What is Bitcoin Mining and Bitcoin Miner?
This article will explain you about what is “ Bitcoin, Bitcoin Mining, Proof of Work and Bitcoin Miner”. You can also learn about the Bitcoin Cloud Mining, Bitcoin Mining Hardware and software details.
What is Bitcoin?
Bitcoin is an internet protocol that enables the transfer of value over a communications channel like the Internet or radio.
An easily understood application is decentralized digital currency; like being able to send a gold coin as easy as you send an email.
But blockchain technology enables many things like a fridge that can pay for and restock itself or self-driving taxis.
Read more about Bitcoin and its status in India here:-
What is Bitcoin Mining?
Bitcoin mining is how Bitcoin transactions are validated and confirmed by the Bitcoin network.
Bitcoin miners create a new block by solving a Proof of Work problem that is chained through cryptographic proof to the previous block.
What is Proof of Work?
A proof of work is a piece of data which was difficult (costly, time-consuming) to produce so as to satisfy certain requirements. It must be trivial to check whether data satisfies said requirements.
Producing a proof of work can be a random process with low probability, so that a lot of trial and error is required on average before a valid proof of work is generated. Bitcoin uses the Hashcash proof of work.
What is a Bitcoin Miner?
A Bitcoin miner is a computer specifically designed to solve problems according to the proof of work algorithm.
Currently, highly specialized chips called ASICs, Application Specific Integrated Circuits, are used as Bitcoin miners.
Before you read further, please understand that most bitcoin users don’t mine! Bitcoin mining for profit is very competitive and volatility in the Bitcoin price makes it difficult to realize monetary gains without also speculating on the price. Mining makes sense if you plan to do it for fun, to learn or to support the security of Bitcoin and do not care if you make a profit. If you have access to large amounts of cheap electricity and the ability to manage a large installation and business, you can mine for a profit.
If you want to get bitcoins based on a fixed amount of mining power, but you don’t want to run the actual hardware yourself, you can purchase a mining contract. Also be aware of cheaters and Bitcoin scammers.
Scam mining companies are common and many have fallen prey to their schemes. Beware.
Bitcoin debit card
Another tool many people like to buy is a Bitcoin debit card which enables people to load a debit card with funds via bitcoins.
During mining, your Bitcoin mining hardware runs a cryptographic hashing function (two rounds of SHA256) on what is called a block header. For each new hash that is tried, the mining software will use a different number as the random element of the block header, this number is called the nonce. Depending on the nonce and what else is in the block the hashing function will yield a hash which looks something like this:
You can look at this hash as a really long number. (It’s a hexadecimal number, meaning the letters A-F are the digits 10-15.) To ensure that blocks are found roughly every ten minutes, there is what’s called a difficulty target. To create a valid block your miner has to find a hash that is below the difficulty target. So if for example the difficulty target is
any number that starts with a zero would be below the target, e.g.:
If we lower the target to
we now need two zeros in the beginning to be under it:
Because the target is such an unwieldy number with tons of digits, people generally use a simpler number to express the current target. This number is called the mining difficulty. The mining difficulty expresses how much harder the current block is to generate compared to the first block. So a difficulty of 70000 means to generate the current block you have to do 70000 times more work than Satoshi Nakamoto had to do generating the first block. To be fair, back then mining hardware and algorithms were a lot slower and less optimized.
To keep blocks coming roughly every 10 minutes, the difficulty is adjusted using a shared formula every 2016 blocks. The network tries to change it such that 2016 blocks at the current global network processing power take about 14 days. That’s why, when the network power rises, the difficulty rises as well.
Bitcoin Mining Hardware
In the beginning, mining with a CPU was the only way to mine bitcoins and was done using the original Satoshi client. In the quest to further secure the network and earn more bitcoins, miners innovated on many fronts and for years now, CPU mining has been relatively futile. You might mine for decades using your laptop without earning a single coin.
About a year and a half after the network started, it was discovered that high end graphics cards were much more efficient at bitcoin mining and the landscape changed. CPU bitcoin mining gave way to the GPU (Graphical Processing Unit). The massively parallel nature of some GPUs allowed for a 50x to 100x increase in bitcoin mining power while using far less power per unit of work.
While any modern GPU can be used to mine, the AMD line of GPU architecture turned out to be far superior to the nVidia architecture for mining bitcoins and the ATI Radeon HD 5870 turned out to be the most cost effective choice at the time.
As with the CPU to GPU transition, the bitcoin mining world progressed up the technology food chain to the Field Programmable Gate Array. With the successful launch of the Butterfly Labs FPGA ‘Single’, the bitcoin mining hardware landscape gave way to specially manufactured hardware dedicated to mining bitcoins.
