><\/svg><\/a><\/picture><\/p>\n

Furthermore, when we take into account that 21 million is the maximum number of Bitcoins that will ever come into circulation, we have a recipe for success in deflationary economics.\u00a0<\/span><\/p>\n

Every aspiring miner needs to take in account that in May 2020, when the <\/span>next halving occurs<\/span><\/a>, the rewards will effectively be cut in half. But as history shows, this hasn\u2019t proven to be a problem in the long run. By looking at historical patterns we can observe that Bitcoin\u2019s price increases before and after each halving, making miner\u2019s efforts still worth their while.\u00a0<\/span><\/p>\n

The roles of a Bitcoin miner<\/span><\/h2>\n

Before you go out shopping for your first mining machine, let\u2019s go through the three main responsibilities a miner has towards the Blockchain and his Bitcoin-using peers:<\/span><\/p>\n

    \n
  1. Issuing new Bitcoins<\/b> – this is the simplest part. Solve the math problems, get Bitcoin.\u00a0<\/span><\/li>\n
  2. Confirming transactions<\/b> – part of the computing power is dedicated to confirming transactions and get rewarded in return. This is done to prevent double spending of the same Bitcoin and making transactions irreversible.<\/span><\/li>\n
  3. Securing the network<\/b> – by their participation in the network, miners make it more difficult to hack. The more miners there are, the more secure the network is.\u00a0<\/span><\/li>\n<\/ol>\n

    So now that you know what mining is and what it takes to be one, you are ready to discover what you need to invest to become one. As with all things, mining comes at a price, but we\u2019re here to guide you through the process of making your first steps.\u00a0<\/span><\/p>\n

    Is mining profitable?<\/span><\/h2>\n

    There\u2019s no short answer to this question, as it depends on a lot of factors. Before you buy your first piece of hardware in order to start mining Bitcoins yourself, you will need to find out by yourself if mining is profitable for you.\u00a0<\/span><\/p>\n

    Some people believe that they can quit their job the day they invest in some mining hardware, but it\u2019s not that simple.\u00a0<\/span><\/p>\n

    First of all, you must understand that Bitcoin mining is a very competitive space. Its rising value has made it very difficult for the individual miner to make a profit given the difficulty mining has reached today. If you want to make any kind of money by mining, you will probably have to join a <\/span>Mining Pool<\/b><\/a>. This is network of miners that combine their processing power in order to solve blocks in a more realistic time frame. Your rewards, in this case, will depend on the amount of work you contribute to the probability of solving a transaction block.<\/span><\/p>\n

    Efficient mining rigs that don\u2019t consume a lot of electricity and still yield some Bitcoin in return are expensive and require a considerable initial investment. Even the good ones consume quite a lot of power, so you need to factor in the price of electricity in your region.\u00a0<\/span><\/p>\n

    Nevertheless, if you follow some good guidelines and play your cards right, mining can become a good source of passive income. If you factor in that <\/span>Bitcoin\u2019s price is most likely going to rise<\/span><\/a> even more in the future, there’s still a decent incentive to become a miner even a bit late in the game.\u00a0<\/span><\/p>\n

    The Hardware<\/span><\/h2>\n

    We covered the fact that CPU and GPU mining is a revolved era.\u00a0<\/span><\/p>\n

    Trying to mine with either of these is still possible, but you will make less than one cent per month and the process might damage your computer in the long run. In short, not profitable at all anymore.\u00a0<\/span><\/p>\n

    Another option for starting with Bitcoin Mining is using a <\/span>USB miner hardware<\/span><\/a>. These are small ASIC devices that you can connect to your USB drive. Even though they are quite inexpensive (ranging from $30 to $150) Bitcoin\u2019s algorithm has become so difficult to solve that the processing power these devices provide won\u2019t get you very far. The best ones will yield you about $5 a month, so we can unfortunately conclude that these too, have become obsolete.\u00a0<\/span><\/p>\n

    Choosing the right Bitcoin miner hardware<\/span><\/h3>\n

    ASICs were introduced in 2013 and it seemed like every couple of months a new, better machine was put out on the market. Luckily, three years later, the hardware race slowed down quite a bit, <\/span>as we\u2019ve reached a technological barrier <\/span><\/a>in miner development. Even though new machines are still coming out, you can invest in one without fear that it will be outdated quickly.\u00a0<\/span><\/p>\n

    When choosing your ASIC miner, there are three main factors to consider:<\/span><\/p>\n