What is Bitcoin Mining in simple terms?

[thetransporter]

Im a little behind on technology so now Im trying to understand bitcoin - noN centralized money P2P transfer.

http://www.weusecoins.com/

What is Bitcoin Mining in simple terms? ( tried google and could not understand)



- Read the wiki, watched the youtube video they made. But i still do not understand what is happening.

Um63OQz3bjo


All I know it uses your CPU.

I did download their software called "Wallet" its been "synchronizing with network" but a while. What is it doing?

[firebane]

Actually Bitcoining has become much more popular with ATI graphics cards since Nvidia cards dominate the folding sector. People setup MASSIVE ATI farms to do this with.

[ercchry]

its like those "folding at home" cancer fighting things... but you get paid in internet money instead of the sense of doing something to help civilization

[thetransporter]

Originally posted by ercchry
its like those "folding at home" cancer fighting things... but you get paid in internet money instead of the sense of doing something to help civilization



ok i heard of those. so just let it run in the background? i have 2 i7 3960 cpus overclocked to 4.8 or something. ill keep it on and see what happens..

[TYMSMNY]

Originally posted by thetransporter




ok i heard of those. so just let it run in the background? i have 2 i7 3960 cpus overclocked to 4.8 or something. ill keep it on and see what happens..

nothing to do with CPU... but GPU, graphics card.

[thetransporter]

Originally posted by TYMSMNY


nothing to do with CPU... but GPU, graphics card.

what will it be doing with it?

[ercchry]

Originally posted by thetransporter


what will it be doing with it?

processing payments or something... it is used in a grid with a bunch of other computers as a giant super computer to calculate things

[Modelexis]

As far as I understand, your computer is solving complex algorithms and if you successfully solve one level you are rewarded with a coin. The complexity gets harder and harder and requires an ever expanding computer technology in order to grow the currency.

[thetransporter]

so just get a really good video card? like the ones with a fast cpu and 2tb memory?

[boosted_Z]

I've heard (and wikipedia describes) bitcoin miners be compared to miners during the goldrush. They do work, occasionally find gold, and trade it for money. This causes more interest in gold (and gold mining).

Bitcoin relies on a network of miners to verify transactions and 'keep it alive'. Since there is no central authority, a P2P network is needed to manage transactions, total currency, etc. Without the network of people, the currency doesn't work.

When someone signs up to be a miner, you dedicate computer resources and electricity to verify other peoples transactions. These problems are complex (brute force), and iirc, only the person who 'breaks' the code gets paid for it. Think of it like a class working on a math problem, but only the first person to finish with the correct answer gets the candy. Also, if there is a transaction fee associated with the transfer, you get paid that too.

That process also creates new bitcoins to be spent. The miners get currency to spend. Initially some coins were put into circulation, and the next coins were created from the miners, which causes more coins to be traded, which causes more to be created, etc.

I know some people sign up to be part of a group who mines, that way if anyone in the group solves the problem, everyone splits the payment. More people mining = more chance to win. There are algorithms to determine how much you will earn, based on processing power. But it averages out. You might hit two or three in one day, then none for a month.

[4DoorGTZ]

Been mining for over a year now with aprox. 15 gpu's. In that time I saw the "value" of one bitcoin go up to $30 fall to $10, up to $15 fall to $2 and it's back up in the $15 range. But the network size has also tripled causing the difficulty factor to increase making it take more work to solve blocks. Right now I don't see it being profitable for newcomers unless you have free power or free gpu's.

[Agent_Oorange]

Even with free GPUs and free power, it very shortly won't be worth it with ASIC solutions coming online that will decimate any GPU based solution, causing the difficulty to increase very, very fast.

[sabad66]

I'm thinking of just investing in these things... I've seen them fluctuate from $5 - $15 within a matter of like 10 months.

[thetransporter]

i dont understand - i left it all night running, with asus video card i borrowed from work . (750$ game card not workstation) after it connected to network downloading blocks. nothing happened. why is not doing anything?

