Bitcoin Mining In 2021: A Magnificent Step-By-Step Guide
Would you like to know how to mine Bitcoin? If yes, then you’ve come to the right place.
This bitcoin mining guide will give you a detailed description of all you need to know to get your business up and running.
So, without further ado, let’s get started, shall we?
What is Bitcoin Mining?
Bitcoin mining is typically the support system of the bitcoin blockchain.
Miners provide security and also confirm transactions in the bitcoin blockchain.
As a token of appreciation, these miners get newly-formed bitcoins and the transaction fees.
They achieve this by solving computation problems. That allows them to chain together several blocks and hence the name ‘Bitcoin blockchain.’
Why is Mining Bitcoin Important?
This system was established in such a manner that it was to motivate people to assist the network and keep it secure.
It helps monitor transactions while also legitimizing the system.
It’s a fully decentralized process that further adds to the blockchain's security and legitimacy.
How Does Cryptocurrency Mining Work?
- The Hardware
When it comes to cryptocurrency mining, some of the essential requirements are powerful and specialized computers, a constant flow of electricity, strong internet connection, to name a few.
The fact that mining cryptocurrencies use a lot of computing power, the computers need to be powerful enough to handle that hassle-free.
You will need a mining kit that consists of a power supply, memory, fan, graphic cards, processor, and a fan.
In addition to that, miners need to use application-specific integrated circuits.
They also need to find a good mining app installed on their PC and leave it on. Usually, many transactions are happening at the same time. These transactions are put into groups that are known as blocks.
Miners are essentially required to verify these blocks.
As one block gets confirmed, it is put into a chain of blocks that have already gone through verification. Hence the name blockchain.
- The Software
As we have mentioned earlier, the miners run software that connects them to the blockchain to solve mathematical problems.
To decipher the blocks, you must have the transaction data using what is known as cryptographic hash functions.
In case you are wondering, a hash value is a numeric value of a fixed length that helps to identify data uniquely.
Miners try to zero down to the hash values less than the target.
Therefore, whoever is the first to crack the hash values is considered the one who mined the block. And for that reason, they get a reward.
But here is the catch, with every block of transactions, the problem the miners need to solve is always different.
And that’s not forgetting that many miners are trying to solve the problem at the same time.
However, the miner who solves the problem first is the one that gets rewarded with the new cryptocurrency. And to create a database, miners are required to keep data of all the past transactions that ever happened.
The miner checks the database of old transactions during the mining process for verification. That ensures that you haven’t spent the same currency in your prior transactions.
Also, during the mining process, they check if you have enough coins. If the user doesn’t have enough currencies, the transactions are not verified.
Bitcoin Mining Guide: Step-By-Step
There are a few things you need to do to get started in bitcoin mining.
Let’s take a step-by-step look at how to mine bitcoins:
Step One: Get a Bitcoin wallet.
When you mine bitcoins, you will need a place to put your coins. Therefore, the first step is to get a bitcoin wallet.
Obviously, you can’t mine without having a wallet, can you?
That said, you can check out our review on the best bitcoin wallets to help with your selection.
Step Two: Register on an exchange
The next thing you need to do is to find the best cryptocurrency exchange in 2021.
You will need a place to sell your coins or even buy other coins.
If you don’t know where to start, take a look at my top cryptocurrency exchanges section.
That will help you determine the ideal platform for you.
Step Three: Get the right bitcoin mining hardware.
You will need an ASIC Miner to start your mining business.
The ASIC miner is a special type of computer that’s built for the purpose of mining.
Don’t even try to mine with your computer or laptop at home. That’s because you will earn less than one penny in a year.
More importantly, it will take a toll on your electricity bill.
If you're unsure of where to find one, here is a link to a trusted site with worldwide shipping. Alternatively, you can find preowned or refurbished ASIC miners on eBay.
Just make sure that you're buying an up-to-date miner. When purchasing bitcoin mining hardware, it's crucial to have the best possible setup to increase your profit margin.
Step Four: Find a mining pool.
It’s improbable that you can get a mining payout alone; solo mining. That said, by joining a pool, you can share the hash rate. Meaning you will get a certain percentage of the profit.
With a mining pool, you will reduce the cost of mining in terms of electricity, but you will still make substantial profits out of it.
Best Mining Pools in 2021
Mining pools essentially are groups of miners who agree to cooperate and share their block rewards in proportion to the mining hash power everyone has contributed.
These mining pools allow individual miners to join their mining resources with other miners. That helps to improve their chances of mining a block and earning Bitcoin rewards.
But when choosing a mining pool, you need to consider the pool's size and the payment methods they offer.
The larger pools tend to offer frequent payments, while the smaller ones provide higher rewards since the rewards are split among fewer miners.
With that in mind, we will discuss the best mining pools in 2021 that you can join.
SlushPool was the initial Bitcoin mining pool that was announced in 2010. Without a doubt, SlushPool led the way for the other mining pools that have come up over the years. SlushPool is a medium-large mining pool that follows a score-based system to discourage pool-hopping. The pool claims a fee of 2% from every reward given on a solved block.
The mining pool also comes with a user-friendly interface and provides you with regular market updates. While SlushPool might not be the largest Bitcoin mining pool, it's still considered one of the best in the market.
