If you aren't familiar with the latest tech and cyber trends, then you may not have heard of Bitcoin, a virtual currency (also known as a "Cryptocurrency") that exists only in cyberspace and is created by user's computing power. Bitcoin is currently trading at 1 BTC = $628 USD at the time of my writing this post. This is certainly not the highest or lowest price it has traded at since it's inception in late 2009. Bitcoin is a software based digital currency that was written/created by Satoshi Nakomato, a secretive asian dude that lives in LA. There are many rumors about whether or not Satoshi is a person or a group of hackers or if he is a person at all, but several sources have confirmed more recently that he is just some dude who has nothing to do with Bitcoin nowadays and reaps no benefit from it, he just wrote the software and that was it. His billion dollar baby transformed itself into what it is today. So, lets find out how it works.
In 2010, if you wanted to mine for bitcoin you would download a simple dos based program that would run on your computer and use your CPU's idle processing power to run SHA256 based 'hashes', or what is easier explained as decryptions. There are a bunch of these 64 digit passwords that are created everytime a Bitcoin transaction is processed, in order to verify the transaction and approve the transfer of funds, someone must decrypt the 64 digit password.
To do this the dos based program, CGMiner or BFGMiner (the two most popular), run the SHA256 protocol using your computer's CPU to process the calculations at a few megahashes a second. A Megahash is measurment of processing speed. Many 64 digit passwords make up what is known as a block, once all of the passwords within that block have been decrypted correctly, the block is completed and 50 Bitcoin would be issued to the user who finished decrypting first. In early 2010 it was easy for anyone to get into Bitcoin mining and earn a few 50 BTC payouts quickly, of course the Bitcoin was not worth more than a couple dollars at that time either. As more people began to mine, the software adjusted for the increased processing power which would mean quicker block decryptions and faster payouts, the difficulty level of the decryption sequence was raised, basically adding more 64 digit passwords to each block making it take longer to decrypt an entire block. Bitcoin miners soon found that they could use their Graphics Cards GPU's to process the SHA256 algorithms more quickly. GPU mining moved almost 100 to 120 times faster than CPU mining could ever. In early 2012 half of the 21 Million Bitcoin limit had been created and was now in circulation, the software re-adjusted itself once more to compensate for the large amount of Bitcoins created in such a short amount of time, it reduced the 50 Bitcoin reward from decrypting a block to a 25 Bitcoin reward. This in turn helped to prevent the currency from ever experiencing any type of inflation, the difficulty level also continues to rise as more processing power comes online. Private companies start to develop ASIC's, or Application Specific Integrated Chips, whose sole purpose is to run SHA256 alogrithims and process the 64 digit keys. These ASIC's are a huge hit for Bitcoin miners, they increase the potential processing power another 100 to 120 times what it was when using GPU's and use a lot less electricity when operating. Here we are, halfway thru 2014, a little over half of the 21 million Bitcoins are in circulation and the currency trades across the world for every major countries national currency as well as many other virtual currencies such as Bitcoin's newest competitor, Litecoin. There are over a hundred thousand merchants accepting Bitcoin across North America with another hundred thousand across the globe. Bitcoin ATM's are being installed in every major city across the US, allowing people to purchase Bitcoins with US Dollars or cash out Bitcoins for US Dollars. China has banned the Bitcoin and the US Government is seeking ways to regulate it. Every government is pissed because they have absolutely no control, no taxing power, and no say in how the Bitcoin currency works, and affects global markets. All I can say is that they need to get over it, thats what Bitcoin was created for, as a alternative to the failing US Dollar and all the other major fiat currencies across the world. Bitcoin is freedom, thats what it stands for and what it creates. It is also the most secure currency in the world to date, it can't be counterfeit, it can't be pick pocketed, it can't be destroyed, and it can't be minted at will to inflate the national economy. It can however, like all things digital, still be stolen by hackers, but only if the owner is a complete idiot! There are many ways to secure ones Bitcoin wallet, and with two-step verification a modern day common place security measure, the hacker can only gain access to your Bitcoins if he has your cellphone in his hand as well.....how likely is that to happen? Not very!
This is a great 1 minute video that explains how Bitcoin works with pictures and animation, it's very simple to understand and presents the details in an entertaining way. I highly recommend you play it, even if you are anti-bitcoin, this video will clarify things for you.
