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What is Bitcoin Mining?

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You likely know that Bitcoin – and most other cryptocurrencies for that matter, are decentralized digital assets. And as such, transactions can be processed without the need for a centralized party – like a bank or financial intermediary. For Bitcoin to remain decentralized, it requires miners.

In its most basic form, miners are individuals or entities that connect specialist hardware devices to the blockchain network. These devices can solve highly complex mathematical equations. If the miner in question can successfully solve an equation first, then they will receive the block reward.

1. Each block reward is paid out every 10 minutes and it amounts to 6.25 BTC.

2. This is down from the previous reward of 12.5 BTC, 25 BTC, and 50 BTC.

3. Nonetheless, based on the market prices at the time of writing, a Bitcoin mining reward of 6.25 BTC amounts to approximately $250,000.

As lucrative as this might sound, Bitcoin mining is no longer profitable for the average Joe. This is because, to stand a chance of being the first person to solve the 10-minute block equation, you will need to have a specialist crypto mining machine. This is not only expensive but often very difficult to get hold of.

What is Bitcoin Mining?

Moreover, as Bitcoin miners are connected to the blockchain 24 hours per day to improve their chances of being successful, this consumes a significant amount of energy. And therefore, unless you live in a country where energy costs are low, you will likely find it very difficult to generate consistent returns from mining – even if you have the required hardware.

This is why the best Bitcoin mining sites offer their services in cloud form. That is to say, you can now mine Bitcoin and other digital currencies remotely without needing to buy specialist hardware or consume huge amounts of energy. Instead, it’s just a case of depositing funds into a mining site and choosing your contract. This subsequently enables you to earn passive income.

How Does Crypto Mining Work?

In the above section, we briefly explained the fundamentals of Bitcoin mining. Now, we’ll dig a little bit deeper so that you have a firm understanding of how this passive investment space works before committing any funds.

Traditional Bitcoin Mining

As noted above, you likely won’t be looking to engage with a traditional Bitcoin mining strategy due to the high costs involved.

Nonetheless, even if you are keen to explore cloud mining, it’s still important to have a firm grasp of what goes on behind the scenes. After all, to make money from a Bitcoin mining site – you need to risk your hard-earned capital.

1. So, every 10 minutes, the Bitcoin network mines a new block.

2. Within each block is a tranch of transactions that were executed within 10 minutes before the block is validated.

3. When the block is validated, all of the transactions within the respective block are confirmed as valid and will subsequently be posted to the Bitcoin ledger.

Now, before a block can be confirmed, miners are required to validate the tranch of transactions.

1. This is achieved when a highly complex equation is solved – which typically takes 10 minutes.

2. Only one miner can be successful in solving a specific block – which is why only one reward of 6.25 BTC is distributed.

It goes without saying that for Bitcoin miners to make money in the traditional sense, the rewards that they receive must surpass the underlying electricity and maintenance costs.

Cloud Mining Bitcoin

All of the providers from our list of top Bitcoin mining sites offered a remote service that is facilitated via the cloud. This means that in Layman’s Terms – you are not required to buy any specialist hardware devices.

Moreover, other than connecting to the internet, you will not consume any electricity when engaging in cloud mining. Instead, the cloud mining site that you sign up with will have the required hardware devices set up in their rigging farm.

And in turn, when you invest money into a cloud mining contract, you are essentially renting a percentage of available hashing power that the farm generates.

Cloud Mining Bitcoin

As a simplistic example, if you invest the equivalent of 1% into a Bitcoin mining platform and the respective rig makes a $10,000 profit in a single day, you would earn $100.

In most cases, your mining rewards will be paid to you every 24 hours. This enables you to reinvest the tokens back into another mining contract, which can facilitate compound growth.

Moreover, we should note that most Bitcoin mining companies require you to purchase a contract with a duration of at least one year. Some, however, do offer flexible terms, albeit, at less favorable yields.

Is Bitcoin Mining Profitable?

