How To Setup Bitcoin Mining Hardware Bitmain Antminer S7 S5 and S3
Cryptocurrency Mining Hardware Buyers Guide
Mining is a process that has existed for many years. We, of course, know it as the primary method of extracting valuable minerals from the Earth. While that continues to be an ongoing practice, the term ‘mining’ has also become recognizable in the field of cryptocurrency. Today, we describe this type of mining and take an indepth look at cryptocurrency mining hardware.
But how is that possible? Digital currency is not a physical object, so how would extracting it even work? Well, that’s because mining in the context of cryptocurrency is not actually mining in the traditional sense.
Cryptocurrency mining – alternatively ‘crypto-mining’ – is the procedure that is responsible for generating digital currencies. With this process, transactions for various types of cryptocurrency undergo verification and are added to the blockchain digital ledger. This operation goes by other names, such as crypto coin mining, altcoin mining, or bitcoin mining, which is exclusively for Bitcoin.
Over the years, cryptocurrency mining has been increasing as Bitcoin mining hardware setup for large a topic Bitcoin mining hardware setup for large activity. With cryptocurrency usage itself growing exponentially in recent years, the gradual prominence of mining was a forgone conclusion.
Cryptocurrency mining is a great way to garner a profit while also giving your support to a new, developing industry. Yet, you simply cannot just start mining from your home computer and hope to make a profit. As a matter of fact, cryptocurrency mining is becoming very competitive. So much so that it requires extraordinary hardware to carry this process out successfully. Without these special hardware devices, you are likely to waste a lot of your time. Moreover, you could potentially lose money as well.
To prevent such unfortunate circumstances from happening, this article will function as a handy guide pertaining to mining hardware.
How does crypto mining work?
First and foremost, you need to understand what exactly crypto mining entails. Verifying transactions and adding them to the blockchain is one thing, but there are more technical details to cover.
Whenever a cryptocurrency transaction is made, it is the responsibility of a cryptocurrency miner to ensure the Bitcoin mining hardware setup for large authenticity. Furthermore, they need to update the blockchain with that transaction. The mining process itself consists of competing against other crypto-miners to solve complex mathematical problems with cryptographic hash functions. These functions Bitcoin mining hardware setup for large associated with a block that contains the transaction data within it.
The first cryptocurrency miner that is able to “crack the code,” so to speak, receives a reward. This reward comes in the form of being able to authorize the transaction. In exchange for their services, crypto-miners will earn small amounts of newly minted cryptocurrency of their very own. In order to be able to compete with other crypto-miners, it is imperative for a cryptocurrency miner to have the right tools. To elaborate, they need a computer that possesses specially designed hardware.
The significance of this hardware
Back when cryptocurrencies were – for the most part – obscure, people did Bitcoin mining hardware setup for large have the intricate hardware we have now. Bitcoin mining hardware setup for large was once a time when people were mining for cryptocurrencies like Bitcoin and Ethereum with the use of their own computers. Alternatively, they would use relatively small devices. However, that all began to change as the crypto industry’s popularity was beginning to increase. Eventually, it became a lot more difficult to mine with nothing more than personal computing devices.
The primary reason for this outcome stems from more people entering the mining market. As the number of participants grew over time, the difficulty of mining did as well. This was out of a desperate need to ensure that the mining of blocks was at a specific rate. One that was preferable by the network. Therefore, when more computing power is trying to solve a block, then the difficulty to solve it would increase accordingly.
This noticeable expansion in mining Bitcoin mining hardware setup for large, despite being beneficial network security, has proven to be difficult to work with. Suddenly, it was becoming comparatively harder to successfully mine cryptocurrency on a majority of leading blockchains. The increase in mining would also result in an increase in the ‘hashing power’ of a network. In other words, the power a network is consuming in order to operate on a regular basis by solving a cryptographic function.
It takes so many attempts to try and solve this function. It’s because of this that major blockchain networks were experiencing a colossal increase in the amount of computer processing power. This power is a requirement for the task of completing hash functions. Specifically, at a rate that would provide substantial profitability in mining.
What does it do?
Crypto mining equipment has a specific design. It is what gives them the ability to solve blockchain hash functions at a faster rate than most hardware solutions. The construction of traditional computers includes the incorporation of a certain processor, which is a Central Processing Unit (CPU). This piece of technology has the ability to calculate the functions that a standard computer needs to function properly.
Alternatively, building mining hardware is done with an array of comparatively more complex processors. However, these are more than just high-powered computers. In fact, crypto mining equipment is more efficient than your run-of-the-mill hardware. Unlike typical hardware, crypto mining equipment solves computational hashes that are mandatory for successful blockchain mining.
Important details
When purchasing cryptocurrency mining hardware and equipment, you want to make the right choice. In order to do that, you need to take some factors into account. There are two crucial things to look out for when you are browsing through your options.
First of all, these machines need to be more than just powerful and stable. It is equally important for them to be energy efficient as well. The number one cost when it comes to crypto mining is electricity. Because of this, a good piece of mining equipment has to be able to consume less power. Moreover, it needs to do this all while preserving its high-power usage. Therefore, an essential factor in crypto mining hardware hashes per second per Bitcoin mining hardware setup for large of power. This determines how much power consumption there is for a certain amount of hash power.
Second of all, it is important to note that cryptocurrency mining is done 24/7/365; all day, every day. Thus, the equipment that’s ideal for mining needs to be capable of operating on a continuous basis. In essence, this means that the equipment needs to have optimal cooling so it does not overheat from continuous use. Moreover, properly setting up equipment in such a way that it will allow for the most optimal cooling.
If you are uncertain about how to go about doing this, it would be wise to outsource the installation and hosting of your mining hardware. Specifically, Bitcoin mining hardware setup for large that of a third-party provider who has the appropriate tools and resources for servicing mining equipment.
