The cryptocurrency market attracts people with the opportunity to make money. There are different ways to do this: investing, trading, steaking, profitable farming, giveaways and others. At the end of 2017, Bitcoin network mining gained popularity. It is an activity related to mining new blocks of the chain. The question of how to properly start mining bitcoins from scratch in 2024 worries many participants of the network. This article provides a comprehensive answer to it.
How bitcoin is mined
The Bitcoin network is a chain of blocks, which stores data about all transactions. The work of the system is provided by specialnodes (nodes) – miners. Their task is to solve the cryptographic hash function. This is a special algorithm that encrypts the original data in a set of symbols. The sequence of letters and numbers is called an identifier (hash). It is necessary for creating new chain blocks and recording transactions.
Solving a cryptographic problem requires computing power. In mining they are called hash rate. For mining blocks, participants receive a reward in the form of cryptocurrency from the Bitcoin network. Such a system serves as an incentive for miners. The principle of operation of the network nodes is as follows:
- A miner finds a hash function.
- Sends the result to other nodes for verification.
- If more than 50% of the network members confirm the solution, a new link in the blockchain is created.
- The Bitcoin system is synchronized between miners.
At the beginning of 2023, the reward for finding a new block is 6.25 bitcoins. It will be given to the miner who solves the hash function first. The probability of this depends on the amount of computing power. The higher the hash rate, the higher the chance of finding a solution.
How to start mining bitcoin in 2024
As the cryptocurrency industry develops, new block mining technologies appear.Also, over time, mining BTC becomes more difficult, as more computing power is needed. The main reason for this is high competition: the overall hashrate of the Bitcoin network is constantly growing. In 2024, in order to start mining bitcoins, you need:
- Register a wallet for BTC coins.
- Choose the equipment for mining.
- Calculate the yield.
- Choose a pool (if necessary).
Register a wallet
Cryptocurrency is not stored in accounts in the usual sense. Special programs use a private key that confirms that the user has a certain number of coins in the Bitcoin network. Such software is called cryptocurrency wallets. Before you start mining bitcoins, you need to start a storage for them.
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There are different cryptocurrency wallets. They are categorized into:
- Software (for computers and mobile devices).
- Hardware.
- Online wallets (services and browser extensions).
- Paper wallets.
The choice of a bitcoin mining wallet depends on the required security and usability. Hardware devices are better suited for reliable storage of cryptocurrency. However, they are not characterized by a high level of convenience. The most functional and comfortable are software and online wallets, but they are less secure.
What to mine with
To mine cryptocurrencies, different computing equipment is used. Everything depends on the hashing algorithms, power consumption and the complexity of mining in a particular blockchain network. In 2023, CPUs, GPUs, ASICs and FPGAs are used. The last type of hardware is rarely used due to the complexity of customization.
CPU
In the early days of Bitcoin network development, a computer or laptop was used. The first block was mined by Satoshi Nakamoto using a CPU in January 2009. An Intel Pentium 4 was capable of solving the hash function in an average of 50 minutes.
In early 2023, BTC mining on processors is unprofitable. However, there are blockchains that are optimized for CPUs (e.g. Monero).
GPU (graphics card)
In September 2010, the first bitcoin mining client on graphics chips appeared. Video cards proved to be several times more efficient than CPUs. They are able to break down one complex task into dozens of smaller ones, and this leads to an increase in performance. In 2023, video cards are used to mine digital assets in some blockchains (Ethereum, Litecoin, Dash). However, it is not possible to profitably and quickly mine Bitcoin on them.
FPGA (programmable gate array)
The considered computing device is customized by the user for specific tasks. This feature is used for mining different digital assets. Valve matrices are cheaper than ASIC equipment, but they are difficult to program without certain knowledge. FPGA boards are not used in BTC mining in early 2023.
ASIC
This is the only cost-effective option for bitcoin mining. ASIC hardware is customized for one specific task, which makes the device efficient at finding a hash. It also has low power consumption relative to the power output. Among the disadvantages of ASICs is the flexibility of use. Most of these devices cannot be customized to mine other coins.
Mining farms
Using a single device to mine Bitcoin is inefficient. The 2022 Antminer S19 Pro (a performance ASIC) generates about $18.34 in revenue per day. Therefore, regular users and entrepreneurs are setting up mining farms. This increases the chances of hash solutions and profitability.
