Cryptocurrency mining: what is it in simple words. Why are mining farms needed and why such computing power?
Money transfers as well as e-commerce now rely on various financial institutions such as banks, brokerages, investment and insurance companies, who act as trusted intermediaries for making payments. In the digital age, the number of payments has increased many times, but the payment scheme has remained the same. A trusted intermediary is needed to make the payment, but such a scheme entails certain problems.
The price of intermediaries’ services increases the cost of each individual payment, etc. the intermediary has a minimum cost to carry out the operation; it becomes impossible to conduct micropayments.
Also, a centralized trusted intermediary often acts as weak link in the payment chain, subject to hacker attacks and performing a huge number of checks on each payment, which affects the speed of payments.
In 2008, Bitcoin offered a solution, payment system, based on cryptography rather than trusting a third party. The main feature of Bitcoin is that for this digital currency to work, you do not need a bank or any other intermediary who can influence the process of money exchange, block it in any way, receive a commission, or start issuing an unlimited amount of money. This feature greatly influenced the popularity of this currency.
But if you remove the intermediary, then a problem arises - how then to ensure the safety of payments, as well as protect the entire system from outside interference?
Bitcoin offered a decentralized solution to this problem, based on timestamps on money transfers, as well as a complex cryptographic calculation mechanism known as “proof of work” that verifies and signs all transfers. Records of transfers in the Bitcoin system generated in this way cannot be changed without performing a huge number of calculations.
This cryptographic protection mechanism will be discussed in this article.
What is mining for? Who are miners?
Mining is the process of using the computing power of a computer (video card, processor or specialized devices) to ensure network security, verify the accuracy of money transfers and synchronize the data of all users.
In general, mining can be thought of as a data center, except that it was designed to be completely decentralized, with participants located in any country and no one person having control over the network.
The process is called mining, similar to gold mining, as it is the mechanism used to produce new cryptocurrency coins. But unlike gold mining, mining generates rewards in the form of coins in exchange for services to maintain the security and performance of the network.
Simply put, you perform all the checks with your computer, and for this the network rewards you with cryptocurrency coins. Then you can use these coins to pay on the same network, or exchange for paper money - dollars, rubles, etc. But a logical question arises: where does the security for these cryptocoins initially come from, so that they can be exchanged for paper money? The answer to this question has deep roots in economic theory, but in short it can be said this way:
- There are people who buy bitcoins. They buy a certain amount of bitcoins with paper money and use them as a means of exchanging goods and services.
- There are people who sell bitcoins after receiving them for goods or services
- There are people who mine, create bitcoins using mining. Mining, in turn, performs a number of functions - ensuring the security of all operations for buyers and sellers, checking transfers for fraud and generating new bitcoins. It turns out that the bitcoins created are incentive for those who mine and means for those who buy, sell, exchange.
This whole system is built in such a way that there are network participants, those who use cryptocoins, and there are those who maintain the network and create new coins (miners).
When you mine (create) a certain amount of crypto coins, you become the one who sells these coins. Mining acts as an incentive for everyone who wants to maintain the functionality of the network, receiving a reward for it. Due to this, the network becomes fault-tolerant, safe and cheap, which in turn encourages people to buy and sell crypto coins even more.
Many cryptocurrencies use mining. But initially there is a limit on the number of coins that can be mined, so over time, mining will be stopped, but mining will still be needed to maintain the network and the reward for mining will come from commissions for transfers.
The difficulty of mining also increases with each mined block; more powerful equipment is needed to mine new blocks. Therefore, many will unite in so-called mining pools, where one server combines the power of many computers into one and everyone receives a reward proportional to the power of their computer.
Who are miners? From all of the above, it becomes clear that miners are those network nodes that support the network and mine new coins, i.e. mining. A miner can be either one computer or a whole group of computers united in a pool. In this case, one superminer is the pool server, which combines all the computing power. He receives the reward and distributes it among all computers connected to him.
In mining, miners compete with each other to see who will be the first to take unconfirmed transaction, will check it for correctness, find the key to protect it and add it to the blockchain. The first miner to do this will receive a financial reward. You can read more about what blockchain is in the article “Blockchain - what is it in simple words”
It is worth noting that the mining process for different cryptocurrencies has its own nuances. Here we will look at how this process occurs in general, without reference to cryptocurrency, although most of the information will still be focused on the leading cryptocurrency by capitalization - Bitcoin.