Now that you know how Bitcoin works, lets look at my experience and see if it even worth trying to mine Bitcoin so late in the game.....afterall, we've all heard the stories, and perhaps you even know someone first hand who has become a millionaire just from mining Bitcoin. Is it still possible to become a millionaire at the end of July 2014 by mining Bitcoin? Read on and decide for yourself.
Like most Bitcoin miners I started by using my CPU and GPU and using a program called GUI Miner on a computer running Windows Vista Business. My 8 Core AMD FX-8120 is overclocked to 4.3Ghz and runs at a very low 81 degrees Fahrenheit under full load with liquid cooling. I only run NVidia GPU's as I've had very bad experience with ATI cards in the past and it left a bad taste in my mouth. Having said that, I will put it out there that Radeon cards achieve much higher hash-rates and they run the SHA256 algorithms much more efficiently than any NVidia Card. This does not mean that you can't mine Bitcoins on NVidia Cards because you can, and with enough of them running you can mine pretty quickly. With that said, my NVidia Geforce GTX 560Ti is overclocked using the NVidia Performance Settings in the software that came with the drivers. It's not overclocked much, core clock runs about 100Mhz faster than default and the memory clock runs a little over 200Mhz faster than it's default setting. I have the fan set to run at 65% speed to keep the card a little cooler than it would run at the default clock settings. With this setup, my highest hash-rate acheived was something around 96MH/s which is the equivalent of producing about $0.0000295 US Dollars worth of Bitcoin each day by mining 24/7/365. As you can see, this is not very profitable and I knew this would not get me anywhere since I was consuming more electricity running the GPU and CPU cores at full load for long periods of time. This left me with only one way to go. I needed to purchase a couple ASIC's and recalibrate my computers, all of them, and my internet connection, so that I could squeeve every last Megahash out!
I was unsure of which ASIC to purchase but I decided I would go with a USB stick styled ASIC since they use less than 2 Watts of electricity and are purchased for under $10/each. I highly recommend anyone wanting to get into Bitcoin mining or just experiment with it to look into a USB ASIC as you won't be out much if you decide that mining Bitcoin is not for you. I bought 1 ASICMiner Block
Erupter and 1 Bitmain Antminer U2. The U2 hashes at 2 Gigahashes a second (2 GH/s) which is the equivalent of 2000 MH/s and the Block Erupter runs at 336 MH/s. Its obvious which one is the winner for the price here, but I was not concerned with that at this point, I wanted to find which ASIC would be the most stable and the easiest to install and run 24/7/365. I found installing both of these USB ASIC's to be somewhat challenging for the beginner Bitcoin miner, even though I am quite savvy when it comes to computers. Windows happens to be the most difficult of all the Operating System's to set these up with. Here's a brief explanation
After I had my Windows desktop mining away, I was curious to see how it would work with my Mac. Of course, all things are much simpler on a Mac as anyone who has ever used one knows, there is no need to install drivers for any device that you plug into your Mac and it is no different for the USB ASIC's. The other plus about Bitcoin mining on a Mac is that you don't have to type a bunch of long drawn out commands each time you want to run CGMiner. You will plug you USB ASIC into a free USB port of your Mac, download CGMiner for mac, and input the same command line that you used in Windows (minus the cgminer.exe part at the beginning) into the text box that appears when you launch CGMiner, and it will begin mining away. Next time you launch CGMiner the commands you typed are already there, it saves them! How genius is that? Like I said, everything is simpler on a Mac, it is true, Mac just makes more sense that Windows, not to mention the fact it is so much more stable, but that's a story for another day.
Now that I was mining away on both my Mac and my Windows machine I was actually making some Bitcoin. I still ran GUIMiner and had my graphics card mining in the background while CGMiner was using the Antminer U2 USB ASIC to mine in the foreground, on my Mac I had CGMiner running with the Block Erupter USB ASIC and I even downloaded GUIMiner to two antique Dell
Inspiron 2200's running Windows XP and had them mining with their super non-powerful single core Intel Celeron M processors. With all four computers running around the clock my hash-rate hit 2500 MH/s! Yes that's right I was running at 2 and a half Gigahashes a second and earning about $0.000495 US Dollars worth of Bitcoin a day! It went up an entire decimal place, I was earning 20 times what I was earning before! And now I was addicted, I had caught the Bitcoin mining bug!
