Bitcoin mining

[pendell]

Reading through this guide (http://www.bitcoinmining.com/getting-started/)



To begin mining, you'll need to aquire bitcoin mining hardware. In the early days of bitcoin, it was possible to mine with your computer CPU or high speed video processor card. Today that's no longer possible. Devices based on custom ASIC chips who's performance offers up to 100x the capability of older systems have come to dominate the industry. Mining with anything less will consume more in electricity than you're likely to earn. It's essential to mine with purpose built bitcoin mining hardware. Several companies such as Butterfly Labs or Avalon offer excellent systems built specifically for bitcoin mining.

To learn more about bitcoin mining hardware, see our hardware page or compare available systems at Bitcoinx's bitcoin hardware comparison page.


*Puzzled*

How does that even work? I mean, if your computer is on it's going to consume essentially the same amount of electricity regardless of what's running in the background, yes? Couldn't one run it in the background and thereby generate a few cents or dollars? Not a massive profit by any means, but money all the same.

Respectfully,

Brian P.

[tyckspoon]

Reading through this guide (http://www.bitcoinmining.com/getting-started/)



*Puzzled*

How does that even work? I mean, if your computer is on it's going to consume essentially the same amount of electricity regardless of what's running in the background, yes? Couldn't one run it in the background and thereby generate a few cents or dollars? Not a massive profit by any means, but money all the same.

Respectfully,

Brian P.

Depends on how much extra work -and resulting extra power draw - you're making your computer do by having it run a mining program against how long it takes to generate any bitcoin currency (also whether or not it's possible to generate fractions of a bitcoin, or if you only see any return when you've created at least one full unit.) It'll depend on your local energy rates and a lot of other factors, certainly, but it doesn't sound outrageous to not turn a profit on the operation if you have to run your computer at a heightened level of performance for an extended period of time to get anywhere.


Without a mining pool, you might mine for over a year and never earn any bitcoins

..for a rough and very inexact idea of the sorts of timelines you might be looking at before you earn any actual bitcoins with which to try and make money. (And personally, I would bet on Bitcoin's value collapsing before you really got anywhere anyway.)

[Whoracle]

Keep in mind I never fully understood bitcoin. That said:

Bitcoin computing operations are a highly specialized form of computation*. General purpose hardware is OK-ish for doing those operations, for a clock-cycle-to-operation ratio. Specialized hardware (like the ASICs mentioned) is better at that. So while it takes (roughly) the same "amount" of electricity to get N cycles out of general purpose hardware as it does for the ASICs, you get more operations done on the ASICs.

Consider the following:
Let A be a general purpose CPU
Let B be a bitcoin ASIC
All actual numbers are pulled straight from a very personal, dark place.

A can do X bitcoin-specific calculations per second and consumes 1 $Unit of electricity.
B can do 2X bitcoin-specific calculations per second and consumes 1 $Unit of electricity.

Now, every X calculations net us, say, 1 cent, and every $Unit costs 1.5 cents.
On A you earn less than you pay for the electricity, while B will net you a small profit.

Actual numbers may vary, but that's the gist of it. It tends to fluctuate with the bitcoin-exchange rate, too.
Also, the power consumption varies depending on system load. That's why you have bigger PSUs in gaming rigs than in netbooks, for example. Your system can consume (say) 100W while idling, and 750W running on 100%, depending on the architecture and overall build of the system. Different components consume less/mroe power for equal gain. And then there's the whole throttling/power saving methods that modern systems have...

*GPUs for example is better suited for floating point calculations than a CPU, broadly speaking. IIRC, bitcoins are pure floating point calculations. And the ASICs are even better for that, it seems.


Hope that made sense.

[pendell]

I think it does. From what you're telling me, bitcoin mining will push up my processor usage , and this will mean a greater draw in electricity and power than normal operations. Because there are a finite number of bitcoins, and the number of bitcoins generated by a computer is directly proportional to the extent that a computer contributed to finding that computer, there really is no place for a standard processor. The share in the solution is minimal, so you might , say, take weeks or months to generate the equivalent of a single US dollar.

Respectfully,

Brian P.

[FLHerne]

I mean, if your computer is on it's going to consume essentially the same amount of electricity regardless of what's running in the background, yes?
This bit is where your reasoning breaks, because with even fairly modern hardware this is far from true. :smallwink:

All CPUs made for years reduce their clock frequency when near-idle (e.g. this old laptop drops from 2400MHz to 800MHz, newer ones are even more drastic), which reduces power consumption. More modern ones have 'idle states' and 'power gating', where individual cores can be shut down (using almost no power) when not required.
With the latest generations almost the entire processor can be shut down (for tiny intervals, of course), and operating system designers are putting a lot of effort into avoiding waking it up unnecessarily.

