This article will tell you how to mine bitcoins - the first and most important cryptocoins in the world. Readers will learn whether it is possible to become a full participant in the mining process at the present time, and what is necessary for this. There is also information about BTC difficulty, ASICs, rigs and other aspects, which still raises questions for newcomers as for the cryptocurrency features.
Table of content:
- Mining process now and many years ago
- Main principles of mining
- How to begin earning cryptocurrency
Mining bitcoin now and then
In early 2009, the world first heard about the cryptocurrency. The unknown Mr. Satoshi Nakamoto, who still prefers being a pseudonym, without fanfare and expensive presentations, announced the bitcoin. For programmers who worked in the financial sphere, it was not a surprise: the release of cryptocurrency was preceded by many years of work. For most people this news has gone unnoticed. Someone took it with skepticism and even with humor, but there were also those who concluded: the bitcoin has a great future indeed.
The usual home computer has stopped being just a means for entertainment or a typewriter. A good graphics chip or a powerful processor made it possible to mine virtual coins without much effort. Now the cost of bitcoin has reached high values, and it was no longer possible to get even one coin on home equipment. What's the matter?
- The success of bitcoin attracted a large number of participants, that’s why it is impossible to assemble the block alone as it was till 2010.
- Cryptocurrency difficulty a special index, which is used in calculations, is constantly increasing. The reason is the same namely increasing the miners’ number.
- In view of the fact that special equipment is used to generate the block, power consumption has also increased enormously.
Before talking about the technical features of mining, you should understand this process itself. The digital world has its own laws that follow strict rules and algorithms, unlike real life, where people make compromises, allow the influence of so-called human factor. No wonder they say that mathematics is an exact science!
How does bitcoin mining work?
New technologies and currency of the future
Cryptocurrency invention was inevitable because the most types of payments went into non-cash. If there is any sense in printing paper bills and chasing coins, if this money is fiat in fact and it's easier to transfer everything into the digital environment? The idea of a virtual currency was realized through the blockchain technology, and the first monetary unit was bitcoin.
Hash, blocks and blockchain
Mining is a complex computational process, during which a huge amount of data is processed to detect a hash with the necessary properties. By “hash” we mean a cryptographic record that is executed by one or another algorithm. In the case of BTC this is SHA-256. The block is ready as soon as the desired hash, and according to the request of the system it must contain some part of the previous record, will be found. Consequently, the miner receives a reward. All the assembled blocks are united into a chain called blockchain. Currently, more than 500,000 blocks have been assembled.
Is mining interesting for forgers?
False money printing is strictly punishable by the law, but there are people who undertake this black business with pleasure just striving for profit. Of course, they will wonder how to earn bitcoins dishonestly. Fortunately scammers do not succeed in the cryptocurrency world. To hack the system they have to begin from the Genesis block anew using their own algorithm. Once the chain is higher by one block, the entire system will obey the new rules. In theory, "51% attack" is possible, but in reality there are no such computing capacities and, even if they were, the undertaking is absolutely not profitable: the expenses will be greater than the income as a result.
Difficulty as a mining regulator
You cannot speed up mining and get more bitcoins than the system allows. The difficulty is a regulatory tool in this case. It helps to contain destructive factors for the blockchain, the main one of which is the growing number of miners. So, for example, in a week it is possible to get only 2016 blocks that means 1 block in 10 minutes. Increasing difficulty changes the reward amount. The first miners received 50 BTC for one block, now they can get only 12.5.
How to begin mining bitcoins
So, we described the main theoretical points about blocks generation and the receipt of compensation for their "works". Now we should analyze the technical side of the question.
To build a farm one needs to spend a lot of money for the equipment. Currently, ASIC is an only profitable device for BTC mining because it is based on the special chips and has a high hashrate. For the farm dozens of ASICs and rigs are used. A farm owner will have to invite a programmer who helps to make the initial setup and maintains the system during its work.
The farm is installed in a well ventilated, dry and separate building. Twenty-four-hour rumble of fans in the attic of a residential house will not be pleasant to anyone living there. Also, there will be a need for an uninterrupted and chip source of energy and, of course, the stable broadband Internet is demanded.
Such a luxury as a farm can be afforded by rich investors, large organizations or data centers. The higher and more efficient your computing equipment is, the more chances to find blocks and to earn bitcoins. With a relatively small starting capital, you can acquire only a couple of ASICs and take part in collective mining.
A pool is exactly the same crowd mining when users unite their computing resources for transaction processing and block searching. All you need is to set up the equipment and the soft, register on one of the numerous pools and together with other participants wait for the gold coin to fall into the common “piggy bank”. As soon as it happened the income is divided among all members according to a certain scheme approved by the resource administration. By the way, your equipment must be modern and powerful. A home computer, even in the case of a pool, is out-of-date.
Is there a way how to mine for bitcoins without expensive maintenance of farms or bulky home installations connected to a pool resource? Of course, there is, and this method is called cloud mining. All you need is to rent the facilities on one of the working farms for a certain or an indefinite period. Cloud mining is suitable for those users who are unable to organize the process on their own or the payment for energy in their country is very high. The share of your participation may be different, but the smaller it is, the less reward will be received as a result. Genesis-Mining, Eobot, HashFlare and other companies offer their services in this field.
Now you know the basic methods of how to mine bitcoins. Unfortunately, ordinary users will not be able to make their first million from scratch at the present time. There is also an increasing interest from government bodies, the introduction of restrictions and even prohibitions - cryptocurrencies are at their formation and legalization stage. On home equipment you can start mining other maybe less popular coins and learn the process in practice. This knowledge will be very useful in the future.