6 Tips for Mining Bitcoin the Right Way

The largest issue I had when starting my bitcoin mining experience, and I am pretty sure others have shared this issue, is that most sites weren’t built to be very user friendly and I am no advanced user. I don’t have much experience with Linux or Ubuntu and only a working knowledge of Macintosh OS. So this will be for the group or individual who have the easy way in mind.

A Mining Rig Will Be The First Order of Business.

As far as niches go, the bitcoin mining rig is one of the most competitive you will ever see. As more and more people find mining to be a worthy time investment, the numbers of miners coming up with the latest mining software increases each day. With this in mind, you will want to start with due diligence if you hope for any chance of success in the Bitcoin mining scene. A bit of research will tell you if this is a good idea for your situation.

A Bitcoin calculator is a device that can help with this important research. All you got to do is enter your important information into the Bitcoin miner you are planning on obtaining and see how long you will need to make a profit. I can tell you from personal experience that if you don’t have at least a couple hundred dollars to spend you probably won’t make it to any big payoffs.

Once you have completed all your necessary calculations you can then select your miner. If you are not sure which is the best option for you, you can head over to our full list of reviews and figure out what is the best option for you. The newest and most powerful option today is the Antminer S9.

Those interested in this should know that things have changed since the early days of bitcoin mining, when it was possible to perform this action from your computer with a graphics card. This was called GPU mining and is no longer an option, today you will need an ASIC miner, which is a specially built computer to handle this task.

Get a Bitcoin wallet

The next point of order will be to get your hands on a decent “Bitcoin Wallet”. Because Bitcoin is a form of digital online currency, you will need a place to hold your valuable Bitcoins. These are pretty easy to get but important to manage properly. Once you have your bitcoin wallet you will need a proper wallet address, which will be a long string of numbers and letters. Different wallets have different ways to obtain the public Bitcoin address but the process is pretty straightforward for most wallets.

If you choose to use a self-hosted wallet, in other words, a program downloaded onto your computer as opposed to an online service, you will have another important step to make. What you will need is a copy of your wallet .dat file stored somewhere safe like on a thumb drive. You can watch a tutorial on how to do this on YouTube. The reason you will need this is in the event your computer crashes. Without a copy of your wallet.dat file, you could lose all your collected Bitcoins. They won’t go to another person, they just vanish like burning paper money.

Find a mining pool

Now that you got your rig, you got your wallet and you are ready to take on the world alone, you should stop and take a moment to consider the advantages of joining a mining colony or pool. A mining pool is a like a group of Bitcoin miners that combine their collected computation power to produce even more Bitcoins. Why is this a good idea? Because Bitcoins are only awarded in blocks of 12.5 at a time, the chances of collecting the entire block on your own are pretty slim.

In the mining pool, you will be given an easier algorithm to work on and the combination of efforts will make it quite possible to solve the larger algorithms and earn the block of Bitcoins that will be divided among the team of miners. This makes the advent of obtaining the Bitcoin block a more frequent, you will be making your personal ROIS much faster because you will be working in combination with other miners.

Properly selecting your Mining Pool will require asking some important questions:

  • What is the reward method? You will want to know if rewards are proportional, PPLNS, or score based.
  • What is the mining fee and charge withdrawing funds?
  • How frequently are blocks uncovered?
  • How easy is the withdrawal process?
  • What kind of stats does this pool provide?
  • How stable is this pool?

Most of these questions can be found at this excellent post by BitcoinTalk. You can also find a complete source of mining pools at the Bitcoin Wiki page. For reasons of simplicity I will show you the Slush Pool process or mining Bitcoins. When you sign up for a particular pool, you will get a username and a password for the pool that you will use often.

After you follow the link to the pool you will need to sign up and follow the instructions provided. Setting up the account is pretty straight-forward, next you will need to add all your “workers”. This means that every miner you have working needs a worker ID so they can track progress for each worker.

The Computer’s Mining Program

Now that you have covered all the basics you can begin mining. You will need a mining client that will handle the operations of your rig from your computer, this way you will be able to monitor and control your rig. The software you choose will be specific to the mining rig you select. Many of the mining rigs have their own mining software, Bitminer is one example, but there are many more. You can find a list of software here.

I work from an Apple computer and use the Macminer software option. The most popular program that I have found for a PC is the BFG and 50Miner. For a full comparison of the optional miners check out this review here.

Organise a VPS

Organising a VPS can make the whole process of mining bitcoin a lot easier and also a lot safer. A VPS will allow you a far greater degree of privacy when using bitcoin and quality offerings such as Liberty VPS are fast, secure and anonymous.

Start mining the Bitcoins

So now you really are ready to go. All that’s left is to connect the miner to your wall socket and USB connection in the computer and you can begin mining. First thing to do is enter the mining site with your name and password.

Then your works commences and you will begin mining for Bitcoins. You will actually begin to make collections and take a part of the next block collected.

Conclusion – It might be a equally good idea to buy the coins?

The entire setup and mining experience can be costly and time consuming for most, it might be an easier option just to buy the Bitcoins yourself. This has often been found to be the best way to obtain Bitcoins. For information on buying Bitcoins click here.