Choosing a pool for mining
How is bitcoin mining in simple words in 2024? The main problem with mining is that there is a lot of competition. To make money from it, you need to be among the first to find a solution to a cryptographic problem. However, due to the high competition, the probability of this is low. There are 2 solutions to the problem:
- Build a powerful mining farm.
- Use the services of pools.
To realize the first method, you need a lot of money. In the other case, a beginner is recommended to participate in pools. They offer to combine the computing power of users to find a hash. Jointly mined bitcoins are divided between participants according to the distribution scheme of a particular mining pool.
There are many services (Binance Pool, Nicehash, EMCD and others) offering such a service. The main nuances when choosing a mining pool are as follows:
- Power. The higher the total computing power, the faster new blocks are mined. But in large mining pools there is more competition. Therefore, participants receive payments more often, but less.
- Commission. Different bitcoin pools take 0-4% of miners’ rewards. There is also sometimes a withdrawal fee.
- Security. Integrity and resistance to hacking are important aspects when choosing a service.
- The scheme of reward distribution. You should find out what algorithm is used to divide cryptocurrency between users.
Software
To start mining BTC, tracking indicators and setting up equipment, you need special software. It is necessary to understand such programs to understand where is the best place to mine bitcoins:
- CGMiner. A productive software for experienced miners. It does not have a graphical interface, and the configuration is done through the console. The latest versions of the program work only with ASIC devices.
- BFGMiner. The software supports Scrypt (Litecoin, Dogecoin) and SHA256 (Bitcoin, Bitcoin Cash) hashing algorithms. It differs from CGMiner in the flexibility of work settings. It has no graphical interface.
- Easyminer. A program for bitcoin mining on Windows. It has a graphical interface, but is not translated into Russian. The software allows you to configure devices for BTC mining and monitor the indicators.
- Awesome Miner. The program supports the simultaneous operation of different mining equipment. It allows you to manage the process from one place. The software displays to the user the temperature, power consumption, hash rate.
Mining programs are recommended to download from official websites. At the beginning of 2023, infected files are often distributed on the Internet.
Equipment activation
Bitcoin-mining is launched with slight differences that depend on the software. In programs with a graphical interface, it is most often necessary to connect to the pool, enter a username and password. It remains to select the equipment and start mining blocks.
However, activation in a console program is different. Step-by-step instructions on how to become a bitcoin miner in CGMiner are as follows:
- Create a file with a .bat extension in the folder with the program.
- Write in it the basic settings: cgminer -scrypt -o- stratum+tcp: pool address: -u user login -p password.
- Run the executable file.
The program allows you to create configurations for Bitcoin mining. An extended list of settings is available on the developer’s website.
Principle of operation
Mining programs are created to work with encryption algorithms. They start the equipment with certain settings, and the devices start calculations. The important task of such programs is to achieve the highest efficiency of mining.
Necessary technical requirements
At the beginning of 2023, bitcoin mining generates income only on ASIC devices. They are connected to an ordinary computer or laptop. There are no high requirements for the processor and video card, because the ASIC is used for calculations. The power supply should be 10-15% more powerful than the equipment requires. The hard disk should be chosen with your wallet in mind. Fat clients (e.g. Bitcoin Core) load the blockchain completely, and its weight is 390 GB (as of February 2022).
There are other conditions that are necessary for comfortable mining:
- RAM – from 4 GB.
- Protection devices against power surges (uninterruptible power supply unit).
- Operating system Windows 7 and newer, macOS or Linux.
- Stable internet speed.
- A program to restart the mining of new blocks (for example, WatchDog).
Other ways to mine bitcoin
Often, the cryptocurrency is mined on ASIC, GPU and CPU devices. However, it can be done in other ways.
Online mining
Of the disadvantages of equipment for mining BTC allocate noise, temperature, discomfort with installation and customization. Therefore, the emergence of cloud bitcoin mining was inevitable. Special services rent computing power. This saves the user from buying ASIC devices, controlling their work and other problems.
Online mining is a risky and often unprofitable activity. Often services offering such services are scams.
Mining on your phone
Application developers have released programs for mining digital assets on mobile devices. Technically, BTC-mining on phones does not differ from the usual one. However, the power of their processors is much less, so it makes no sense to use mobile devices to find a hash in the Bitcoin network.
