OK, I thought, I have time on my hands, why not try this bitcoin mining thing and make a few bucks. I went on over to big bitcoin forum and started reading one of the guides. I soon came to a grinding halt. The stuff in the Getting Started guide is so technical it made my hair curl. It looks like I need to buy a ton of hardware and spend a lot of quality time with the tech info.
So, a couple of basic questions before I decide anything. In one thread people are talking about their video cards, whether they’re powerful enough, whether they have something called OpenCL or Cuda support. (Yes, I read that as OpenGL at first but it definitely seems to be OpenCL.)
What, in the name of all that’s holy, has a video card to do with Bitcoin mining? And one other comment gave me pause which I’d like to check out with you guys. One poster said, “Never mine on a laptop. Not worth it.” Is that true? What would I need besides this weird Gridseed box, which I assumed hooked up to the laptop?
I have a sinking feeling I’m out of my depth here but I’d appreciate any thoughts.
Video card GPUs are optimized for performing certain kinds of calculations to make your video games and whatnot look pretty. As it turns out, there are all kinds of interesting math and science problems which benefit from the same optimizations used for graphics. A few years ago, people started realizing that they could take advantage of their powerful GPUs by writing software that abused graphics libraries to do practical calculations using the GPU instead of the computer’s CPU.
Bitcoin mining happens to be one of the types of problems that benefits from GPU design. People who set up mining rigs generally build machines with lots of powerful video cards in them and use libraries specially designed to calculate bitcoin hashes with their GPUs.
Be aware that bitcoin mining is almost assuredly a money-losing operation at this point. You’ll pay more in electricity bills running a massive mining rig than you are likely to make selling bitcoins.
I have never done any Bitcoin mining but I have read about it for years and have discussed it with people that have done it. Mining Bitcoins is a rather odd but ingenious way to introduce them into circulation in a controlled way.
The whole explanation as to how mining works is complicated and is better left to links like I provide below but the basic concept is simple enough.
Bitcoins come into existence when a computer solves a very difficult type of math problem. The reward for solving one of these problems is currently 25 Bitcoins (or $16656.50 at today’s exchange rate) but the probability of an individual miner solving one is very low even with obscenely powerful computers.
The difficulty of these problems grows over time as the miners add faster and better hardware so that the rate of generating new Bitcoins remains constant over time.
A person that has faster hardware than the average miner will have above average games but this advantage will diminish as the average miner’s equipment becomes faster. It is like a computer arms race among miners of sorts.
Video cards are just a specialized type of processor that are much better than general processors at certain types of math problems, especially ones that Bitcoin mining requires.
It isn’t worth trying to mine Bitcoins if your hardware is much below the average for all miner’s. It will take your computer too long to mine a Bitcoin to be worthwhile and something like an older laptop may never produce anything in any semi-reasonable amount of time.
Here is a more detailed explanation of how the mining algorithms work and the rules that they follow to increase in difficulty over time.
I’m probably going to get ninja’d here, but when you mine bitcoins, what you’re actually doing is validating a bitcoin transaction. The purpose of the validation is to ensure that the bitcoins being spent aren’t being double-spent; the method bitcoin uses is to delay the transaction long enough for the transaction to be made public and propagate to other bitcoin users. Specifically, each transaction is attached to a math problem which needs to be solved with brute force. The details of the math problem are largely irrelevant, as long as it takes a few minutes to solve. If the problems are solved too quickly, bitcoin ramps up the difficulty to keep the time to solve somewhat constant.
As a reward for people using their valuable computer cycles to validate transactions, the first computer to successfully solve the problem gets some fraction of a bitcoin. Thus, bitcoin mining. As bitcoins became more valuable, miners started an arms race of computer power in order to be the first one to solve the problem, validate the transaction, and get the reward. First GPUs were used over CPUs, and now custom ASIC hardware. In order to beat out your fellow miners now, you either need an army of GPUs (power hungry) and a cheap source of electricity, or you need to decide that you’re going to go in the business of bitcoin mining and buy dedicated, custom-designed hardware. But since you’re not developing the hardware, you’re competing with everyone else who has a few thousand dollars to blow on a get-rich-quick scheme.
Gone are the days of casual bitcoin mining to make a few bucks on the side.
I don’t think this is true. From my limited understanding, verifying a transaction is a very easy computation.
On the other hand, mining bitcoins involves doing this easy computation from a mind-bogglingly large set of possibilities, to find one of the ones that has certain characteristics (the 256-bit hash has its first x bits be zero).
So, once you find a candidate whose hash function makes it a valid bitcoin, it’s very easy for anyone else to verify that it’s valid; the hard part is that there’s no easy way to find them except to do that easy calculation a HUGE number of times for many many candidates.
Running through numbers with someone I met at a bar, we concluded the best bet to make money with BT was to buy them instead of mine them. The complexity of BT and its variants exponentially increases. So, say you look at the complexity required to compute a BT block for today. In three months time the complexity will have increased and your ROI drops significantly.
