So how do you mine bitcoins?

Anthony Volastro offers a clearer description than most: “‘Mining’ is lingo for the discovery of new bitcoins – just like finding gold. In reality, it’s simply the verification of bitcoin transactions.” And how is that done? “It’s not just one transaction individuals are trying to verify; it’s many. All the transactions are gathered into boxes with a virtual padlock on them – called ‘block chains’ … Miners run software to find the key that will open that padlock.” And when they achieve that, new bitcoins are released as a reward.

They are tending the bitcoin garden, playing a kind of functional game – keeping the ledger true and the transactions verified. And it has all been set up so that, by doing that, you can find the unreleased bitcoins and dig them up.

In the early days, it was easier to be a miner. There were fewer miners around. As the bitcoin universe has expanded, however, more people are after the finite digital gold, just as in real gold prospecting. People have banded together, created “pools”, sharing ever more expensive hardware, processing capability and even electricity costs that go with finding those precious bitcoin golden nuggets. You see, it isn’t easy to find a bitcoin. The easier days are over. The view on the street now is that “only the biggest centralized miners will profit.”

So is it worth becoming a miner?

To answer that question, it’s worth hearing from the practitioners – the digital diggers and drillers. “It took ages for me to mine bitcoins because of enormous competent people mining with excellent machines,” said one.

Mining has become more competitive and tougher. On discussion boards the advice is not to even attempt it solo. You’ll have to join a “pool” – a group mining together, with some pretty impressive computer kit. (Most are all-night coders in China). You’ll need access to some hardcore hardware and be ready to burn 24/7 electricity.

Some now claim that the hold just a few groups have now over the mining operation is a significant barrier to entry for anyone else, especially a rookie. There’s no going it alone. You’ll have to join a “mining pool” and you might just feel like you’ve ended up in another institution. Ironic, eh?

There are alternatives to Bitcoin, such as Lite coin or Quark coin. Yet these alternative forms of digital money are becoming increasingly competitive as well. And as they evolve and become more competitively turbulent, the rewards diminish as well.. If you are just starting out as a potential miner, you stand a better chance going for one of these newer alternatives.

So, unless you are ready to dive in with some serious hardware, investment of time and even real money, bitcoin mining is probably not for the little guy any more, if it ever truly was. Bitcoin is institutionalizing around centralised groups and may well be becoming similar to the organisations the whole thing was set up to replace.