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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 become involved. However, mining bitcoins will include expenses -- and risks -- of its own. And the more popular bitcoins become, the harder it is to mine profitably. .

Unlike paper currency, which is printed by governments and issued by banks, bitcoins do not come in any physical type. This creates a significant hazard, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is how the bitcoin network keeps its transactions protected.

Bitcoin transactions are secured with blockchains, which compose a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely difficult to change or undermine, even from 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 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 that they effectively procedure. .

The bitcoin founders have set a limit of 21 million bitcoins available 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, roughly 16.8 million of the 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change radically, it seems like we won't reach on the 21 million-bitcoin restrict 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 is no longer practical, 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 every 10 minutes. If only a few people have been bitcoin mining at any given time, then the network will probably be generous and discuss bitcoins easily in order to reach the predetermined number. However, now that 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 at being profitable, 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 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 steady stream of payments without your needing to get involved.

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As soon as it's fairly easy to set up and use 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 procedure 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 several times that to get a top-quality rig -- having to replace it every year or two takes a huge bite out of any gains you earn from mining. Plus, most mining channels consume enormous amounts of electricity, so you also have to subtract expense in the bitcoins you earn to determine your profits. .

If buying and maintaining your own mining gear doesn't appeal to you, then cloud mining may be the way to go. Cloud mining companies invest in huge mining rigs, often filling entire information centers with 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 area is rife with he said pseudo-companies which sell thousands of multiyear subscriptions, pay out for a few months, and then vanish into the sunset. In case you decide to try cloud mining, do your homework in advance and confirm that the company you're dealing with is a real cloud miner and not a scheme.

Avoid companies with anonymous domain registration (you can look up their registration info at Network Solutions), as well as any mining company that"guarantees" gains or provides enormous incentives for referring new clients; anything over a 10% referral commission is profoundly suspicious, because valid mining pools just don't generate a large enough profit margin to pay huge commissions. .