If you want to mine BT, you have to buy enough hardware to have a high probablility of mining a BT block within a month (or so). You want to realize that ROI ASAP before complexity increases, again (and again and again, etc).
CPU is worthless, AMD video cards are better, but, the good ones now cost a 30% premium. ASIC is the way to go as it will do a BT block the fastest as it will be able to run 24/7/365 whereas if you use your computer (CPU/GPU) you stop mining. Something to note is to look at the ASIC hardware on Amazon or the like. You’ll notice that the cost of the machines drop, exponentially, over time as the complexity increases, exponentially.
So, that is why we decided the best way to make money with BT was to buy them and wait and then cash them in. It’s a safer bet and a lot easier.
Mmm… not sure if I’m reading this right, but the important thing is that validating transactions is mining. Miners aren’t discovering new bitcoins; the bitcoins themselves are just a unique identifier. You can think of them as being the serial number on a physical $100 bill, except there’s no bill, just the serial number.
The bitcoin serial numbers are generated by the system, and the only way to get them into circulation is to give them to miners, aka, people who solve the math problem associated with a transaction (or, as I just learned, a block of transactions).
Also note that the difficulty of solving the hash is completely arbitrary. As you say, the first “x” digits = 0 or whatever, where they can constantly adjust the value of x to keep up with increases in computer power and the number of miners.
I’m assuming here that a “transaction” is the process of me giving you one of my bitcoins (or a fraction of one). You can only transact with bitcoins that have already been discovered (through the mining process).
Quite unfortunately, down the road most new Bitcoins are probably going to be generated on equipment without the owner’s consent. E.g., botnets of PCs that have had Bitcoin mining planted via malware or by rogue employees installing the software on their companies’ networks of machines.
Something I don’t understand: I’ve heard that there is a finite number of bitcoins to be mined and all will have been mined withing a certain (relatively small) number of years.
I’ve also heard that mining bitcoins is also what validates transactions along the way.
If that were right, once all the bitcoins were mined there would no longer be any reward for people to carry out the calculations required to validate transactions.
I’m sure there is something I’m not understanding here…
I think the idea is that at some point, people making transactions will offer a small “commission” to whoever validates their transaction. Miners/validators would choose to validate the transactions with the largest commission first, so if you want your transaction to go through in a reasonable amount of time, you add a reasonable commission.
No idea whether that will actually happen, especially with the recent trouble.
To the OP: it’s weird to see you started this thread yesterday. A year ago you could well have asked about all that GPU stuff and which is best. These days, there’s no point. You cannot mine feasibly without an ASIC. GPU mining has been as dead over the last year as CPU mining became about three years ago.
Only if you buy an ASIC will you earn more by mining than you have to pay for electricity costs. And even THEN it is very unlikely that you will recover the cost of purchasing the ASIC in any reasonable timeframe, or at all. So really, don’t bother.
To everyone else, a few points to clear up.
Yes, the process of mining basically IS the process of validating transactions. Well more accurately, it’s the process of putting them into the nearly immutable ledger called the blockchain (the ‘validation’ really occurred at an earlier step).
Mining won’t stop when all the bitcoins have been produced. Instead, the miners will be rewarded by transaction fees. Well they already are, but at the moment the transaction fees are a tiny blip compared to the newly generated coins. This will change (or Bitcoin will die).
No, no significant mining will be carried out with botnets any more. That prospect stopped when ASICs took over the mining process.
Don’t confuse Bitcoin mining with mining for alternative cryptocoins that use the ‘scrypt’ algorithm (Bitcoin uses ‘SHA-256’). For those, GPU mining is apparently still viable, though I haven’t looked into it very thoroughly, and won’t. (I’m fed up with GPU mining!)
And I suppose I may as well add my two cents here on the latest ‘bombshell’. No, I’m pretty certain that “Dorian S.” guy from the Newsweek article is NOT Bitcoin’s Satoshi Nakamoto.
I’m laughing, as the saying goes, all the way to the bank. (Except of course I would never dream of using any service that would call itself a ‘bitcoin bank’ - such services prey on people who just don’t get it)
I also meant to comment on this, but only to say that IMHO it’s 100% spot-on. Don’t mine. Buy some BTC with some spare money (usual caveat, only what you don’t need for a few years) and just keep hold of it. Notwithstanding my previous comment about laughing all the way to the bank, I’d be laughing a hell of a lot harder if I’d just bought and held in October 2011 when I first heard of bitcoins.
Curiously some of us were discussing this over lunch. It would appear that by far the easiest way to make bitcoins with a lot of compute is the crack the security of people with bitcoins and then steal them. And perhaps the easiest way of doing this isn’t some form of cryptographic hacking attack, but to simply set up a bitcoin exchange, and then later on vanish with all the snarfed bitcoins. The security cracking performed being the oldest one. Social engineering, and in particular, exploiting peoples greed.
You might guess how cynical I am about the likelihood of any form of long term prospect for bitcoin. But no doubt, the real Satoshi will be very rich by now. Imagining bitcoin is some sort of new wave way of making money, and of avoiding governments is about as naive as thinking that using the Tor network insulates your communications from discovery.