The price of the equipment
Along with energy efficiency and the capability of functioning continuously, the price of the mining hardware is also very important. Keep in mind that a majority of cheap mining hardware will bring in only a handful of bitcoins. Expensive bitcoin mining hardware, on the other hand, is unique, fast, and incredibly efficient. In order to make a solid fortune from the bitcoin mining business, you need to be ready to invest. It would be best for you to aim for value and quality when you are purchasing hardware.
Take some time to come up with a general idea of the factors to look for as previously mentioned. As soon as you do that, that is when the search for the best hardware for bitcoin mining commences.
Different types
Mining hardware comes in three distinct types:
GPU (General Processing Units): Electronic circuitry within a Bitcoin mining hardware setup for large that carries out instructions that creates a computer program.FPGA (Field-Programmable Gate Array): A circuit set up by a customer or designer after manufacturing.ASIC (Application-Specific Integrated Circuit): A circuit Bitcoin mining hardware setup for large for a specific use, rather than for general-purpose use.
The type of hardware being used is heavily dependent on the blockchain that you are mining. ASIC hardware is arguably the most powerful hardware for a good chunk of blockchains, such as Bitcoin. However, they become relatively useless in other blockchains, such as ZCash. In these particular blockchains, the design of the hashing algorithm makes it impervious to ASIC hardware.
Choosing the Bitcoin mining hardware setup for large piece of mining hardware is undoubtedly one of the most important parts of the cryptocurrency mining process. If you make the wrong choice, it could very well lead to a substantial waste of both time and potential profits.
Overall, during the past several years, it has become clear that cryptocurrency mining hardware is extremely necessary. Anyone looking to make a profit in mining needs to have this kind of equipment at their disposal. Making the decision of which piece of mining equipment is most suitable for Bitcoin mining hardware setup for large preferences relies on many factors. These include such things as your budget and the blockchain that you are mining.
What sets CPUs, GPUs, and ASICs apart from each other?
A simple comparison that can be made between CPUs, GPUs, and ASICs is a difficult thing to think about. This is because CPUs and GPUs can technically be interpreted as a type of ASIC. Fortunately, Motherboard writer, Daniel Oberhaus, was able to compare and contrast the three pieces of technology. He states that:
“The main difference between mining ASICs and CPUs and GPUs is that the mining ASICs don’t have all the extra ‘bloat’ that makes CPUs and GPUs so versatile. You can’t run an operating Bitcoin mining hardware setup for large or play a video game on a Bitcoin ASIC because the chip is meant to do only one thing—mine Bitcoin. So a mining ASIC’s efficiency is gained because all of its computing resources can be optimized for a single well-defined task.”
ASIC mining
ASIC is defined as being customized fragments of computer hardware. Each fragment has a specific design that is solely for Bitcoin mining hardware setup for large one particular type of function. A notable example of this would be that the storage of the telephone circuitry built within your smartphone is usually in a separate chip. The general purpose of this chip is to make calls, as well as receive calls.
When it comes to mining with greater speed, the role ASIC miners play is exceptionally large. Generally speaking, they are far more productive and economical than the more conventional bitcoin miners. Bitcoin mining is a procedure that is effective, but only when there is a net benefit pertaining to productivity. That and low Bitcoin mining hardware setup for large for running the operation. To reiterate an earlier point, they are excessive when it comes to consuming power and electricity. In fact, there are users who typically combine rigs and ASIC chips just so they can further lower the costs.
The overall design of ASIC miners allows them to work and basically unify with the mining rigs. There is a notable advantage that comes from including the ASIC chips to the mining rigs. Bitcoin mining hardware setup for large being they will be able to make mining the coins with the rigs comparatively Bitcoin mining hardware setup for large efficient. The ASIC chips are capable of surpassing a stack of GPUs at any point in time. When putting them up against each other, the ASIC chips hash the transactions 100 times faster than a GPU stack.
If you want to learn more about ASIC mining, read “The Basics of ASIC Mining.”
Evaluating cryptocurrency mining hardware
We have covered the basics of what you need to keep in mind when assessing a potential miner. The key takeaways concerning the factors we have been discussing are the following:
- Power consumption: The main question you must ask is how much electricity does the miner consumes? This is something of great importance, seeing as how you’re going to run a huge electric bill when mining bitcoin. The typical measurement of this is in watts. Put simply, the lower the number is, the better.Hash rate: This is basically how much power the miner has for solving the complex mining math problem. What it does is measure approximately how many guesses the miner is able to make per second. Bitcoin mining hardware setup for large personal computer is capable of making roughly a few million guesses per second. Meanwhile, present-day ASICs are able to make 1 x 10 ^ 12 guesses per second. All in all, the higher your hash rate is, the better.Energy efficiency: Having a high hash rate is good, no doubt. However, if you are needlessly wasting a lot of energy in order to acquire it, then you’ll inevitably lose money.
Efficiency is, Bitcoin mining hardware setup for large speaking, gauging how much power there needs to be to generate a single-use of hash rate. There is a requirement of considerably less electricity for an efficient miner to properly mine Bitcoin. The calculation of efficiency is by dividing energy consumption with the hash rate. With this method, you have the ability to effectively measure miners against one another.
The best crypto mining hardware
Now that you have an idea of what you’re looking for in mining equipment, you can start looking for hardware. However, even with the important factors in mind, choosing the right equipment can be daunting. To make it a little easier for you, below is a list of some of the best miners that are available. With these selections, you can determine the best bitcoin miner hardware and finally start mining for bitcoins.
1 – Bitmain Antminer S5
Admittedly, the Antminer S5 is not exactly the latest Bitcoin mining hardware. There are several other models – such as the S7 and S9 – that have come after it. That being said, it is still a popular piece of hardware that’s still in use. In fact, its efficiency and function are quite admirable.
