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Mining for Bitcoins - A Step by Step Guide for Beginners

Updated on July 1, 2013

Should I start Mining for Bitcoins? Is it a good time?

The answer to this question is yes from my point of view. Why? One of the main reasons is that digital currencies are very volatile. Many would say that`s a bad thing but I think it`s not the case here because we are counting on that.


  • Let me give you an example:


The Bitcoin trading price is now $89 USD per Bitcoin. We are mining for Bitcoins now at this trading price and we could find ourselves cashing out a lot more later. A few weeks back the Bitcoin digital currency was trading at over $200 USD per Bitcoin!

An this is not all. This is a one of a kind thing where you can earn money by doing nothing but leaving your Bitcoin mining rig turned on. Of course it all depends on how much are you willing to invest.

What is a Bitcoin?

Watch the video below to learn more about crypto currencies and Bitcoin.

GPU Mining Rig vs FPGA vs ASIC

Maybe you`ve heard by reading on other articles that it`s the ASIC era in Bitcoin Mining. That may be somehow true but you should choose wisely.

Here is a comparison:

  • ASIC Miners - are fast, and at the moment it`s a sure bet to make the most money but the downside is that the companies that sell these machines are way behind schedule shipping the orders. (This means that if you order a ASIC miner now, it may take even 5-6 months to get it and in the mean time many other people will have these machines going thus increasing the difficulty and making mining less profitable.)
  • FPGA Miners - this type of miners are not recommended anymore because of the high cost per hash power they provide. You will need many FPGA miners to make a good income per month and it will take even more time to break even with the money you`ve put into these machines.
  • GPU Miners - From my point of view these type of miners are the way to go. You might ask yourself why? The GPU`s use more power! It`s true but even so the advantages are many. You can use these miners for other crypto currencies too, like Litecoin which at the moment is more profitable to mine than Bitcoin. Litecoin might be the coin of the future like Bitcoin was at the beginning. The exchange rate is now somewhere at $3 per Litecoin and if you start mining now and keep your coins you could even be a billionaire in a few years. GPU miners will be able to mine any new crypto currency and if at a certain point you don`t need it anymore you can always sell your mining machine, compared to FPGA and ASIC miners that will never serve any other purpose besides mining.

Recommended GPU for mining: Gigabyte Radeon HD 7950 - This one is the best in terms of hash speed and power consumption. I use it in my own rigs and get ~700mh/s. I will write a guide on how to create a very good mining rig in the near future so check out this page often for updates.

Getting started with Bitcoin

1. Step one Download the Bitcoin Wallet


Go to the official Bitcoin Website to download the Bitcoin-Qt


After you download the wallet, let it run. It will download all the blockchains from the network. This may take from one to a couple of hours and it will be up to date. In your wallet you will be able to see your unique address that you will use to receive coins from the pools you use.

Example of wallet address: 1KtAs4HBFzkdHC2ou4gxyGHwcL7aKzwTve

2. Download AMD GPU Drivers

Go to the link below to download the latest AMD Catalyst Drivers for your GPU:

http://sites.amd.com/US/GAME/DOWNLOADS/Pages/downloads.aspx

Go to the link below to download the latest AMD Catalyst SDK Drivers:

http://developer.amd.com/tools-and-sdks/heterogeneous-computing/amd-accelerated-parallel-processing-app-sdk/downloads/

3. Download your mining software

Cgminer is the best GPU miner I have found so far and is easy to configure. Download it here:

http://ck.kolivas.org/apps/cgminer/

4. Signup on one of the mining pools available

Here is a short list of mining pools available at the moment:

https://en.bitcoin.it/wiki/Comparison_of_mining_pools

I recommend BTC Guild because it`s the largest and most popular and you are less likely to have any problems using it. Once you have an account with them there are detailed instructions on how to set up your mining software in under a minute and you are ready to start.

5. Signup on an exchange website

The largest exchange website at the moment is BTC-E.COM

You will need an account on a exchange website to withdraw your coins to USD or EURO. You can even exchange Bitcoin to Litecoin, Litecoin to Bitcoin, Feathercoin, Namecoin etc.

6. Check the profitability of various cryptocoins


I always use Dustcoin.com to see the comparison charts. I recommend looking only for Litecoin and Bitcoin Information. There are many other coins listed but these two are the best. You will see that Litecoin is almost always more profitable to mine but you can take your pick.

7. Start your Cgminer with your chosen pool and you are ready to make some cash!


Comments

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    • jabelufiroz profile image

      Firoz 

      5 years ago from India

      Useful Guide for Beginners. Voted up.

    working

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