How to Mine Bitcoins – For Dummies

With lots of ups and downs (mostly ups) over the last six months, Bitcoins has generated lots of buzz around the world. Valuation of Bitcoin roared from a mere $12 to $238 (2000% rise), just before plunging a little last week.

Bitcoin-Market-Price-(USD)

With big names like the Winklevoss twins getting involved in virtual currency, it is grabbing even more attention.

How to earn Bitcoins?

Well you either buy Bitcoins at exchanges like Mt. Gox or you mine them.

Mining Bitcoins is like solving algorithms. The better hardware you have, chances are there you do it faster. So whosoever is the fastest to mine the block gets whole 25 Bitcoins for it. Naturally people do it in groups, to be more effective in this race.

Mining Bitcoin

Wallet

Well, you need a place to store your money. You can choose your own Bitcoin wallet. I recommend using Bitcoin-Qt, original client.

Bitcoin-Wallet

Mining Pool

There are various factors which one should consider while choosing the mining pool, like transaction fees etc. You can go though the detailed post. For starters, I recommend going with the most popular one Slush’s Pool.

Create an account and add a worker. Workers will be used as login credential to mine bitcoins. If you are testing / comparing different clients, use different worker accounts for the purpose.

Bitcoin-WorkersBitcoin Miner

You can choose from tons of available miners for different platforms given at Slush’s Pool. For windows, i recommend using Kiv’s GUI miner.

GUIMinerIn case your device is not detected, most probably your graphics card drivers are missing. Install ATI / Nvidia SDK for Bitcoin Mining.

Worth Mining Bitcoins?

On my ATI Radeon HD 3450 card with both CPUs Affinity, it gave me an average of 1.2Mhash/s.

Bitcoin-Mining-Value

After mining for 24 straight hours, the output was 0.00001220 BTC. This is definitely NOT worth, unless until you have a better hardware. Or maybe having a better graphics card, GPU mining is much more powerful than CPU mining and cost effective. You can also buy dedicated Bitcoin mining hardwares. Atleast the TC article about the Cost of a Bitcoin suggests, its a worthy investment.

Make sure you backup wallet or your private key. Lost around ~1 BTC in 10 different wallets after HDD crash.

Have you mined Bitcoins before? How much did you make? Let us know in the comments!

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