A very peculiar thing was seen after the results of the US Presidential elections. All across the world, the markets were in turmoil after Donald Trump was declared President- Elect- some as much as 5%. Currencies were in a tumble. In fact, the Mexican Peso literally went in a free fall, falling by double digits on the prospect of the dreaded Mexican wall turning into a possibility. Predictably, gold prices surged, as usually happens in times of global uncertainty. But what was really strange was the rise in price of the Bitcoin. From a price of $708, it jumped as much as $738 and then fell to $726- a 3% rise from just the day before. Also peculiar was the fact that the other crypto currencies not just did not rise but actually fell. If nothing else, this showed the increasing use of the bitcoin as a safe haven. And the fact that it is here to stay.
This article focuses on the basic requirements of getting started with bitcoin mining. Basically, a Bitcoin miner is a specially designed computer for bitcoin mining and solving algorithms. Today, ASICs are thought to be the best player in the arena. Also, getting started with mining requires a considerable amount of upfront investment today, given the craze for the crypto currency, which, going by the trends, is only set to increase in the coming years. With the right gear, it can give you a pretty good return!
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Speed and Hash Rate
Taking a decision as to what miner you should use typically involves some major things. The most obvious is speed. This is the biggest advantage to have in a ruthless world of cut- throat competition, where every nanosecond matters, with hundreds of thousands of people fighting over a couple of coins. Speed in turn, depends on the kind of system one uses as well as something called the hash rate.
A hash is nothing but a one way mathematical function which turns an input to a fixed length alpha numeric output, but which cannot be reverse engineered to get the input again. It can be visualized as a machine wherein you feed your jigsaw and it works to solve it to get the answer in the quickest possible way. The quicker the solution, the more profit you earn. This is called the hash rate. It is basically the amount of work done by your machine in one second. With the advent of highly sophisticated systems, this has been constantly reducing over the years- from Megahashes to Terahashes. To put that in perspective, a Terahash is about 1,000,000,000,000 hashes!! So if I say I have a machine with a hashrate of 3 TH/s, its equivalent to saying it performs about 3 trillion hashing operations – All in ONE second. Obviously, the higher your hash rate, the higher your conversion rate. Typically, it is adjusted after every 2016 blocks based on whether it took less or more time to mine the previous 2016 blocks. Hence, it is on the basis of this rate that the difficulty level is set in the network for the next set of blocks. It was in January 2016 that the network hash rate crossed 1 Exa hash per second and currently stands at about 2.17 Exa hash (14th November 2016). With this speed, it has overtaken the world’s fastest supercomputer- the Tianhe-2.
Coming to the type of systems, there are many to choose from and have been discussed in detail below. However, another aspect to bear in mind is the electricity consumed.
Before starting, it is better to do a cost benefit analysis to get an idea of the breakeven point. Among the other costs, one of the most prominent would be electricity charges. You don’t want to end up in a situation where the profits you earn via mining are all lost paying your electricity bills. It is always better to have a rough estimate in advance about how much energy would be consumed by the system. This should also factor in the cost of running the computer as well. For the same reason, there are reports of mining growing rapidly in countries with cheap electricity rates- like China and Mongolia
The aim is to maximize the number of hashes per watt of electricity consumed. As an example, the AntMiner S9 has a hash rate of 12930 GH/sec and takes in about 1370 watts of power; it gives you 9.44 GH/sec per watt.
A wallet is the first step for your coins. It is like a virtual encrypted bank account. There are various types of wallets- for computers, phones, hybrid, cloud etc. A safe starting point especially for the newbies is to have one on your computer itself. Try out the breadwallet or blockchain if you’re a beginner. If you have a lot of bitcoins, you can go for armory. This is the safest and most secure wallet there is today. However, it can look very overwhelming to a beginner. For android users, Bitcoin wallet, airbitz are both good. For iOS users, Copay does the job. Popular desktop wallets include electrum. Also, be sure to safeguard it with multiple identification checkpoints to make it as secure as possible. There have been many prominent heists carried out on bitcoins in the past. With no central regulatory authority, you literally have no one to turn to case of a mishap. So better safe than sorry.
you need this as a medium to connect one to the pool or block chain (depending on group or solo functioning). It plays the role of transmitting and receiving the work to and fro the other miners/ blockchain. Depending on the setup, can run on almost any system like windows, OSX, Linux etc. the software also helps keep a tab on the system’s hash rate, speed, fan speed, temperature etc. there are multiple options on the software available. If you prefer working solo, you might want to check out the BitCore client. In case of cloud mining, there is no need for mining software. There are plenty of options to choose from:
a. For windows:
i. CGminer: one of the most popular and common software for GPU/FPGA/ASIC. Has been written in C available on many systems – OS X, Linux, and Windows. Has a boatload of features like fan speed control, overclocking, remote interface, ample support for GPU and CPU, detection of new block with a mini database.
