What is Bitcoin Mining?
Bitcoin mining is the process of storing, securing, and verifying Bitcoin transactions. It is like precious metals – limited (there will only be 21 million Bitcoin) and the more you take out, the more resource intensive and difficult it is to find.
Check also our Complete Guide To Bitcoin Mining
Bitcoin Mining Pools
A Bitcoin mining pool is a group of miners who work together to mine bitcoins by contributing hash rate and sharing the reward evenly.
NOTE: Hash rate or hash power is the unit of measurement that measures how much power the Bitcoin network is consuming in order to function constantly.
How does Bitcoin Mining work in a Bitcoin Mining Pool?
What a Bitcoin mining pool does is function as a controller for all the pool partakers doing:
- Looking for block rewards
- Taking the pool member hashes
- Assigning block rewards evenly to participants
- Recording the total amount of work done by the participants
Types of Bitcoin Mining
There are basically two types of Bitcoin Mining practiced in general. They are:
- Cloud Mining
- Traditional Mining
Bitcoin Traditional Mining:
Traditional mining or hardware mining was practiced using an array of mining hardware. At the time it was introduced, the only hardware required was a simple computer. But over the years, the hardware got bigger and efficient. The miners started putting together a specially made cryptocurrency mining PC that turned out to be extremely costly. If you take the financial philosophy aside, hardware mining is simple. All that you need are compatible GPUs, a fancy motherboard, high-powered CPU, and an exotic DRAM and a ventilation system that can keep your home or office cool all the time.
On the other hand, you will also need software that mines Bitcoin. Traditional mining, however, according to many miners is not worth it. Traditional mining still is a costly affair but it guarantees security and safety of your Bitcoin transactions. Do you have cheap hardware lying around? Cheap power rates? Spare video cards? These are something that is necessary for traditional cryptocurrency mining and only enter the waters of traditional mining if you can afford to lose.
Last but not the least, traditional mining is really useful for those who are technically minded and want to run their own hardware and software.
Bitcoin Cloud Mining:
Cloud hashing or Cloud Mining enables the users to purchase mining capacity of hardware in data centers. That is, there is no physical hardware required, it enables miners to earn Bitcoin without managing software, bandwidth, hardware, electricity, and other offline issues.
The mining is done remotely in the cloud and relieves the miners from the hassles they generally encounter such as heat issues, upkeep trouble, installation, hosting issues, and more. People who prefer hassle-free mining experience opt for cloud mining.
First, you have to determine which Bitcoin cloud provider you want to go with. There are many cloud mining providers you can look for. Then you have to determine which contract you want to go for and for what terms. There is a 1000GH contract and a 500GH contract and most of the contracts are for a period of one year. All you have to do is pay the cost to the service provider, either in BTC or dollars whichever is feasible. And you will get a regular flow of BTC into your wallet.
Cloud Mining – Pros and Cons
PROS:
- No excess heat to deal with
- No electricity costs
- Quiet – no constantly humming fans
- No equipment to sell when Bitcoin mining is no longer profitable
- You don’t need to invest in state-of-the-art mining hardware and the chances of the mining equipment suppliers’ letting you down is very less
CONS:
- Cloud mining is less fun
- You are always exposed to deceitful transactions, in other words, it is sometimes FRAUD
- The cloud mining operations are shady or unverifiable
- The profits are lower as the services are expensive
- Lack of control over cloud mining operations
Traditional Mining – Pros and Cons
- All the dealings and operations are managed by the miner himself
- Can change the Bitcoin mining software anytime whenever required
- The profits are higher as there is no intermediaries involved
- Less exposed to fraudulent
CONS:
- Hefty initial investments on hardware
- Extremely annoying with all the heat and sound
- Electricity costs are higher
- You may have to sell Bitcoin mining hardware when it is no longer profitable
Is Bitcoin Cloud Mining Successful over traditional mining?
In conclusion, it is safe to say that cloud mining is the future of Cryptocurrency mining because it is more convenient, feasible, and effective as you don’t have to plan out a budget and invest in fancy hardware. Cloud mining allows the miners to purchase mining power of hardware located in data centers. They can prove to be cost-effective as all the mining is done in the cloud without any offline hassle.
Best Cloud Mining Providers
Genesis Mining: offers well-established data centers and possess mining contracts for many cryptocurrencies
Hashnest: verified data centers and backed by Bitmain
Hashflare: miners can buy hash rate for multiple cryptocurrencies
Hashing24: offers demo mode and is partnered with reputable BLockchain Tech Company
Eobot: Secure and possess a built-in calculator to estimate profits
There is a lot more information on Best Bitcoin Mining Pools 2018
Conclusion
Bitcoin mining is a complicated topic and it is important for the miners to understand and gather knowledge about everything related to Bitcoin in order to avoid hefty risks.
Disclaimer!
All information found here, including any ideas, opinions, views, predictions, commentaries, suggestions are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. Conduct your own due diligence, or consult a licensed financial advisor before making any and all investment decisions.