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Bitcoin Mining

Bitcoin has a public ledger called the blockchain. The mining process adds new transactions to this public ledger. Why? Well, Bitcoin users need this process because it means that every transaction is securely confirmed and verified, while all users using the Bitcoin network have full access to the blockchain - in other words, to the Bitcoin ledger. Mining also helps the network figure out which transactions are fair and legitimate by eliminating any transactions that try to spend money a second time.

So when someone "mines" Bitcoin, they are actually doing a service to all Bitcoin users because they guarantee the legitimacy of Bitcoin transactions. During the mining process, the people who mine bitcoin will complete a new block, which means that the miner is rewarded. In 2018, the reward for completing a new block was 12.5 bitcoins, but the reward decreases over time.

As you can imagine, mining requires a lot of hard work and patience - you won't get bitcoin mining results quickly. Thus, there is an obvious analogy with the actual physical mining of metals such as gold. Hence the use of the word "mining" for the computational tasks that generate the new bitcoin.

Choosing your mining equipment

Bitcoin mining involves very complex calculations that require a lot of computing resources. So, choosing the right bitcoin mining hardware kit is really important. When choosing a bitcoin mining kit, there are a number of specific characteristics to consider.

Hash rates

Perhaps the key aspect of your choice of mining kit is the following: the hash rate that your mining hardware can support. A hashrate is essentially the number of cryptographic calculations that your mining hardware can perform every second. It’s easy to see why a higher hash rate will help you mine coins faster – simply because more calculations per second means you solve the cryptographic math needed to mine a coin much faster. As a result, you can quickly complete the block and get rewarded for it.

Hash functions work like this: whatever input you give it will always produce the same result. Thus, in order to find a specific output, you must try as many random inputs as possible - and as quickly as possible. This makes mining competitive and the miner that can process more input than other miners will eventually be rewarded faster. So, again, if you can get hardware with a high hash rate, you will have an advantage over other miners, which means you will earn more rewards faster.

The hash rate measurement is MH/sec, which is short for mega hashes per second. You can also measure hash rates in terms of GH/sec and TH/sec, which are giga- and terahashes per second, respectively. Bitcoin mining hardware has a hash rate that can range from a few hundred MH/sec to 10 TH/sec (or 10,000,000 MH/sec).

Cost of energy

There are costs associated with bitcoin mining, and it's not just the physical mining hardware that you need to worry about. If you can afford powerful hardware, you will quickly find that you have another headache: the electricity costs associated with running this hardware, because powerful mining hardware consumes a lot of power.

Therefore, when buying equipment, you need to carefully monitor the power consumption of the kit - calculate it in watts, and then see how much it will cost you so you won't be too surprised when you get your next electricity bill. If you don't, you risk spending all your mining profits on electricity, or even incur large losses.

Hashrate along with energy consumption is a good way to evaluate the profit from mining. Compare the hashes you can complete in an hour to the cost of electricity per hour (or per day). An easy way to do this is to divide your kit's hash rate by the watts consumed. This will give you the MH/s per watt which will help you, along with your current electricity costs, determine if your mining kit will be profitable.

Be sure to include additional costs such as the computer hardware that drives the mining GPUs when you calculate the profit - your computer will also consume power in addition to the mining hardware you have.

Bitcoin mining hardware options

When Bitcoin was just released, a lot of people took notice because it was a unique idea that people thought was very liberal. In any case, Bitcoin was very revolutionary compared to how transactions were handled before: centralized banks. This self-governing network was not the responsibility of financial institutions, tax authorities and other large organizations, since it was completely decentralized.

In those early days of Bitcoin, fewer people knew about cryptocurrency and fewer people bought and invested in Bitcoin, so the value of Bitcoin was not as high. As a result, it was easy to mine bitcoin, which meant that many miners were interested in mining bitcoin for profit, but they were also interested in bitcoin because it was such an incredible, new idea. At that time, bitcoin mining required the use of basic computing power - even a laptop or a powerful desktop computer was enough.

Through this bitcoin mining process with laptops and desktops, people have begun to realize that GPUs (graphics cards) are capable of really boosting the bitcoin mining experience. GPUs are well suited for bitcoin mining: GPUs consume less power than the CPU of a mining computer, and GPUs can mine 50 to 100 times faster.

As a result, specialized devices specially designed for mining were introduced to the market. Mining opportunities have increased and this has led to an interesting development: bitcoin mining farms that were actually profit centers, leading to the development of a more formal industry dedicated to bitcoin mining.

