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More Mining

What is mining? Mining is the process of adding processing power to the peer to peer network for Bitcoin transaction processing.

To provide an incentive to people like you and I, so that we are willing to add this power the network, there is a built in lottery.  On average about every 10 minutes new block is found. This block is worth 50 BTC to the person who finds it.  This called the Block Reward. It is scheduled to half after 21,000 blocks have been found.  As of today that is within the next few days. It has taken four years to get to this point. So the new reward will be 25 BTC or roughly $300 USD.

Over the years people have mined with the CPU on their computer, just providing spare CPU cycles. then developers found a way to use the Graphical Processors (GPU) which were about 100x faster.

Then a new technology came out called FPGA, and now ASIC’s. Butterfly labs sells ASIC and should start delivering in December. They will be the first to market with the new ASIC miners. Energy cost to run the mining equipment has always been a factor, until now. The ratio of Hash rate to cost of energy is now fairly low.  So power costs are not as much of a factor.  An ASIC miner performs the hashing required to make the network function.

If you mine standalone, you will only get paid if you find a block. This is the preferred way to mine if you have a larger percentage of the overall mining capacity. The rate of the blocks found is throttled to 1 per 10 minutes or 144/day by a P2P network regulated factor called the difficulty. As more mining power is added tot he network, this factor increases. So if 10x the mining capacity is added, which is the expectation, you need 10X the hashing capacity in order to maintain the same chance to find a Block.

What if you don’t have enough mining power to find blocks regularly? For most miners this is the case. Mining pools are used to allow miners to collectively mine together. There are a number of different schemes for payout to miners. PPS allows for a static value to be assigned to every valid work unit. this allows the miner to take their pay hourly if they want.For a more in depth look at the mining look here:

https://en.bitcoin.it/wiki/Mining
Butterfly labs has also created a how to for mining with their mining equipment:
https://forums.butterflylabs.com/showwiki.php?title=Tutorials%3AGetting+Started+With+CGminer+BFGminer
Here are some example of mining revenue. I am currently mining with 2 Bitforce Singles from Butterfly labs, which are each performing at 830 MH/s. With the Block reward at 50 BTC and the Difficulty around 3.3 M, I’m making about $5 USD a day.I have two Single SC (ASIC Models) on order. when I receive them, I should be making about $20/day based on a $2300 USD investment. This calculation is based on :
33M Difficulty, $12 USD/BTC, 25 BTC Reward

There is another way to mine for much less. you can buy mining contracts which will pay out over time. Progressive mining will allow you to but 1 yr or indefinite contracts that payout every 14 days. you buy a fraction of their mining capacity. so you get the benefits of being in a pool, with out having to buy the hardware.

1 yr contract is 0.25 per contract and you can buy up to 40 contracts.

Indefinite Contacts are 0.5 BTC and you can buy up to 25

http://www.progressivebtcmining.com/

To learn more about Bitcoins and how to get started with Bitcoins check out my Step by Step buide:
www.amazon.com/Bitcoin-Step-by-ebook/dp/B00A1CUQQU/

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2 comments on “More Mining

  1. ps3 emulator password
    April 22, 2013

    Hey! Where did you download design of this blog? It’s amazing 😀

    • Bitcoin Step by Step
      April 23, 2013

      It was one of the default themes. I just kept scrolling through them all until I found one I liked. This was the one that won 🙂

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