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If you want to join in the bitcoin frenzy with no simply buying the digital currency at the inflated prices, then bitcoin mining is another way to get involved. However, mining bitcoins does come with expenses -- and dangers -- of its own. And also the more popular bitcoins become, the more difficult it would be to mine them profitably. .

Unlike paper currency, that is printed by governments and issued by banks, bitcoins do not arrive in any physical type. This makes a significant risk, as hackers can theoretically produce bitcoins from nothing. Bitcoin mining is the way the bitcoin network keeps its transactions secure.

Bitcoin transactions are secured by blockchains, which compose a public ledger of transactions. Due to the way blockchain transactions are structured, they are extremely difficult to change 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 details in a block that goes into the bitcoin ledger.

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As a reward for doing the work to track and secure transactions, miners earn bitcoins for each block they successfully process. .

The bitcoin founders have set a limit of 21 million bitcoins offered for mining. Once that total is reached, miners will continue to be able 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 the 21 million-bitcoin restrict until the year 2140. .

During the first 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 difficult for your average computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins every 10 minutes. If only a few people have been bitcoin mining at any given time, then discover here the network will probably be generous and share bitcoins readily in order to attain the predetermined number. But now that bitcoin mining has become so prevalent, 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 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 purchase 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 without your needing to get involved.

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As soon as it's fairly easy to establish and utilize a bitcoin mining rig, actually making money on the process is something of a challenge. Because more and more people are signing up for mine bitcoins, the mining procedure continues to get 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 your hardware, or several times that for a top notch rig -- having to replace it every year or 2 takes a huge bite from any profits you make from mining. Plus, most mining channels consume enormous amounts of power, so 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 attract you, then cloud mining might be the way to go. Cloud mining companies invest in enormous mining rigs, 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 that sell thousands of multiyear subscriptions, pay out for a couple of 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 that 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" profits or provides enormous incentives for referring new clients; anything over a 10% referral commission is profoundly suspicious, because legitimate mining pools just don't generate a large enough profit margin to pay big commissions. .