During a weekend trip out to my parents house I attempted to explain Bitcoin to my father, who was less than impressed with it's awesomeness, however he did see that I was impressed and he gave me a ton of spare computer parts and even an old Compaq to help further my Bitcoin addiction! Upon returning home I started to lay out all the computer parts I had and take inventory. I had a goal at this point, I wanted to achieve a hash-rate of 6.5 TH/s (6.5 Terahashes a second) or 6500 Gigahashes a second which is also 650,000 MH/s! After conducting significant research and running several calculation simulators I had discovered that upon achieving a hash-rate of 6.5 TH/s I would be earning in excess of $100,000 US Dollars a year worth of Bitcoin (To achieve $100,000/year, I would have to be mining at 6.5 TH/s 24/7 as of early May 2014 and the network difficulty would have had to stay exactly where it was, of course this didn't and will never happen so one can expect to earn about $5,000 to $10,000 less than the estimate due to difficulty fluctuations)! To get to that rate though it was going to take quite a bit of work, a lot of computing power, and some more ASIC's....a ton of ASIC's to be exact.
I have now been mining Bitcoin for a little over 97 days. I am currently averaging a hash-rate of 1720.25 GH/s or just slightly around one and three quarter terahashes a second (I'm 1/5th of the way to achieving my goal hash rate of 6.5TH/s). My current power consumption is estimated to be about 3000 Watts just for the computers and hardware that are currently mining. I have turned one computer into a Stratum Mining Proxy for Getwork ASIC's, I run my USB ASIC's on Linux since it seems to be more stable than Windows when running the USB sticks, I have just finished installing Preev.com, the Bitcoin Network Difficulty level, length of time it takes the pool to complete a block, and each individual worker's (the device doing the mining) performance and hash-rates.
Linux on two more computers that will be used as part of a Dedicated Bitcoin Mining Cluster I am currently setting up, I have several Block Erupter Rev. 2 ASIC Cards running as well as a few of the Bitmain Antminer S1's thanks to my fiancé who decided to invest in some hardware. At our current hash rate ~1.7 Terahashes a second. I am earning anywhere from $18/day on the low end up to $35/day on the high end with the most I've made in one day being $55. I pay my fiancé based on the percentage of work her hardware contributes to our overall hash rate. For example, her Bitcoin Miners produce about 24% of the total hash rate so they are doing 24% of the work. She earn's 24% of each day's take, which I pay out to her weekly in Bitcoin's. Depending on the block difficulty and the speed at which the pool solves the blocks on a given day the amount of money earned varies. I have certainly come a long way from that $0.00002 a day! I have been keeping highly detailed logs each day about my mining progress, I am inputting the data into spreadsheets and producing charts from the spreadsheet data to provide myself with a graphical analysis of my Bitcoin Mining Performance, the Pool's Cluster Performance, and the entire Bitcoin Network's Performance. I track the BTC:USD exchange rate through
Since I've only been mining Bitcoin's for a few months it's hard to tell whether or not anyone can get rich mining Bitcoin if they start now, but I can tell you these facts: It IS getting more difficult to solve a block (it takes longer and more processing power each day), hundreds more people begin mining each day (adding to the overall Network Hash-rate, which in turn increases difficulty), the daily rewards ARE going down, and the value of a Bitcoin IS going up. I find these truth's to be self-evident, I can back them up with raw data, and can prove to anyone who wants to claim otherwise that these are the facts. Each day more merchants start accepting Bitcoin, more Bitcoin ATM's are
installed around the world, and Bitcoin gets noticed by more people. As time continues on, if these trends remain consistent, small time Bitcoin miners like myself, will HAVE to significantly upgrade their hardware, we will HAVE to get faster hash-rates in order to make the same amount of money we made yesterday. With that said, the best advice I can give you if you're planning on mining Bitcoin, is to make a plan, set a goal hash-rate, and work to achieve it. I'm not stopping at 1725 GH/s, my goal is 6.5 TH/s, and once I get there I will re-evalutate and set another goal, the faster you mine the more money you make.