With the current price and production rate of bitcoin (driven largely by specialised ASIC chips), the value of bitcoins generated with a CPU or home GPU is now lower than the cost of the extra electricity used to produce them.

[TSGames]

I think it does. From what you're telling me, bitcoin mining will push up my processor usage , and this will mean a greater draw in electricity and power than normal operations. Because there are a finite number of bitcoins, and the number of bitcoins generated by a computer is directly proportional to the extent that a computer contributed to finding that computer, there really is no place for a standard processor. The share in the solution is minimal, so you might , say, take weeks or months to generate the equivalent of a single US dollar.

Respectfully,

Brian P.
That's exactly correct. It once was possible to mine Bitcoins on consumer hardware, but we are way past that point now. On consumer hardware it will cost you more in electricity to mine than you could get from the resulting Bitcoin.

Your remaining options are to use specialized hardware such as specially built mining rigs or FPGAs.

If neither of those appeals to you there's always dogecoin =)

[MLai]

What the heck is bitcoin mining??

[FLHerne]

What the heck is bitcoin mining??
The generation of new bitcoins, by computing lots and lots of hashes.

Not literally digging them out of the ground. :smalltongue:

[Grinner]

What the heck is bitcoin mining??

Automated accounting for fun and profit.

Edit: Ninja'd. I like his better, anyway.

[BWR]

I've been rather skeptical of Bitcoins since I read Charlie Stross' opinion (http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html) on the subject.
I will confess I haven't done any research other than read the links provided, so I can't state with any certainty whether his opinion is a good interpretation of the facts.

[Cikomyr]

I've been rather skeptical of Bitcoins since I read Charlie Stross' opinion (http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html) on the subject.
I will confess I haven't done any research other than read the links provided, so I can't state with any certainty whether his opinion is a good interpretation of the facts.

Bitcoin as an investment medium is a sucker's game. I will never get within 10 miles of the stuff, as its value is inherently speculative and the only reason one might get ahead in bitcoin investment is through properly guessing the Market's flows, which is the sort of methodology that is inevitably losing in the actual investment community.

Genuine investments have hard data and income related to them. Shares have dividend, sales, income linked to them. Bonds have paid interest and actual legal covenant. Commodities have real stuff. The only financial tool actually similar to the Bitcoin in term of nature of investment is currency. But actual currencies are tracked, assessed and controlled on a semi-regular basis. There's still economic activity related to the use of currency, and you have billions of dollars of income involved in the process of backing up currency. There is no such fundamentals for the bitcoin.

[Jimorian]

Bitcoin as an investment medium is a sucker's game. I will never get within 10 miles of the stuff, as its value is inherently speculative and the only reason one might get ahead in bitcoin investment is through properly guessing the Market's flows, which is the sort of methodology that is inevitably losing in the actual investment community.

Genuine investments have hard data and income related to them. Shares have dividend, sales, income linked to them. Bonds have paid interest and actual legal covenant. Commodities have real stuff. The only financial tool actually similar to the Bitcoin in term of nature of investment is currency. But actual currencies are tracked, assessed and controlled on a semi-regular basis. There's still economic activity related to the use of currency, and you have billions of dollars of income involved in the process of backing up currency. There is no such fundamentals for the bitcoin.

Another semi-decent analogy is diamonds. While they have some worth as an industrial material, it's nowhere near the value established by conspiracy and willing mass delusion. :smalltongue:

[Cikomyr]

Another semi-decent analogy is diamonds. While they have some worth as an industrial material, it's nowhere near the value established by conspiracy and willing mass delusion. :smalltongue:

Fair enough.

[TuggyNE]

Another semi-decent analogy is diamonds. While they have some worth as an industrial material, it's nowhere near the value established by conspiracy and willing mass delusion. :smalltongue:

Hmm. Diamonds look nice and (are perceived as*) very durable. Bitcoins have lots of hipster cryptonerd cred. I guess that's a decent parallel, really


*They're pretty brittle, really, and you can shatter them by dropping them a few feet onto a sufficiently rigid surface, like a steel sink or a tile floor.