Let's imagine that we have a network with its own cryptocurrency, consisting of many nodes. Each node is a network participant or simply an ordinary person with his own computer or smartphone.
In this network, everyone sells and buys crypto coins as payment for goods or services. For example, one of the participants A gives another participant B one pizza, for which B in turn pays A 5 crypto coins.
Other network participants do the same. They transfer money to each other for various services. An analogue could be a bank transfer for services, but in our case there is no central authority that accepts and sends transfers. Everyone is equal on the Internet.
But now another problem appears - for example, participant B can spend his money many times, after all, no one controls how much money B had, how much money he has. Of course, any participant can keep a journal in which he will record how much money B had and how much money he had when he made an exchange with him. For example, A can write down that B now has 2 crypto coins left after he paid 5. But not all network participants see that an exchange is taking place between A and B.
C and D do not see transactions because there is no central journal where all transactions would be recorded and everyone could see who spent where and how much. It turns out that B can transfer C 5 crypto coins and then transfer another D 5 crypto coins, although in fact he does not have that many coins.
This is a known problem of double spending. Maybe we’ll go back to centralized systems and be sure that our money is accounted for and is safe and sound? Are you sure that your money is safe under a centralized system? :)
Decentralized systems have taken a different path. They took a central node where everything was stored - all records of transfers, amounts, etc. and distributed these magazines among all participants.
But now it is necessary to maintain all these logs intact, i.e. make sure that no one “cheats” during transfers and does not attribute non-existent amounts to themselves. This is where mining and miners come into first place.
Not all nodes on the network are engaged in mining, but there is no limit on the number of miner nodes. Typically, the average cryptocurrency network is divided into “thin” and “thick” clients. “Thin” nodes are nodes that do not engage in mining, but simply make transfers from a wallet to the wallet of another node. These thin clients simply use the network as a medium of exchange. “Thick” are servicing nodes, nodes that are engaged in mining, essentially miners.
So how do miners maintain the network and all the checks discussed earlier? The software of this network, which is used by all participants without exception, is written in such a way that all new requests for transfers cash First of all, they are sent to miners. For example, A transfers 5 crypto coins to B. This transfer transaction is sent to all(!) miners in the network.
Why everyone, and not just the one next door? The security mechanism discussed below requires such operating logic.
So the transaction is sent to all miners. They do several things:
![](https://i0.wp.com/bcinfo.tech/work_image/mining/img10.png)
Now B contacts the nearest miner, copies the log to himself and sees that the log contains an entry about the transfer of 5 crypto coins from A to B.
It may seem, how does such a system differ from the usual centralized one? If all the same, miners act as central authorities. But in reality this is not entirely true. All network nodes can (and according to some technical documents should) be miners. This means that an individual miner cannot make changes without the consent of other miners and is not a center, but simply another node, which any other node can become instead of it.
If A, B or anyone else tries to make unauthorized changes to the log, they simply will have no effect and will be rejected by the network, because all changes are made by miners, and miners themselves cannot add anything to the logs themselves, but constantly “check” these logs with each other.
The most recent and “fresh” log is copied by all network participants when contacting the nearest miner. Thus, all participants have the latest version of the journal and cannot make changes to it themselves. To do this, they need miners, and compromising one miner will not give an attacker anything, because the network accepts transactions by a majority vote and a hacked computer of one of the miners will also not be able to harm the network.
In order to make changes to the log, we need to repeat all searches for secret keys up to the transaction we need, but since even one calculation can take considerable time and require significant resources, repeating all calculations can require a huge number of calculations that were previously made by all miners networks.
It is impossible to steal money from a chain of transactions under such conditions, unless you have the computing power of all the miners on the network multiplied by the number of calculated blocks in order to do this in an acceptable time.
By journal, in this context of conversation, we mean, of course, blockchain.
As a result, what we have. All network participants have journals with records and see the status of the accounts of all other participants, and now if A tries to transfer to B a non-existent amount of 1000 crypto coins, the network will simply reject such a transfer after all checks.
All this is done through special software that is installed at each network node. It will not be possible to use some of your own software, since the network will also reject all transactions from this node, seeing a “stranger” in its ranks.
The source code of the software that powers the network is usually open source and available to everyone. Everyone can make sure that there are no secret money transfers or eavesdropping in the code. Also, each developer, if desired, can join the development of the program or on the basis existing code create your own cryptocurrency (which, by the way, is what we are seeing now with all the variety of cryptocurrencies).
