By now most of us have heard about Bitcoin and the huge success that it is having around the world. For those of you that haven’t, Bitcoin is a digital currency like the US dollar ($), the British pound (£) and the Euro (€), but unlike these it is not tied to any country and does not have any hard currency (e.g. notes and coins), it is purely numbers in a computer that are heavy security.

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This begs the question can you take advantage of this new currency and make some money from the comfort of your own home?

I decide to have a look and see if I can make some money mining this new currency using my desktop computer.

I discovered that the way that Bitcoins are created is through a process called mining (like the mining of gold and silver only digital), where computers are used to process transactions. When an individual or group meet the required level they are rewarded with 25 coins for their hard work.

This Is What Mining Was Like!

Mining Equipment
Credit: Photo by Dave Friedel

So can you start mining from your own home?

Yes, you can. It can be a little complex but with a little guidance you can be up and running in next to no time. The process of mining has become easier with the introduction of visual mining programs.

So what do you need to get started?

A Home Office

Home Office
Credit: Photo by Sean MacEntee

In order to start mining Bitcoins you need the following:

  • A Bitcoin Wallet (this is a program you put on your computer that keeps track of your money)
  • A miner program (there are several around however look for a GUI version so you don’t have to code)
  • A computer (preferably one with a powerful graphics card)
  • An internet connection (most of us have this)
  • Electricity (with your computer needing to run 24/7 it can use a bit of power)

Well I had all of this and was ready to get going, but don’t get started yet as I discovered some things that I did not expect.

Is it profitable to be a miner?

Flying Money Do You Want Some?

Money
Credit: Photo by 401(K) 2013

As I looked further into the mining of Bitcoins, I discovered something interesting. As I mentioned earlier work required to earn coins increases and it becomes harder to mine. This has led to people building more powerful computers that have been designed purely for mining. What really shocked me was that with my computer it would take years (around 14 at time of investigation) to mine one lot of 25 coins! With Bitcoins being worth about US$600 each at the time I would make $15,000, that’s only about $1,000 per year and I would only be getting payed at the end.

I did however discover there are groups of people (called pools) that work together and earn the coins, what you earn is usually determined by how much of the work you do.

After discovering this I jumped on an online calculator and found that I would earn about US$0.15 per day. I thought to myself, this could be ok, all that I need to do is get a whole heap of computers and I would be able to earn a bit of money with little time required.

Then I realised that I had forgotten to take into account the electricity used by my computer! With taking into consideration the cost of electricity I discovered that I would actually lose money.

So how do people make money mining?

The people that are making money mining are the ones that have the money to buy thousands of low power consuming computers that are specially designed for mining.

A Bitcoin Miner

Bitcoin Mining Machine
Credit: Photo by Zach Copley

The other problem that I came across was that work required became more and more as time goes on, reducing the return received.

So just like the mining booms of Gold in Silver of the past it turns out to be the people that are supplying the picks, shovels and jeans that are making all the money. With the creators of the specialised machines unable to keep up with demand, if you have the knowledge then hardware is the pace to be.

So should you mine Bitcoins?

Bitcoin Currency

Bitcoin Currency
Credit: Photo by Zach Copley

If you are thinking of mining for money then NO! It takes a lot of specialist equipment to make mining viable and has little return. However if you are interested in computers and want a challenge then go ahead.

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