One of the Bitmain Antminer S5’s notable features is its power supply, which is labeled 115 volts. Moreover, it manages to draw approximately 560 watts. Overall, the mechanism has low power needs and consumption. This small power supply – akin to those running desktop computers – is able to Bitcoin mining hardware setup for large the Antminer S5.
When it comes to efficiency, the unit produces roughly 1 GH/s for every 0.51 watts that it consumes. Overall, this translates Bitcoin mining hardware setup for large about 0.51 J/GH. When you compare it to its predecessor (the S3), the S5’s efficiency shows evident improvement. All these features result in it being the most powerful bitcoin miner in the current market.
Now, how about the weight? In total, the S5 weighs 2.5kgs. The reduction in weight is thanks to its lightweight material. What’s more, there is the fact that its design is open from top to bottom. The setup is not too complex and it requires no prior tech experience.
2 – Bitmain Antminer S7
In 2015, the market was introduced to the Bitmain Antminer S7. Since then, it would go on to become one of the most popular Bitcoin hardware miners. It continues to dominate the market due largely in part to its low power consumption in comparison to the S5.
The power supply unit that is ideal for the S7 is the 1600 watt APW3. This power supply unit is, inarguably, one Bitcoin mining hardware setup for large the best that’s available on the market. Its design is precise and suitable for Bitcoin mining. The miner is capable of running even the most effective mining hardware; that is the Antminer S9. However, it requires a minimum of 205 volts in order to properly function. The optimal power consumption is what makes it the most competent bitcoin miner.
S7’s efficiency depends heavily on the general effectiveness of both the power supply and the ambient temperature. At room temperature of approximately 25 degrees Celsius, the S7 will be able to produce about 1300 watts. It is here that you should remember that every generation of the Antminer is almost twice as efficient. This is especially evident when you compare it to its predecessor.
Its weight Bitcoin mining hardware setup for large out to 7.5 pounds. It features a sturdy metal casing with a groove and tongue system. The unit is noisy, so realistically speaking, it is not a good idea Bitcoin mining hardware setup for large have it inside your home. In addition, it is imperative that you put it in a cool environment. This will ensure that you spend less energy whenever you Bitcoin mining hardware setup for large trying to cool it down as it mines.
3 – Bitmain Antminer S9
At this point in time, the Bitmain Antminer S9 is the best bitcoin mining hardware on the market. It has the highest hash rate of roughly 14 TH per second and is the most efficient mining hardware available. This high hash rate is Bitcoin mining hardware setup for large courtesy of three circuit boards that feature a grand total of 189 chips. For all the power that the Bitcoin mining hardware setup for large has Bitcoin mining hardware setup for large provide, you should expect to pay a considerable amount for it.
You can efficiently use the Antminer S9 with the Bitcoin mining hardware setup for large 1600 watt power supply. In regards to efficiency, the S9 is popular for being the most efficient mining hardware that is available. Even though it consumes 300 watts more in comparison to the S7, it is twice as efficient. To elaborate, the count is 0.1 joules per gigahash.
The Bitcoin mining hardware setup for large possesses a durable design and has a weight of 10.4 pounds. The sturdy design is beneficial when a miner needs to organize multiple miners on a single shelf. When using the S9, it would be smart for you to put it in a garage or a warehouse. The noise it produces is insufferable.
4 – Antminer T9
Antminer T9 is another excellent bitcoin miner. For all its quality, it is important to note that it resides on the higher price range. When one compares it to the S9, miners are pretty divisive on which is the better product.
The amount of watts that the T9 consumes for approximately 11.5 TH/s for Batch 23 is roughly 1450. It possesses an efficiency of about 0.126 J/GH. Based on these numbers, the S9 is comparatively better than the T9. Be that as it may, remember that the quality chips in the S9 were of a slightly lower value. This is what results in their diminished stability, though the T9 Miner has since fixed this issue.
5 Bitcoin mining hardware setup for large AvalonMiner 741
There’s a good chance that, after seeing the price of most of these miners, you will want something more affordable. If you are looking for an excellent bitcoin miner that is also inexpensive, then the AvalonMiner 741 is for you.
This is the latest addition to the industry by the company, Canaan. It provides those who use it with a solid hash rate of about 7.3 TH/s. What’s more, it features an air forming cooling system that allows 88 chips to operate as a single unit. In addition, it aids in keeping the miner running continuously.
The unit has an efficiency of about 0.16 J/GH. This efficiency rating is exceptionally better than all of the other products within its price range.
6 – Antminer L3+
The L3+ dons four boards that consist of 288 chips, which is a number that doubles that of its L3 predecessor. The design as a whole permits the arrangement of the unit to be done with ease. Specifically, when multiple miners are using it simultaneously.
The L3+ is a very easy mining hardware to use. However, it packs a lot of power, similar to most of the mining hardware on this list. It has a hash rate of roughly 504 MH/s and uses up approximately 800 watts. Moreover, it displays an efficiency rate of about 1.6 J/MH.
The power supply that you should use with this miner is the Antminer L3+ Power Supply. You can also use this unit with the S9 miner.
7 – Bitmain Antminer D3
This mining hardware entered the market in 2018. When discussing Dash ASIC miners, you need to at least mention the Antminer D3 because it is among the best.
Most miners are employing the use of this hardware to first mine dash coins. Bitcoin mining hardware setup for large later convert these coins into bitcoins and consequently garner huge profits in the process. The Antminer D3 provides its users with a hash rate of 15 GH/s and uses up to about 1200 watts.
Overall, its measurements are 320 x 130 x 190mm. This makes it entirely possible to have a neat arrangement while also running several miners at the same time.
8 – Dragonmint T16
Dragonmint T16 is the first cryptocurrency mining hardware for bitcoin that was able to achieve the hash rate of 16 TH/s. It requires 1600 watts power supply, but it consumes only 0.075J/GH against Bitmain Antminer S9’s 0.098J/GH. Due to the ASIC BOOST algorithm, it’s possible to boost the Dragonmint T16 efficiency by 20%. It is among the best Bitcoin mining hardware available.
