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If you want to join in the bitcoin frenzy with no just buying the digital currency in the inflated prices, then bitcoin mining is another way to get involved. But, mining bitcoins does include expenses -- and risks -- of its own. And the more popular bitcoins become, the harder it would be to mine profitably. .

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

Bitcoin transactions are secured by blockchains, which make up a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely tough to alter or undermine, even from the best hackers. However, in order to secure those transactions, someone needs to dedicate computing power to verifying the action 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 monitor and secure transactions, miners earn bitcoins for each block they effectively 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 radically, it looks like we won't hit on 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's no longer practical, because solving bitcoin transactions has become too difficult for your computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins each 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 attain the predetermined number. But now that bitcoin mining has become so widespread, the network has become much stingier about handing out bitcoins into miners.

These days, in order to have a chance in being rewarding, miners need to adopt one of two approaches: 1) purchase 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 digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a continuous flow 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, 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 have more difficult and will probably keep doing this for some time.

And since bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for your hardware, or even several times that to get a top notch rig -- having to replace it every year or 2 takes a massive bite from any profits you earn from mining. Plus, most mining channels consume enormous amounts of electricity, which means you also have to subtract expense in the bitcoins you earn to determine your profits. .

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

The largest challenge facing cloud mining readers is avoiding fraud. The field is rife with pseudo-companies which sell thousands of multiyear subscriptions, cover for a couple of months, and then vanish official source into the sunset. If 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 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" profits or offers enormous incentives for referring new clients; anything over a 10% referral commission is deeply suspicious, because legitimate mining pools just don't generate a large enough profit margin to pay big commissions. .