Bitcoin mining is a process which has the following actions
- Transactions are verified
- Transactions are added to the public ledger (known as the block chain)
- New bitcoins are released
Besides internet and suitable hardware you must join a bitcoin mining pool for it to work. This is a pooled mining service that allows multiple users to work together to mine Bitcoins and is hosted on online servers. Web search will take you to several services.
Here is what you must do to join a bitcoin mining pool:
Decide on your hardware on the basis of:
- Hash rate- the number of calculations that your hardware can crack per second. Higher the hashrate, better your chances in solving a transaction block.
- Energy consumption- Ensure that your hardware does not use too much energy and your bitcoin mining is cost effective.
- Divide number of hashes by number of watts to understand how many hashes you get for each watt and compare to income through mining.
Bitcoin mining hardware has 3 main categories:
- CPU – Though least powerful, slow, this can be boosted through fitting Graphical Processing Units (GPU). Its strength lies in the ability to switch between different currencies.
- FPGA (Field Programmable Gate Array) is an integrated circuit that is designed to be configured post building- enabling mining hardware personnel to buy chips in volume, customize and then place in their own equipment. Great performers as designed for the purpose of mining.
- ASIC (Application Specific Integrated Circuits) specifically designed for crazy high speed mining of bitcoins with relatively low power consumption. Soon this shall reach 2 Terahashes/sec from the current 5-500 Gigahashes/sec.
To join a bitcoin mining pool, you must also calculate the profitability of mining
- Input parameters such as equipment cost, hash rate, power consumption, current bitcoin process as well as network difficulty into mining profitability calculators such as The Genesis Block.
Download the software
- Equipment based softwares that instructs hardware to work and passes through transaction blocks.
- It connects your computer to the network enabling it to interact with bitcoin clients.
- For GPUs and FPGAs- the standard bitcoin client and mining software are required
- For ASIC miner, software is also available but it is increasingly becoming a package deal with all things pre configured including the address, effectively making it a plug and play device.
Find a bitcoin mining pool website, create an account and create workers as per your mining hardware.