[Surrealistik]

Genuine investments have hard data and income related to them. Shares have dividend, sales, income linked to them. Bonds have paid interest and actual legal covenant. Commodities have real stuff. The only financial tool actually similar to the Bitcoin in term of nature of investment is currency. But actual currencies are tracked, assessed and controlled on a semi-regular basis. There's still economic activity related to the use of currency, and you have billions of dollars of income involved in the process of backing up currency. There is no such fundamentals for the bitcoin.

Bitcoin actually isn't similar to currencies at all in that it features massive volatility and isn't backed by governments, and their corresponding economies/taxation bases/systems and militaries; there are real and substantive elements that effectively underlie and underwrite the value of fiat currency. Commodities are probably closer to Bitcoin in net (particularly fetishistic speculative commodities like diamonds and gold with low inherent/utility value) and derivatives are closer still (which have no physical backing and are purely speculative contractual entities that obtain their value strictly from the things they're indexed to or 'derived' from).

[warty goblin]

It's also worth noting that, aside from their volatility, bitcoins are also inherently deflationary. As currencies go, they're just profoundly dumb, but I guess they sound higher tech than the equivalently stupid gold standard so to a certain technology-obsessed portion of my generation they're the hot new thing.

[Surrealistik]

Oh yes, that is unquestionably one of the undesirable traits of Bitcoin: the fact that it is inherently deflationary by design encourages speculative hoarding and consequently deflationary spirals; terrible traits to be had in a 'currency' to be sure. This is to say nothing of its confidence destroying aspects (volatility aside) in the form of irreversible and anonymous transactions that prevents you from holding your counterparty accountable for fraud (or other charges) if you have not concretely verified his identity and involvement via external means, or from retrieving sent funds.

[warty goblin]

Oh yes, that is unquestionably one of the undesirable traits of Bitcoin: the fact that it is inherently deflationary by design encourages speculative hoarding and consequently deflationary spirals; terrible traits to be had in a 'currency' to be sure. This is to say nothing of its confidence destroying aspects (volatility aside) in the form of irreversible and anonymous transactions that prevents you from holding your counterparty accountable for fraud (or other charges) if you have not concretely verified his identity and involvement via external means, or from retrieving sent funds.

For all that Bitcoin does serve at least one vital function: The instant somebody advances it as an economic argument I know I can safely start ignoring them. Other methods of detecting people with even worse understanding of economics than mine can take precious additional seconds to ping.

[TSGames]

For all that Bitcoin does serve at least one vital function: The instant somebody advances it as an economic argument I know I can safely start ignoring them. Other methods of detecting people with even worse understanding of economics than mine can take precious additional seconds to ping.

Well said.

I thought that former Fed Chairman Ben Bernake eloquently summed up Bitcoin in this 16 second clip:

http://www.youtube.com/watch?v=GItVUgnmmDk

[JeenLeen]

In the past, I've had an apartment that gave free electricity. Some with free electric and internet.
If I had a decent computer (not top of the line or specialized to bitcoin mining, but decent), how much could potentially be earned by running that computer on mining 24/7 (or with breaks, if needed, to maintain its systems)?

I'm curious about if, for example, you could effectively pay rent (say 800/month) for a small apartment through mining if you set up enough computers. (I'm ignoring that the landlord might realize something is up and start looking into it.)

[Cikomyr]

In the past, I've had an apartment that gave free electricity. Some with free electric and internet.
If I had a decent computer (not top of the line or specialized to bitcoin mining, but decent), how much could potentially be earned by running that computer on mining 24/7 (or with breaks, if needed, to maintain its systems)?

I'm curious about if, for example, you could effectively pay rent (say 800/month) for a small apartment through mining if you set up enough computers. (I'm ignoring that the landlord might realize something is up and start looking into it.)

You'd still end up abysmally behind based solely on the initial hardware investment and its inevitable value depreciation.

[Tyndmyr]

In the past, I've had an apartment that gave free electricity. Some with free electric and internet.
If I had a decent computer (not top of the line or specialized to bitcoin mining, but decent), how much could potentially be earned by running that computer on mining 24/7 (or with breaks, if needed, to maintain its systems)?

I'm curious about if, for example, you could effectively pay rent (say 800/month) for a small apartment through mining if you set up enough computers. (I'm ignoring that the landlord might realize something is up and start looking into it.)

You'll run into power and cooling issues soon enough if you try to convert an apartment into a server farm. Running several computers is no big deal, but when you get to "pile them up" levels, things get ridiculous, and most apartments just can't cope with that.

If you already have a computer, and have power included in your bill, it may make sense to mine when your computer is idle. Still, it's probably not worth the hassle of setting up for a non-dedicated machine, tho.