Getting started with Bitcoin mining first requires understanding, in its most basic form, what mining for a cryptocurrency actually means.

— Fundamentals of Getting Started with Bitcoin Mining —

In a nutshell, it involves running a series of encrypted verification processes to validate transactions and maintain the security and integrity of the Bitcoin ledger on the blockchain. To do this, you need computing power and a connection to the Bitcoin blockchain.

To be an effective and — more importantly — profitable miner, computing speed is essential. The speed with which you mine Bitcoin is measured as “hashes per second.”

As you are aware — even if your computing experience is limited only to checking emails, surfing the web and watching videos — the harder a computer works (i.e. the more processing power that it’s using) the hotter it gets. This is why when you are multi-tasking on your PC you sometimes hear the fan start humming. This is also why when it comes to Bitcoin mining rigs, effective cooling is essential.

What does all of this tell you? One, that mining at its essence is nothing more than solving mathematical equations to verify and safeguard Bitcoin transactions. Two, this requires processing power. Three, the faster your processing power, the more efficient and profitable your mining can be. Four, the more processing power you have the more it needs to be cooled. Five, an internet connection is required to be able to access the Bitcoin blockchain.

Consider those five items as the fundamentals of understanding how to start Bitcoin mining. What comes next is planning and executing your own mining operation.

— Hardware Requirements —

You may have heard stories about people who mined Bitcoin on their desktops or laptops. While mining on such hardware was possible in the early days of Bitcoin, in the present day, mining on such devices would be a waste of your time. They simply do not offer the processing speed required and would consume more in electricity than the reward that you would get for your effort.

The equipment used to mine Bitcoin is referred to as a “mining rig” or “Bitcoin miner.” These are essentially small computer boxes void of unneeded peripherals. Think of them as stripped down, lean, mean mini-computers geared for lightning fast processing power. Most are based around an application-specific integrated circuit(ASIC) chip. This is because such chips are designed for one specific application — in your case, mining. This is unlike the processor in your computer which is designed as a general purpose chip. ASIC chips are faster and more efficient for mining.

Sourcing your mining rig can be as simple as searching on Amazon or eBay. Likewise, they can also be purchased directly from companies and individuals that assemble them. If you have well-developed technical skills, you can even build your own mining rigs yourself.

— What to Look for in a Mining Rig —

When it comes to selecting a mining rig you will often hear that you should purchase the fastest one that you can afford. In order to make this determination, you need to be aware of a few key specs for the rig you are considering buying. You must also make a few assumptions about your operation.

The specs you need to know are the rig’s hash speed or hash rate, its power consumption, and selling price.

The assumptions you need to make are the hashing “difficulty factor” and your cost of power, While the latter is easy to arrive at by analyzing your electric bill and researching your power company’s rate tables for high consuming customers, the “difficulty factor” is a bit more abstruse.

All of these calculations can be done by hand. However, if you are a newcomer to Bitcoin mining, or if long-form number crunching is not your thing, a Bitcoin mining calculator can greatly facilitate this process. By entering the specs for your mining rig you will be able to see how different assumptions will affect your overall profitability.

Before investing in a particular mining rig it is highly recommended that you run these calculations. By doing so you will be able to determine what is the fastest mining rig that you can realistically afford. Anything less would be guessing and if you guess wrong you could end up with an unprofitable rig.

— Cooling Your Rig —

Cooling your mining operation depends on many variables. These include everything from the specifications of your individual rigs, to where you are located geographically, the time of year, the area where you have your rigs setup, among others. Some cooling options include air cooling, submersion cooling, and refrigerated air conditioning.

As your mining operation grows and you collect monitoring data from your rigs you will be able to gauge what is the optimum cooling solution for you. When you first start, an open-case rig with basic air cooling should suffice

— Obtain a Bitcoin Wallet —

A Bitcoin wallet is not where your Bitcoin is actually stored. It is a pair of digital keys that identify where your Bitcoin is in the blockchain and which allows you to access them to send and receive. In mining, a Bitcoin wallet is necessary in order to have a place for your reward to be deposited to you.

Our section on Bitcoin and altcoin wallets will provide you with further insight on how to obtain one.

— Mining Software —

Mining software serves two purposes. One, it is what allows your rig to connect to the blockchain. This is how the latest copy of the blockchain arrives at your rig and how it sends what it has processed/hashed. Two, it provides you with a dashboard that monitors the rigs in your operation. This provides you with essential information related to speed, temperature, power consumption, mining efficiency, etc.

If you are part of a mining pool (spoiler alert, we are covering that next) your mining software will also connect you to your mining pool.

Most mining software will work on one or multiple operating systems such as Windows, Mac OS, or Linux. For those new to mining, it is recommended that you use one that comes with a graphical user interface (GUI). This will make interacting with the software easier and more intuitive. Terminal-based interfacing should be avoided unless you are familiar with using terminal commands from other computer applications.

BTCMiner, EasyMiner, and GUIMiner are good examples of mining software.

— Choosing a Mining Pool —

While using a mining pool is not obligatory, it can offer many benefits. As its name implies, a mining pool will allow multiple miners to pool their processing power. By so doing, they greatly increase the time involved in finding and hashing blocks. This, in turn, makes getting a reward faster. The more blocks are hashed, the more money the pool makes.

If you do decide to go the mining pool route, you should consider a few things before settling on a pool.

• When was the pool established?
• What is its reputation?
• What is the average time for finding available blocks?
• How can you withdraw your share of the rewards?
• How do they determine the partitioning of the rewards?

Mining pools can be a good way to get your feet wet with Bitcoin mining. They can help you to familiarize yourself with the metrics and terminology that is involved. For some, it can be the ideal way to gain practical experience before going at it alone.

— Stay Relevant —

A mistake that many new Bitcoin miners make is that they assume that the mining environment remains static. They do not take into consideration such factors as the increasing number of miners on the blockchain, the increasing difficulty involved with hashing that this implies, and the diminishing number of Bitcoin rewards that will be available.

In so doing, these new miners may inadvertently close their eyes to the necessity of having to continuously remain relevant by upgrading their hardware as it is needed.

This need for sustained relevance is not mentioned to dissuade people from entering the world of Bitcoin mining. Rather, it is mentioned to prepare new miners for the reality of what is required to be consistently profitable.

— Other Options —

For those who have an interest in Bitcoin mining but who do not have the inclination to purchase, install, configure, and run their own mining rigs — there is another option. This involves what is known as “cloud mining.”

With cloud mining, there is no need to own and operate your own mining rig. The physical installation, upkeep, and operation of the mining rig take place somewhere else. Cloud mining operators offer mining rigs with all of the needed software for a fee.

Cloud mining centers will charge miners a setup fee to “rent” a mining rig with a determined hash rate. Most will also charge a monthly maintenance fee.

They lower the technical barrier to entry for Bitcoin mining. How they compare to solo or pool mining in terms of profitability depends on the cloud mining center used and the unique variables that would be present in your physical mining rig setup.