It seems as if bitcoin mining has already been around for ages and all the opportunities to make something substantial out of it are long gone. Well, not necessarily, Rollers, and today we’ll dive into what bitcoin mining is all about and the best way to approach it…
We will be looking into mining pools, mining rigs, the required equipment, the issues that will definitely arise, what cloud mining is all about and finally what other options are out there that can just eliminate you all the hassle.
The fact that the mining industry has changed greatly over the past 5 or so years is indeed true, but it doesn’t mean that bitcoin mining is left for the early birds only. This progress has opened up ways of alternative mining, making it much more accessible, easier and fun, like in the case of Rollercoin. If mining was previously considered to be more of a technical job to tackle and grasp, these days it has been turned into an investment, be it financial or time based. Let’s now start to untie the knot that is bitcoin mining and form a straightforward guide on how to mine bitcoin the right way!
How Bitcoin Mining Works?
As you know, bitcoin mining does not imply physical mining that happens in real mines all across the world. Instead it is a process where a large network of computers works on approving transactions that fill the blockchain. Each of these connected computers carries expenses, like electricity consumption, upkeep costs and the primary cost of the computer itself. Therefore, bitcoin serves as a reward to the people who participate in the blockchain with their computer’s processing power and the more advanced the computer is, the greater are the chances of a large reward.
Over 23 trillion USD is traded in bitcoin every 24 hours
A critical point that must be mentioned is that the continuous increase in mining difficulty has played an incremental role in keeping the bitcoin price at an attractive level to the miners. This is important because there is no blockchain without miners and as a result, miners come primary to the blockchain operations and not the public, that buys and sells BTC for investment or value transfer purposes. Mining difficulty goes only one way and that way is up. It increases with time and the number of computers that process transactions within the network. The more computers there are, the more difficult it will be for your own computer to get a share of each mined block. Furthermore there is a programmed to the blockchain difficulty increase, called halving, in the process of which, the reward per each block decreases every 4 years. Last halving took place in May 2020 and saw the block remuneration fall from 12.5BTC down to 6.25BTC.
Such substantial mining reward decrease means that miners must stock up on more equipment or somehow work to improve the processing power of their existing machines in order to stay in line with their usual rewards.
This then swiftly brings us to bitcoin miners and equipment in general because if you feel the need for tinkering with equipment it is most likely what you will go for. Do give Rollercoin a try first though, to learn the basics of real world mining and earn bitcoin whilst you are at it!
Bitcoin Miner and Other Equipment
Time to get real guys, if you plan to mine bitcoin in 2021, your desktop PC that you have had at home for the past 5 years just won’t do. To be more precise, even if you buy a PC or a laptop that has just been released, it won’t help much either, in a move to win over the bitcoin world. In 2021 bitcoin miners use designated computers called ASICs and they fill countless warehouses with them, scattered all over the world.
You can disregard the previous paragraph if you are a Rollercoin member because we let you mine real bitcoin regardless of the processing power of your computer…
Still, if buying actual equipment is what you are after, make sure you read on to see what you are up against. To start with, you will have to figure out what equipment to use and it is what Cryptocompare can help you with. You can use their extensive database to compare mining rigs and seek out the rig or a miner that suits your needs and location. Do take into account where the ASICs will be kept and the kind of power they require from the mains, so you don’t burn the cables, plugs and eventually your house down.
Electricity consumption comes primary when selecting bitcoin mining equipment and you must make sure that electricity costs are not greater than the reward from mining that your equipment will generate. Also, you should note that ASICs generate a lot of heat and you will have to either find a storage room with good ventilation or a room where low temperatures can be sustained.
Remember that the hotter it gets, the less productive your bitcoin miners will become!
This is why large scale mining companies always try to set their warehouses in cold climate countries like Iceland, Canada or somewhere in Scandinavia, since it is a good starting point to ensure that the mining equipment won’t overheat and remain productive throughout the full operational life cycle.