[4DoorGTZ]

What you are running the "wallet" like program is simply a network verification tool for all of the transactions. What you need is a mining client, that will get work solve it and submit it. Its not worth trying it solo so best bet would be to sign up with a pool.

www.bitcointalk.org is a good resource if you have time to read around.

[Zero102]

You need a miner like cgminer, bfminer, guiminer, whatever, to actually do any mining. There is absolutely no point in wasting money on a high end GPU just for mining right now as ASICs are set to launch within the next 30 days or so and should decimate GPU mining, the same way GPUs decimated CPU mining. If you were talking about this 2 years ago it would have been a great time to buy high end GPUs for bitcoin mining. You could make your money back in 30-60 days with certain setups back then. Those days are gone, and even ASICs won't bring them back.

If you are set on doing GPU mining keep in mind that this will stress your video card and probably shorten its lifespan (or at least the life of the fan, and if that goes under heavy load.....).

Not all hope is gone though, with my work machine (radeon 6770 - $180 video card 2 years ago, ~190MHash/s) I've produced over $450, and I only started mining about 10 days before the value dropped from $30. That said, I've got a couple ASICs on order :D

As for using bitcoins, you need the bitcoin app, if you have a slow internet connection it will probably take a couple hours to synchronize with the rest of the network, maybe a day. I do all of my bitcoin stuff over an ssh tunnel to home and that means I'm pretty much capped at my home upload speed + ssh overhead, or like 30kb/sec. It took 2-3 days to regenerate the block chain when I had to nuke and pave my machine.

[topher91]

I've got 2 AMD 5850's I'd be willing to part with for a good price...do the research. These are great for bitcoin mining.

[n1zm0]

I have an old 5770 I can spare for workhorse duties, is it ideal to over clock this for mining or just run it default? Either way its a spare gpu I don't really need.

[Zero102]

If you are paying for power and hardware GPU mining is a losing battle right now and it is only going to get worse. If you've got free power and time on your hands then it is worth a few bucks. My 6770 makes me about $0.60/day with current prices and difficulty.

A 5770 will perform identically to my 6770, about 190MHash/s. If you overclock it you can get it to 200-210MHash/s, but if it ever crashes your lost productivity during the time until you notice the crash will more than eat up the extra production. I overclocked mine for a while and found it just didn't pay off.

If you don't need to use the machine at the same time you can run the card a bit harder than I do, maybe get 220MHash/s, but your desktop will be laggy.

The bitcoin hardware comparison chart says a 5850 will do ~345-350MHash/s., so at current prices about $1/day each

https://en.bitcoin.it/wiki/Mining_hardware_comparison

If you are doing mining on this scale you pretty much MUST join a pool, trying to crack a whole 25BTC block on your own is a waste of time with single/dual GPU setups.


If you are considering getting into mining, before spending any money watch what happens to the network hash rate and difficulty as the ASIC miners reach people. By the end of February we should see a significant influx of ASIC miners and that should give you a real indication of long term profitability.

[thetransporter]

Originally posted by topher91
I've got 2 AMD 5850's I'd be willing to part with for a good price...do the research. These are great for bitcoin mining.


I have 2 Asus/amd 6950s - probably the same type of yours but from what people are saying on here its not worth my time even with free power. ?


http://imgc.classistatic.com/cps/kjc/120305/652r1/4549kbi_20.jpeg

[Zero102]

Obviously it is worth it if you have free power, I said it wasn't worth it to buy hardware and pay for power to do GPU mining right now. If you have free power and free hardware then how can it not be worth it? :dunno:

A 6950 probably performs about 370MHash/s, or about $1/day worth of bitcoins when mining in a pool. Personally I like slush's pool but its mostly a matter of preference.

[J@Tuner]

Dang it! I've been folding for 10+ years for free???? :)

[Super_Geo]

I have two work computers, each with a Matrox M9140 LP PCIe x16... would those be any good? They support 4 monitors each, but not sure how fast they are...

[Zero102]

I have no idea if Matrox cards are even supported. They need to support OpenCL or Cuda or something to be useful for mining.

I suppose try downloading the GPU computing drivers for your card and give cgminer or guiminer a try and see what happens. If you are getting under 25MHash/s you are probably CPU mining which is really not worth the time and effort.

