Popular sites such as Slush's Pool allow small-time miners to receive percentages of bitcoins when they add their computer power to the group. Pools are a collective group of bitcoin miners from around the globe who literally pool their computer power together to mine. There is a way around such a hefty investment: joining mining pools. ( Read more: How to make your email as stealth as Edward Snowden) New faster hardware is being created by various mining start-ups at a rapid rate and the price tag for a full mining rig-capable of discovering new bitcoins on its own-currently costs in the ballpark of $12,000. Programmer language aside, all this means is that the hardware is designed for one specific task-in this case mining. Today, application-specific integrated circuits (ASIC) are being used. Over the last few years, miners have had to move on to faster hardware in order to keep generating new bitcoins. That's the way the system was set up-easier to mine in the beginning, harder to mine as more bitcoins are generated. When mining began, regular off-the-shelf PCs were fast enough to generate bitcoins. The program keeps running and the faster and more powerful a miner's PC is, the faster the miner will start generating bitcoins. When launched, the program begins to mine on its own-looking for the magic combination that will open that padlock to the block of transactions. The second piece of software needed is the mining software itself-the most popular is called GUIMiner.

With no central bank backing your bitcoins, there is no possible way to recoup your loses. When bitcoins are lost or stolen they are completely gone, just like cash. Late last year, hackers staged a bitcoin heist in which they stole some $1.2 million worth of the currency from the site Inputs.io.

The problem is, as in most bitcoin scenarios, wallets are unregulated and prone to attacks. A prospective miner needs a bitcoin wallet-an encrypted online bank account-to hold what is earned. The software required to mine is straightforward to use and open source-meaning free to download and run. How do you mine on a budget? Bitcoin mining can be done by a computer novice-requiring basic software and specialized hardware.

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