Bitcoin is the most recognized application of blockchain technology. Since its creation in 2008, it has undergone rapid growth, reaching a market capitalization of nearly 600 billion euros as of May 2022. In comparison, the second most utilized cryptocurrency, Ethereum, had a market capitalization of 235 billion euros. One of the various methods to acquire Bitcoin (BTC) is through mining. BTC mining is based on the Proof of Work (PoW) mechanism, which translates to “Proof of Work,” and provides robust security for Bitcoin.

Things to know to get the most out of this guide:

In this guide, you will learn the basics of Bitcoin mining: the different methods, the necessary equipment, and the essential steps…

Things to know before commenting on this guide:

No specific skills are required.

Bitcoin is the most well-known use case of blockchain. Created in 2008, it has since experienced meteoric development, with a capitalization of around 600 billion euros in May 2022, compared to 235 billion euros for the second cryptocurrency used worldwide, Ethereum.

Among the different ways to obtain Bitcoin (BTC), we find, among others, mining. BTC mining is based on the Proof of Work (PoW) mechanism. This principle, translated as “Proof of Work,” ensures strong security for Bitcoin.

Mining Bitcoin is a practice that more and more individuals and companies are deciding to practice. This concept consists of starting one’s computer(s) so that they “discover” Bitcoin through a complex set of calculations. You should know that there are three different methods for mining BTC. You are free to choose the one that suits you best, whether in terms of knowledge or your budget, because mining can be expensive, especially in terms of equipment.

But what does mining Bitcoin mean? How much does mining Bitcoin work? How can you start mining Bitcoin? Are there Bitcoin mining companies where you can work in?

In our guide below, we shall explain everything about mining Bitcoins!

What is Bitcoin Mining?

Bitcoin mining

BTC mining is the process by which new Bitcoins are created and added to the blockchain. As a reminder, the blockchain is a kind of large register open and accessible to all, entirely decentralized, which records all Bitcoin transactions from its creation until today.

BTC mining is carried out by miners or companies specializing in BTC mining. The latter uses compelling computers to solve pretty complex mathematical equations. When the equation is solved, a block is added to the blockchain.

This addition can be rewarded with a given amount of bitcoin. It is essential that miners work together, as this maintains and guarantees the network’s security! This prevents double spending and ensures that all transactions are verified transparently.

How is Bitcoin Mined?

bitcoin mining

You might ask how bitcoin mining works. In this next part of the article, we shall present three effective methods for mining BTC. These are cloud mining, mining with ASIC, and mining in a mining pool. Let’s go!

BTC Mining on Cloud Mining

This is the most straightforward and economical method to start Bitcoin mining. Cloud mining Bitcoin is ideal for beginners, who will pay a third party or company to mine for them.

In exchange, you get the Bitcoin rewards. Mining Bitcoin on cloud mining has many advantages, namely:

  • Un faible investissement de départ
  • A low initial investment
  • No specific equipment to purchase
  • No technical knowledge to acquire
  • No increase in electricity bill
  • No problem with material storage

Some disadvantages must also be considered since mining Bitcoin on cloud mining is much less profitable than traditional mining. A few players have established themselves in the cloud mining market – particularly GMINERS, Ecos, and finally, Just Mining.

Bitbuy

  • Regulated platform
  • Suitable for beginners
  • Not available in US

Solo BTC Mining with an ASIC

Solo BTC mining with an ASIC allows you to keep all your gains. However, it is a much more complex and costly mining method in terms of investment, which is therefore reserved for experienced miners.

Mining Bitcoins alone allows you to control your activity and not share your winnings. To mine Bitcoin, you need an ASIC, a machine of programmed chips dedicated to cryptocurrency mining, and a Bitcoin mining rig with several graphics cards of variable power. Yet, you must show restraint, as Bitcoin is the cryptocurrency with the most miners today. Therefore, you must be extremely patient to find a block, and profitability is only sometimes there.

BTC Mining in a Mining Pool

Bitcoin mining in a mining pool is collective mining. That is, the power of the graphics cards of different miners is pooled to facilitate the search for blocks. Halfway between cloud mining and solo mining, the mining pool represents an excellent solution for pooling expenses and, above all, increasing the chances of mining Bitcoin thanks to more significant weight in the network. This solution is aimed at both beginner and experienced miners.