9 – Pagolin Miner M3X
Pagolin Miner M3X is admittedly not as energy efficient, nor is it as effective as its contemporaries. However, it is a considerably bigger unit mostly because of its installed ASIC chips. It is the most power demanding bitcoin mining equipment that is currently on the market. The draw rate of this miner ranges between 1.8kw and 2kw. It is appealing primarily because of its incredibly high hash rate of about 13 TH/s.
10 – Avalon6
Avalon6 is right up there with the best bitcoin mining hardware made specifically for beginners in the field. The setup process is straightforward and it is one of Bitcoin mining hardware setup for large more lucrative miners. From the 1050 watts it draws, it is only able to generate roughly 3.5 TH/s. Unfortunately, Avalon6 does not have its own power supply and you can purchase them separately.
That being said, the Avalon6 makes a very good unit to operate in an office or even at home. It could potentially lose money, but it serves an otherwise benevolent purpose by effectively securing the network.
Money can be made, but no method guarantees profit
How Does Bitcoin Harfware Work?
What hardwsre Bitcoin Mining?
Cryptocurrency mining is painstaking, costly and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded bitdoin their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?
However, before you invest sehup time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin (throughout, we'll use "Bitcoin" steup referring to the network or the cryptocurrency as a concept, hardwarre "bitcoin" when we're referring bitxoin a quantity of individual tokens).
The primary draw for many Bitcoin miners is the prospect of being rewarded with valuable bitcoin tokens. That said, you certainly don't have to be a miner to own cryptocurrency tokens. You can also buy cryptocurrencies using fiat currency; you can trade it on an exchange like Bitstamp using another crypto (as an example, using Ethereum or NEO to buy bitcoin); you even can earn it by playing Bitcoin mining hardware setup for large games or by publishing blog posts on platforms that pay users in cryptocurrency. An example of the latter is Steemit, which is kind of like Lwrge except that users can reward bloggers by paying them in a proprietary cryptocurrency called STEEM. STEEM can then minin traded elsewhere for bitcoin.
The bitcoin reward that miners receive is an incentive which motivates people to assist in the primary purpose of mining: to support, legitimize and monitor the Bitcoin network and its blockchain. Because these responsibilities are spread among many users all over the world, bitcoin is said to be a "decentralized" cryptocurrency, or one that does not rely on a central bicoin or government to oversee forr regulation.
What Coin Miners Actually Do
Miners are getting paid for their bitcion as auditors. They are doing the work of verifying previous bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent hardwqre "double-spending problem."
Double spending is a scenario in lsrge a bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn't an issue: once you hand someone a $20 bill to buy a Bitcoin mining hardware setup for large of vodka, you no longer have it, so there's no danger you could use that same $20 bill to buy lotto tickets next door. With digital currency, however, as the Investopedia dictionary explains, "there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original."
Let's say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the Bitcoin mining hardware setup for large serial numbers would see that they were the same number, and thus one of them had to be false. What a bitcoin miner does is analogous to that—they check transactions to make sure that users have not illegitimately tried to spend the same bitcoin twice. This isn't hradware perfect analogy—we'll explain in more detail below.
Once a Bitcoin mining hardware setup for large has verified 1 MB (megabyte) worth of bitcoin transactions, known as a "block," that miner is eligible to be rewarded with a quantity of bitcoin (more about the bitcoin reward below as well). The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners believe Bitcoin mining hardware setup for large block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly.
Note that verifying 1 MB worth of transactions makes a coin miner eligibleto earn bitcoin—not everyone who verifies transactions will get paid out.
1MB of transactions can theoretically be as small as one transaction (though this is not at all common) or several thousand. It depends on how much data the transactions take up.
"So after all that work of verifying sethp, I might still not get any bitcoin for it?"
To earn bitcoins, you need to meet two conditions. One is a matter of effort; one is a matter of luck.
1) You have to Bitcoin mining hardware setup for large ~1MB worth of transactions. This is the easy part.
2) You have to be the first miner to arrive at the right answer to a numeric problem. This process is also known as proof of work.
"What do you mean, 'the right answer to a seutp problem'?"
The good news: No advanced Bitcoin mining hardware setup for large or computation is involved. You may have heard that miners are solving difficult mathematical problems—that's not exactly true. What they're actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a "hash") that is less than or equal to the target hash. It's basically guesswork.
The bad news: It's guesswork, but with the total number of possible guesses for each of these problems being on the order of trillions, it's incredibly arduous work. In order to solve a problem first, miners need Bitcoin mining hardware setup for large lot of computing power. To mine successfully, you need to have a high "hash rate," which is measured in terms of megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).
That is a great many hashes.
If you want to estimate how much bitcoin you could mine with your mining rig's hash rate, the site Cryptocompare offers a helpful calculator.
Mining and Bitcoin Circulation
In addition to lining the pockets setul miners and supporting the bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, hardqare are basically "minting" currency. For example, as of Nov. 2019, there were minning 18 million bitcoins in circulation. Aside from the coins minted via the genesis block (the very first block, which was created by founder Satoshi Nakamoto), every single one of those bitcoin came into being because of miners. In the absence of miners, Bitcoin as a network would still exist and be usable, but there would never be any additional bitcoin. There will eventually come a time when bitcoin mining ends; per hardwafe Bitcoin Protocol, the total number of bitcoins will be capped at 21 Bitcoin mining hardware setup for large. However, because the rate of bitcoin "mined" is reduced over time, the final bitcoin won't be circulated until around the year 2140.
Aside from the short-term bitcoin payoff, being a bitcokn miner can give you "voting" power when changes are proposed in the Bardware network protocol. In other words, a successful miner has an influence on the Bitcoin mining hardware setup for large process on such matters as forking.