On a closing note, I would like to leave you with this thought: as of today, July 20th, 2014, if you were to take $40,000 US Dollars and use it all to purchase Bitcoin Mining Hardware, you will make your $40,000 back in less than 45 days, and after one year you will have earned $225,000 on top of the $40,000 that you earned back in just over a month! This takes into effect the difficulty rising twice each month and daily rewards decreasing. With that said, if the trends remain constant, lets say you purchase $120,000 worth of Bitcoin Mining Hardware, in 6 months you will have earned $497,000 which is a $377,000 profit! If that isn't a solid return on your investment I don't know what else is! You could almost go take a loan out at the bank and have it paid back in full before you incur any interest charges! I'm not suggesting you go and do this, and I can't be held responsible if you do and lose your ass, but I will say that the numbers don't lie, IF the trends remain consistent and nothing changes, then you can expect these returns. It should now be apparent why so many businesses are pouring their money into Bitcoin mining hardware, they have the deep pockets to purchase Massive Servers and Supercomputers capable of super fast hash-rates, they can setup these huge Mining Clusters and make their money back in a month, then just pocket the profits from that point forward! I've made money mining Bitcoin, you can too, it's a real thing........happy mining :)
In 2010, if you wanted to mine for bitcoin you would download a simple dos based program that would run on your computer and use your CPU's idle processing power to run SHA256 based 'hashes', or what is easier explained as decryptions. There are a bunch of these 64 digit passwords that are created everytime a Bitcoin transaction is processed, in order to verify the transaction and approve the transfer of funds, someone must decrypt the 64 digit password.
This is a great 1 minute video that explains how Bitcoin works with pictures and animation, it's very simple to understand and presents the details in an entertaining way. I highly recommend you play it, even if you are anti-bitcoin, this video will clarify things for you.
Now that you know how Bitcoin works, lets look at my experience and see if it even worth trying to mine Bitcoin so late in the game.....afterall, we've all heard the stories, and perhaps you even know someone first hand who has become a millionaire just from mining Bitcoin. Is it still possible to become a millionaire at the end of July 2014 by mining Bitcoin? Read on and decide for yourself.
Like most Bitcoin miners I started by using my CPU and GPU and using a program called GUI Miner on a computer running Windows Vista Business. My 8 Core AMD FX-8120 is overclocked to 4.3Ghz and runs at a very low 81 degrees Fahrenheit under full load with liquid cooling. I only run NVidia GPU's as I've had very bad experience with ATI cards in the past and it left a bad taste in my mouth. Having said that, I will put it out there that Radeon cards achieve much higher hash-rates and they run the SHA256 algorithms much more efficiently than any NVidia Card. This does not mean that you can't mine Bitcoins on NVidia Cards because you can, and with enough of them running you can mine pretty quickly. With that said, my NVidia Geforce GTX 560Ti is overclocked using the NVidia Performance Settings in the software that came with the drivers. It's not overclocked much, core clock runs about 100Mhz faster than default and the memory clock runs a little over 200Mhz faster than it's default setting. I have the fan set to run at 65% speed to keep the card a little cooler than it would run at the default clock settings. With this setup, my highest hash-rate acheived was something around 96MH/s which is the equivalent of producing about $0.0000295 US Dollars worth of Bitcoin each day by mining 24/7/365. As you can see, this is not very profitable and I knew this would not get me anywhere since I was consuming more electricity running the GPU and CPU cores at full load for long periods of time. This left me with only one way to go. I needed to purchase a couple ASIC's and recalibrate my computers, all of them, and my internet connection, so that I could squeeve every last Megahash out!
I was unsure of which ASIC to purchase but I decided I would go with a USB stick styled ASIC since they use less than 2 Watts of electricity and are purchased for under $10/each. I highly recommend anyone wanting to get into Bitcoin mining or just experiment with it to look into a USB ASIC as you won't be out much if you decide that mining Bitcoin is not for you. I bought 1 ASICMiner Block
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| A pair of Bitmain Antminer U2 USB Bitcoin Miners They run at 2.0GH/s and cost about $15. |
After I had my Windows desktop mining away, I was curious to see how it would work with my Mac. Of course, all things are much simpler on a Mac as anyone who has ever used one knows, there is no need to install drivers for any device that you plug into your Mac and it is no different for the USB ASIC's. The other plus about Bitcoin mining on a Mac is that you don't have to type a bunch of long drawn out commands each time you want to run CGMiner. You will plug you USB ASIC into a free USB port of your Mac, download CGMiner for mac, and input the same command line that you used in Windows (minus the cgminer.exe part at the beginning) into the text box that appears when you launch CGMiner, and it will begin mining away. Next time you launch CGMiner the commands you typed are already there, it saves them! How genius is that? Like I said, everything is simpler on a Mac, it is true, Mac just makes more sense that Windows, not to mention the fact it is so much more stable, but that's a story for another day.
