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If you want to join in the bitcoin frenzy without 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 the more popular bitcoins become, the harder it would be to mine profitably. .

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

Bitcoin transactions are secured by blockchains, which make up a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely difficult to alter or undermine, even by the best hackers. But in order to protect those transactions, someone needs to dedicate computing power to verifying the action and packaging the details in a block that goes into the bitcoin ledger.

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As a reward for doing the work to monitor and secure transactions, miners earn bitcoins for every block they effectively process. .

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

During the early days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that's no longer sensible, because solving bitcoin transactions is becoming too difficult 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 couple people have been bitcoin mining at any given time, then the network will probably be generous and discuss bitcoins easily official statement in order to reach the predetermined number. However, now this bitcoin mining has become so widespread, the network is now much stingier about handing out bitcoins to miners.

Nowadays, in order to have a chance in being profitable, miners need to adopt one of two strategies: 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 some other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady stream of payments with no needing to get involved.

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While it's fairly easy to establish and utilize a bitcoin mining rig, actually making money on the process is something of a challenge. Since 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 a while.

And since bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for the hardware, or several times that to get a top notch rig -- having to replace it every year or two takes a massive bite from any profits you earn from mining. Plus, most mining channels consume enormous amounts of electricity, so you also need to subtract that expense in the bitcoins you earn view it to determine your own 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 mining companies invest in huge mining channels, often filling entire information centers with all the hardware, and then sell subscriptions to individuals interested in dipping a toe into bitcoin mining.

The largest challenge facing cloud mining subscribers is avoiding fraud. The area is rife with pseudo-companies that sell thousands of multiyear subscriptions, cover view it for a few months, and then vanish into the sunset. If you choose to try out cloud mining, do your homework in advance and confirm that the company you're dealing with is a true cloud miner and not a scheme.

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 offers enormous incentives for referring new customers; anything above a 10% referral commission is deeply suspicious, because legitimate mining pools just don't generate a high enough profit margin to pay huge commissions. .