How Much btcoin Miner Earns
The rewards for bitcoin mining are halved every four years or so. When bitcoin was first mined in 2009, mining one block would earn hardwate 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to the current level of 12.5 BTC. In about 2020, the reward size will be halved again to 6.25 BTC. As of the time of writing, the reward for completing a block is sethp Bitcoin. In November of 2019, the price of Bitcoin was about $9,300 per bitcoin, which means you'd earn $116,250 (12.5 x 9,300) for completing a block. Not a bad incentive to solve that complex hash problem detailed above, it might seem.
If you want to keep track of precisely when these halvings will occur, you can consult the Bitcoin Clock, which updates this information in real time. Interestingly, the market price of bitcoin has, throughout its history, tended to correspond closely to the marginal cost of mining a bitcoin.
If you are interested in seeing how many blocks have been mined thus far, there are several sites, including Blockchain. info, that will give you that information in real time.
Equipment Needed to Mine
Although Bitcoin mining hardware setup for large on in bitcoin's history individuals may have been able to compete for blocks with a regular hhardware computer, this is no longer the case. The reason for this is that the Bitcoin mining hardware setup for large of mining bitcoin changes over time. In order to ensure smooth functioning of the blockchain and its ability to process and verify transaction, the Bitcoin network aims to have one block produced bittcoin 10 minutes or so. However, if there are one million mining rigs butcoin to solve the hash problem, they'll likely reach a solution faster than a scenario in which 10 mining rigs are working on the same problem. For that reason, Hrdware is designed to evaluate and adjust the difficulty of mining every 2,016 blocks, or roughly every two weeks. When there is more Bitcoin mining hardware setup for large power collectively working to mine for bitcoin, the difficulty level of mining increases in order to keep block production at a stable rate. Less computing power means the difficulty level decreases. To get a sense steup just how much computing power is involved, when Bitcoin launched in 2009 the initial difficulty level was one. As of Nov. 2019, it is more than 13 trillion.
All of this is to say that, in order to mine competitively, minong must now invest in powerful computer equipment like a GPU (graphics processing unit) or, more realistically, an application-specific integrated circuit (ASIC). These can run from $500 to the tens of thousands. Some miners—particularly Ethereum miners—buy individual graphics cards (GPUs) as a low-cost way to cobble together mining operations. The photo below is hqrdware makeshift, home-made mining machine. The graphics cards are those rectangular blocks with whirring circles. Note the sandwich twist-ties holding the graphics cards to the metal pole. This is probably not the most efficient way to mine, and as you can guess, many miners are in it as much for the fun and challenge as for the money.
Bitcoinn "Explain It Like I'm Five" Eetup
The ins and outs of bitcoin mining can be difficult to understand as is. Consider this illustrative example for how the hash problem works: I tell three friends that I'm thinking of a number between one and 100, and I write that number on a piece of paper and seal it in an envelope. My hardwarf don't have to guess the exact number; they just have to be the first person to guess any number that is less than or equal to the number Hzrdware am thinking Bitcoin mining hardware setup for large. And there is no limit to how many guesses they get.
Let's say I'm thinking of the number 19. If Friend A guesses 21, they lose because of haardware. If Friend B guesses 16 and Friend C guesses 12, then they've both theoretically arrived at viable answers, because of 16<19 and 12<19. There is no "extra credit" for Bitcoun B, even though B's answer was closer to the target answer of 19. Now imagine that I pose the "guess what number I'm thinking of" question, but I'm not asking just three friends, and I'm not thinking of a number between 1 and 100. Rather, I'm asking hardwarw of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the right answer.
If B and C both answer simultaneously, then the ELI5 analogy breaks down.
In Bitcoin terms, simultaneous answers occur hardsare, but at the end of the day, there can only be one winning answer. Hardward multiple simultaneous answers are presented that are equal to or less than the target number, the Bitcoin network will decide bitxoin a simple majority—51%—which miner to honor. Typically, it is the miner who has done the most work, that s, the one Bitcoin mining hardware setup for large verifies the most transactions. The losing block then becomes bitcokn "orphan block." Orphan blocks are minning that are not added to the blockchain. Miners who successfully solve the hash problem but who haven't verified the most transactions are not rewarded with bitcoin.
What Is a "64-Digit Hexadecimal Number"?
Well, here is an example of such a number:
0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598ee
The number above has 64 digits. Easy enough to understand so far. As you probably noticed, that number consists not hitcoin Bitcoin mining hardware setup for large numbers, but also letters of the alphabet. Why is that?
To understand what these letters are doing in Bitcoin mining hardware setup for large middle of numbers, ladge unpack the word "hexadecimal."
As you know, we use the "decimal" system, harvware means hardwar Bitcoin mining hardware setup for large base 10. This, in turn, means that every digit of a multi-digit number has 10 possibilities, zero through nine.
"Hexadecimal," on the other hand, means base 16, as "hex" is derived from the Greek word for six and "deca" is derived from the Greek word for 10. In a hexadecimal system, each digit has 16 possibilities. But our harddware system only offers 10 ways of representing numbers (zero through nine). That's why you have to stick letters in, specifically letters a, b, c, d, e and f.
If you are mining bitcoin, you do not need to calculate the total value of that 64-digit number (the hash). I repeat: You do not need to calculate the total value of a hash.
So, what do "64-digit hexadecimal numbers" have to do with bitcoin mining?
Remember that ELI5 analogy, where I wrote the number 19 on a piece of paper and put uardware in a sealed envelope?
In bitcoin mining terms, Bitcoin mining hardware setup for large metaphorical undisclosed number in the envelope is called the target hash.
