How to Startup Your Own Bitcoin Mines
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Bitcoin mining is a relatively complicated process when you don’t understand how to get started. There are many concepts that once explained become clear. However, the important part is understanding the procedure involved in how you can set up a Bitcoin mine at home. This article will help you get started on Bitcoin mining anywhere in the world.
How do Bitcoins Work?
In order to earn Bitcoins at home, you should first understand what exactly you are asking your machine to do. Bitcoins are maintained through a shared network that operates much like a lottery – each individual machine that is represented in the Bitcoin network will use its processing power to solve an equation, known as a hashing function. This hashing function is how something called a block header is formed, which keeps the validity of the network in check. The way that the Bitcoin mining hardware runs these operations specifically involve a nonce, or a different number as the random number of the block header. Miners will solve equations based on the difficulty target, and attempt to find a number below that difficulty target.
As the number of users increase in order to find a valid block, the mining difficulty increases. This term determines how much more difficult finding a new block was compared to a previous block.
That’s about the essentials you will need to know for mining Bitcoins, and now we can start discussing equipment.
Find the Right Equipment for the Right Job
This is one of the most essential stages of Bitcoin mining. You have to determine what kind of profitability you want to achieve with your efforts, or the electricity costs involved are going to outweigh your returns. Mining Bitcoins is accomplished through various different means. In the past, when Bitcoin mining was simply a hobby, people used their computer CPU units to generate blocks. As time progressed, ATI Radeon cards were known to be more extensive in their processing power and available for an acceptable price. However, due to the optimisations and the increasing complexity of Bitcoin mining networks, it is now impossible to generate a proper return from these methods. Most Bitcoin users have now switched over to the ASIC (Application Specific Integrated Circuit) in order to generate hash’s and solve the lottery block. The disadvantage of this requirement is that you will only ever be purchasing an ASIC for this purpose, period.
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It’s important therefore to calculate your mining costs. An ASIC offers at least a 50 to 100x increase performance for close to 8x reduction in electricity consumption, so there is no real technological alternative available. Therefore, running some calculations is essential in determining profitability. For example, if a user wanted to start generating hashes, they would need to calculate the electricity generated per hash. The basic equation would be a machine’s Megahash per second vs its watt consumption. Say a user uses a GPU that generates 14Mhash/s – at this point in time, it would take approximately 13 years for that user to find a solution to the block and be rewarded and most likely burn out their hardware. Therefore, determining your mining setup is the second most essential part of mining Bitcoins. Being able to at least provide an estimate for a financial plan is almost a necessity in the ever-changing world of Bitcoin mining.
Getting Started With a Wallet and Bitcoin Mining Software
In order to have your Bitcoins available as a fund, you will need to create a Bitcoin wallet. The wallet is available from websites such as , and will allow you to obtain a long sequence of numbers and letters that will become your wallet address.
Think of this as your virtual Bitcoin passport. If you lose it, you will effectively lose everything you earn from Bitcoin. Be sure to have a physical backup of this sequence on a device such as a USB.
Furthermore, after obtaining the Bitcoin wallet you will need to have the appropriate software installed. There are a many options to choose from here for a Bitcoin user. GUIMiner is probably the most simple solution for Windows users, and Linux users can install CGMiner. Mac users may use DiabloMiner, but will have to find workarounds (such as using proxies) in order to increase the speed at which the program makes calls to Bitcoin or risk having a slower response.
Decide Whether to Solo or Join a Pool
Simply starting up your computer and using a software will generate you little on it’s own – but joining a pool will increase the chances of being allocated a reward for being part of a ‘set’ of machines that deciphered a block.
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Joining a pool with many users may increase your chance of a reward, while smaller pools will yield greater rewards at a slower rate. Although there is a risk that the pool owner may run off and take the currency, Bitcoin is ultimately about freedom of choice and this lies with being able to trust a particular system. Slush’s pool and BTC Guild are two very common resources people can use in order to join a pool and increase their mining profitability. The difference between making a real return on your investment could depend on the effectiveness on your pool. Read up on reviews and search for more information about your particular pool of choice to ensure that the owners have a good reputation, and that you will not be wasting your time (and electricity) with them.