Cryptocurrencies have dominated many discussions across the global economy. A lot of controversy hovers over cryptocurrency discussions with different economies considering different policies and regulations. At the center of it all is the earliest and dominating currency of 2022; Bitcoin. And from bitcoin, bitcoin mining was birthed.
What Is Bitcoin Mining?
Bitcoin mining is the process of updating a ledger of bitcoin transactions incentivized with the rewarding of new bitcoins to those who participate.
It involves the creation of new bitcoins by solving extremely complicated maths problems that verify transactions in the currency.
What Is Bitcoin?
Bitcoin was invented by Satoshi Nakamoto in 2007 when he started by writing a code for bitcoin. In August 2008, he registered the domain name, bitcoin.org.
It was created as a decentralized alternative to the banking system. This means that the system can operate and transfer funds from one account to another without being controlled by any central authority or body.
With the central authority, transferring money is easy since the bank is the only one allowed to update the ledgers that hold balances for everyone in the system. But with bitcoin, updating the ledger of bitcoin transactions or “implementing the Blockchain” isn’t a cup of tea for everyone.
It requires the use of very powerful computers with strong processors i.e. “the bitcoin miners” to carry out the complex maths calculations.
The bitcoin miners use special software to solve the maths problems and are issued a certain number of bitcoins in an exchange, making it a smart way to issue the currency and it also creates an incentive for more people to mine.
Bitcoin Explained Further
Bitcoin is one of the most popular types of cryptocurrencies. In the bitcoin mining game, it is about guessing the right solution to the equation generated by the system.
While it seems easy, the more powerful the computer you use in mining bitcoin, the more guesses you can make per second. You guess right, you win.
Once your mining computer comes up with the right guess, your mining program determines which of the current pending transactions will be grouped together into the next block of transactions i.e. “the temporary banker of bitcoin in the blockchain”.
The block you have created along with your solution is sent to the whole network so other computers can validate it. Each computer that validates your solution updates its copy of the bitcoin transaction ledger with the transactions that you chose to include in the next block.
After the process, the system generates a fixed amount of bitcoins and rewards them to you as compensation for the time and energy you spent in solving the maths problems.
One can become a Bitcoin miner provided you have these most important and elusive requirements needed to mine bitcoin.
These are; massive computing systems loaded with software that is powerful enough to carry out complex maths calculations such as the graphics cards known as GPUs, ASIC miners, etc.
Next, this computing system requires ample electricity since the bitcoin miners use a lot of electricity in either powering or cooling them since they can become really hot.
It is really important for miners to have this kind of equipment for positive results.
How Can I Mine Bitcoins| Best Bitcoin Mining Software
Back in 2009, using your CPU was enough for mining since mining difficulty was low. Gradually, people moved to the use of graphic cards known as “GPUs”.
A GPU is a special component added to computers to solve more complex calculations.
GPUs were originally intended to allow gamers to run computer games with intense graphics requirements but because of their architecture, they became popular in the field of cryptography.
Around 2011, people started using them to mine bitcoins. Considering that more mining power of your computer means more chances of winning, the mining power of 1 GPU is equal to that of 30 CPUs which was an improvement.
Another evolution came later on with FPGA mining, just like the GPU, an FPGA is hardware that is connected to a computer in order to run a set of calculations.
FPGAs are 3 to 100 times faster. The downside is that they are harder to configure which is why they were not as common as GPUs.
Finally, around 2013, a new breed of miners was introduced, the Application Specific Integrated Circuit or the ASIC miner. The ASIC technology was designed specifically for mining bitcoin.
Unlike the GPUs, CPUs, FPGAs, they could not be used for anything else. Their function was hardcoded into the machines. ASIC miners are the current mining standards. Some early ASIC miners were in form of USBs but they became obsolete rather quickly.
Their technology developed more quickly and after about 3 years of this tech race, we have finally reached a technology barrier and things have calmed down a bit.
How Does Bitcoin Mining Work?
Bitcoin mining operates on a peer-to-peer network. The bitcoin network automatically changes the difficulty in maths problems depending on how fast they are being solved.
In the early days, bitcoin miners solved these problems using computers and processers. Later, they discovered that graphic cards used for gaming were much better suited for this kind of work. The GPUs were faster but still power-hungry since they used more electricity.
After some other technologies like FPGAs, the ASIC technology was then introduced and the ASIC chips were even faster and they used less electricity. As the bitcoin popularity increases, more miners join the network making it difficult for individuals to solve maths problems.
