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If you want to join in the bitcoin frenzy with no simply buying the digital currency at today's inflated prices, then bitcoin mining is another way to become involved. But, mining bitcoins does include expenses -- and risks -- of its own. And the more popular bitcoins become, the harder it is to mine profitably. .

Unlike paper currency, which is printed by governments and issued by banks, bitcoins do not come in any physical form. That makes a significant risk, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is how the bitcoin network keeps its transactions secure.

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely difficult to change or undermine, even from the best hackers. However, in order to secure these transactions, someone needs to dedicate computing power to verifying the action and packaging the facts in a block that goes into the bitcoin ledger.

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As a reward for doing the work to track and secure transactions, miners earn bitcoins for every block that they effectively procedure. .

The bitcoin founders have put a limit of 21 million bitcoins available for mining. Once that total is reached, miners will continue to have the ability to benefit from transaction fees, but they won't be granted bitcoins as a reward for their job. As of mid-January 2018, roughly 16.8 million of those 21 million bitcoins have been mined.  Assuming that the bitcoin mining industry doesn't change dramatically, it seems like we won't hit on the 21 million-bitcoin restrict until the year 2140. .

During the early days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that's no longer sensible, because solving bitcoin transactions has become too hard for your average computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins each 10 minutes. If only a couple people have been bitcoin mining at any given time, then the network will probably be generous and share bitcoins easily in order to attain the predetermined number. However, now this bitcoin mining has become so widespread, the network is now much stingier about handing out bitcoins into miners.

Nowadays, in order to have a chance at being rewarding, miners need to adopt one of two approaches: 1) buy specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To get started with your own mining rig, you purchase hardware designed for mining bitcoin (or any other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady flow of payments without your needing to get involved.

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As soon as it's fairly easy to set up and use a bitcoin mining rig, actually making money on the process is something of a challenge. Since more and more people are signing up for mine bitcoins, the mining procedure continues to have more difficult and will probably keep doing this for a while.

And because bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for the hardware, or several times that for a top notch rig -- having to replace it every year or 2 takes a massive bite from any profits you make from mining. Plus, most mining rigs consume enormous amounts of electricity, which means you also need additional resources to subtract expense from the bitcoins you earn to determine your own profits. why not look here .

When buying and maintaining your own mining gear doesn't appeal to you, then cloud mining might be the way to go. Cloud mining companies invest in enormous mining rigs, often filling entire data centers with all the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining subscribers is avoiding fraud. The area is rife with pseudo-companies which sell thousands of multiyear subscriptions, pay out for a few months, and then vanish into the sunset. In case you decide to try cloud mining, do your homework in advance and confirm that the company that you're dealing with is a true cloud miner and not a scheme.

Avoid companies with anonymous domain registration (you can look up their registration info at Network Solutions), in addition to any mining company that"guarantees" gains or offers enormous incentives for referring new clients; anything above a 10% referral commission is profoundly suspicious, because valid mining pools simply don't generate a large enough profit margin to pay big commissions. .