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The Ultimate Guide: How to Invest in Bitcoin Mining in 2021

Aside from the most common way of investing in cryptocurrencies, which is by purchasing them from exchanges or P2P platforms, some people want to know how to invest in bitcoin mining operations.

Bitcoin and other cryptocurrencies that run on a Proof-of-Work (PoW) model offer another investment opportunity, which is Mining. And no, this has nothing to do with excavating the ground to search for precious metals.

Are you looking for how to invest in Bitcoin mining or seeking crypto mining investment opportunities? In this guide, we will specifically walk you through how to start a Bitcoin mining investment in 2020. 

We’ll also inform you if there is actually a Bitcoin mining without investments in either the software or machines required for the activities. Lastly, we will discuss another mining solution, which will enable you to mine cryptocurrencies even without your physical presence.

Knowing how to invest in bitcoin mining is important. As cryptocurrencies, particularly Bitcoin, continue to gain massive adoption and price increases, cryptocurrency mining can be considered a part-time or even a full-time business.

Now, that we’ve cleared that, let’s dive right in.

What Exactly is Bitcoin Mining?

Bitcoin mining is a backbone activity of the Bitcoin network, done with specialized computers to ensure the verification of transactions and the issuance of new Bitcoin into the market.

Just like stores would document their daily transactions either on papers or computers, this is pretty much what goes on Bitcoin and other cryptocurrency mining. However, the latter involves a more complicated process that requires high computational power to achieve.

Unlike stores, transactions that occurred with Bitcoin are logged in Blockchain. First, Bitcoin transactions are verified across multiple nodes on the Blockchain. Afterward, this transaction will be compiled as a Block and logged on the Bitcoin Blockchain.

Miners who successfully verified and map a transaction on the network will receive 6.25BTC as a reward. Previously, the block reward was 12.5 BTC; however, it was reduced after the third halving of the cryptocurrency this year.

How to Invest in Bitcoin Mining: What You Must Know?

Before you invest in Bitcoin mining, it is advisable to consider the following:

  • High Power Consumption: As explained earlier, the machines used in Bitcoin mining perform at a high computational power, which also means more electricity consumption. Due to expensive energy costs, many small-scale miners were forced out of the market as the block reward got lesser amid Bitcoin halving. Thus, you might want to consider the cost involved before starting out your mining journey. However, many miners are using Solar power to waive cases of high electricity costs in Mining.
  • Bitcoin Mining is Competitive: At this point, it is worth mentioning that the cryptocurrency mining industry is very competitive, especially in Bitcoin. So, starting a crypto mining investment will require more capital or fund, depending on the coin, to acquire advanced mining equipment to place you in a better position in the competition. See the best cryptocurrencies to mine checklist to get an idea of where to begin.
  • Bitcoin Block Reward Halving: Especially if you are new to the cryptocurrency industry, you probably would want to know that Bitcoin reward is predetermined to be reduced by 50 percent every four years. This reduction in supply is called the Bitcoin halving. Hence, it would be best if you considered that your reward for mining Bitcoin is not fixed. For instance, the Bitcoin mining reward was settled at 50 BTC. However, the current reward has been slashed to 6.25 BTC.

Bitcoin mining investment can be worth it if done rightly. Having listed these few points to note, let’s explore the many ways you can engage in Bitcoin mining, and unveil if it is possible to begin free Bitcoin mining without investment.

1. Starting a Bitcoin Mining Farm

bitfarms

A Typical Bitcoin Mining Farm in Operation (Source: Bitfarms)

While there may be other options to start Bitcoin mining, many people mostly mine Bitcoin from their mining farm. A Bitcoin mining farm can be a setup of different mining equipment that can be run on a small or large scale, depending on the operator/miner. An individual miner can run about 100 mining machines in his/her farm, while companies can deploy thousands of these machines in a single farm. 

What You Need to Setup Your Bitcoin Mining Farm

Find an Ideal Mining Spot: This is where you will set up and run all your Bitcoin mining operations. You can choose to mine the cryptocurrency from your home, depending on the scale you wish to operate. Rent/hiring a shop or warehouse can be ideal for large-scale Mining. 

Getting Your Bitcoin Mining Hardware: In the early stage of Bitcoin, miners had used their computer systems to mine cryptocurrency. They generated enough hash sequences, and they could also confirm Bitcoin transactions using their computer systems with high processors. 

Fast forward to the present, Bitcoin miners have transitioned from using the Central Processing Unit (CPU), Graphical Processing Unit (GPU), and Field Programmable Gate Array (FPGA) to Application-Specific Integrated Circuit (ASIC) machines to mine Bitcoin. 

ASIC-powered machines like Bitmain’s Antminers may be the ideal machine to start your Bitcoin mining operation. Not that you can use other hardware to mine Bitcoin. However, miners now prefer ASIC machines since they provide a 100x increase in hashing power, yet with a low electricity consumption rate, compared to the other technologies. 