Traditional Bitcoin mining is no longer profitable for the average Joe. Crucially, this space is now dominated by a small number of large-scale Bitcoin mining pools – many of which are located in China.

With that said, it is possible to make a profit when you invest in a Bitcoin cloud mining site. In most cases, the provider will let you know the anticipated yield on your investment in percentage terms.

Some providers go one step further by letting you know how much you will make in dollars on a daily, weekly, and monthly basis.

1. However, it is imperative to remember that your ability to make a profit from mining is largely dependent on the market value of digital currencies.

2. For example, when you are shown the ROI at a Bitcoin mining site, this is based on you receiving your rewards in crypto tokens.

3. This means that a 1 BTC investment at a yield of 10% would amount to an additional 0.10 BTC in mining rewards.

4. Now, if the value of the respective digital currency drops by a considerable amount, your mining endeavors can result in a loss.

And for this reason, we would argue that there are much better ways to earn passive income from your cryptocurrency investments, which we cover in more detail later on in this guide.

Costs of Crypto Mining

When investing money at a Bitcoin mining site, many costs are accumulated behind the scenes. This includes the cost of:

1. Buying the many ASIC devices required to stand a chance of validating a block

2. Huge electricity costs to keep the crypto mining rig operational 24/7

3. Ongoing maintenance

4. Internal costs related to facilitating accounts, deposits, and withdrawals

These costs will, of course, be passed on to you as a client of the website. The good news is that the best Bitcoin mining sites that we came across build these costs into the ROI of the respective contract.

As such, you know exactly how much you will make from your mining investment.

Another fee to bear in mind is the opportunity cost of having your digital currencies locked away in a mining contract. As noted earlier, you often need to sign up for a term of at least one year. During this period, you likely won’t be able to withdraw your tokens.

How to Start Mining Bitcoin?

If you’re confident that cloud mining is right for you and wish to start earning passive income today – this section of our guide will get you set up with the leading platform Shamining.

Step 1: Open Shamining Account

The first step is to visit the Shamining website and click on the ‘Register’ button.

how to use Shamining

You will then be required to enter your first and last name, email address, cell phone number, and a chosen password.

Step 2: Deposit Funds

Next, you will be asked to deposit into your account. The minimum deposit at Shamining is $250, albeit, make sure that you add enough funds to cover the Bitcoin mining contract that you wish to invest in.

Take note, if you are planning to deposit funds with a debit or credit card as opposed to cryptocurrencies, then you will need to upload some ID.

Step 3: Choosing Bitcoin Mining Contract

Now that you have funds in your Shamining account, you will need to choose the contract that you wish to invest in.

how to use Shamining

If you’re unsure which contract is best for you, Shamining offers a handy calculator. Once you’ve selected a suitable contract, click on the ‘Buy’ button and confirm the investment.

Step 4: Earn Passive Income

As soon as you confirm the mining contract via your Shamining account, you will automatically start earning passive income. The Bitcoin tokens that you earn will be deposited into your account.

You are welcome to request a withdrawal at any given time. With that said, some investors will use their rewards to buy new contracts. This is a good option if you are looking to benefit from compound growth.

Is Mining the Best Way to Make Money with Crypto?

sWe briefly explained earlier that in the grand scheme of things, there are much better ways to earn passive income from cryptocurrencies when compared to Bitcoin mining.

1. After all, when you invest via a cloud mining website, your ROI is largely dependent on the market value of the respective digital currency.

2. If the market value drops, then you might be operating at a loss. Furthermore, and perhaps most importantly, the Bitcoin cloud mining industry is filled with scammers.

3. In many cases, the mining website will just be a front to deceive you into depositing your cryptocurrencies. And, when you do, you will likely never see the tokens again.

This is why we much prefer crypto savings accounts offered by reputable platforms like Crypto.com, Aqru, and BlockFi. The aforementioned platforms have a great reputation in this space and enable you to earn interest on your cryptocurrency deposits. There are various yields and lock-up terms on offer – so most investor profiles should be catered for.

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