10 Things to Know About Bitcoin
- Facts about Bitcoin
- What is it?
- How does it work?
- Where did it come from?
- Why does BTC have value?
Mining cryptocurrencies such as Bitcoin simply means that you run computer equipment to earn small portions of Bitcoin or other altcoins (cryptocurrencies other than Bitcoin). Why does this need to happen? If you give something away freely, it typically doesn’t maintain any value. So Bitcoin is released slowly through this mining process. It is referred to as “Proof of Work”. What happens is that the computer hardware uses the software for Bitcoin to calculate what the solution is to a random number. You can’t calculate it, so the computer hardware guesses through brute force many times per second to attempt to find the answer. The first one to solve the number is rewarded with Bitcoin. Many miners are used in pools of resources to speed along their efforts and have better results, splitting their share of the rewards in Bitcoin or BTC.
Also, these miners are used to confirm transactions and copy them all over the world as redundant copies of the Blockchain. A small fraction of the fees to send and receive Bitcoin go to the miners. This is the infrastructure behind the entire Bitcoin network. Miners processing capability is measured in “Hash Rate”. This is important to calculate if this will be profitable for you or not. Some countries cost for power usage makes it difficult and less than ideal to be involved in this part of the industry.
What equipment is needed?
Initially, Bitcoin could be mined with a laptop. Over the years, the Bitcoin software has gradually adjusted automatically to increase the difficulty of mining due to more powerful computers and a higher volume of those around the world running their own miners. A typical setup for a home mining machine would be the following:
• A metal frame or computer case
• 1 or more power supplies.
• Mining Motherboard (Designed to use multiple graphics cards)
• CPU (Processing Chip & Fan)
• RAM (Memory)
• Solid State Hard Drive (To Store Your Operating System)
• Mining Software (NiceHash, Claymore, Etc.)
• Additional Fans and cooling options.
(Risers on a special motherboard designed to accommodate more GPU’s than a standard motherboard. This model has 6 x GPU cards on this crypto mining machine.)
The cost of mining equipment varies. You can start mining today with a home computer if you have a separate GPU other than an onboard version built into the motherboard. What you really need to be successful at mining cryptocurrencies is to be educated. Buying equipment and getting it running for the first time is the first step of many to ensure you have a return on your investment. Buying all of this equipment typically leaves a 6 month to 1-year timeline to break even on the money you have spent. What really breaks the bank is if you have issues with drivers, hardware and adjusting software. You can learn this yourself, but it’s such a better experience to learn from someone who knows the industry, the hardware and your options after you have received your Bitcoin.
When you receive your first batch of Bitcoin, which is a small fraction of one Bitcoin, you can hold it, trade it or sell it. These actions are where you need more education. Now before your head spins and you are overwhelmed with all of these concepts and costs, you have other options. You don’t have to mine cryptocurrencies to be involved in the industry. You can buy Bitcoin and just hold it. Spend it if you want to. Experience different processes in the industry. You can also pay others to mine for you. Cloud mining allows you to buy the services of other companies mining equipment online. You are paid a percentage of the profits for funding their efforts.
Do your diligence to compare prices, equipment specs and get some expert advice. Ask some important questions. For example, what models of GPU are used? What size of memory is used on the GPU’s? (Aim for 6GB and up for optimal hash rate). What size of hard drive does it come with? (More GPU’s require more hard drive space for virtual memory outside of RAM). You will have a lot of questions, but don’t be afraid to ask and open a dialogue with the experts in your city. Those who know about crypto mining, love to talk about it. It’s infectious and creates a sense of opportunity in us all. After you understand these concepts, you will be intrigued by industrial mining farms. Purchase Issue 1 of our magazine if you would like to see an exclusive tour of the Hut8 Mining facility in Medicine Hat, Alberta! This facility cost $140 Million to build and is a real eye-opener to this part of the industry.