Payback and profitability
Users think about how to learn how to mine bitcoins and where to start in search of passive income. Profitability is an important indicator when mining BTC. The Antminer S9 device was used for the calculation.
Payback of the farm
ASICs cost a lot of money. When choosing equipment, the payback is taken into account. The approximate lifetime of mining devices is 12-18 months. Therefore, ASIC should pay off in less than a year. Services such as CryptoCalc allow you to calculate the payback. However, mining calculators give approximate figures. Payback depends on the complexity of the network at any given time.
Cost of equipment and other expenses
In 2023, the approximate price of an Antminer S9 in Russia is 37 thousand rubles. Sometimes miners apply for additional services: installation, customization and overclocking of equipment. For large cryptocurrency mining farms rent separate ventilated rooms (because of the strong noise and heating). It remains to add the commissions of mining pools – 0-7% of profit and withdrawal fees.
Potential profitability
The approximate profitability of Bitcoin-mining can be calculated by special calculators. On the CryptoCalc service you need to specify the Antminer S9 hash rate (13.5 TH/s), electricity consumption (1285W), electricity tariff in Russia ($0.046) and pool commission (1%). After entering the values, the service gives an approximate yield of $497.76 per year.
Possible risks
Bitcoins are mined with certain dangers. The main problems when mining cryptocurrency:
- Sagging coin rates. Volatility in the cryptocurrency market makes bitcoin mining a risky endeavor. When the value of a BTC coin drops, its mining becomes unprofitable.
- High price when buying equipment. For example, the cost of Antminer E3 at the start of sales was $800. When the next delivery of the equipment was made, its price rose to $2150.
- Faulty mining devices. Under the warranty, repair will take about 1 month, which will lead to downtime. And in its absence, there is a chance to lose your investment altogether.
Advantages and disadvantages of Bitcoin mining
Bitcoin mining is controversial among users of the network. The advantages and disadvantages of mining are presented in the table.
| Pros | Minuses |
|---|---|
| Passive earnings (requires a minimum of effort) | Mining devices break down, they need to be maintained, buy new ones |
| Decentralization of coins and tokens allows you to avoid government control | The complexity of Bitcoin mining is increasing |
| Affordability of mining digital assets | Uneconomical to use video cards, processors and FPGA chips |
| Coins can be easily converted into real money | High returns require large investments |
| Cryptocurrency rate growth brings additional earnings | Volatility in the value of digital assets |
| The payback period for investments in equipment is from 4 to 12 months | There is a possibility of banning mining on the territory of the country |
| Possibility to expand the farm (adding new ASICs) | |
| Availability of information about mining on the Internet. |
General recommendations
The probability of failure in bitcoin mining is high. Therefore, it is worth following these recommendations:
- First you need to study the principles of mining new blocks of the chain, and then assess the available opportunities.
- Get knowledge about information technologies. They will allow you to analyze the prospects of cryptocurrency. In the absence of knowledge about the market of digital assets, it is better to abandon BTC mining.
- Bypass cloud services for cryptocurrency mining.
- Buy new equipment. Do not take used, as mining devices quickly become obsolete and wear out.
Summary
You can always make money from mining as long as there are blockchains based on the Proof-of-Work consensus algorithm. However, there is a tendency for the process to become more complex and the threshold of entry to increase. Professionals and large investors are slowly crowding out amateurs. But now, in 2024, small miners are still mining bitcoins on ASIC hardware.
Frequently Asked Questions
💻 Can I use a video card to mine Bitcoin?
In early 2023, GPU mining of BTC is unprofitable. The graphics chip will burn out faster than the cost of the graphics card will be recouped.
💵 Is it profitable to mine bitcoins without pools?
To mine BTC, you need a lot of computing power. They must be enough to be the first among competitors to find a valid hash of a new block. Otherwise, the probability of success is minimal.
🔎 Where to buy an ASIC?
You can buy asic miners from official distributors. However, more often the equipment is out of stock due to high demand.
🔧 What is the best way to mine Ethereum?
In 2023, video cards are used to mine ETH. They are more efficient.
📅 When will the last block of Bitcoin be mined?
It is estimated that it will happen in 2140.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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