How to Mine Bitcoin

You've heard of Bitcoin and you're ready to get your hands on some digital wealth. However, this may be easier said than done. When you "mine" Bitcoin, you actually verify Bitcoin transactions in the public, decentralized ledger of Bitcoin transactions (called the blockchain).

Every time you find a new block to add to the chain, the system gives you some Bitcoin as a reward. Back in the early days of Bitcoin, it was easy to mine Bitcoin using your own computer. However, as the cryptocurrency has become more popular, it has become all but impossible for individuals to make a profit mining Bitcoin. That doesn't stop a lot of people from trying, though. If you want to mine Bitcoin, you can either sign up with a cloud-mining company or build your own mining rig to mine for yourself

Software wallets are kept on your computer, while mobile wallets are apps that you install on your smartphone. Software and mobile wallets are reasonably secure, can be downloaded for free, and are suitable for smaller amounts of Bitcoin

Invest in a hardware wallet if you're serious about Bitcoin.

Hardware wallets may set you back a couple of hundred dollars but are considered more secure. Since they aren't connected to the internet, they aren't vulnerable to hackers. If you intend to keep your Bitcoin long-term, a hardware wallet is likely a worthwhile investment

Enable all security features on your wallet. 

Once you've chosen a Bitcoin wallet, set it up for maximum security to protect your Bitcoin. Use two-factor authentication to secure your account. When you log in, a code will be sent to you in a text message or email. You have to enter the code to access your account. This makes your account less vulnerable to hacking

Decide which cloud-mining service provider to use. 

There are a number of different cloud-mining service providers available, some of which are better established than others. Each service charges different fees and has different contract packages available

Pick a cloud mining contract package. 

With cloud-mining, you essentially lease mining power from a miner farm for a period of time. While your contract is active, you get all the Bitcoin that is mined using that amount of mining power, minus fees paid to the cloud-mining service for maintenance of the mining hardware

Withdraw your earnings to your secure wallet. 

When you purchase your contract, your mining power goes to work for you immediately. As you earn Bitcoin, it will show up on your account at the cloud-mining service. When you've accumulated enough, you can send it to your wallet

Use an online mining calculator to calculate mining profitability. 

Mining rigs can be relatively expensive and consume a lot of power. Playing with different setups on an online mining calculator can help you determine whether it's worth it to you to start mining

Buy ASIC miners and a power supply for your mining rig. 

An ASIC miner is an application-specific integrated circuit (ASIC) designed specifically to mine Bitcoin. Essentially, it's a computer chip that needs a power supply to run it. ASIC miners vary in price depending on their hashing power and their efficiency

Connect your miner and boot it up. Connect your power supply to your ASIC miner, then connect your miner to your router. Use an ethernet cable to connect your miner – a wireless connection is not stable enough.

Download Bitcoin mining software to a networked computer. 

After you've connected your hardware, you need to download software so you can mine Bitcoin. There are a number of different mining programs to choose from. Two of the most popular are CGminer and BFGminer. These are both command-line programs, so if you aren't particularly tech-savvy, they may present a challenge for you

Join a mining pool. 

Mining pools are groups of miners that pool their hashing power to mine Bitcoin more quickly. A pool enables you to compete with massive mining conglomerates that have mining farms with tremendous hashing power. You don't need to pay anything up front to join a mining pool. Instead, the pool takes a percentage of the Bitcoin mined (typically between 1 and 2 percent

Configure your miner to work in your mining pool. 

Once you've chosen your mining pool and set up a worker account, access your ASIC miner configuration screen and enter the IP address for your mining pool. Then enter the worker name and password you created for the mining pool. When you've entered this information, save your settings.

Transfer any Bitcoin you mine to your secure wallet. 

As you mine Bitcoin, it will show up in your mining pool account. Your mining pool may have a monthly or quarterly payout schedule, or you may be responsible for manually moving your Bitcoin from your account to your wallet.