How to properly start mining bitcoins from scratch in 2024

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:

1. Create a file with a .bat extension in the folder with the program.
2. Write in it the basic settings: cgminer -scrypt -o- stratum+tcp: pool address: -u user login -p password.
3. 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.

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