How to Start Mining Bitcoins?

There are three main categories of hardware used to mine Bitcoins, and each of them varies when it comes to power and price. This guide will further explain how to create and launch a Bitcoin mine. At this point, you surely know how Bitcoins work and what mining means but we have to get over theory and start practising. How to configure your hardware and begin to mine? The first thing you need to do is to decide on hardware you are going to use, and while doing so you need to consider two factors.

Hash rate

It is the speed at which your hardware is able to compute while solving mathematical problems described later in the section about mining. Hash rate it measured in megahashes, gigahashes and terahashes per second (MH/s, GH/s and TH/s). The higher your hash rate is in comparison to currently average rate the higher the probability of solving transaction blocks. You can find more information about hash rates for different hardware on Wiki.

Power consumption

Computing power uses electricity which can cost you much, so it’s worth to check how many watts your potential hardware uses. You’ll want to make sure you won’t have to spend more money to pay bills than you’ll be able to earn in coins. In order to estimate power consumption you need to use both aforementioned factors. Divide hash rate by amount of watts; for example, if you already own a 500 GH/s hardware and your power consumption equals 400 watts the outcome is 1,25 GH/s per watt. You can check your electricity bill or use any kind of energy consumption calculator online in order to find out how much cash it is. However, you need to make note that in some cases you will need to use a computer in order to turn your mining hardware on and it needs its own electricity source which has to be taken into consideration during calculation of costs.

Bitcoin mining hardware

There are three main categories of hardware when it comes to mining: GPU, FPGA and ASIC. Each of them will be explained in details below. CPU/GPU Bitcoin mining The least-powerful category of Bitcoin mining hardware is a computer. In theory, you can use your computer to mine Bitcoins, but in practice, the whole process is so slow in comparison to current standards that it makes no sense. You can increase your hash rate by adding graphics cards which have graphics processing units (GPU). They are designed for complicated mathematical problems in order to be able to compute polygons needed in video games. Consequently, they are especially useful when it comes to SHA hashing required for solving blocks. You can buy GPU systems from two main suppliers, ATI and Nvidia. High-end cards can cost up to several hundreds of dollars but they are much better in comparison to using just a processor. For example, using ATI 5970 can result in more than 800 MH/s – single processor’s output is usually lower than 10 MH/s. One of the advantages of using GPU systems is their universality – they can be used to mine other cryptocurrencies than Bitcoin, as opposed to other hardware described below. For instance, Litecoin, unlike Bitcoin, uses Scrypt algorithm. It has been optimized in such a way that it is processor and GPU-friendly, so it’s a great solution for miners who want to shift between different coins. However, GPU mining is very unusual nowadays. The difficulty of Bitcoin mining increased so much when ASIC circuits have appeared that graphics cards are unable to keep up. If you want to begin GPU mining you need to acquire a motherboard which can support many drives in order to spare some money on the power supplying units for separate boards. FPGA Bitcoin mining FPGA is an integrated circuit which is supposed to be configured after being constructed, which means that it can be adjusted before getting connected to hardware. FPGAs are adapted to work in mines so they are much more efficient than CPU/GPU. Single FPGA circuits of higher quality are able to work in about 750 MH/s and it’s possible to place more than one circuit in a single set. ASIC Bitcoin mining And this is where the fun begins. ASICs are designed specifically to mine Bitcoins extraordinarily quickly at low power usage. Their production is both expensive and time-consuming, but the results are incredible. At this moment the hash rate of standard units on the market is from 5 to 500 GH/s. Sellers promise that ASIC circuits will have rate up to even 2 TH/s. In September 2015, 21 Inc released a “Bitcoin computer” which includes mining circuits and costs about $400, but it’s intended to be used by developers, not for profit.

Calculate the profitability of your mine.

Before you decide on which hardware you want to buy use a calculator, for example TradeBlock or bitcoinX. You can fill in parameters such as the cost of the hardware, hash rate, energy usage and current Bitcoin’s value in order to estimate how much time it will take to pay the investment off. One of the key parameters is the degree of difficulty of a network – it determines how difficult it is to solve blocks. Most probably it will increase along with the release of ASIC devices, so it’s worth to reconsider return on the investment when more people will join in. Use this guide to acquire more information and estimate the profitability of your mine.

Download software

Depending on which hardware you’ve chosen you will need adequate software in order to use it. In case of GPU and FPGA circuits you’ll need a hosting computer which requires two elements: standard Bitcoin software and search engine. This software will connect your computer to a network and allow it to interact with Bitcoin clients, transfer transactions and track blockchains. Downloading whole Bitcoin blockchain will take some time, but it’s required for the software to work. Bitcoin client will effectively transfer information between your mine and Bitcoin network. There are many options when it comes to software used to mine Bitcoins depending on whether you use Windows, Mac, or any other OS. You might need software for ASIC as well, but newer models are supposed to be pre-configured, so everything you have to do is connect it to electricity. One programmer developed a mining system based on Raspberry Pi, cheap computer of the size of a credit card which uses low amounts of energy. It can be connected to ASIC through USB in order to power it.

Join a Bitcoin community

Good for you, everything’s ready now. I’d bet that you think that you’re ready to mine more coins than you’d be able to handle, but, sadly, that’s not how it works. Your chance to succeed in mining Bitcoins is very low unless you start working with other people. You can learn more on that subject in our incoming guide on how to join a Bitcoin community.