Over time, bitcoin mining has become very profitable, and many serious miners run very large Bitcion mining farms that bring in a lot of money. These mining farms use a combination of hardware, including GPUs and powerful coolers to keep temperatures down. Electricity is a big problem for these operations, but in some countries, electricity prices are low, so mining farms are concentrated in places with cheap electricity.

Unfortunately, this means that in order to mine bitcoins, you will have to face very efficient mining operations that have a lot of capital behind them - essentially, this is competition with large companies around the world that have a lot of money to spend. . There are also countless individual Bitcoin miners, and they tend to cooperate for profit by joining Bitcoin mining pools.

Choosing a CPU

While the CPU is indeed central to your computer, it is not really the most important part of a bitcoin mining setup. Yes, when Bitcoin first launched, you could mine using only the CPU, and you could do it profitably as long as your PC's CPU had enough power.

However, the miners worked hard to maximize their profits, so they ended up trying different types of mining hardware. They quickly discovered that CPUs were not the best option for bitcoin mining. You still need to use the CPU to power your PC running the mining rig, but it will take decades for your CPU to mine a significant amount of Bitcoin.

GPUs for mining

There are many different uses for GPUs or GPUs ranging from advanced 3D gaming to 3D rendering. In fact, the original design goal of GPUs was to be able to compute the mathematical calculations that make top video games look as good as they do. However, by coincidence, this also meant that GPUs are excellent tools for performing hashing functions. And as we know, hashing is the key to solving the cryptographic puzzles that Bitcoin transaction blocks solve.

GPUs are not cheap, at a few hundred dollars each, but they have a huge advantage over CPUs when it comes to hashing. A good GPU can easily process data a hundred times faster than a top-end CPU. This fact has led to the emergence of the so-called mining rig: a basic computer connected to a large number of GPUs designed for mining and mining as fast as possible. However, some people have used these machines in a mixed configuration, such as playing 3D games at certain times during mining when they were not playing.

However, the bad news for GPU mining quickly emerged: you can't really profitably mine bitcoin with a GPU today. In short, the more powerful the mining hardware, the more difficult it is to mine bitcoin. As a result, GPUs can no longer efficiently mine bitcoins compared to the alternatives we will discuss below. Thus, you will not get your money back in capital and electricity costs if you use a GPU to mine bitcoins.

FPGAs in Bitcoin mining

GPUs were soon replaced by something called a Field Programmable Gate Array, or FPGA. Integrated circuit, FPGAs need to be configured after they are assembled, but this means that a company that creates a mining kit can buy a lot of FPGAs and then configure them so that they do a great job of bitcoin mining. FPGAs have proven to be a great option for bitcoin mining and have changed the parameters of bitcoin mining by removing GPUs from the playing field.

In fact, FPGA mining rigs were the first mining kit to use hardware specifically designed for bitcoin mining and that could only be used for bitcoin mining. In one key development, it was quickly discovered that FPGAs used much less power than GPUs - in fact, at the same hash rate, an FPGA could use less than 20% of the GPU's power, meaning that mining operations were much larger. . profitable.

What are ASICs?

The final stage in the bitcoin mining arms race, Application Specific Integrated Circuits or ASICs were chips designed from the ground up for bitcoin mining. You cannot program an ASIC, its functionality is printed in its schematics, and in the case of bitcoin mining rigs, the ASIC can only be used for bitcoin mining. Good ASICs can mine 100 times faster using less electricity. At this stage, there is no ASIC replacement technology on the horizon, so ASICs remain the fastest way to mine Bitcoin for the foreseeable future.

Of course, making a custom-designed chip would be time-consuming and quite expensive. However, these costs pay off - a top miner from a company like AntMiner can deliver hash rates that are in the terahashes per second range - easily over 10 TH/sec. Price? Over a thousand dollars. You also get cheaper solutions, but the speed will be slower.

Working out mining profitability

Getting the right profit from mining is difficult and it depends on the choice of equipment, so beginner miners may find the choice of equipment a bit difficult to manage. Choosing the right equipment will determine your bottom line, so you need to calculate your profit margin to cover the cost of the equipment as well as the electricity you use. It is important that you make this calculation before spending money on equipment because your equipment can be difficult to resell.