[thetransporter]

Originally posted by Zero102
Obviously it is worth it if you have free power, I said it wasn't worth it to buy hardware and pay for power to do GPU mining right now. If you have free power and free hardware then how can it not be worth it? :dunno:

A 6950 probably performs about 370MHash/s, or about $1/day worth of bitcoins when mining in a pool. Personally I like slush's pool but its mostly a matter of preference.


so about 60/month..
Thanks zero102.

[sabad66]

The BTC market is nuts today...way too unstable.
http://mtgoxlive.com/

[Zero102]

The last couple days have been a real roller coaster ride. I dunno what is causing it, my thoughts are it is related to the pending ASIC miners but really I haven't the foggiest idea what is going to happen. There was some really good bitcoin forecasting site, they would probably have something about this, except I can't remember their name :(

[AndyL]

Well... I'm going to raise the dead here...

Debating what to do with the miner... Was ok at the start of the year... Now being just a pair of nvidias... It's powered down...

Have all the parts, to do a pi farm of the erupters - but even at <50$ea - with the current exponential rate of increase on difficulty... They'll never pay for themselves... (still debating whether to actually order them)

But all the calculators are working on a 30-50% difficulty increase per month - even the new monster farm rigs - will never ROI if they're delivered after october-november...

Is anyone expecting to see the difficulty rate level off or - do we just expect it to continue it's upward trend?

[sputnik]

With specialized ASIC machines joining the network, the days of mining with GPUs are over.

http://arstechnica.com/gadgets/2013/06/how-a-total-n00b-mined-700-in-bitcoins/

[Zero102]

pi farm of the erupters? what?



I picked up a Jalapeno from Butterfly labs (pre-ordered Sept 19, 2012), got it about 3 weeks ago. It was ~$165 for the device and it just mined its second bitcoin today. Paid for itself in about 16-17 days while only using 30W of power

[ercchry]

Originally posted by Zero102
pi farm of the erupters? what?



I picked up a Jalapeno from Butterfly labs (pre-ordered Sept 19, 2012), got it about 3 weeks ago. It was ~$165 for the device and it just mined its second bitcoin today. Paid for itself in about 16-17 days while only using 30W of power

wait... so you are saying i could invest $xxxxx in a bunch of these contraptions and i could make DOUBLE that every month?! :eek:

[BerserkerCatSplat]

Originally posted by ercchry


wait... so you are saying i could invest $xxxxx in a bunch of these contraptions and i could make DOUBLE that every month?! :eek:

Not really. Bitcoins get progressively harder to mine, so you your mining rate would steadily decrease over time unless you continually improved your "mining equipment."

[ercchry]

Originally posted by BerserkerCatSplat


Not really. Bitcoins get progressively harder to mine, so you your mining rate would steadily decrease over time unless you continually improved your &quot;mining equipment.&quot;

the laws of diminishing returns is a real bitch... :rofl:

but still, lets say you invested... $10k, first month you make $10k, next month $20k... then it starts to drop off... at what rate? would you be at $15k, then $10k, $5k, $0? or $19.5k $19k, 18.5k, etc

still seems worth it if you are recovering costs of investment in 16 days :nut:

[Xtrema]

So I would guess drop off is based on how many people got in on the arms race.

The more powerful miners on the market, the faster the value will drop.

So the key is get into manufacturing bitcoin devices like Butterfly labs. :rofl:

[ercchry]

Originally posted by Xtrema

So the key is get into manufacturing bitcoin devices like Butterfly labs. :rofl:

yup, if this was some sort of money tree. you can believe they would not be selling anything. just producing more boxes to grow their own farm

[BerserkerCatSplat]

Originally posted by ercchry


the laws of diminishing returns is a real bitch... :rofl:

but still, lets say you invested... $10k, first month you make $10k, next month $20k... then it starts to drop off... at what rate? would you be at $15k, then $10k, $5k, $0? or $19.5k $19k, 18.5k, etc

still seems worth it if you are recovering costs of investment in 16 days :nut:

I honestly couldn't give you any kind of estimates - I'm no Bitcoin pro by any means. But I wouldn't discourage it - if you can get a proven mining device going and make some money, why not? The only downsides are the diminishing returns and the fact that the value of Bitcoins tends to be rather variable.