To overcome this, miners have developed a way to work together in mining pools. If you’re an online merchant, it will be an added advantage if you learn how to accept Bitcoin payments.
What Are Mining Pools?
Assuming you have just entered the bitcoin mining game, you are up against some heavy competition. Even if you buy the best possible miner out there, you are still at a huge disadvantage compared to professional bitcoin mining firms. That’s why mining pools came into existence.
The idea is simple, miners come together to form a pool and combine their mining power to compete effectively. If the pool wins the competition, the reward “block reward” is shared by the pool members depending on how much power each of them contributed.
Today, there are a dozen mining pools that compete for the chance to mine bitcoin.
What Are The Risks Of Bitcoin Mining
Electricity cost: bitcoin mining does not guarantee profits due to the high upfront costs of electricity. The bitcoin miners use a lot of electricity either in powering them or cooling them.
According to the Congressional Research Service report of 2019, one ASIC miner uses the same amount of electricity as half a million play station 3 devices.
Price volatility: no one knows the future price of bitcoin as it can be hard to predict. The price has varied widely since 2009 and has made it difficult for miners to know if their reward will outweigh the energy used.
Regulation: as bitcoin mining is an operation outside government control, only a handful of governments have accepted it. So bitcoin mining could be risky in some countries.
Is Bitcoin Mining Taxed?
The IRS classified bitcoin as an asset similar to property and therefore retail transactions made by bitcoin have to incur taxes. You should be aware of these tax considerations for bitcoin mining;
Business priority: making bitcoin mining your business means you have to deduct a certain amount of your earnings to pay as tax.
Bitcoin income: the money you earn from bitcoin is taxed using the market value of the currencies at that time at ordinary income rates.
You can visit the bank rate’s cryptocurrency for more information about the basic tax rules.
The 15 Best Bitcoin Mining Software In 2022
BetterHash is a cryptocurrency mining software that enables you to mine different crypto assets such as Bitcoin, Ethereum, Monero, Grin Coin, ZCash, etc. It is friendly to both beginners and experienced users.
Using BetterHash, mining doesn’t require one’s account, allows you to join mining pools and you can create a wallet where you can transfer cryptocurrency.
This software allows pools to direct hash by themselves but it has low profits.
#2. CCG Mining
CCG Mining is a cloud mining application where can trade in various digital currencies. This software helps you to achieve the highest level of hash rate to boost your income and it is the most profitable of them all.
You can create your own mining rig, no maintenance fee, no purchase limit, user friendly, it is secured by cloud, offers unlimited contracts, and has the highest hash rate.
Shamining is a cloud mining software where you can start cryptocurrency mining without the need for technical skills.
Here, you just have to create an account and verify your identity, then you can control your miners from any device, calculate your earnings.
It’s environmentally friendly software and compatible with all computer devices.
#4. Kryptex Miner
Both beginners and experienced users can use it. Kryptex miner can detect the most profitable coin and is capable of complex computation puzzles. You get paid $0.5 minimally as long as you keep it running.
It provides miners with updates, monitors the harsh rate of graphic cards and there’s a profitability calculator that will help you calculate profit according to the inputs of the graphic card.
Kryptex has a convenient UI making mining comfortable.
#5. Cudo Miner
It’s best for miners who prefer using desktops and laptops to mine. It has a feature for both GPU and CPU miners that perform several algorithms. Its rare features make it unique.
Account-holders can use remotes to disable mines, display hash rates, revenues, and so on.
You can earn and receive money in different currencies. It has a user-friendly interface, powerful web console, and advanced tracking capabilities.
The unlimited number of devices that it can support per account makes it a perfect software for first-time miners.
It is best for cloud mining. It encourages calculating the profitability of ASIC miners and you can make independent decisions.
BeMine is the provider of services of cloud sharing of ASIC-miners and is an ASIC retailer and cloud mining solution. Because of its independence, it offers only relevant machines. You can replace the balance of your personal account in various ways like MasterCard, Visa, bitcoin cash etc.
It facilitates miners who want to store their equipment in data centers such as Russian Datacenters.
It is great as you can buy a whole ASIC miner or its shares and it has free cloud mining.
EasyMiner lets you manage different cryptocurrencies from the same place. It has user-friendly options for those who are not conversant with the command-line interface.
It is also important in such a way that you can get the graphical representation of your results with the app.
