Mining is the process by which new Bitcoins are generated, but it's also an integral part of how the Bitcoin network processes transactions. You might be surprised to know that anyone can mine Bitcoin, support the network, and claim the rewards for doing so - all it takes is some clever software! In this guide, we'll walk you through the basics of Bitcoin mining software, including how it works and how you can get started with mining Bitcoin on your desktop or other hardware device.
Mining software is specialized software that uses your desktop's computing power to mine Bitcoin or other blockchain-based cryptocurrencies. In exchange, you (the miner) receive a monetary reward in the form of cryptocurrency.
If it weren't for the sizable electricity costs of continually using computing power, mining would pretty much be free money. However, these electricity costs do exist, and they force miners to build specialized mining hardware, find alternative energy sources (especially renewable energy sources), or even move country.
As we explained in our article What Is Bitcoin Mining?, mining is technically the process of solving tough cryptographic puzzles that easy for others to verify. In the case of Bitcoin and many other cryptocurrencies, these puzzles are the proof-of-work (PoW) mechanism that encourages miners to be fair in maintaining the blockchain.
The only way to solve these puzzles is by trial-and-error. This is the purpose of mining software: to automatically test random solutions to the puzzles until the correct solution is found. The more powerful the computer, the more solutions it can test and the more puzzles it can solve.
It's important to know that the likelihood of solving a cryptographic puzzle is extremely low. As a result of this, miners working alone would very rarely solve blocks themselves, making their mining income extremely unpredictable. Mining pools are the solution to this problem: pools are groups of miners who collectively attempt to solve blocks and share the profits between if they are successful. By default, almost all mining software has support for mining pools.
If you want to try out Bitcoin mining for yourself, you'll definitely need mining software. Generally speaking, mining software can be categorized in two ways:
Since this article focuses on Bitcoin mining software, we'll look at examples of both dedicated Bitcoin mining software (if you're sure you want to mine Bitcoin) and automatic mining software (if you want to maximize profits) for both desktops and hardware devices.
The world's first mining software was designed to mine just Bitcoin using an ordinary computer, and such software is still available today with added support for hardware devices. Most of this software has similar base functionality: control fan speeds, use computing power from your CPU or GPU, and connect to mining pools. Here are some popular examples of dedicated Bitcoin mining software:
BTCMiner (Windows, Linux) is an open-source Bitcoin miner with support for Windows and Linux. It has support for mining pools, but otherwise it's an incredibly basic application with few bells and whistles.
CGMiner (Windows, Linux, OS X) is the gold standard for Bitcoin mining software. It's an efficient mining application with support for almost all hardware mining devices. Like BTCMiner, it's open-source and allows you to connect to mining pools - what more do you need?
BFGMiner (Windows, Linux) is very similar to CGMiner in terms of functionality and efficiency. However, BFGMiner offers slightly more options for those using mining hardware instead of their computer's CPU.
If you're not too bothered about supporting the Bitcoin network, you can use automatic mining software to automatically switch between mining the most profitable coins. This will allow you to improve your profits without any added work, but might involve small fees.
GamerHash (Windows) is a new kid on the block when it comes to mining software. This clever, well-maintained application is designed to make the most of the world's gaming computers for cryptocurrency mining. In exchange for a fee of the profits, it automatically mines the most profitable coins using your PC. GamerHash even boasts an online store where you can redeem your cryptocurrencies for digital rewards, such as Spotify or Amazon gift cards and Steam games.
SmartMine (Windows) is a great example of automatic, multicurrency mining software. It offers support for a handful of cryptocurrencies and will direct your device's computing power to the most profitable coin as determined by WhatToMine. Naturally, you can choose the mining pools of your choice, as well as adjust a range of settings to maximize profits.
If you test out any of this software, you might be disappointed by the small or non-existent profits from your home mining operation. Unfortunately, the profitability of mining Bitcoin or other cryptocurrencies can vary greatly depending on the value of the coins themselves and the number of active miners across the network.
To make any serious profits from mining, you need to maximize your computing power while minimizing electricity costs. For this, you should definitely consider investing in specialized mining hardware (which is easily dozens of times more energy efficient) or building your own energy farm. In any case, mining Bitcoin isn't quite the free money that some will have you believe.
Although it's not really software, cloud mining is another approach to mining cryptocurrencies. With cloud mining, you pay a monthly fee to rent computing power for the sole purpose of mining. The provider of the computing power is responsible for the entire mining process and its costs - including electricity costs - and you get to keep any profits for yourself.
It's definitely worth looking into cloud mining services such as Genesis Mining or HashFlare, but you have to wonder why these providers would rent out computing power to you if they could keep profits for themselves.