[ercchry]

Originally posted by BerserkerCatSplat


I honestly couldn't give you any kind of estimates - I'm no Bitcoin pro by any means. But I wouldn't discourage it - if you can get a proven mining device going and make some money, why not? The only downsides are the diminishing returns and the fact that the value of Bitcoins tends to be rather variable.

well, there is the other variable too... as something becomes more rare, value increases... do they have a solid exchange yet to turn them into real money? buy low, sell high. collect more coins from via passive means...

i'd have to learn a bit more before i jumped in though

[AndyL]

Problem right now is the big bumps in hashrate... so difficulty is rising exponentially this year... gpu's are completely useless... there have been weekly 100terrahash spikes (like some big mining equipment being tested for 12hr runs ) for the past month...

Butterfly labs is rumored to do a "healthy" burn-in of the gear they sell... there are caps however on mining revenue - but there is little doubt they mine with the equipment before releasing... this of course pisses off those who pre-ordered this hardware and expected to receive it before its impact on difficulty was "felt".

[AndyL]

Originally posted by ercchry


well, there is the other variable too... as something becomes more rare, value increases... do they have a solid exchange yet to turn them into real money? buy low, sell high. collect more coins from via passive means...

i'd have to learn a bit more before i jumped in though

There are a couple exchanges - I've had no issue cashing out this year...those winklevoss twins of facebook fame own the biggest one if i recall...

[Zero102]

Originally posted by AndyL
Problem right now is the big bumps in hashrate... so difficulty is rising exponentially this year... gpu's are completely useless... there have been weekly 100terrahash spikes (like some big mining equipment being tested for 12hr runs ) for the past month...

Butterfly labs is rumored to do a &quot;healthy&quot; burn-in of the gear they sell... there are caps however on mining revenue - but there is little doubt they mine with the equipment before releasing... this of course pisses off those who pre-ordered this hardware and expected to receive it before its impact on difficulty was &quot;felt&quot;.

They have stated a few times that they mine on a testnet to not impact the real network. No idea if anybody can prove this but there have been no noticeable spikes during times that people allege they have been testing with "their" equipment.


As for the buying in and doing this yourself argument - if you bought from BFL right now you might have a device in 3-6 months. By then the difficulty will be MUCH higher. Plus they upped the price of the devices to $250, making the return on investment much longer. There are other ASIC manufacturers coming out of the woodwork. I haven't researched any of them so I can't say much about how trustworthy they are.

[rage2]

This is way faster than mining... :rofl:

http://www.techworld.com.au/article/521785/sec_charges_texas_man_running_bitcoin_ponzi_scheme/

I love his defense legal defense:

http://www.cbc.ca/news/canada/calgary/story/2013/08/12/calgary-bitcoin-bit-coin-money-texas-currency-jesse-hirsh.html


"His defence in a Texas court was that Bitcoin is just a game, and he won the game by figuring out how to get other peoples Bitcoins and that he should not be subject to the laws because it's not a real currency."

[ipeefreely]

Originally posted by sputnik
With specialized ASIC machines joining the network, the days of mining with GPUs are over.
That's pretty cool! :D


Originally posted by rage2
I love his defense legal defense:
:rofl: :rofl:

[4DoorGTZ]

Had I been all in with bitcoin I could have paid off my Condo. Over the couple years I mined about 1200BTC, at the top of the market that could have been $250k, even today that could have been $120k. However I have been selling them off for precious metals the whole time, I recall an order for some bullion that was 195btc..... today that would get me almost $20k worth.

So now I just invest in other bitcoin businesses on the bitcoin exchanges, was into 1 where the operator disappeared and the shareholders banned together, hired a lawyer and got the previously ordered mining Asic's redirected away from the scammer. Its now mining for a newly created entity that pays bitcoin dividends twice a week.

It is time I retire my rack of GPU's though (free power means they still make me something)