Thus, mining and miners act as a distributed, decentralized regulatory authority in the network. In this situation, security is controlled by mathematical algorithms, excluding the human factor. In this model, without the desire of transaction participants, no third party can interfere with them, impose their services, or block or confiscate other people’s funds. Even if we assume that attackers will still be able to hack the entire network and take control. The value of such a network will instantly fall and it will simply not be profitable for an attacker to use the network.
The desire to earn money drives miners as the “invisible hand” of the market and is an incentive. Thus, by making money from mining, without even delving into the essence of this process, they strengthen the security of the network, maintain it and make it more stable.
Mining of popular cryptocurrencies - Bitcoin, Ethereum, Ripple, Monero, etc.
A few words about mining famous cryptocurrencies.
Mining Bitcoin
Classic Bitcoin is mined using the SHA-256 algorithm. Initially, the processor of a regular personal computer was used to mine Bitcoin. But when high-performance video cards appeared on the market, mining on processors became impractical. The complexity of the network increased very quickly and the number of bitcoins obtained when mining on a processor became less expensive than the cost of electricity when using a processor. Video cards were powerful processors specifically for calculations using the SHA-256 algorithm.
Then replace the usual GPU mining FPGA mining came - mining on a special programmable chip that consumed a very small amount of energy with relatively high performance.
Further, FPGA chips were replaced by special integrated circuits (ASIC devices), which were designed by the manufacturer specifically for mining using the SHA-256 algorithm. The ratio of electricity consumption to performance in such devices is very high, which gradually reduced the efficiency of mining on video cards and FPGA chips to zero, just as video cards replaced processors at one time. Now the most effective ASIC devices for mining with the highest performance are: BITMAIN AntMiner S9, BITMAIN Antminer T9, BITMAIN AntMiner R4, Canaan Creative Avalon 7, BITMAIN AntMiner S7, Canaan Creative Avalon 6.
For Bitcoin there is also cloud mining and joint bullet for mining.
Mining Bitcoin Cash (BitcoinCash)
Bitcoin cache is mined using the SHA-256 algorithm, just like classic Bitcoin. This cryptocurrency is a branch (fork) from the main Bitcoin. After its appearance, some miners and pools switched their capacity to mining this currency, as a result of which the difficulty of mining increased.
This cryptocurrency has introduced several innovations to the classic Bitcoin, but the mining process remains the same as that of the classic Bitcoin.
For mining Bitcoin Cash, just like in Bitcoin, specialized ASIC devices are used: BITMAIN AntMiner S9, BITMAIN Antminer T9, BITMAIN AntMiner R4, Canaan Creative Avalon 7, BITMAIN AntMiner S7, Canaan Creative Avalon 6.
Mining Ethereum
Ethereum mining is carried out using the Ethash algorithm, which is a modified version of the DaggerHashimoto algorithm. For mining, video cards and processors are used, as well as specialized software, the most popular of which is Claymore Miner.
Most efficient video cards on at the moment for mining ether: NVIDIA GTX 1080 Ti, AMD R9 390, AMD RX 480 8GB, NVIDIA GTX 1070, NVIDIA GTX 1080, AMD RX 580 8GB.
Each miner who generates a block once every 12 seconds receives a reward of 5 ether coins. Before mining can begin, the miner's computer must create a "DAG" file, which is a special data structure for the Ethash algorithm that prevents the use of ASIC devices, making the Ethereum network more decentralized with a large number miners. Creating the file takes about 10 minutes.
The Ethash algorithm requires memory to accommodate the DAG file, currently about 2 GB of RAM if mining occurs on a processor or 2 GB of video memory on a video card.
The Ethereum network also implements smart contracts, which are used to create automatic conditions and enforce them within the network.
Mining Ripple
Ripple does not use mining. A small portion of the cryptocurrency remains with RippleLabs. The remaining part is purposefully distributed to individual segments of its target audience in the form of grants and sponsorships. Everything that is sold on exchange exchanges is used to conduct exchanges on the Ripple network.