Fortunately, you can use a ready-made calculator to help you - two options include the BTC Mining Profit Calculator, which allows you to add facts such as the price you pay for your hardware, plus the hash rate you achieve, along with the amount consumed. you electricity - this then takes the current price of bitcoin and tells you whether your investment will make a profit or just end up costing you money. You can try another calculator from Genesis Block.

Choosing mining software

Do you think it will be difficult to choose equipment for mining? You have even more options to choose from - this time in regards to the software you use for mining. You don't need mining software for all types of mining rigs, but you probably will - GPUs and FPGAs also require you to make available a computer that you can use for mining that acts as a host for the bitcoin client, and also the mining software you choose to use. .

Why Bitcoin client and mining software? Well, the bitcoin client connects your miner to the bitcoin network, and the mining software is the app that uses your mining hardware to solve cryptographic puzzles to solve blocks of transactions - for which, of course, you get rewarded.

The ASIC system can be pre-configured via software, they can even include a bitcoin address that is ready to use. All you have to do is plug the ASIC miner into an outlet and get started. However, older ASIC installations required separate software to run.

What are the most popular bitcoin mining software options? We think you should try one of these five solutions, depending on your specific needs:

Understanding mining pools

The computer resources required to mine bitcoins have increased to the point where successful bitcoin mining now requires you to compete against big money organizations that can build large mining farms. So mining alone is difficult, and one way to improve your ability to mine bitcoin is to join a pool of bitcoin miners.

When pooling your mining efforts, you are basically giving your computing resources to collective mining so that blocks can be found faster, which means faster rewards. These rewards are then distributed among the people who contribute their computing resources in proportion to their contribution. Thus, joining a pool can make your mining income more sustainable, as you will get paid faster, even if the individual payments may be small.

Joining the pool is easy, you sign up just like you would on any other website - by creating an account. Then you add workers - or multiple workers if you have multiple rigs - and attach the workers to your hardware rigs. Keep in mind that pools charge fees for their services, so you could lose anywhere from one to ten percent of your mining reward. Some pools don't charge at all.

Can you profitably mine Bitcoin?

The profit you can make from bitcoin mining has changed rapidly over the years as bitcoin itself has become more valuable and the difficulty of bitcoin mining has increased exponentially. The early enthusiasts who used CPUs to mine bitcoin are now no longer able to make money from it, instead the game is in the hands of people who run enterprise scale mining ventures.

So, basically, easily accessible bitcoins were mined a long time ago, so mining today is incredibly difficult, like trying to find diamonds. The rising value and popularity of Bitcoin has also attracted a lot of new players to the Bitcoin mining scene, which makes the competition to mine new coins even fiercer – meaning you just need more and more powerful computing resources to mine the coin.

Specialised mining gear is now key

It's not that you can't mine - it just means that you now need some pretty specialized bitcoin mining hardware to make a profit. People trying to mine often find that they are simply wasting more of the electricity they use to mine than what they get in exchange for mining. Access to cheap electricity is part of the key to successful bitcoin mining today, as is scale, the ability to run a very large mining operation.

People who mine at home also have to deal with all sorts of problems, from power outages to equipment breakdowns and disconnections from the Internet, not to mention the price drop of bitcoin that happens from time to time. It is really very difficult for people to mine bitcoins at home and make money in general.

This does not mean that the home mining offer will not change: ASICs are getting better and better, and the software that controls the hardware is also getting more and more functional. In the future, all of these factors may change so that people can mine Bitcoin at home again, which would be good as it supports the decentralized aspect of Bitcoin. In other words, people mining bitcoin at home don't let all the power accumulate in a few big players.

What you need to know about Bitcoin cloud mining

There is an alternative to bitcoin mining using your own hardware. It is known as cloud mining and works on the same principle as other cloud services. Instead of owning your own computer hardware, you are "renting" mining capabilities from someone else. It's a bit like buying a mining contract, and in doing so, you'll be sharing the vast computing power of the company you're under contract with.

Without a doubt, bitcoin cloud mining can be easier than trying to do it with your own hardware because you don't have to worry about software, internet bandwidth, or electricity costs. And, of course, you don't have to pay for hardware. All you need is an internet connection and, ideally, your own bitcoin wallet to store your coins locally.

However, please note that when you outsource your mining activities to a cloud mining provider, you are taking on some risk. You transfer almost all control to the cloud mining provider. That's why choose only reliable cloud mining providers like Cryptxtr.