How does Bitcoin Mining work? Mine BTC Now
Nowadays, Bitcoin mining is immensely popular, and many people are making large sums of money from it. Mining Bitcoin seems like an easy way to make money, but is it really or is there more to it?
Making Money from Bitcoin Mining and Investing
1 - Choose a broker: Find a suitable Bitcoin provider so that you can get started easily (we recommend eToro!)
2 - Deposit money: To invest in Bitcoin, you need to have money in your account. Depositing money is easy with e.g. iDeal.
3 - Buy Bitcoin: Choose the number of bitcoins you want to buy and invest in Bitcoin.
4 - Start mining: Start mining and sell your bitcoins for cash at the broker!
Ready to buy bitcoins? Click the green button!
This article will explain what Bitcoin mining is, how to do it and if it is a good way to make money. This way, you will know if buying Bitcoin mining hardware or Bitcoin mining on phone pays off. We will also explain how you can best invest in Bitcoins or other crypto currencies.
What is Bitcoin Mining?
To know what Bitcoin mining is, you also need to know what Bitcoin is and how it works. Bitcoin is the first cryptocurrency, and incidentally the one with the highest price.
Bitcoin, like most other crypto currencies, works with a data system called blockchain. Blockchain, as its name suggests, is a series of blocks also called nodes.
These nodes store transactions in a decentralised manner: there is no central authority or owner in the blockchain that keeps an eye on everything, as there is in today's banking system. Yet it is virtually impossible for criminals and fraudsters to manipulate the data in the blockchain, because the nodes constantly monitor each other.
If the data in the nodes does not match, the blockchain immediately notices this and the false node is deleted. The data stored in the nodes is protected by highly advanced cryptography, so no one can see the information.
Mining Bitcoins: The creation of new bitcoins
In today's banking system, governments decide when and how much money to print. Because blockchain is a decentralised network in which there is no authority which can determine how many bitcoins should be generated, this is impossible in the case of crypto coins.
The moment such a formula is solved, a number of new bitcoins are generated. The person who has mined them will receive them as a reward for the time and effort that has been put into the mining.
To avoid generating too many bitcoins at once, the level of difficulty is adjusted according to the amount of computer power used for mining. The more people that are mining, the more difficult the formulas become.
Investing in Bitcoin or Mining it Yourself?
Before we talk about Bitcoin Mining, what it looks like in practice, and if it is wise to do so, let's talk about investing in Bitcoin itself. A second and perhaps more popular way to make money from Bitcoin is to simply buy the currency and then sell it at a profit when it rises.
The advantage of this is that you do not need to make a big investment in Bitcoin mining software or research how Bitcoin mining works and whether Bitcoin mining is legal. In this section, we will explain exactly how to make your first investment in Bitcoin or any other cryptocurrency.
Step 1: Investing in Bitcoin Mining | Step 4: Find a suitable product |
Step 2: Create an account | Step 5: Make your first investment |
Step 3: Deposit money | Start directly with eToro |
Step 1: Choose a Bitcoin Broker
Instead of the relatively difficult how does bitcoin mining work, you can easily invest in bitcoins to benefit from the currency's rising value. You do not need to buy expensive Bitcoin mining software or Bitcoin mining hardware and can start right away.
There are many brokers and cryptoexchanges online that offer Bitcoin and other crypto currencies. Each broker does this in a different way, and they can be very different from one another.
They can differ in their offer, user-friendliness and the fees they charge. We have listed a number of brokers here that we recommend for investing in cryptocurrencies.
Buy Bitcoin Instead of Bitcoin Mines: eToro
We recommend eToro if you want to buy bitcoin instead of mining bitcoin. This platform is both easy to use and clear, which makes it ideal for beginners.
First of all, the trading platform offers helpful features to get you started. Our favourite feature is the so-called CopyTrading function. With this function, you can view and completely copy the portfolios of experienced brokers selected by eToro. So you know for sure that you have a strong portfolio.
Are you not completely comfortable with trading and would you like to practice without any risks first? Then the demo function is something for you. This allows you to trade with virtual money without any risk until you are comfortable with the platform.
Do you then want to try real trading? Then you can start low thanks to the low minimum deposit of $50 (€42). Besides crypto, you can invest in a number of other trading products, such as shares, ETFs and commodities. Investing in stocks and ETFs is even possible with 0% commission!
The platform is well regulated by the FCA and CySec, so you can confidently invest using the online trading platform. Try it for free today!