Bitmain's Antminer

Antminer ASIC Miner (Bitmain)

Thus, your chances of earning Bitcoin or staying profitable with older technologies against ASIC machines are very slim. Perhaps, ASIC machines are way costlier compared to the other technologies.

Installing Your Mining Software: The next tool you would need is to install a Bitcoin mining software. Mining software instructs the hardware on what work needs to be done, finding mathematical puzzles to solve from transaction blocks. 

The most popular Bitcoin mining software includes:

  • Bitcoin Miner
  • CGMiner
  • BFGMiner
  • RPC Miner
  • EasyMiner

Most modern ASIC-powered miners are built with compatible software, so you might start using them right away. 

Meanwhile, there is still something closer that comes close to free bitcoin mining without investment. It is called “Cloud Mining.”

Under this scheme, you can earn Bitcoins as a mining reward without even owning a single mining machine. This makes up another way you can invest in Bitcoin mining without having to quit your job or being present at the mining farm to inspect those machines.

2. Cloud Mining

By cloud-mining Bitcoin, your physical presence is most likely not needed, as the machines run from a remote location. Hence, this will enable you to auto-mine Bitcoin without directly investing in or buying mining hardware or software.

All you need to do is purchase a mining contract from companies offering cloud mining service.

Cloud mining saves you a lot of stress and challenges that come with running your mining farm. You can go about your job, holiday, and even travel abroad without necessarily worrying about hardware and software maintenance, electricity supply, and mining farm downtime issues.

Noteworthily, cloud mining also comes with disadvantages, which you would want to consider before buying any cloud mining contract.

The Risks of Bitcoin Cloud Mining

Firstly, you do not have ownership of the mining equipment, so you cannot guarantee that these machines will run as long as you want. The companies offering this service might decide to cease operation at any time if they ascertain that the cryptocurrency’s price is too unstable. When such situations arise, these miners resort to selling off their bitcoin holdings, which in turn can affect the market negatively.

Secondly, the cloud mining provider will charge a commission for the service rendered. Hence, you don’t own all the rewards to yourself. It would help if you also exercised caution, as there are many illegal bitcoin mining investment companies also promoting Bitcoin cloud mining services.

They typically claim to sell investment plans and offer highly robust referral programs that are only designed to send more victims their way.

Bitcoin Cloud Mining

Sample Fake Bitcoin Mining Investment Companies.

In fact, 99% of online websites posing as a bitcoin mining investment company is fraudulent and will only separate you from your money. You’ll likely find a number of them on Google Search results for “Bitcoin mining” related keywords. Some even run campaigns via Google Ads to attract unsuspecting investors.

Please, stay away from them. If you must invest in bitcoin mining via cloud mining companies, ensure that you do due diligence and possibly involve a legal expert.

3. Joining a Mining Pool

Since your chances of competing with large-scale bitcoin mining investment companies are very slim, miners came up with the idea of pulling their resources together, thereby raising their hash power. By joining a Bitcoin mining pool, you will contribute your computing power with that of other miners in the pool to generate a block, which comes with a reward. 

Largest Bitcoin Mining Pools

Largest Bitcoin Mining Pools (Source: Blockchain.com)

These rewards are being shared amongst the miners evenly. So, you ought to decide whether to stand alone or pull your resources together with other miners. Note that mining pools have a greater chance of generating blocks because of their superior hashing power. Thus, the miners that invest in bitcoin mining via pools are likely to receive more income from time to time.

Frequently Asked Questions (FAQs) About Investing In Bitcoin Mining
  • Is there free Bitcoin Mining without Investment?

If you are wondering whether there is Bitcoin mining without investment, then it is worth mentioning that you’re not the first person to ponder it, especially given how valuable Bitcoin has become.

Many think that there is free Bitcoin mining without investment; however, the answer to this question is pretty much a NO.

You can’t start free Bitcoin mining without investment at all. 

If you’re looking for a way to earn bitcoins for free, check out our list of high-paying Bitcoin faucets and games that payout small units of bitcoin when you carry out certain tasks.

  • Is Bitcoin Mining Profitable?

At most times, bitcoin mining is profitable if you’re able to source for electricity cheaply. Another factor that often determines profitability is how soon you sell your bitcoins after mining them. Under bullish market conditions where transaction fees spike, bitcoin miners make more profits as well.

Whether you’re mining with CPU, GPU & ASIC, NiceHash has an excellent profitability calculator that lets you directly compare electricity costs against realizable profits. Using this tool, you can invest in bitcoin mining with an estimated profit ratio in mind.

Final Words

In this article, we covered vital information about how to invest in Bitcoin mining. We also disclosed that there is free Bitcoin mining without investment.

Anyone tell you that there is a way to mine Bitcoin without investing is probably going to rip your off your money. You must also keep an eye out for the many fake bitcoin mining investment companies out there, promise unrealistic returns over a short period.

We believe that this guide will help you as you consider how to invest in bitcoin mining. You will be a better position to decide which investment opportunities are best for you, or whether it will be best for you to simply buy and hold Bitcoin for profit.

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