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If you want to join in the bitcoin frenzy without 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 dangers -- of its own. And the more popular bitcoins become, the harder it is to mine them profitably. .

Unlike paper currency, that can be printed by governments and issued by banks, bitcoins do not arrive in any physical type. This makes a significant risk, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is the way the bitcoin network retains its transactions secure.

Bitcoin transactions are secured by blockchains, which make up a public ledger of transactions. Because of the way blockchain transactions are structured, they are extremely difficult to alter or compromise, even by the top hackers. But in order to secure those transactions, someone needs to dedicate computing power to verifying the activity and packaging the details 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 they effectively process. .

The bitcoin founders have set 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, however they won't be granted bitcoins as a reward for their job. As of mid-January 2018, roughly 16.8 million of the 21 million bitcoins have been mined.  Assuming that the bitcoin mining industry doesn't change dramatically, it looks like we won't reach on the 21 million-bitcoin restrict until the year 2140. .

During the first days of bitcoin mining, miners would often download a software bundle designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that is no longer sensible, because solving bitcoin transactions is becoming too hard for your average computer to manage.

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The bitcoin network is designed to make a certain number of new bitcoins each 10 minutes. If only a few people are bitcoin mining at any given time, then the network will be generous and discuss bitcoins easily in order to reach the predetermined number. But now this bitcoin mining has become so widespread, the network has become much stingier about handing out bitcoins to miners.

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

To begin with your own mining rig, you purchase hardware designed for mining bitcoin (or some go to the website other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady stream of payments with no needing to get involved.

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As soon as it's fairly simple to set up and utilize a bitcoin mining rig, actually making money on the process is something of a challenge. Since more and more people are signing up to mine bitcoins, the mining procedure continues to get more difficult and will likely keep doing so for some time.

And since bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for the hardware, or even several times that for a top-quality rig -- having to replace it every year or two takes a huge bite out of any profits you earn from mining. Plus, most mining rigs consume enormous amounts of electricity, which means you also need to subtract expense in the bitcoins you earn to determine your profits. .

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

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