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If you want to join in the bitcoin frenzy with no simply buying the digital currency in the inflated prices, then bitcoin mining is another way to get involved. However, mining bitcoins will come with expenses -- and dangers -- of its own. And 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 come in any physical form. This makes a major hazard, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is how the bitcoin network retains its transactions secure.

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Because of how blockchain transactions are structured, they're extremely tough to alter or undermine, even by the top hackers. However, in order to secure these 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 monitor and secure transactions, miners earn bitcoins for every block they successfully procedure. .

The bitcoin founders have set a limit of 21 million bitcoins offered for mining. Once that total is reached, miners will continue to have the ability 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 those 21 million bitcoins have been mined.  Assuming that the bitcoin mining industry doesn't change dramatically, it looks like we won't hit the 21 million-bitcoin limit 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 is no longer sensible, because solving bitcoin transactions has become too hard for your computer to manage.

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The bitcoin network is designed to make a certain number of new bitcoins every 10 minutes. If only a few people are bitcoin mining at any given time, then the network will be generous and discuss bitcoins easily in order to reach the predetermined number. However, now that bitcoin mining has become so prevalent, the network is now much stingier about handing out bitcoins into miners.

These days, in order to have a chance at being rewarding, miners need to adopt one of two approaches: 1) buy specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To get started 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 my response payments without your needing to get involved.

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As soon as it's fairly easy to set up 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 to mine bitcoins, the mining process continues to have more difficult and will probably keep doing this for some time.

And because bitcoin mining rigs aren't cheap -- 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 out of any profits you earn from mining. Plus, most mining rigs consume enormous amounts of power, which means you also need to subtract expense from the bitcoins you earn to determine your profits. .

When buying and maintaining your own mining gear doesn't attract you, then cloud mining might be the best way to go. Cloud mining companies invest in enormous mining channels, often filling entire information centers with the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The largest challenge facing cloud mining readers 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 you can find out more 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 true 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" gains or provides enormous 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 big commissions. .