Bitcoin Mining – How You Can Dig For $$$s

by | Mar 31, 2022 | 0 comments

 

I’m often asked this question: Can I mine my own Bitcoin? The Answer is Yes…But.

First… What is Bitcoin mining and Why is it Done?

Bitcoin mining is the process by which new coins are entered into circulation.  It is also the way the bitcoin blockchain confirms new transactions and validates the chain’s integrity.

Mining is performed using computers to solve complex mathematical problems.  The first computer to solve the problem adds a block to the chain and receives the rewarded coins and the process starts over.  The reward for completing this task is 6.25 BTC or $290,000 at today’s bitcoin value.

Currently,  there are approx. 1 9 million coins in circulation out of a total cap of 21 million.  It is estimated that the final coin will be mined in 2140 – after that, miners will be paid fees in order to keep the validation and integrity of the bitcoin blockchain.  The whole process is called Proof of Work (PoW) and it requires a lot of computing power.

Can You Be a DIY Miner?

To start a DIY mining operation you’ll first need to obtain a ‘mining rig’ but before you invest in a rig I highly recommend you educate yourself on the hone-mining process.  Several good places to start are r/Bitcoinmining, and Braiins.  There are also many free bitcoin home-mining tutorials on YouTube.  

Once you have a very good understanding of what home-mining entails and you want to move forward you’ll need to purchase a mining rig.  Back in the day, cypherpunks mined BTC with normal processing units {CPUs} then had to upgrade to GPUs (graphic processing units) – computers with chips used to power video games.  Now, most miners use ASICs (application-specific integrated circuits}.  Very robust processors with chips built for the sole purpose of mining bitcoin.  Big mining companies like Riot Blockchain or Marathon Digital have entire warehouses full of ASICs.

Industrial mining operation with hundreds of ASICS

For the DIYers, companies such as Luxor and Compass sell home mining rigs.  One of the most popular is the Bitmain Antminer S19 (see photo),  But if you are running a sole S19 your chance of mining any coin is ver remote.

S19

So, to give themselves a fighting chance, home miners join a mining pool, ie. Slush Pool.  And although your single S19 only adds a smidgen of power to the pool, you will receive your pro-rata share of any mined coin.  Naturally. the more rigs you are running the more coin that comes your way.  Home mining pools wear about 5-10% of all bitcoins mined.

Another Alternative – The ‘Retail’ Miner

Hmmm… Say I want to be a home miner but don’t want the hassle of running a rig?   Enter the ‘retail miner’, who outsources the task of running and maintaining their home rigs.  Compass is one such company {think of compass as the Airbnb of mining}. You’ll never touch your rig and income from the pool comes with much less effort.  Most retail miners use the S19 rig (which cost about $10,000) but receive between $20-40 per day less the cost of power.

Summary

For many,  home mining is a hobby and a fun thing to do.  You don’t need to be an engineer or mechanic to do it and it is an activity that can be shared with friends and family.

My guess is that home mining will continue to grow but their share of mined coins will shrink.  Yes, home miners are collectively buying thousands of new rigs but the big miners are collectively buying millions.  If you’re solely in it to make money perhaps your best bet is to invest in the companies that are manufacturing and supplying the hardware and ASIC chips.

 

 

 

 

 

 



 

 

 

Categories: Cryptocurrency
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By Jim Lavorato

Jim Lavorato is the founder of 4M Performance which is designed to assist businesses to survive and thrive in these uncertain times. Jim launched an entertainment-related company in 1988. He was at the forefront in cinema technology and helped spearhead the movie industry's transition to digital presentation and distribution. He also co-founded the Arboreal Group, an environmental consultancy. He has published articles on the motion picture and media industries and is a contributing editor for ScreenTrade magazine and writes a blog "Cinema Mucho Gusto". He is a certified SCORE Mentor in the SCORE Greater Phoenix Chapter and lives in Scottsdale, AZ. Learn more about Jim in his "About" page.

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