Last but not least, comes the biggest problem each miner could ever face. It is the upkeep! Just like any other IT equipment, bitcoin mining rigs or ASICs have a tendency to break or simply stop mining for no reason. As a result, you will have to keep a close eye on the performance of each miner in your collection to make sure that everything runs as it should. We know countless cases of how large rigs kept on running but not mining, consuming a lot of electricity and not producing any reward.
Bitcoin Mining Pools
Once your equipment arrives, you plug it all in and hear those fans spinning, it is time to find the right mining pool to join. Given that bitcoin mining difficulty is extremely high, there is little to no chance of getting rewarded with bitcoin by connecting directly to the blockchain. This is why mining pools exist. They group up a large number of miners just like you and combine the processing power to make sure that bitcoin blocks do indeed get mined. Once it happens, the remuneration is split between the mining pool participants based on the hash power that your equipment adds to the pool. In other words, the more work your bitcoin miners do in helping the pool to discover new coins, the greater the pool share they create on your behalf. Shares become the main accounting instrument that makes the reward distribution fair.
These are the main methods of how rewards get split within a pool:
🔹 PPS – Pay Per Share. Payout is based on shares contributed to the pool
🔹 PROP – Proportional. Reward is split proportionally between pool
🔹 members according to the member’s contribution compared to total pool
🔹 SMPPS – Shared Maximum Pay Per Share. Similar to PPS but capped to the maximum that the pool has earned
🔹 ESMPPS – Equalised Shared Maximum Pay Per Share. Similar to SMPPS but with an equal distribution of the reward between pool members
Okay now, in case you have been totally put off by all the hassle that equipment mining seems to be and are looking for other options that exist apart from Rollercoin, you can always opt for cloud mining. It is where you simply rent out mining equipment from the bitcoin mining company and receive the rewards from it without having to monitor or set up the rigs. The cloud mining company takes care of all of that on their sights for you, so in theory you can just sit and relax.
Not so much so, because one thing that is guaranteed to be present in the contract is the point that outlines that the bitcoin mining company does not promise you a 24/7 operation of the mining rigs. This goes back to the upkeep problem, where no cryptocurrency mining equipment ever works without a hiccup. We’ve seen countless cases where public’s cloud rented mining ASICs were out of work for months regardless of how reputable the management company is. Therefore, although cloud mining may seem like a perfect solution and the easiest gateway to mining, there are certain risks involved that should not be overlooked.
So What Does it All Come To?
Bitcoin mining as an industry has seen an immense rise in the last 7 years and this rise does not show any signs of stopping. Over this time, we have seen formation of the so called mining wales, corporations that manage industrial grade mining farms, banks that buy these corporations and countries that make mining part of their future economic strategy.
As for the general public that wants to start mining, the options are broad and somehow at the same time scarce, because given the vast amount of options in terms of related product and service vendors, the actual ways of mining haven’t changed.
You either buy your own equipment and join a mining pool or opt for a cloud mining vendor.
All of these options have certain advantages and disadvantages but one thing common to both is that whatever solution you go for, it’s not going to be a walk in the park. If you buy your own equipment (a lot of it in case you want to see substantial reward), you‘ll have to manage the on-time and be prepared to constantly upgrade your rig to keep the bitcoin mining profitability at the constant level. If playing with heavy computers is not your thing, then there is cloud mining, but here you have a risk of being in the hands of the mining company and not having any leverage if the situation goes South.
Nevertheless, it is not always this tough and you may just be the lucky one who’ll be able to deviate from the technical problems mentioned earlier. The earlier you start, the better your chances will eventually be to grow your small rig into something truly substantial and put yourself on the bitcoin mining map. Still though, if you are looking for more solutions, then Rollercoin is here for you, because we let you mine real bitcoin without any equipment and hidden contractual clauses. Plus you get to have whilst at it.
Most importantly, playing the Rollercoin game will teach you all the nuances of real mining, so by the time you conquer the Rollercoin ladder, you will be fully prepared for the real world. Not only skills wise, but BTC wise too!