Appropriate hardware is required to mine Bitcoin. Users can purchase these themselves or use them via a cloud provider . In view of the effort, the question arises as to whether it is worth wanting to mine Bitcoin yourself – and what alternatives there are.

If you want to benefit from the value development of bitcoin, you must first acquire it . Many cryptocurrencies work via the proof-of-work algorithm and the so-called mining . The computing power used to process data blocks generates new coins, which in turn flow to the “Miner”.

Start bitcoin mining nowCFD Service – 77% lose money

Why Mine Bitcoin? This is how the blockchain works

Mining digital currencies like Bitcoin is possible thanks to the technology behind BTC and its mimic – the blockchain. Because Bitcoin is not simply a unit of virtual currency, but also the client software and the chain of all data blocks in which Bitcoin transactions are recorded .

The blockchain is what is innovative about BTC. It was created in 2009 by the still unknown “Satoshi Nakamoto” to create a user-managed, tamper-proof alternative to fiat money. It was also a response to the global financial crisis.

Bitcoin is the entirety of all participants in the network on whose computers the Bitcoin software runs.

Of course, investors who only carry an electronic wallet with them without mining can also use the BTC. However, the coins are managed by the network.

Here, all transactions executed in BTC are recorded in blocks of data. Finding and processing the new data is rewarded with new bitcoins, which benefit the miners. New blocks of data are appended to the existing chain of blocks and then updated across the network. Manipulation is therefore not possible afterwards .

The Importance of Mining Coins

Why do bitcoin units need to be mined at all? This is a procedure with which new coins can be issued without having to resort to a central administration such as a national bank.

Because in the P2P network of the blockchain there is no “coin monopoly”. Instead, BTC are just “mined”.

Start bitcoin mining nowCFD Service – 77% lose moneyAnd this is how the concept looks like: Computing power is required to find new blocks, process the data they contain and add them to the blockchain. This computing power is converted into newly generated bitcoins. Depending on the work done, entire coins or subunits of BTC, called satoshi, are created.

• Theoretically, anyone can take part in mining Bitcoin
• However, the more advanced the mining is, the higher the demands on the technical equipment
• Around the year 2140 all bitcoins will be mined

Anyone who contributes via the Bitcoin Client or indirectly through cloud mining can take part. However, as the number of users increases, finding the blocks becomes more and more difficult – and more expensive for the miner.

This is to prevent all 21 million BTC from circulating prematurely and quickly . So far it is assumed that the final amount of bitcoins will be mined in 2140 . What work do the Bitcoin miners have then? Your work is still necessary to keep the network running. But the compensation will then probably come from fees from Bitcoin transactions.

Start bitcoin mining nowCFD Service – 77% lose money

Mining Bitcoin: duration and process

The process that we colloquially refer to as mining is not primarily used to create new coins. This is just added value to create an incentive to mine.

The most important thing about the blockchain is the continuous updating of the database of all Bitcoin transactions on all computers .

A specific procedure has been established for this: If a payment is made with BTC, it must be confirmed and entered into the blockchain database.

The latest transactions are summarized in data blocks and wait in this form for processing. The miners now have to find the unconfirmed blocks and verify their content . So basically their main function is that of accountants .

MINING BITCOIN: FINDING THE DATA BLOCKS CAUSES COSTS

Since the data blocks of the Bitcoin blockchain are only 1 MB in size, processing the data they contain would be done in a very short time. Only – then all bitcoins would be mined in no time at all.

However, this should not happen so quickly. The maximum number of BTC has already been determined. In addition, the remuneration of the Bitcoin gold diggers is halved every 210,000 blocks, so the value creation within the Bitcoin system is deliberately slowed down – to prevent BTC inflation .

• Bitcoin mining is primarily used to process transactions
• In addition, this ensures the security of the network
• As a reward, the miners receive newly found coins

The original developer or developers behind the pseudonym Satoshi Nakamoto assume that each new block will be found and processed within ten minutes .

Each miner is in competition with all other participants who have the same goal in the race for the new blocks and thus for earning opportunities. It’s a bit of a matter of luck. But on the other hand, the miners have to solve complex calculations to secure a new block.

And this is where the effort comes into play – the required computing power can now only be provided with special hardware.

Start bitcoin mining nowCFD Service – 77% lose money

Mining Bitcoin: Hardware and other requirements

If you want to mine Bitcoin yourself , you can do this in different ways. With direct mining , special hardware equipment is required so that the home PC can do it at all.

In addition, users have an increased energy consumption when mining Bitcoin .

If you don’t want to buy an expensive ASIC miner, you can go digging with a cloud provider .

Another way to reduce costs is to participate in a pool , where many miners pool their resources and share the profit.

MINE BTC WITH CLOUD MINING

Bitcoin cloud mining avoids the purchase of hardware or the installation of special software.

All the necessary technical components are provided by an external provider from whom you can rent the resources. This is what is known as cloud mining. You don’t have to meet a lot of requirements here. The process is as follows:

• Create Bitcoin wallet
• Participate in mining through a cloud provider
• Generated BTC (or its subunits) flow into the wallet

Start bitcoin mining nowCFD Service – 77% lose money

MINING BITCOIN: INSTRUCTIONS AND REQUIREMENTS

If you don’t want to go the (detour) route via the cloud, you have to invest in the hardware that is necessary for prospecting. And there are costs here!

In the early years of Bitcoin, the then few users could happily dig away on their home computers with a reasonably good graphics card – with success. Today, the computing power of average systems is no longer sufficient .

This can be remedied by special additional devices that are specially equipped with ASIC chips for mining Bitcoin.