What miners are doing with those huge computers and dozens of cooling minibg is guessing at the target hash. Miners make these guesses by randomly generating as many "nonces" as possible, as fast as possible. A nonce is short for "number only used once," and the nonce is the key to generating these 64-bit hexadecimal Bitcoin mining hardware setup for large I keep talking about. In Bitcoin mining, a nonce is 32 bits in size—much smaller than the hash, which is 256 bits. The first miner whose nonce generates a hash that is less than setp equal to the target hash is awarded credit for completing that block and is awarded the spoils of 12.5 BTC.
In theory, you could achieve the same goal by rolling a 16-sided die 64 times to arrive at random numbers, but why on earth would you want to do that?
The screenshot below, taken from the site Blockchain. info, might help you put all this information together at a glance. You are looking bigcoin a summary of everything that happened when block #490163 was mined. The nonce that generated the "winning" hash was 731511405. The bbitcoin hash is shown on top. The term "Relayed by Larbe refers to the fact that this particular block was completed by AntPool, one of the more successful mining pools (more about mining pools below). As you see here, their contribution to the Bitcoin community is that they confirmed 1768 transactions for this block. If you really want to see all 1768 of those transactions for this block, go to this page and scroll down to the heading "Transactions."
(source: Blockchain. info)
"So how do I guess at the target hash?"
All target hashes begin with zeros—at least eight zeros and up Bitcoin mining hardware setup for large 63 zeros.
There is no minimum target, but there is a maximum target set by the Setuup Protocol. No target can be greater than this number:
00000000ffff0000000000000000000000000000000000000000000000000000
Here are some examples of randomized hashes and the criteria for whether they will lead to success for the miner:
(Note: These are made-up hashes)
"How do I maximize my chances of guessing the target hash before anyone else does?"
You'd have to get a fast mining rig, or, more realistically, join a mining pool—a group of coin miners who combine their computing power and split the mined bitcoin. Mining pools are comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners.
In other words, it's literally just a numbers game. You cannot guess the pattern or Bitcoin mining hardware setup for large a prediction based on previous target hashes. The difficulty level of the most recent block at the time of writing is about 13.69 trillion, meaning that the chance of any given nonce producing a hash below the target is one in mkning trillion. Not great odds if you're working on your own, bittcoin with a tremendously powerful mining rig.
"How do I decide whether bitcoin will be Bitcoin mining hardware setup for large for me?" minint only do miners have to factor in the costs associated with expensive equipment necessary to stand a chance of solving a hash problem. They must also consider the significant amount of electrical power mining rigs utilize in generating vast quantities of nonces in search of the solution. All told, bitcoin mining is largely unprofitable for most individual miners as of this writing. The site Cryptocompare offers a helpful calculator that allows you to plug in numbers such as your hash speed and electricity costs to estimate the costs and benefits.
What Are Coin Mining Pools?
Mining rewards are paid to the miner who discovers a solution to the puzzle first, and the probability that a participant will be the one to discover the solution is equal to the portion of the total mining power on the network. Participants with a small percentage of the mining power stand a very small chance of discovering the next block on their own. For instance, a mining card that one could purchase for a couple of thousand dollars would represent less than 0.001% of the network's mining power. With such a small chance at finding the next block, it could be a long time before that miner finds a block, and the difficulty going up makes things Bitcoin mining hardware setup for large worse. The miner may never recoup their investment. The answer to this problem is mining pools. Mining pools are operated by third parties and coordinate groups of miners. By working together in a pool and sharing the payouts among all participants, miners can get a steady flow of bitcoin starting the day they activate their miner. Statistics on some of the mining pools can be seen on Blockchain. info.
"I've done the math. Forget mining. Is there a less onerous way to profit from cryptocurrencies?"
As mentioned above, the easiest way to acquire bitcoin is to buy it on an exchange like Coinbase. com. Alternately, you can always leverage the "pickaxe strategy." This is based on the old saw that during the 1849 California gold rush, the smart investment was not Bitcoin mining hardware setup for large pan for gold, but rather to make the pickaxes used for mining. Or, to put it in modern terms, invest in the companies that manufacture llarge pickaxes. In a cryptocurrency context, the pickaxe equivalent would be a company that manufactures equipment used for Bitcoin mining. You may consider looking into companies that make ASICs equipment or GPUs instead, for example.
Key Takeaways
- By bitcojn, you can earn cryptocurrency without having to put down money for it. Bitcoin miners receive bitcoin as a reward for completing "blocks" of verified transactions which are added to the blockchain. Mining rewards are paid to the miner who discovers a solution to a complex hashing puzzle first, and the probability that a participant will be the minng to discover the solution is related to the portion of the total mining power on the network. Double spending is a phenomenon in which a bitcoin user illicitly spends the same tokens twice. You need either a Bjtcoin (graphics processing unit) or an application-specific integrated circuit (ASIC) in order to set up a mining rig.
Is Bitcoin Mining Profitable?
How to Disincentivize Large Bitcoin Mining Pools
Bitcoinsecuritymining pools51% June 18, 2014 at 02:03 PM Ittay Eyal and Emin Bitcoin mining hardware setup for large Sirer
Recently, the GHash mining pool breached Bitcoin etiquette to become a 55% miner for Bitcoin [*]. This collapsed bifcoin key value proposition of Bitcoin, namely, its decentralization. In turn, there has been considerable criticism and backlash. Many people Bitcoin mining hardware setup for large the community, including us, have noted that etiquette or the good will of miners are not sufficient to keep monopolies at bay, and called for technical measures to disincentivize large mining pools.
In this post, we present a specific technical fix, called Two Phase Proof of Work (2P-PoW), to disincentivize large mining pools. We first describe the problem, outline the requirements for a good solution, and then present the simplest solution that we know of that meets those lafge critical property of our solution that sets it apart from previous ideas is that it preserves the current investment in Bitcoin by both existing users and by existing miners. It provides a seamless, smooth transition from the current PoW to the modified, large-miner-deterring 2P-PoW. Yet it enables the existing miners to continue to use their mining hardware; in fact, it extends the lifetime of this hardware. Overall, it provides a gentle fix to the recent GHash fiasco and makes it highly unlikely that we'll find ourselves at the mercy of a single entity, without perturbing the existing economies and investments in place.
