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If you want to join in the bitcoin frenzy without just buying the digital currency at the inflated prices, then bitcoin mining is another way to become involved. However, mining bitcoins will include expenses -- and dangers -- of its own. And the more popular bitcoins become, the more difficult it would be to mine them profitably. .

Unlike paper currency, which is printed by both governments and issued by banks, bitcoins do not come in any physical type. That makes a major hazard, as hackers could theoretically create bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions protected.

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Because of how blockchain transactions are structured, they are extremely difficult to alter or undermine, even from the top hackers. But in order to protect those transactions, someone needs to dedicate computing power to verifying the activity and packaging the facts 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 successfully procedure. .

The bitcoin founders have put a limit of 21 million bitcoins available for mining. Once that amount 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 job. 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 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's no longer practical, because solving bitcoin transactions is becoming too hard 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 couple people have been bitcoin mining at any given time, then the network will probably be generous and discuss bitcoins readily in order to attain the predetermined number. However, now that 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 of two approaches: 1) buy 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 virtual currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a continuous stream of payments with no needing to get involved.

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

And since bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for your hardware, or 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 make from mining. Plus, most mining channels consume enormous amounts of power, which means you also have to subtract that expense in the bitcoins you earn to determine your own profits. .

If buying and maintaining your own mining hardware doesn't appeal to you, then cloud mining may be the way to go. Cloud mining companies invest in enormous mining channels, often filling entire data centers with all the hardware, and then sell subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining readers is avoiding fraud. The field is rife with pseudo-companies that sell thousands of multiyear subscriptions, cover for a few months, and then disappear into the sunset. In case you decide 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 scheme.

Avoid companies with anonymous domain registration (you can look up their registration info Network Solutions), as well as any mining company that"guarantees" gains 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. .