The cryptosphere is growing every day, and most people have heard of Bitcoin by now. However, not many people know how to ‘mine’ Bitcoin. Mining is the process of solving cryptographic puzzles to add transactions to a blockchain. In a sense, miners play the role of a digital accountant. Bitcoin is a digital asset, with a high exchange value – meaning people buy, sell, and trade with it. A critical part of this space is transparency, and to achieve this, any transactions that are successful must be recorded on a blockchain.
When someone makes a transaction, it is broadcast to the Bitcoin network. This informs the miners that work needs doing. Then it is the miners’ role to solve the puzzles that allow transactions to be recorded. Their incentive for doing this is both the transaction fee offered by the person who wants their transaction recorded, and the Bitcoin reward that is granted to the successful miner(s). Currently, the reward is 12.5 Bitcoin. However, this reward is halved every four years. It began as a reward of 50 Bitcoin, dropping to 25, and now it is 12.5. In 2020, the reward will be 6.25 Bitcoin.
What do you need to begin mining?
- A cryptocurrency wallet or private database (to store your Bitcoin).
- A mining software package.
- Membership to an online mining pool. (It takes an enormous amount of power to successfully mine Bitcoin. Because of this, people tend to group together and share the amount of power across a number of computers. The reward is then split between members of the pool.)
- A full-time internet connection.
- A location to set up your hardware, preferably in an air-conditioned space.
- A desktop computer that is designed for mining with a powerful processor.
- Hash rate: Refers to the amount of power a miner uses to solve the mathematical algorithm that mines for the cryptocurrency.
- ASIC: Stands for ‘Application-Specific Integrated Circuit.’ These are integrated circuits (ICs) customised for a particular use, rather than for general purposes. A chip designed to run in a digital voice recorder or a high-efficiency Bitcoin miner is known as an ASIC.
- GPU: Stands for ‘Graphics Processing Unit.’ GPUs became the go-to option for miners when Bitcoin first gained popularity. This was because they are more efficient at mining than a CPU (Central Processing Unit). GPUs became outdated for the likes of Bitcoin when ASICs arrived on the scene. However, not all cryptocurrency requires ASICs to mine, so GPUs are still used in some instances.
- Command-line: A command line is an interface used for typing commands directly to a computer’s operating system.
- FPGA: Stands for ‘Field Programmable Gate Array.’ This device is commonly used in electronic circuits. They are semiconductors which contain programmable logic blocks and interconnection circuits. Also, they can be programmed or reprogrammed to the required functionality post manufacturing.
The best Bitcoin mining software
- CGMiner: This piece of software has been around for a long time. It is a cross-platform miner that supports Windows, Mac OS X, and Linux. It is compatible with ASIC and GPU hardware miners. (ASIC miners are amongst the most powerful hardware on the market, but note that they do not work with every cryptocurrency – for example, Ethereum. They do work well with Bitcoin, though.) CGMiner is a command-line application that has full monitoring, fan speed control, and a remote interface. It also comes with a scalable networking scheduler that can scale to a hash rate of any size without network delays. This is one of the best overall products on the market, but is not necessarily the easiest to use.
- MultiMiner: This piece of software is fantastic for ease of use. Mining software is often command-line based, such as CGMiner, which can be daunting for newcomers. MultiMiner, however, is a desktop application that is significantly easier to use if you are a beginner. Like CGMiner, MultiMiner is also compatible with Windows, Mac OS X, and Linux. It also allows users to switch between mining devices, such as an ASIC or FPGA, without much effort. Its system utilises an underlying mining engine to detect available mining hardware and then lets users choose the coins they’d like to mine.
- Miner-Server: The previous two entries on this list are common choices for people who are already invested in cryptocurrency mining. If you are still undecided and do not want to fork out money on expensive pieces of hardware such as an ASIC just yet, then cloud-based mining is an option for you. Miner-Server is one of the better pieces of software used in cloud-based mining. If you join with Miner-Server, you will be added to a mining pool, meaning the prize will be split if your pool is able to successfully mine. But, it is a cheap option to begin with. The base price is around $0.14 to join, so it is an ideal starting point for those wishing to test the waters of mining.
- BFGMiner: If you are one of those people who loves customisation, then BFGMiner is an option for you. It is a modular FPGA/ASIC miner that features dynamic clocking, monitoring, and a remote interface. BFGMiner has a built-in stratum and proxy server, and its code gives out work retrieval and work submission to separate threads. This ensures that working services are not hindered. If you are interested in BFGMiner, it is recommended you do further research as this product is very, very technical. If you are not confident with technical information, it would be best to avoid BFGMiner for now.
If you are interested in learning the technical information about the Stratum protocol, follow this link.
As always, do not rush into any purchases before you are happy with your desired product. Mining can be a very complicated process that requires you to have a solid foundation of the technical basics. Providing you understand common terms such as ASIC, FPGA, GPU, hash rate, and command line, then along with this introduction to some of the most popular mining software packages, you’re well on your way to mining your first Bitcoin.
For more information and guides from Coin Rivet, click here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.