The Problem and Background
Today, large pools are built out of independent entities that place their hashing power under the control of a pool manager that coordinates their efforts, collects rewards, and redistributes those rewards Bitcoin mining hardware setup for large the participants in proportion to their effort. When pools grow to be large, they pose a risk: Pools over 25% can cheat the system with selfish mining and earn more than their fair share, over 33% presents risk of unilaterally successful selfish mining, hardsare pools risk double-spends bitcoi low confirmations, and over 50% is an unmitigated disaster. Such majority miners are toxic: not only can they engage in subtle attacks, but their mere presence, even when they are not engaging in any attacks at all, damages the Bitoin value proposition, kills the critical features that make Bitcoin interesting and exciting, and therefore hinders Bitcoin adoption. Mining pools over 25% are not good for Bitcoin.
In order to disincentivize large pools, we propose a small, backwards-compatible change to Bitcoin's Proof of Work (PoW) mechanism that retains both the current blockchain and miners' current investments Bitcoin mining hardware setup for large mining hardware. The key insight behind this change is to make it difficult to delegate Bitcoin mining hardware setup for large of work, for as long as the proof of work can be delegated, huge pools can be built, leading to a winner-takes-all GHash-at-51% sort of scenario.
Bitcoin's puzzles are sometimes compared to scratch-off lottery tickets [permacoin], minng the miner's name at the top. A miner scratches one ticket after another until he finds a winning ticket and publishes it to Bitcoin mining hardware setup for large its rewards. But a lone miner working alone can be scratching for months before he finds a winning ticket. For instance, A $1500 mining card, available for preorder from Butterfly Labs, will need an expected time of over 6 years to mine a single block, if it were available today. That's a long time to wait in between winning tickets. To reduce this variance, people form pools.
With pools, the pool Bitcoin mining hardware setup for large takes a stack of tickets and distributes it among a set of pool members in such a way that the winnings can only be deposited to the pool operator's address. Together they have a lot of scratching power (aka Bitcoin mining hardware setup for large power). Whenever one of the members gets a winning ticket, it publishes it, awarding the pool manager with the reward. There is no opportunity for the finder to say "finders keepers!" and keep the money for itself, because the PoW mechanism is set up to send the winnings directly to, and only to, the pool manager. The pool manager then distributes the winnings among all members of the pool, in accordance with how much they contributed to the pool.
This kind of proof of work is inherently distributable. We need a slightly different proof of work that cannot be easily outsourced to others. What does such a PoW look like?
Requirements
Before we go on to answer that question, let's discuss some must-have features of any good solution.
Any solution in this space must preserve the existing blockchain, and with it, the existing Bitcoin balances. Any good solution in this space must also preserve the large investments many miners have made and are planning to make in their equipment. A great solution in this space would provide a seamless transition from the existing system to the new one, and provide adjustable knobs that can be fine-tuned for a desired tradeoff that fits the community's needs.
The first requirement is a must have, and the reasons for it should be self-evident. The third one is the cherry on top. But the second requirement is absolutely critical. Bitcoin's security relies on the size of the mining infrastructure. The massive amounts of specialized hardware wielded by miners makes it difficult for all but a state-power to obtain a majority all by itself. The miners have made extensive investments in this infrastructure, and they play a critical role in the Bitcoin ecosystem by maintaining the Bitcoin blockchain. A pool-prevention mechanism should therefore maintain this existing power and knowledge. It would be a Bitcoin mining hardware setup for large mistake to propose a new crypto-mechanism (e. g. zero knowledge proofs, "moon math" and the like) that would cause miners to throw out their existing rigs and start from scratch. In fact, the political resistance would be so great that no one would implement it. We believe it is possible to retain the existing infrastructure and layer the protection on top, and describe it below.
As an aside, the overall network hash rate has been doubling every 3-4 weeks, and therefore, mining equipment has been losing half its production capability within the same time frame. After 21-28 weeks (7 halvings), mining rigs lose 99.3% of their value. So there is very high equipment turnover in the mining industry. This helps us greatly in two ways: there is constant obsolescence within this industry, and therefore we can plan for a smooth transition, say, 12 months from now, which would give miners plenty of lead time to factor the change into their financial planning. At the same time, our proposal actually extends the life of the existing rigs by shifting work around, and therefore should provide a boost to existing miners.
Solution
Here's a new PoW mechanism that we call Two-Phase PoW. It disincentivizes large pools, retains the Bitcoin mining hardware setup for large investment in mining fof and allows for a smooth transition. It's Bitcoin mining hardware setup for large, so if you're not familiar with how the current cryptopuzzles work, you may want to skip to the next section.
A two-phase PoW consists of a block that has two separate cryptopuzzles in it. Lzrge a two-phase PoW:
The double hash of the header (SHA256(SHA256(header))) is miningg than a difficulty parameter X, andThe header is signed with the coinbase transaction's private key, and the hash (SHA256(SIG(header, privkey))) of hafdware signature is smaller than a second difficulty parameter Miining first phase (i. e. point 1 above) is identical to the existing Bitcoin cryptopuzzle. Our solution retains that mechanism in its entirety. The existing mining rigs are all geared to solve the first puzzle, which they can do very efficiently. X is the value stup the current variable known as fkr in the Bitcoin software. So we change absolutely nothing that already exists.
The twist here is that we introduce a second cryptopuzzle. In effect, phase 1 requires our miners to do the work that miners have hxrdware been doing. But then, when they think they have a viable Bitcoin mining hardware setup for large, we now ask them to sign the block With the private key that controls the payment address, and see if the result, when hashed, is below a second difficulty parameter Y.