While the FPGAs didn’t enjoy a 50x – 100x increase in mining speed as was seen with the transition from CPUs to GPUs, they provided a benefit through power efficiency and ease of use. A typical 600 MH/s graphics card consumed upwards of 400w of power, whereas a typical FPGA mining device would provide a hashrate of 826 MH/s at 80w of power.
That 5x improvement allowed the first large bitcoin mining farms to be constructed at an operational profit. The bitcoin mining industry was born.
The bitcoin mining world is now solidly in the Application Specific Integrated Circuit (ASIC) era. An ASIC is a chip designed specifically to do one thing and one thing only. Unlike FPGAs, an ASIC cannot be repurposed to perform other tasks.
An ASIC designed to mine bitcoins can only mine bitcoins and will only ever mine bitcoins. The inflexibility of an ASIC is offset by the fact that it offers a 100x increase in hashing power while reducing power consumption compared to all the previous technologies.
Unlike all the previous generations of hardware preceding ASIC, ASIC may be the “end of the line” when it comes to disruptive mining technology. CPUs were replaced by GPUs which were in turn replaced by FPGAs which were replaced by ASICs. There is nothing to replace ASICs now or even in the immediate future.
There will be stepwise refinement of the ASIC products and increases in efficiency, but nothing will offer the 50x to 100x increase in hashing power or 7x reduction in power usage that moves from previous technologies offered. This makes power consumption on an ASIC device the single most important factor of any ASIC product, as the expected useful lifetime of an ASIC mining device is longer than the entire history of bitcoin mining.
It is conceivable that an ASIC device purchased today would still be mining in two years if the device is power efficient enough and the cost of electricity does not exceed it’s output. Mining profitability is also dictated by the exchange rate, but under all circumstances the more power efficient the mining device, the more profitable it is. If you want to try your luck at bitcoin mining then this Bitcoin miner is probably the best deal.
Bitcoin Mining Software
There are two basic ways to mine: On your own or as part of a Bitcoin mining pool or with Bitcoin cloud mining contracts and be sure to avoid Bitcoin cloud mining scams. Almost all miners choose to mine in a pool because it smooths out the luck inherent in the Bitcoin mining process. Before you join a pool, make sure you have a bitcoin wallet so you have a place to store your bitcoins. Next you will need to join a mining pool and set your miner(s) to connect to that pool. With pool mining, the profit from each block any pool member generates is divided up among the members of the pool according to the amount of hashes they contributed.
How much bandwidth does Bitcoin mining take? If you are using a bitcoin minerfor mining with a pool then the amount should be negligible with about 10MB/day. However, what you do need is exceptional connectivity so that you get any updates on the work as fast as possible.
This gives the pool members a more frequent, steady payout (this is called reducing your variance), but your payout(s) can be decreased by whatever fee the pool might charge. Solo mining will give you large, infrequent payouts and pooled mining will give you small, frequent payouts, but both add up to the same amount if you’re using a zero fee pool in the long-term.
Bitcoin Cloud Mining
By purchasing Bitcoin cloud mining contracts, investors can earn Bitcoins without dealing with the hassles of mining hardware, software, electricity, bandwidth or other offline issues.
Being listed in this section is NOT an endorsement of these services and is to serve merely as a Bitcoin cloud mining comparison. There have been a tremendous amount of Bitcoin cloud mining scams.
Hashflare Review: Hashflare offers SHA-256 mining contracts and more profitable SHA-256 coins can be mined while automatic payouts are still in BTC. Customers must purchase at least 10 GH/s.
Genesis Mining Review: Genesis Mining is the largest Bitcoin and scrypt cloud mining provider. Genesis Mining offers three Bitcoin cloud mining plans that are reasonably priced. Zcash mining contracts are also available.
Hashing 24 Review: Hashing24 has been involved with Bitcoin mining since 2012. They have facilities in Iceland and Georgia. They use modern ASIC chips from BitFury deliver the maximum performance and efficiency possible.
Our Final Conclusion:-
Bitcoin mining process is not as easy task. One should know about the working mechanism of Bit coin Miner. It needs a lot of investment and Hardware and power supply. Sometime Bitcoin mining will even damage your internal parts of computer or accessories due to overheat. The output result or bitcoin earned through your device maybe less than the amount you spend due to electricity and instruments cost. In this situation if u have money to try then go for good Bitcoin cloud mining company. But remember that bitcoin is still risk Investment only.
Thanks and Read More @ the source website https://www.weusecoins.com/en/mining-guide/
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