One of the most common questions that we have been asked at bitcoin meetups is, “What is bitcoin mining?” Well, here is a short guide to get you started. Keep in mind, at this point it is very difficult to make money mining bitcoins. That being said, you might want to try just for fun.
There are basically two main kinds of mining: solo and pool. Solo mining refers to practicing mining on your own. You don’t have help or assistance offered by anyone in this mining category. Though, it is a private and peaceful method and can help you earn a reward of a whopping 25 Bitcoins, it is indeed the harder of the two methods. It can take a solo miner numerous weeks, months or even years in earning actual Bitcoins as they are relying on their own hardware to accomplish the goal.
On the other hand, pool mining is a better and more convenient method of practicing mining. Using this method, you sign up with an account offered by any company that carries out groups of miners working together, and adding all their computational power, to solve blocks. Such companies have their own hardware and software and group together mining efforts and skills of several miners’ computers. Every miner gets a proportional amount of Bitcoins depending on how much computational power they provided to the pool. However, this is a better option for you as it increases your likelihood of earning more Bitcoins.
If you are interested in knowing more about mining pools a simple Google search will put you in the right direction.
There are mainly three categories of hardware for miners: FPGAs, ASICs and GPUs.
FPGA refers to Field Programmable Gate Array, which is an incorporated circuit that needs to undergo configuration after it is built. It allows a hardware manufacturer in getting a large volume of chips that can be customized for mining before they are placed in the equipment. Due to their customizable features, they help you mine better than GPUs and CPUs.
ASIC refers to Application Specific Integrated Circuits. They are specifically created for one purpose: mining Bitcoins at an escalating speed without consuming a lot of power. Due to their excellent speed and low consumption of power, these chips are quite costly. Their speed ranges from 5 to 500 Gigahashes per second, which is a huge amount.
GPU and CPU mining refers to mining using your own computer. This is an extremely slow type of mining as your computer does not have enough power and speed to practice mining at an increasingly fast pace. Adding in graphic hardware in your computer can increase the Bitcoin hash rate using your CPU. This card consists of graphical processing units (GPUs) that are created for enormous mathematical lifting that helps them calculate complex polygons. The two major vendors of GPUs are NVidia and ATI. These high ends are pricey but help you practice CPU mining expediently and at a good pace too.
You can choose any of these methods, which work best for you. Another issue you need to consider is whether you should buy your own rig or rent one. If you are a beginner miner, it is wise to rent a rig at first so you can find out how good you are at Bitcoin mining. Once you become an expert at it, you can purchase your own rig, as it will become an affordable option at that time. You won’t have any time constraints and would be able to use it at any time you want.