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Mining Basics

 

Has anyone here considered Bitcoin Mining? Its an easy way to make money. I’ll be making about $600-700 / month with only a $2,300 investment.

In a nut shell what it is, adding processing power to the Bitcoin network. As you know, the bitcoin network is a peer to peer value transfer infrastructure. There is no central authority. The network relies on individuals to build out the network. That network has skyrocketed over the past year.

The processing power of the network is measured in Hashes per second. This is how many cryptographic SHA256 hashes can be computed per second. You don’t need to know what a hash is, just that it is something used by the network. the current hash rate of the entire network is 25 TH/sec. T stands for Tera and is 1,000 GH or Giga Hash. 1 GH = 1,000 MH, and 1 MH = 1,000,000 Hashes. So a TH = a trillion Hashes per second.This is a great time to get into Mining. There is a new technology coming out which makes it more efficient to mine. the new Hash rate will soon be something more like 250 – 500 TH/sec.Ok I’m sure by now your head is spinning and your wanting to know how this affects you and your pocket. I’ll give you and example of what can be accomplished with mining:For $2,300 investment I can buy 2 Single SC from www.butterflylabs.com. These will produce 120 GH/sec. Based on a total Hash Rate of ~250 TH, and a exchange rate of $11/BTC I can make $20Here is how its calculated, for those interested:
http://bitcoinx.com/profit/

since the difficulty is pegged to the Hash Rate an increase 10x in the hash rate will increase the Difficulty 10x

25 TH = Difficulty 3368767
so 250 TH = 33687670

The block reward halves every 4 years. At the time I’m writing this we are 1 week away from the first ever split. So my calculations are based on 25 BTC block reward.

$11.68 per BTC
120000 MH/sec

Power is cheap where I live
0.0495 $/1000 watt hours
120 W ( same power as two light bulbs)

Power costs are like $0.14 / day
Total take home per day is $20.78
Per month that will be $600

The expectation is that by the end of Jan 2013 we will be at 150 Th and by end of March at 250 TH, by end of year 500 TH. So there will be more money the first half of the year.

With the ability to pay off the devices in 4 months and let the remaining months be pure profit. this is a good time to investigate Bitcoin Mining.

For starters check out my book on Bitcoins. I’ll post more about mining as the days progress.

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This entry was posted on November 25, 2012 by in Mining and tagged .

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