With the BTC mining pool, processing is faster. Having multiple nodes on the same network speeds up the discovery process and thus allows you to mine much quicker solo. The mining pool earnings are distributed between the different miners, and a commission is charged by the platform used. Some of the best BTC mining pools include BTC.com and Poolin.

Mining Bitcoin in Three Simple Steps

Bitcoin mining
macro miner figurines digging ground to uncover big shiny bitcoin

The mining pool is the recommended method for mining Bitcoin, regardless of whether you are a beginner. It is, in fact, the method that makes it possible to generate the most stable income while pooling the initial investment. If you already have the mining hardware, follow this tutorial to mine BTC in a mining pool.

1 – Download Bitcoin pool mining software.

Once the BTC mining hardware is correctly installed, you must choose the appropriate Bitcoin mining software. The BTC.com platform is one of the most used by Bitcoin miners.

Go to the BTC.com website and click the “Pool Service” button. You are then asked to create an account using an email address or phone number. You will then need to indicate the nature of your hardware and download the software adapted to your operating system.

2 – Configure BTC pool mining software

Once the software is installed, a user guide allows you to configure the settings according to the power of your machine. The dashboard will enable you to adjust the settings, access the mining history, send your winnings to your wallet, etc.

Be careful to correctly enter your wallet data into the BTC pool mining software and configure an amount from which profits must be transferred.

3 – Mining BTC… Transfer the rewards!

Once all the data is entered and the settings are correctly configured, you can start mining BTC. The tokens earned will be automatically sent to your wallet based on the payout threshold you indicate.

Please note: BTC mining software charges a commission on winnings, which must be considered when calculating profitability.

Coinbase

  • Regulated exchange
  • An easy-to-use platform
  • Free crypto training offered

Where to Store your BTC tokens?

Bitcoin mining

You need a BTC wallet to store the BTC obtained as a reward. This electronic wallet allows you to keep your bitcoins more or less securely. There are two types of Bitcoin wallets:

  • The BTC Hot Wallet: It is a hot storage solution for private keys. This type of wallet is accessible with a computer and an internet connection after opening an online wallet. This is the simplest option but the least secure. Some examples are MetaMask, Coinbase, eToro, etc.
  • The BTC Cold wallet: It is a cold storage solution for private keys. This type of wallet comes in a physical form and is the size of a USB stick, which plugs into a computer or where BTC is stored. The BTC hard wallet is more secure but less easy to use, thanks to offline storage. It is also paid. Trezor and Archos offer BTC hard wallets, but the best on the market is undoubtedly Ledger, for which we provide a complete guide here.

Binance

  • Low fees
  • One of the largest crypto exchanges
  • Fee discount for using native BNB

Bitcoin mining: What is it?

To understand how to mine Bitcoin, knowing in advance what this action consists of is essential. Bitcoin is a unique cryptocurrency, and in addition to being the most widespread, it has the particularity of having a cap. This cap or ceiling corresponds to the maximum number of tokens in circulation in the long term. The BTC cap is 21 million. That is to say, there will always be 21 million Bitcoins in circulation.

Bitcoin mining aims to secure and verify transactions between different Bitcoin users. This is computer work involving complex calculations carried out using ultra-powerful machines. 

BTC mining not only allows you to participate in the blockchain network actively but also to obtain rewards. It consists of increasing the volume of Bitcoins in circulation and securing the Bitcoin network when it creates, verifies, publishes, and propagates new blocks in its blockchain.

Mining BTC corresponds to the action of securing the network through verified calculations.

Halving: Bitcoin mining is becoming more and more complex

While other cryptocurrencies have no cap, Bitcoin has the particularity of having a limited supply. At the start of 2022, nearly 19 million Bitcoins were circulating globally. And since the cap is 21 million, only 2 million bitcoins are left to mine.

A mining bonus division system has been implemented to reduce the number of new bitcoins created each year. This is called Halving. In May 2020, the 630,000th block was identified, and the reward increased from 12.5 BTC to 6.25 BTC for the miner. The next halving is expected at the end of 2024, when the premium will increase from 6.25 BTC to 3.125 BTC. It is estimated that the maximum number of bitcoins in circulation (21 million) will be reached after 33 halvings, i.e., around the year 2141.

