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Bitcoin Mining

Bitcoin Mining

Bitcoin has a public ledger called the blockchain. The process of mining adds new transactions to this ledger. Mining ensures all transactions are securely confirmed and visible to all users. It helps detect double-spending and confirms transaction legitimacy.

Miners help the network by confirming transactions and receive Bitcoin as a reward for completing blocks. In 2018, the reward was 12.5 BTC, though this amount reduces over time.

Mining is resource-intensive, both in time and computing power — hence the name "mining" as an analogy to gold mining.

Choosing Your Mining Equipment

Bitcoin mining requires complex calculations. Choosing the right hardware is essential, particularly focusing on the hash rate.

Hash Rates

Hash rate refers to the number of calculations your hardware can perform per second. A higher hash rate means more chances to complete blocks and earn rewards.

Hash rates are measured in MH/s (megahashes), GH/s (gigahashes), or TH/s (terahashes). High-performance hardware can reach up to 10 TH/s.

Cost of Energy

Electricity costs can eat into profits. Compare hash rate to power consumption (MH/s per watt) to gauge profitability. Don't forget to factor in your computer's power draw as well.

Mining Hardware Options

Initially, Bitcoin was mined using regular CPUs. Then GPUs became popular due to better efficiency, followed by FPGAs and now ASICs — the most efficient hardware for mining today.

CPUs

CPUs are now too slow for meaningful mining results. They are still necessary to run your mining software but not useful for the mining itself.

GPUs

GPUs used to be the top choice, with much faster hash rates than CPUs. However, they’re no longer efficient for Bitcoin mining due to increased difficulty and power consumption.

FPGAs

FPGAs were an improvement over GPUs in both power efficiency and performance. They’re reprogrammable and were a precursor to ASICs.

ASICs

ASICs are custom chips designed specifically for mining. They offer the best performance and lowest power usage, but are expensive and non-versatile.

Mining Profitability

Calculating profitability is essential. Use tools like the BTC Mining Profit Calculator or Genesis Block’s calculator to input hardware costs, hash rates, and electricity rates to see potential ROI.

Choosing Mining Software

Mining software controls your hardware and connects to the Bitcoin network. Some options include:

  • Bitcoin Miner – Easy to use with profit reports and power-saving mode (Windows, macOS).
  • RPC Miner – Best for Mac users.
  • CGMiner – Supports multiple GPUs and operating systems.
  • BFGMiner – Tailored for ASICs.
  • EasyMiner – Great UI with graphs, supports solo and pool mining.

Understanding Mining Pools

Solo mining is hard due to competition from large operations. Pools allow miners to combine resources and split rewards. Pools typically take a fee (1-10%) for their services.

Can You Profitably Mine Bitcoin?

It’s tough. Most profitable miners today are large-scale operations with cheap electricity and specialized hardware. Still, hobbyists may break even or profit with strategic choices and possibly cloud mining.

Bitcoin Cloud Mining

Cloud mining lets you rent mining power instead of owning hardware. It’s easier but riskier due to reliance on third-party vendors. Stick to reputable providers such as Global Mirror Markets.