BTC.com has been in the market for a while before they even opened a mining pool in 2016.
They are known for having their own blockchain explorer and wallet. The mining pool is owned by Bitmain Tech and is one of the largest pools we have in the market today.
With BTC.com, they provide their own payment methods, FPPS, TX fees in payouts, and block rewards. The pool also charges a mining fee of 1.5% and a payment threshold of 0.001BTC.
Antpool is a Chinese Bitcoin mining pool that Bitmain Technologies operate. It is a medium-sized pool that allows you to choose between the PPS+, which includes a 4% fee from the block reward and a 2% from the mining fees. Or, you could go with the PPLNS, which consists of a 0% fee. The payments on Antpool are made at least once per day if the amount exceeds 0.001BTC.
If you are a beginner in the crypto mining space, you will appreciate the clean interface Antpool offers that displays your hash rates and earnings. What's more, Antpool provides a wide range of security options, including wallet locks, email alerts, and two-factor authentication.
F2Pool was established in 2013, and over the years, it has grown into a medium-large mining pool. F2Pool mining pool operates with a PPS+ reward system that takes a fee of 2.5%. F2pool also supports the mining of Ethereum, Litecoin, Zcash, among other coins.
The platform offers a daily payout with a minimum withdrawal of 0.005BTC. And unlike most Chinese mining pools, F2Pool has an English interface that is quite simple and straightforward.
If you want to make money mining Bitcoin, joining a mining pool is the logical thing. Pools tend to vary in fees, size, and payment methods. If you are a beginner in this field, it would be best to join a large and well-established pool to give you a better experience.
Should I Mine Bitcoin in 2021?
If you haven’t realized it yet, it’s much harder today to mine bitcoins than it was a few years back.
That means if you are willing to accept the challenges, then mining bitcoin is your ideal choice.
However, there are other faster and arguably, easier ways to earn bitcoins. For instance, you can buy and sell bitcoins.
Top 5 Countries for Cryptocurrency Mining in 2021
When looking to start mining cryptocurrency, it's best to find a suitable location.
These are the ideal conditions for mining cryptocurrency:
- Cold Climate - This makes it easier to keep your equipment cool, increasing mining efficiency and decreasing the cost of electricity.
- High Download Speed - Countries with high download speeds will make the mining process far more efficient.
- Low Electricity Cost - Running your mining rigs will use a fair bit of electricity. Having a low electricity cost will make your operation more profitable.
- Legality - Mining is not legal in every country. Make sure to check your countries legality laws before you begin your crypto mining journey.
Here are the best countries for mining cryptocurrency based on the checklist above:
Without a doubt, Switzerland is one of the best countries to mine cryptocurrency in 2021.
We all know crypto-mining will require electricity and internet connectivity. Thankfully, Switzerland has a low energy cost and steady internet connectivity.
To be more specific, Switzerland's electrical service costs $0.21 for every kWh. Likewise, the country has download speeds of up to 38Mbps.
That’s enough to get your cryptocurrency mining business up and running.
Georgia is also another country that’s crypto-mining friendly. But that’s not all! Georgia has an incredible electricity fee of $0.06 for every kWh. Unfortunately, Georgia doesn’t have the highest download speeds (7.14 Mbps).
The country has an annual temperature of 5.8oC, which will help with the equipment's cooling.
Canada is on this list because it has the best climate for mining equipment. What’s more, the electricity rate in this North American country is fairly reasonable.
Additionally, mining is legal in the country. The download speeds in Canada are very impressive (28.76 Mbps). That makes this country one of the best places to start your mining business.
Cryptocurrency mining is considered legal in Finland. However, it’s not recognized as currency but as a financial contract.
All in all, cryptocurrency mining is fully accepted in Finland. The country’s electrical service costs $0.07 for every kWh. More importantly, the download speed is about 29.34 Mbps.
Finland has an average temperature of 2.100C, which is fairly good for cryptocurrency mining.
Another country with favorable weather is Iceland.
This Nordic country has one of the largest digital mining, thanks to its conducive environment.
What’s more, Iceland has endless energy reserves that will help you create the ideal cryptocurrency mining company. This country has a couple of geothermal power plants that create huge amounts of affordable electricity.
That said, the commercial electric service is $0.12 for every kWh. Additionally, the internet download speed in Iceland is 22.13Mbps.
Should You Start a Cryptocurrency Mining Farm?
Cryptocurrency mining has substantial profits, but only if you do it right. What’s more, you also need a huge capital to profit.
You need to understand the challenges that you will face from cryptocurrency mining. For instance, the electricity bill and you also need a huge capital.
All these countries have a legal framework in place to protect your cryptocurrency mining company in case of any security issues.
However, other countries with anti-democratic governments do not have any legal or respect for private companies.
As such, your mining company will never be safe, and it’s up to you to protect it. Such countries include China, Russia, Venezuela, and Belarus.
Before You Go
With the proper guidance, you can make a profit from bitcoin mining in 2021. What’s more, the value of bitcoin is rising by the day.
So, unless something happens to the cryptocurrency market or the bitcoin blockchain, your bitcoins will be quite valuable.
We hope you enjoyed our Bitcoin mining guide, and remember to take time to find the right equipment for bitcoin mining. See ya!
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