BTC mining: essential vocabulary

There are a few vocabulary words that you need to know before embarking on a BTC mining activity.

  • Nonce: Arbitrary number intended to be used only once.
  • RIG: All mining equipment without its case.
  • Halving: System of dividing the mining premium by two.
  • CPU: It is the central processor.
  • Node: Computer holding the blockchains and operating peer-to-peer. He is the one who takes care of the interactions between the different stakeholders.
  • Hashrate: This is the power delivered by the CPU or graphics card, making it possible to determine the profitability of mining.
  • Remote: Remote control of RIGs.
  • Blockchain: It is a database containing the history of cryptocurrency exchanges. An apt method of storing and transmitting data in the form of linked blocks, impossible to modify.
  • Payout: The minimum amount of coins required to obtain payment from the pool on the wallet.

BTC mining: Proof of Work

The principle of bitcoin mining is based on PoW (Proof of Work). The miners calculate the nonce, corresponding to a series of characters meeting complex criteria and including a fingerprint containing the pieces of the blockchain. PoW allows the blockchain to remain homogeneous and mathematically (almost) impossible to usurp.

When a miner finds a combination, the latter provides a “Proof of Work,” which allows him to prove that he was the first to solve the problem. This proof of work will allow him to receive a reward for his work and authorize him to create a new block.

A concrete example

Let’s imagine that Fabien sends 0.25 BTC to Aurelien. This transaction request is publicly broadcast on the Bitcoin network via a node. This is where the work of the miner begins, who must carry out several checks:

  1. He must verify that Fabien owns 0.25 BTC and that this information is stored in the blockchain. To do this, many computers communicate with each other and validate, with a majority vote, that the sender holds the number of BTC he wishes to send.
  2. It must perform a complex control calculation for the transaction.
  3. He must ensure that the 0.25 BTC has been subtracted from Fabien’s wallet and added to Aurelien’s wallet.
  4. He must register this new transaction in the Bitcoin blockchain so that a trace of the transaction is present in the register.

This is how the proof of work certification process is launched. When the block is created and finalized, it is added to the rest of the chain, and the miner can collect his reward.

Bitcoin mining: The necessary equipment

Bitcoin mining requires machines with high-performance computing power. And it is precisely because of this computing power that BTC mining is so energy intensive. To be able to mine Bitcoin, you need the following hardware:

ASIC

Although it is possible to mine Bitcoin with a traditional computer, the latter’s power often needs to be improved to make the activity profitable. This is why purchasing an ASIC is essential. This machine specializes in cryptocurrency mining and has significant computing power.

Among the best ASICs for mining bitcoin, we find the MicroBT Whatsminer M30S++, the Bitmain Antminer S19 Pro, or the iChicken B2 devices sold from 5,000 to more than 15,000 euros, depending on their power.

Pool mining software

Choosing BTC mining software is fundamental since it is this software that will allow you to exploit the full power of your ASIC’s graphics cards. BTC mining software runs on Linux and Windows. Some of the best BTC pool mining software includes Ecos, Gminers, and Slushpool.

The operating system

You need a compatible operating system to run your BTC pool mining software. Most Bitcoin mining software is available in Windows or Linux versions.

  •  Windows: The operating system preferred for beginners because it is easy to learn 
  • Linux: The more precise and complex operating system, ideally suited to BTC mining but less easy to learn for beginners.

Air conditioning for the equipment

As Bitcoin relies on the Proof of Work (PoW) mechanism, the devices used to perform complex calculations can quickly tend to heat up. But for mining to be efficient and to ensure better longevity for its machines, it is essential to avoid overheating. This is why Bitcoin miners usually have an air conditioning system in the room where the hardware is located.

How profitable is Bitcoin mining?

Bitcoin mining

The profitability of Bitcoin mining depends on three major factors:

  • The price of BTC
  • The cost of electricity
  • The amount invested in the equipment

Today, few individuals mine Bitcoin profitably. Indeed, for Bitcoin mining to be profitable, it should be done for €0.10 per kilowatt of electricity maximum. At less than €0.07 per kilowatt, BTC mining can even become viable.

  • In France, in 2022, the average price per kWh for individuals is estimated at €0.1740, well above the maximum amount to ensure profitable BTC mining.

BTC mining hardware such as graphics cards and ASICs evolve quickly, hence the importance of making the equipment profitable as soon as possible.

