Mining Cryptocurrencies

Cryptocurrencies like Bitcoin, well almost exclusively Bitcoin, have been getting some play time in the popular media. Hopefully you understand what they’re talking about, if not check back to my earlier post “A Change in Direction”. Now you might be asking yourself, “How do I get some?” One option is to “Mine” your Cryptocurrency

Mining Cryptocurrencies is essentially using electricity to generate Cryptocurrency. Not all Cryptocurrencies can be mined. For those that can, the process involves looking for a new block in the currency’s blockchain. The miner who finds the block is rewarded with some units of the currency.

The process of looking for a block involves math, complicated and difficult math. The sort of math that would take you or me 30-45 minutes to do by hand with a calculator. Additionally, the more miners doing the same math for a currency increases the “Difficulty” of the math. New or less popular currencies are easier to mine until they become more popular. The more miners or powerful mining hardware working away at the currency, the more the completion rate of the calculation must be slowed down to keep the reward rate stable. The “Difficulty” of the calculations is proportional to the “Hash Rate” of the currency’s network and must adjust to speed up or slow down the reward frequency.

Mining can be done on a computer’s CPUs, though the video card(s’) GPU(s), or with application-specific integrated circuit (ASIC) hardware.

CPU Mining

CPU (Central Processing Unit) mining is the easiest to write software and therefore usually the first option made available when a new currency is made available. It’s also extremely poor performing. By poor performing I mean the Hash Rate (Number of calculations performed in a second) is not high enough usually to pay for the amount of electricity used to run the CPUs. What? Why is that? Remember, “The process of looking for a block involves math, complicated and difficult math.” A computer’s CPU isn’t built for just doing math calculations. A CPU also responsible for sending commands to all the hardware in a system (network card, sound card, USB devices, etc.)

GPU Mining

GPU (Graphical Processing Unit) mining is a little harder to write software for because there are so many variations of Video cards. New CPUs are released every few years and the command structure doesn’t really change, just the speed at which those commands are executed. Additionally, there are only two CPU manufacturers (AMD and Intel). New Video Card Hardware is released every year, sometimes twice a year, and while there are two main video card platforms (AMD, and NVIDIA) the platforms are manufactured by 20+ different providers. GPU mining software must be compatible with several different versions of each platform’s hardware and updated whenever a new version is released. The payoff is a higher Hash Rate. Why are GPUs better for this? First, a GPU is engineered to do a lot more complex math. All those complicated lifelike video games you love, require a lot of math to display and manipulate the visual environment.

ASIC Mining

Application-specific integrated circuit (ASIC) are platforms where the Processing Unit is designed to perform only one action. In the specific case of Cryptocurrency mining, and ASIC miner is a chip that only has the instruction required to perform the complicated calculations for a designated set of currencies. These devices are the most efficient for mining Cryptocurrencies because they can’t do anything else like send commands to your hard drive or tell the back ground of a first-person shooter to move as you hold down the ASDW keys.

I will post a more in depth discussion about my personal experiences and the experiences reported by others in trying to use ASIC mining hardware. I will just provide this cautionary teaser: AMD, Intel, and NVIDIA are old, well established, insured, companies with large customer bases. Cryptocurrency ASIC manufacturers are largely new companies without any reputation or large amounts of R&D funds, and in many cases, no support whatsoever.

Up next, my fun experiences with ASIC miners and then a detailed guide into mining software.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/

 

 

 

3 responses to “Mining Cryptocurrencies

  1. Pingback: Adventures in Mining Bitcoin with ASIC Hardware | Wisdom from the Stache

  2. Pingback: Crytocurrency Mining Software and Pools | Wisdom from the Stache

  3. Pingback: Blockchain Rewards | Wisdom from the Stache

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