Buying Bitcoin Instead of Mining Bitcoin: Capital.com
A second broker we recommend when investing in crypto currencies is Capital.com. This is a broker that has managed to make itself very big within the investment world in a short time.
Just like Libertex, you can invest in CFDs of trading products at Capital.com. This means that you get to own the product when you make your investment, so you do not need to keep your crypto coins in a wallet when you invest at Capital.com.
Capital.com also offers other trading products besides cryptocurrencies, such as stocks and ETFs. These are all very easy to find within the clear interface of the website.
Capital.com is still growing very fast within the European market, and therefore has the right licences to be able to trade there. Capital.com, like Libertex, has permission from CySec to trade within Europe.
Buy Bitcoin Instead of Mining Bitcoin: Libertex
Libertex is a very prominent broker worldwide when it comes to both cryptocurrencies and other trading products. At Libertex, you invest in CFDs, which means that you do not buy the products themselves, but bet on the price changes.
Libertex has a license from the Cypriot regulator CySec, which allows them to offer their services fully within Europe.
The range of cryptocurrencies and trading products offered by Libertex is very broad. In addition to crypto, they also offer stocks, currencies, commodities and ETFs.
Libertex is very suitable for novice investors, as it has a very user-friendly and easy-to-use platform. In addition, Libertex also offers a free demo account that allows you to practice trading without investing real money.
The minimum deposit amount is only €100, which is very low compared to the competition. This amount can be easily deposited into your account using payment services such as iDeal and Paypal.
Step 2: Create an account
Once you have found the broker that best suits your personal preferences, you can start by creating an account. In this article we will use eToro as an example, because this process is more or less the same at every broker.
Go to the website and click on register. Then enter your email address and a password, after which you will receive a confirmation email. With this, you can activate your demo account at eToro.
To be able to invest with real money, you have to verify your account with your ID. Then you have to fill in a questionnaire in which you declare that you are aware of the risk of investing and show that you know what you are doing.
Step 3: Adding money to the account
Instead of buying expensive hardware and software for Bitcoin mining, or ruining your iPhone with Bitcoin mining on your phone, all you need to do now is transfer money to your account.
Now you can start depositing money into your account. Click on the deposit button on the top right and select the amount you wish to deposit.
Then select how you would like to pay for your investment. Once you have completed the payment process, the transaction is complete.
Step 4: Select Bitcoin
If you want to invest in Bitcoin or any other crypto currency, you can easily search for it in the search bar at the top of the interface. Type 'Bitcoin' to go to the Bitcoin product page.
You can also go to the list of all crypto currencies offered and select one from here. eToro offers a lot of different cryptocurrencies, so there is more than enough choice.
Step 5: Buy Bitcoin
If you want to invest in bitcoin, you can now click the "buy" button on the bitcoin product page. Next, select the number of bitcoins you would like to buy.
If you want to set leverage or a stop-loss, you can also select it here. To complete your purchase click on the 'buy' button. If the price of bitcoins rises over time, you can sell the bitcoins for a profit.
How Does Bitcoin Mining Work?
Mining Bitcoin is not as easy and accessible as you might think. In fact, you need several things before you can start mining Bitcoin.
First of all, you need to have the right hardware. If you want to mine effectively, buying this Bitcoin mining hardware will cost you thousands of dollars.
How does Bitcoin Mining hardware work?
First of all, you need to have the right hardware. If you want to mine effectively, this hardware can cost thousands of dollars.
In theory, you could mine bitcoin with a less powerful computer or on your phone, but with powerful hardware and even mining farms, your chances of winning are slim.
You need very powerful processors to make a profit on Mining Bitcoin.
You also need to consider that with bitcoin mining you are almost constantly using 100% of your computer power. This means that there is a risk that parts of your computer will burn out.
This also means that the energy consumption of your computer is extremely high, and thus there are high costs associated with keeping it running after you buy bitcoin mining hardware. If your energy costs associated with Bitcoin mining are higher than the profits from mining, you will make a loss.
There are online Bitcoin mining calculators, such as Nice Hash, where you can calculate how much mining Bitcoins will bring you. You only need to provide your computer processor model and your energy price per kilowatt, and the Bitcoin mining calculator will automatically calculate what your estimated profit or loss will be.
This way you know in advance which Bitcoin mining hardware you can buy and which will make you a loss and which will make you a profit. This way you will not have any surprises later and can make a good investment.
What is Bitcoin Mining Software?
Another thing you need to start mining is Bitcoin mining software. First, you need a Bitcoin wallet so that you can store the bitcoins you collect from your Bitcoin miner.
