Following up from our Introduction to Bitcoin: History and Overview, come a helpful guide dedicated to Mining.
As previously mentioned, mining involves using specialist hardware to carry out very complex calculations to calculate the hash value of the content of the previous block that was mined along with a nonce value.
Let’s start of by going over a few terms we will be looking at in this post:
Miner: the equipment that carries out Bitcoin mining.
Hashing Power: how powerful the Bitcoin miner is.
MH/GH/TH/PH: hashing power equates to Mega Hash/Giga Hash/Tera Hash/Peta Hash
Pool: not something for swimming in. A pool is used to harness the power of of several miners to increase the chances of one of them claiming the block reward. This is then split between the miners in the pool, depending on the share of hashing power they have.
When it comes to mining, there are several ways you can get up and running.
First up we have physical mining, where you purchase the equipment, pay for the power to run it and reap all the rewards forever. Some prefer this method as you are in total control over where and what the miner is mining. There are some negatives to running your own Bitcoin miner though. You have to pay for the electricity to run it, which depending on where you live can either be very cheap (which works out better for you), or very expensive (which can minimise the instant profit that you make from mining). You also have to put up with fan noise that helps cool the miners down to stop them from overheating. If you have a spare room to keep your kit in, or live in a cold part of the world, you won’t have as much problem with this though.
So where can I buy a physical miner from?
There are many sites which offer mining equipment, here are the most reliable sources which have had confirmed orders received by people who purchased from them:
Butterfly Labs: these guys were one of the first to ship ASIC miners with their Jalapeno model, which offered 5GH/s hashing speeds. Delays in the design and manufacturing process however meant that by the time these actually hit the market, other manufacturers had already released much more powerful miners meaning these weren’t as effective as they could have bee. Since then, they have kept on increasing their hashing speed up to their Monarch range which feature speeds in the GH/s range. By the looks of it, they are starting to wind down their mining portfolio but are currently working on a product they call BitSafe. BitSafe aims to be a secure, handsized wallet that can safely secure your Bitcoins in without worry.
Bitmain: their Antminer range have become quite popular among the Bitcoin mining community. As of writing, they are currently shipping their S7 range of miners which offer around 4.73TH/s hashing speeds. More recently, they have launched their AntRouter R1, which can be used at home as either a wireless router, or a wireless hotspot. What’s unique about this, is that it contains a built in mining chip which mines at Bitmain’s Solo Mining Pool, effectively giving you a chance to win all of the 25 Bitcoin reward for that block. While the odds are against you actually getting that reward, you’ve got to be in it to win it and replacing your home router with this might not be such a bad idea, as I bet your current router doesn’t have any sort of mining capabilities does it…
Avalon: Avalon Miners current 6.0 hardware can get up to hashing speeds of 3.7TH/s, not as much as the Antminer S7. But, by purchasing one of their controller cards, you can chain up to sixty Avalon 6.0 Miners together, giving a total hash speed of 220TH/s! While everyone doesn’t have the sort of money to splash out on sixty miners, you can purchase a Raspberry Pi controller to easily get one up and running, which comes pre-loaded with the most recent, stable software for mining.
If purchasing a physical miner doesn’t sound like something you can either afford or run yourself, there are other options in the form of cloud mining.
With cloud mining, you essentially purchase a share of someone else’s mining hardware. For instance Person A has 5TH/s of hashing power from their hardware they own and share their hashing power on a monthly/yearly/lifetime contract to Persons B, C, D and E. Person A is in charge of monitoring, maintaining and general running of the hardware and Persons B, C, D and E pay them for the privilege of using their hardware. Person A may choose to take fees over the duration of the contract to pay for things like maintenance and electricity, but it makes mining a lot easier for those purchasing a contract from Person A. All they have to do is let them know their Bitcoin Wallet address and the coins start coming in.
The only problem with cloud mining is that there are problems like fraudulent websites which claim to offer mining contracts but will actually just steal your money and you will never see any sort of return. Thankfully, there are a legit few who provide a stellar service and you can find more details on them below:
Genesis Mining: Based in Iceland, the people behind Genesis Mining have been slowly growing their mining farms, expanding from just mining Bitcoin and other SHA-256 coins, to other coins such as Ethereum. They offer many different plans and a flexible scale of hashing power to purchase. For example, you can have either 1 Year or Lifetime contracts and starting from just 100GH/s. This means that you can dip your toes for a relatively small amount and get introduced to the whole mining experience. Once you are logged in, their dashboard shows you your current hashing power and how much you have made over the past month. You can save an extra 3% off of the cost of your contract by using the following discount code:
Hashnest: An offshoot of Bitmain, these guys offer you the ability to purchase hosted contracts for their Antminers which you receive the bitcoins from without the hassle of actually owning and maintaining one. The main difference between Hashnest and Genesis Mining is that with Hashnest, you have to purchase the whole miner, which can be quite expensive when compared to slowly building up your hashing power as and when you can afford it with Genesis Mining. With Hashnest you also get a mobile application as well so you can quickly and easily manage your contracts on the move. The app is supported on iOS and Android.
That pretty much sums up the basics of mining Bitcoins. Look out for our future posts for more details on how you can get started with Bitcoin and cryptocurrencies.