Now that I was mining away on both my Mac and my Windows machine I was actually making some Bitcoin. I still ran GUIMiner and had my graphics card mining in the background while CGMiner was using the Antminer U2 USB ASIC to mine in the foreground, on my Mac I had CGMiner running with the Block Erupter USB ASIC and I even downloaded GUIMiner to two antique Dell
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| ASICMiner's Block Erupter USB Bitcoin Miner runs @333MH/s and can be had for about $7 |
During a weekend trip out to my parents house I attempted to explain Bitcoin to my father, who was less than impressed with it's awesomeness, however he did see that I was impressed and he gave me a ton of spare computer parts and even an old Compaq to help further my Bitcoin addiction! Upon returning home I started to lay out all the computer parts I had and take inventory. I had a goal at this point, I wanted to achieve a hash-rate of 6.5 TH/s (6.5 Terahashes a second) or 6500 Gigahashes a second which is also 650,000 MH/s! After conducting significant research and running several calculation simulators I had discovered that upon achieving a hash-rate of 6.5 TH/s I would be earning in excess of $100,000 US Dollars a year worth of Bitcoin (To achieve $100,000/year, I would have to be mining at 6.5 TH/s 24/7 as of early May 2014 and the network difficulty would have had to stay exactly where it was, of course this didn't and will never happen so one can expect to earn about $5,000 to $10,000 less than the estimate due to difficulty fluctuations)! To get to that rate though it was going to take quite a bit of work, a lot of computing power, and some more ASIC's....a ton of ASIC's to be exact.
I have now been mining Bitcoin for a little over 97 days. I am currently averaging a hash-rate of 1720.25 GH/s or just slightly around one and three quarter terahashes a second (I'm 1/5th of the way to achieving my goal hash rate of 6.5TH/s). My current power consumption is estimated to be about 3000 Watts just for the computers and hardware that are currently mining. I have turned one computer into a Stratum Mining Proxy for Getwork ASIC's, I run my USB ASIC's on Linux since it seems to be more stable than Windows when running the USB sticks, I have just finished installing Preev.com, the Bitcoin Network Difficulty level, length of time it takes the pool to complete a block, and each individual worker's (the device doing the mining) performance and hash-rates.
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| One of Bitmain's Antminer S1's cost about $250 and can hash @200GH/s or 1/5 Terahash! The S1 uses an ATX PSU for power and consumes about 380 Watts of power. |
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| The latest from Bitmain Tech, the Antminer S3 is set to be released this month. The S3 is a major step up from the S1, hashing @480GH/s almost a 1/2 Terahash and using only 366 Watts of electricity, these are sure to raise the bar! MSRP is $900/each but you can pre-order these from Bitmain in pairs for about $850 in Bitcoin. |
installed around the world, and Bitcoin gets noticed by more people. As time continues on, if these trends remain consistent, small time Bitcoin miners like myself, will HAVE to significantly upgrade their hardware, we will HAVE to get faster hash-rates in order to make the same amount of money we made yesterday. With that said, the best advice I can give you if you're planning on mining Bitcoin, is to make a plan, set a goal hash-rate, and work to achieve it. I'm not stopping at 1725 GH/s, my goal is 6.5 TH/s, and once I get there I will re-evalutate and set another goal, the faster you mine the more money you make.
On a closing note, I would like to leave you with this thought: as of today, July 20th, 2014, if you were to take $40,000 US Dollars and use it all to purchase Bitcoin Mining Hardware, you will make your $40,000 back in less than 45 days, and after one year you will have earned $225,000 on top of the $40,000 that you earned back in just over a month! This takes into effect the difficulty rising twice each month and daily rewards decreasing. With that said, if the trends remain constant, lets say you purchase $120,000 worth of Bitcoin Mining Hardware, in 6 months you will have earned $497,000 which is a $377,000 profit! If that isn't a solid return on your investment I don't know what else is! You could almost go take a loan out at the bank and have it paid back in full before you incur any interest charges! I'm not suggesting you go and do this, and I can't be held responsible if you do and lose your ass, but I will say that the numbers don't lie, IF the trends remain consistent and nothing changes, then you can expect these returns. It should now be apparent why so many businesses are pouring their money into Bitcoin mining hardware, they have the deep pockets to purchase Massive Servers and Supercomputers capable of super fast hash-rates, they can setup these huge Mining Clusters and make their money back in a month, then just pocket the profits from that point forward! I've made money mining Bitcoin, you can too, it's a real thing........happy mining :)