Finally, you need a program that allows you to manage your Bitcoin miner. Nice Hash is a widely used Bitcoin Mining Software.
Be careful about what bitcoin mining software you download, because you can easily be scammed and lose your money. Before downloading any software, always check online whether the Bitcoin mining software can be trusted.
Mining or Investing in Bitcoin?
Although the earning potential of Bitcoin mining can be very high if you do it right, we do not recommend investing in Bitcoin mining. Especially if you are inexperienced and do not know the ins and outs of Bitcoin mining, it is very unwise to suddenly make such a large and risky investment.
The cost of hardware and electricity is very high and the chances of making a profit are very low. Even if you have the right hardware to mine bitcoin today, this hardware will become obsolete in a relatively short period of time.
If you still want to invest in Bitcoin, you can start directly at eToro!
Investing in Bitcoin
Of course, this does not mean that investing in Bitcoin is risk-free. When investing, you should always be aware that you can lose your deposit at any time. This is also true with Bitcoin mining because if the value of Bitcoin suddenly drops, so does your income.
The big difference is that investing does not require an entire investment of thousands of Euros in powerful hardware in order to make a profit. A big advantage of investing is that you can determine your own deposit, and your risk of loss does not depend on the amount of money you put in.
Bitcoin mining does not seem to outweigh the disadvantages of Bitcoin mining due to the high cost of equipment and electricity.
Pros and Cons of Bitcoin Mining
Tip: If you decide to invest, we recommend using eToro. This is a very reliable and user-friendly broker, and you can trade from as little as $50 (€42)!
Tips Before Starting to Mining Bitcoin
Before starting to use a Bitcoin miner, there are some essential things you need to know. First of all, it is very wise to fully investigate whether it is profitable to start mining Bitcoin now. This is because the competition is very high, and that means you need immensely powerful hardware to be able to mine on your own.
It is also important that you keep your Bitcoin mining set-up in a room that you do not use much. Because you are using a lot of computer power, the room will get very warm because of the computer fans. So unless you want to heat up the room a bit, it is better to have a separate room for it.
Finally, it is also useful to know that you can also mine other crypto currencies, such as Ethereum. This is often more accessible, but whether it is also profitable depends on the crypto you want to mine.
There are applications that claim you can also start mining Bitcoin on your phone. Because your phone has little processing power and is not able to really contribute to the network, you should not expect too much from this Bitcoin miner.
Frequently Asked Questions
Bitcoin mining is the process of generating new Bitcoins. Bitcoin miners use their computer power to solve algorithmic formulas and then generate new Bitcoins.
As a reward, the miner whose computer solved the formula gets the generated Bitcoins.
How Bitcoin Mining is explained:
With hardware all over the world calculating difficult algorithms, a secure database is kept up to date. Your hardware contributes to this network and gets rewarded when you create a new block. How well Bitcoin mining works for you depends on how much you spend on buying Bitcoin mining hardware.
To start mining bitcoin, you need a powerful processor, you need the right software on your computer, and you need a wallet.
Before you start mining, it is very important to be aware of the risks and costs involved and to use a Bitcoin mining calculator to see if Bitcoin mining can work for you.
In theory you could, but it would be impossible to make any profit. Also, there is a good chance that you will seriously damage your computer because it is not designed to run at full speed for a long time.
If you know what you are doing, Bitcoin Mining is safe. However, there are many dangers for beginners.
You need to be 100% sure that you are using the right software to avoid getting ripped off.
It depends very much on what your energy price is, what processor you are using, and what the Bitcoin exchange rate is going to do. You can calculate this with an online bitcoin mining calculator.
Many people who wonder about Bitcoin mining and what is Bitcoin mining also wonder if Bitcoin mining is legal. We can reassure them about this. Bitcoin mining allowed. It is a legal activity that you can do, and you pay for it yourself in the form of equipment, Bitcoin mining software, Bitcoin mining calculator, and/or electricity.
Bitcoin Mining: Conclusion
Bitcoin Mining is a popular way to earn Bitcoin but it is not an easy way. You need to know a lot about how Bitcoin mining works and have a very powerful computer before you can safely make any money.
You can easily calculate your own Bitcoin mining earnings by using a Bitcoin mining calculator. It takes into account both the power of the processor and the price you pay for electricity.
However, we at Bankr.com recommend not to start Bitcoin Mining because it is very expensive, very intensive and the risk is high. A better alternative would be to invest in Bitcoin or another cryptocurrency. For investing, we recommend using eToro, as it is a very reliable and user-friendly broker.