EasyMiner helps you create a private pool using your CPU. You can also use ASIC mining on this software and it has a chart system that can connect you to advanced miners.
Overall, this software is ideal for those who want to mine and manage different cryptocurrencies.
It is one of the best cloud mining software and was established in 2017 in the Free Economic Zone.
Being the first legal cloud mining software, ECOS has more than 90,000 users worldwide. It includes cloud mining and wallet, investing opportunities, and savings.
ECOS has a convenient mobile app available on Google play and the App Store. ECOS has a calculator to choose better mining contracts with standard and pro versions, there are daily payouts and shows detailed transactions.
It also offers many contracts with a free mining contract for one month.
Enjoy the frequency with the greatest hash rate with BTCMiner. This software uses cloud mining and has over 140,000 users worldwide. You can mine cryptocurrency as long as you are connected to the internet.
It has FPGA mining equipment and a bitcoin wallet. It is the easiest mining software for bitcoin because of its ability to choose a frequency with a high hash rate and it does this automatically so what you have to do is sit down and relax as it does the work.
This is the best option for miners who would like to perform fast hashing and it does it with the OpenCL framework.
It provides users with an unlimited number of mining pools. It uses graphic cards or GPU mining hardware which is compatible and operates on Mac you can run it on any operating system as long as you have ATI Stream SDK 2.1 or the latest version of Nvidia software.
With this software, you can choose to mine alone or in a group, and gives you the option to choose between solo and group mining, unlimited pools of course, and a GPU bitcoin mining hardware that’s compatible.
#11. NiceHash Miner
It is very easy to use and has a relatively self-explanatory interface.
This bitcoin mining software allows you to check the status of your mining operations and you can also monitor all of your tasks remotely.
It uses a specific benchmarking methodology to determine the most profitable algorithms of your equipment though you can also pick the algorithms you want to facilitate manually.
It has a profitability calculator, easy-to-use interface, instant notification, and options for depositing and withdrawing cryptocurrencies.
#12. Awesome Miner
It is the best centralized management software and another bitcoin mining software. It allows users to manage multiple mining pools and rigs.
Awesome Miner supports a large-scale mining dashboard of over 50 mining engines and is designed to suit the needs of the miner.
But, it doesn’t operate on Mac, and it is not suitable for novice users.
This was built using the mining engine of BFGMiner, it features a GUI, automated mining features like hardware detection, and cross-platform compatibility. It is also optimized for Windows computers.
But, there are fewer options for advanced users and it requires additional software like Linux. While most mining software requires some coding skills, novices can get started with MultiMiner with no technical skills.
The software walks users through the installation process and then scans the details of the hardware, including average hashing power and the linked pool.
MultiMiner goes even further and shows users exactly how to connect to a pool, including where to enter the information associated with the pool.
The software also offers users remote access to their mining rigs, lets them choose their mining strategy, and automatically mines the most profitable or lowest-difficulty cryptocurrency with a display of estimated profits.
This was started by Luke Dashjr in around 2012 and has become one of the most popular mining software in the world.
This software was designed for FPGA and ASIC mining. It can allow mining of multiple cryptocurrencies simultaneously and also runs on Mac, Windows, and Linux. The downside of the software is that it is better for advanced users.
CGMiner was developed in 2011 by programmer Con Kolivas for mining cryptocurrencies such as bitcoin.
Being one of the oldest bitcoin mining software, CGMiner is the best choice overall because of its open-source build, ability to run on any computer and compatibility with multiple mining computers.
The software runs on Mac, Linux, and Windows and is compatible with FPGA, ASIC, and GPU technology. It also has a downside of being better with advanced users.
The software is also known to be difficult to install on Windows 10 computers, Antivirus software including Windows Defender which can also give users a difficult time.
This is another bitcoin mining software.
Frequently Asked Questions
The hash rate is the speed at which a cryptocurrency miner operates.
The creator of bitcoin, Satoshi Nakamoto
Early bitcoin investors are highly admired in the world of cryptocurrencies. This however doesn’t take away the challenges it presents today to a trader or investor.
Bitcoin’s real value comes from selling it to another individual or using it for purchases and payments. The cryptocurrency is highly volatile and therefore you will face good and bad days.
Overall, it has managed to grow exponentially over the past decade and shows no signs of stopping.
- Investopedia: https://www.investopedia.com/
- Bitcoin: https://bitcoin.org/
- Bank Rate: https://www.bankrate.com/