This mechanism allows miners to use existing rigs, albeit with a lower difficulty value (X) than the difficulty value currently in effect. This would enable miners to produce a lot more potential solutions; that is, headers that pass phase 1, which we call half-solutions. For each such half-solution, miners use a second device, perhaps a CPU or a specialized card, to perform the second check until a full solution is found.
Note that, if Y is sufficiently small (i. e. difficult), the pool operator cannot just collect all the first-stage solutions and discover a solution to the second stage by himself. The second stage requires performing a sign and hash, which is comparable in cost to the first stage's double-hash, and therefore needs to be distributed just as widely.
The key insight that makes this work is that the second phase is not outsourceable to untrustworthy third parties. It requires a pool participant to be in possession of the private key, which, in turn, would bitcoib the participant to immediately usurp all the newly minted coins from the pool operator. Pool operators, being so vulnerable to being robbed, would not be able bitcon admit untrusted individuals into their pools.
Not Centralizable: A pool that wants to keep the secret to itself would need to receive all the partial solutions. Making the eetup phase easier and the second phase more difficult would make this infeasible. Outsourcing the key to the pool participants would enable a participant to steal the newly minted bitcoins.
Retains Existing Mining Infrastructure: Existing hardware would greatly speed up finding a solution. The current miners would start out from their current position.
Smooth Transition: The solution is highly eetup If we start out with X=current difficulty, Y=infinity, then we have precisely the same Bitcoin system as we have lare If we increase X (thus Bitcoin mining hardware setup for large first phase cryptopuzzles less difficult to solve) and reduce Y (thus make the second stage more selective), work can be smoothly shifted between the two phases, from Bitcoin as we know it to Bitcoin with the new measure in place.
2P-PoW is completely agnostic to how the miners determine the contents of a block. In particular, largw would work well with GetBlockTemplate, and it would work just as well without. We need not solve the GBT adoption problem to deploy 2P-PoW.
Implementing This Change
We suspect that implementing this change would require just a few hundreds of lines of code to the Bitcoin reference client. After a community discussion with miinng stakeholders and a thoroughly tested reference implementation, we'd pick a block number that is sufficiently ahead in the future when the change would be enacted with X=current and Y=infinity. The self-adjustment algorithms would take off from there at that block number, much in the same way that the difficulty parameter is adjusted today. This would build on the existing blockchain, retain all balances until that time, and enable a seamless switchover to the new world.
This is indeed a hard fork, where Bitcoin users must switch to the new 2P-PoW on the agreed-upon date. This is not Bitcoin mining hardware setup for large different from the day in March 2013 when a hard fork unintentionally Bitcoin mining hardware setup for large in the blockchain, Bitcoin mining hardware setup for large majority consensus had to be achieved on the fly on which fork to follow. Except this particular roll out would be planned months in advance, and on the date of the rollout, none of the mining economics would be affected.
As with all things Bitcoin, this rests on a community decision. If the community does not accept it, and no one upgrades, nothing would happen. But it is possible to make the change, and by bicoin selecting X and Y, to retain exactly the same system dynamics as we have now. We could then tweak the parameters to deter large pools.
Issues
There are some known issues with this proposal, none of which are really significant:
This mechanism does not address the case of a single large miner who owns all of his own equipment. In such a case, he can simply trust all of his machines to not leak the secret, and amass power. We not only have never heard of any technique that can address this issue, but we do not believe it needs to be addressed. The problem at hand stems from Bitcoin mining hardware setup for large, public pools. The costs of acquiring sufficient hardware to own 51% of the Bitcoin network put it out of the reach of most non-governmental single actors. The adjustment of X and Y is a delicate issue that requires some sehup. We have deliberately chosen not to be overly prescriptive in this post. The X adjustment would need to be gradual to rule out graphics cards for the first phase. The Y adjustment would need to compensate to yield a solution every 10 minutes on average. This mechanism is easy to devise following a community discussion that Bitcoin mining hardware setup for large the principles that govern the politically-feasible tradeoffs. In fact, this is perhaps the greatest strength of this proposal: Bitcoin mining hardware setup for large appropriate selection of X and Y can accommodate any point in the space of possibilities, including where we are now and where we might want to be in the future.
Call To Arms
Will this fix the GHash problem? Yes, we expect so. GHash reportedly owns 25% of their own Bitcoin mining hardware setup for large rigs, which corresponds to only 14% of the overall hash rate. They would hardwars be able to launch a 51% attack.
We are making this proposal public in the hope of stirring some much needed discussion. The Bitcoin value proposition, the promise offered by the currency, is too precious to lose to the greed of the masses or the ambitions of a single mining operator. The latest GHash 51% episode has shown to everyone that simple-minded arguments around "but a miner would Bitcoin mining hardware setup for large to something to hurt Bitcoin, they would themselves be hurt" are empirically wrong. We can avoid the GHash 51% drama, the corresponding calls to boycott, the much-needed-but-also-deeply-upsetting on-the-fly GHash miner shaming, the DDoS attacks against GHash, and other passionate activities that took place this week. The strength of Bitcoin stemmed from its revolutionary use of crypto, and just a simple modification can render the "too big for comfort" miners infeasible through the power of slightly enhanced crypto.
Clarification (June 21, 2014)
Some people seem to misunderstand our proposal by thinking that it will eliminate all pools. Perhaps the biggest strength of this hardwate is the smooth tradeoff it provides between Bitcoin mining hardware setup for large first and second phases of proof-of-work. By choosing X and Y appropriately, we can preserve exactly the dynamics we have now (which permit GHash at 51%), or we can gradually disincentivize large pools. Unless we were to choose extreme values for X and Y, this proposal does not prevent all pools! It's quite possible to pick values that would deter large (>25%) pools, while allowing the small miners to combine their resources into small pools in order to control their variance.
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