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.




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

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. ?