Calculating the profitability of Bitcoin mining

The profitability of Bitcoin mining depends not only on the elements set out above but also on the power of the ASIC used for the calculation and the different hash algorithms. To facilitate the analysis of profitability, various sites offer automatic calculators in which you must enter several pieces of information:

  • Hash power
  • Electricity consumption
  • The cost of the kWh
  • Cryptocurrency mined
  • Any pool fees

Once this information has been transmitted, the online tool automatically calculates the operation’s profitability. However, this calculation does not consider the initial investment (equipment purchase).

At Tokize, we recommend these BTC mining profitability calculators: Whattomine, Cryptocompare, NiceHash, and Stelareum.

 

  • Possible financial gains.
  • Indirect investment in BTC.
  • Direct participation in the development of blockchain and decentralized systems.
  • The possibility of generating money while staying at home .
  • Reducing your heating bills thanks to the heat emitted by the equipment .
  • Difficulty being profitable due to the cost of electricity .
  • The important initial investment with the purchase of an ASIC.
  • Lots of technical knowledge to acquire.
  • Ecological problems linked to the use of energy-intensive equipment.
  • The difficulty of mining new blocks solo.
  • Equipment very quickly outdated in terms of technology .

Our conclusion on Bitcoin (BTC) mining

Ultimately, Bitcoin (BTC) mining is an absolutely essential process for creating and securing the network. In solving complex problems, miners play a central role! They allow the blockchain to continue to live and develop. Getting started is, therefore, a good idea.

On the other hand, you should tread cautiously as Bitcoin mining requires using large amounts of energy. Additionally, the equipment to be used is expensive. You must, therefore, think carefully before equipping yourself and opt for options that consume as little electricity as possible.

Despite these challenges, Bitcoin mining is a fascinating and ever-evolving field that plays a vital role in the digital economy and blockchain technology. As the next halving dawns, there is little doubt that the impact of mining will be even more scrutinized.

FAQs about Bitcoin Mining

Who can mine Bitcoin?

Anyone with good computer skills can mine BTC. However, it will be necessary to invest in cutting-edge equipment and train beforehand to be profitable.

How long does it take to mine a Bitcoin?

It takes, on average, 10 minutes to mine a Bitcoin block, with each block corresponding to a reward of 6.25 bitcoins. For a particular miner equipped with an Antminer S19 Pro type ASIC (110TH/s), it would currently take around 1400 days to obtain a Bitcoin reward.

Is Bitcoin mining free?

Bitcoin mining is not free, as you earn a reward on every block you mine.

Is Bitcoin mining profitable?

Bitcoin mining profitability reduces by half every four years. As of 2020, the reward for mining one block was 6.25 BTC.

When will the next Bitcoin Halving take place?

Currently, the block reward for Bitcoin is 6.25 BTC. This reward will be halved during the next Halving, increasing from 6.25 to 3.125 BTC between March and June 2024. The protocol provides for a Having every four years on average.

Is Bitcoin mining legal in France?

Bitcoin, like all other cryptocurrencies, is not legal tender in France. As no French or European directives prohibit it, Bitcoin mining is considered legal.

How do Bitcoin mining scams work?

Some companies or websites pretend to offer Bitcoin mining services, then attempt to dupe you of your funds. However, while there are fake Bitcoin mining companies, there are also legitimate ones.

How many Bitcoins have been mined so far?

More than 19 of the 21 million Bitcoins created have already been mined. Today, there are less than two million BTC left to be mined. The last Bitcoin will be mined in the year 2140.

Can I be mining Bitcoins at home?

Bitcoin mining requires large amount of electricity, stable Internet connection and sophisticated minng equipment. To mine Bitcoins at home would require you to have all these.

How do I start mining Bitcoins?

When starting out, you simply need a Bitcoin wallet, mining software and mining hardware.

About the author

Tobi Amure

Tobi began his career in 2017 as a crypto writer, where he focused on producing educational content. He worked with Stockbossup, an investment platform dedicated to educating black people. Prior to that, he worked as a copywriter with Turboxbt, a crypto trading platform. In 2021, Tobi joined Watcher Guru as a crypto news editor. He was recognized as one of the top 333 web3 creators on LinkedIn for crypto in 2022.