These BTC miners are connected directly to the router. They can be configured from the browser. Some miners are standalone solutions that do not require additional devices.

Incidentally, in addition to the purchases of the device and any software that may be required, there are also the expenses for electricity. And they are now so significant, especially with Bitcoin, that most of the mining takes place over a few, huge server farms.

STRONGER TOGETHER: BITCOIN DIGGING IN THE POOL

Mining is easier and cheaper in a collective. Because in the community, the enormous computing power can be shared , which a “gold digger” can hardly provide alone.

The entire computing power of all participants flows into so-called mining pools, so that new blocks can be found quickly. The resulting remuneration is also shared . However, the hardware already described is also required for a mining pool .

Start bitcoin mining nowCFD Service – 77% lose money

Mine Bitcoin yourself: It doesn’t work without a certain amount of effort

With Bitcoin, finding new blocks of data on your own is now associated with a great deal of computing power. Individual miners can hardly bear the costs . Therefore, there are now alternative offers that can be used to reduce expenses.

No matter what you ultimately decide on, whether hardware or cloud, alone or together, the costs incurred must of course be deducted from the expected return.

Special crypto mining calculators allow a quick cost-benefit calculation . Contributing to the costs incurred are:

• BTC miner spending
• Cost of powerful graphics cards
• Mining software expenses
• Mining pool or cloud mining fees
• power consumption

On the other hand, there are the hoped-for returns, which always depend on the market value of the bitcoins mined . And that can change quite quickly – cryptocurrencies are notoriously volatile.

To be realistic, users should drastically adjust all expected yields downwards before making their first purchase. This is the only way to make a decision as to whether digging is worth it at all.

In the case of bitcoin, not for most private investors. Participation in mining for individuals has become something for tinkerers , but hardly a way to generate income. However, there are alternatives to profit from Bitcoin.

Start bitcoin mining now CFD Service – 77% lose money

And instead? Derivatives on Bitcoin

Bitcoin mining is now time-consuming and costly . Only a few private investors still invest time and money, especially since investing in hardware can be a loss-making business when prices are volatile.

Luckily, there are other ways to make money with Bitcoin . Without any hardware or software, investors can benefit from the course of the cryptocurrency by not physically acquiring BTC, but trading derivatives on the Bitcoin .

So-called CFDs are particularly popular . The “contracts for difference” depict the development of the exchange rate of currency pairs. In this case, Bitcoin is opposed to a strong fiat currency, so CFDs on BTCEUR, BTCUSD, BTCGBP and some more can be traded. However, there are also BTC CFDs between cryptocurrencies.

Anyone who trades a CFD does not acquire the underlying asset, i.e. does not buy Bitcoin.

The profit from such trades is the exchange rate difference between buying and selling the CFD . One of the special advantages of the very flexible financial instruments is the fact that traders can use them to speculate on rising and falling prices.

• Alternatives to mining Bitcoin are to speculate on the BTC price
• Certificates from brokers or CFDs are conceivable
• But the direct purchase of BTC is also an alternative to Bitcoin mining

MARGIN AND LEVERAGE ON CRYPTO CFDS

Another advantage of CFD trading is that the invested capital can be “leveraged” . The trader deposits an amount as a security margin, the broker tops it up by the leverage factor, so to a certain extent grants credit.

However, due to the already high volatility of digital currencies, the leverage factor for crypto CFDs within Europe is limited to 1:2 to protect traders.

Highly liquid forex pairs such as EURUSD can be traded with leverage of up to 1:30.

However, beginners in particular should not lose sight of the fact that leverage not only applies to successful trades, but also to losses ! Trading through a reputable broker who supports his customers to the best of his ability is all the more important .

Trade crypto CFDs instead of mining Bitcoin – with a reputable broker

Choosing a CFD broker that can be trusted is one of the most important decisions investors make. This is all the more true if you do not yet have extensive experience.

The choice is difficult as more and more Forex and CFD brokers are offering their services online. If you use a broker comparison , you will reach your goal faster.

Comparison portals evaluate various important components of the services and add up the result obtained in this way. In addition, the rankings can be sorted again according to your own requirements using a search function and filters.

The ratings are based on individual criteria . Serious regulation is very important, preferably because of a location within the EU. Because particularly strict standards are applied here with regard to the protection of customer deposits.

A well-stocked trading offering that also allows for other strategies beyond crypto CFDs is also a plus. And the fees and costs for trading should definitely be transparent so that there are no nasty surprises later.

Also important for beginners is an intuitive trading platform , customer support that is easy to reach and helpful, and, if possible, an educational offer. A free demo account is a must – because with the demo the services of the broker can be tested and initial knowledge can be acquired before you even use real money.

Conclusion: Use alternative investment opportunities instead of mining Bitcoin

You can still mine Bitcoin , no question. However, the process is becoming increasingly complex and expensive, so that individual miners hardly have a chance with the BTC.

It is always questionable whether the expenses for the necessary purchases are worthwhile, because the volatile price of bitcoin can quickly reduce the desired earnings.

An alternative is trading CFDs on cryptocurrencies such as Bitcoin. There are no costs for hardware and software, for electricity bills and for the mining pool.

Access to over-the-counter trading in CFDs is via a broker and Bitcoin trading itself can be learned. The educational offers of the best CFD brokers contribute to this, which beginners should definitely take advantage of in order to be able to assess the risks involved in trading derivatives.

The best way for investors to gain initial experience is through a free demo account.

THIS IS WHAT NEEDS TO BE DONE NOW:

• Search providers from the crypto comparison !
• Open a free demo account!
• Familiarize yourself with the platform and try your first test trades!