ii. BGFminer: Designed keeping in mind ASICs and FPGA but mostly like CGminer. Has some interesting features like fan control, integrated overclocking, vector support, ADL device reordering by PCI bus ID, mining with free mesa/LLVM OpenCL.
iii. BTCminer: can be used for running large mining rigs. It is an Open Source Bitcoin Miner for ZTEX USB FPGA modules 1.5. Has a ready to use Bitstream requiring no license, dynamic frequency scaling taking the one with the highest rate of valid hashes. Comes with FPGA boards having a USB interface.
iv. Bitcoin Miner: can be used on windows 10 and 8.1. the interface is user friendly and provides pool support, power saver mode. This also comes with a profit report feature to ascertain whether the mining is economically profitable or not.
b. For Linux:
i. EasyMiner: A GUI based software. supports both- the stratum mining as well as the getwork mining protocol- respectively. Can be used for solo as well as pool mining. One of the best features is performance graphs on the mining activity to know where you stand.ii.
ii. BitMinter: Available for systems like Linux, Windows and Mac OS X, this software belongs to a mining pool. Can be used to mine on OpenCL compatible ASICs or GPUs Gives a high speed and reduces the amount of stale workiii.
c. For Mac OS X:
i. RPC Miner: can be used for Mac 10.6 or higher versions.
d. For Others:
i. Poclbm: Uses the OpenCL framework and thus computes hashing quickly. Works with Nvidia and AMD. Good for experimentingii.
ii. DiabloMiner: supports unlimited pools and suitable for those in multiple pools. Returns to the first one after every hour. A Java GPU miner, it uses the OpenCL framework.
Along with the appropriate software, a decent mining hardware too is a must. Initially, when the bitcoin was newly launched, a normal Central Processing Unit was good enough to give one ample returns. It wasn’t soon when the hash rate vis-à-vis the power consumed made this option economically unviable. Next in line was the Graphical Processing Unit. Simply put, a GPU can execute more 32- bit instructions per clock than a CPU and is faster. But it was poor in terms of the cost benefit ratio due to the extremely high power and low speed it offered. FPGA mining offered much lower power consumption and better hash ratings, pushing the performance standards to a new high. The ASICs was a real revolution- both in terms of the speed and power- and made GPU based mining obsolete in many nations. This is most widely used today. We also have cloud mining as the next gen thing With the new bitcoin mining hardware after CPU and GPU, miners were able to set up mining farms for the first time- which changed the very metrics of the game. For all those who want to look further into this, check out this video about a ‘secret’ bitcoin mining factory in China.
The most important criteria while looking for mining hardware are efficiency, cost and speed. Efficiency can be gauged by the amount of calculations and hence conversion a system can do a certain amount of power. A basic Bitcoin ASIC system is a must. Along with it is also required access to cheap power and an environment with temperature control to a certain extent as the system, especially if it’s part of a mining ‘farm’, tends to get very hot. There are many models in the markets today. Some of them like the AntMiner and its various versions are the best right now. There are many companies in this business with some prominent ones being BitFury, Bitmain, Spondoolies tech etc. The BE and BE Tube, ASICMiner, Avalon etc are some others. Here’s a short comparison in terms of the power usage, hash rate and price:
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- A Bitcoin mining pool: Pooling helps you consolidate a larger amount of profit. It is like one of those group assignments back in college where everybody had their share of work cut out, except that here everybody actually has to work and you can’t piggyback on someone else’s job. Pooling is a solution to the increasing level of difficulty in the mining arena with the profits divided in proportion to the work done. Although it is advisable to check up on the pool reviews, history etc that you’re thinking of joining, given the amount of scammers in the market. Some of the best rated pools are BTCC, Bitfury, F2Pool, Slush Pool, Eligius, BW Pool etc.
A very often asked question is should you mine on your own? It seems to be a very lucrative option indeed. After all there are lesser chance of falling for the wrong pool and being scammed. It gives you independence and all the profits too are yours to keep. But remember, all the costs too would need to be borne by you alone. Also, with the pool, chances of successful mining are more and hence returns more frequent. Ultimately, it depends on your will and commitment to mining and your financial status.
So weigh in the pros and cons and decide. Now that you have all the necessary gear, jump right in and let the madness begin!