Mining Litecoin
Litecoin mining is carried out using the Scrypt algorithm. Scrypt's hashing function was specifically designed to make it more difficult to create ASIC devices by increasing the amount of resources required for computation. The Scrypt hash function uses SHA256 as a routine, relying on a lot of arithmetic calculations, but also requiring fast access to large amounts of memory, making running multiple instances of Scrypt on a modern graphics card a bit more challenging. This also means that the cost of producing specialized ASIC mining hardware will be significantly higher than the cost of manufacturing similar devices for SHA-256
Litecoin is a fork of Bitcoin, just like Bitcoin Cash. In the Bitcoin and Litecoin networks, data on the blockchain is recorded in an identical way. The main difference between Litecoin and Bitcoin is that transaction confirmation is faster and data storage efficiency is improved.
Each miner who generates a block once every 2 minutes receives a reward of 25 litecoins.
For Litecoin mining, you can use processors and video cards, but the following equipment has the best efficiency indicators: Antminer L3+, Innosilicon A4 Dominator, Innosilicon A2 Terminator, Gridseed Blade.
Software that can be used for Litecoin mining: sgminer, cgminer, cpuminer, cudaMiner, GUIMiner-scrypt, BFGMiner, MultiMiner, ScryptMiner GUI, Reaper.
Mining cryptocurrency Dash
Mining dashes are produced using the X11 algorithm. The X11 algorithm is a combination of 11 cryptographic algorithms (blake, bmw, groestl, jh, keccak, skein, luffa, cubehash, shavite, simd, echo), hence the name X11.
Dash is also a fork of Bitcoin. In January 2014, Evan Duffield created XCoin as a fork of Bitcoin. In February 2014, the cryptocurrency was renamed DarkCoin, and only in March 2015 the words Digital Cash became Dash.
Each miner who generates a block once every 2 and a half minutes receives a reward of 1.8 dashas.
Today, it is better to use specialized equipment for dash mining: X11 miner 450M PinIdea Dr2, iBeLink DM384M X11, Baikal X11 ASIC Mini Miner, Baikal X11-X13-X14-X15-Qbit-Quark ASIC Mini Miner.
Mining pools for DASH: DASH.SUPRNOVA.CC, SUCHPOOL.PW, COINOTRON.COM, LTCRABBIT.COM, COINMINE.PL, CYBTC.INFO.
Mining cryptocurrency Ethereum Classic
Mining Ethereum Classic is done using the Ethash algorithm, just like regular Ethereum. Video cards and processors are used for mining. The most effective video cards at the moment for Ethereum Classic mining: NVIDIA GTX 1080 Ti, AMD R9 390, AMD RX 480 8GB, NVIDIA GTX 1070, NVIDIA GTX 1080, AMD RX 580 8GB.
Each miner who generates a block once every 14 seconds receives a reward of 4.85 ether coins.
Mining cryptocurrency Monero (Monero)
Monero mining is done using the CryptoNight algorithm. All operations in this cryptocurrency are obfuscated - all transactions in the system are anonymous. The total emission is not limited, as in Bitcoin. The Monero mining algorithm is different in that it heavily uses the AES instruction set for x86 microprocessors and a large amount of memory, which makes GPU mining less efficient than Bitcoin.
Each miner who generates a block once every 2 minutes receives a reward of 6.3 monero.
You can use processors and video cards for mining monero, but the following equipment has the best performance indicators: AMD R9 390, AMD R9 Fury Nano, NVIDIA GTX 1080 Ti, AMD R9 290X, AMD RX 480 8GB.
Mining cryptocurrency zetcash (Zcash)
Zetcash mining is carried out using the Equihash algorithm. Equihash is quantity sensitive RAM proof-of-work algorithm, which means that mining performance is largely determined by how much RAM you have. It is unlikely that ASIC hardware will be created for mining in the foreseeable future.
Each miner who generates a block once every 2 and a half minutes receives a reward of 10 zettcash.
For Zcash mining, you can use processors and video cards, but the following equipment has the best efficiency indicators: NVIDIA GTX 1080 Ti, NVIDIA GTX 1080, NVIDIA GTX 980 Ti, AMD R9 Fury Nano, NVIDIA GTX 1070, AMD R9 390, AMD R9 290X.
The Internet, which was created by American military scientists to transmit highly classified information, now provides users with virtually unlimited possibilities. Here they communicate, meet, live and even earn money. More recently, the newest system has appeared, with its own currency and rules - this is “Mining”. It quickly gained popularity, since it practically does not require constant presence and participation. So what is mining actually? What does it need and how does it work? What is the best way to set up a business: join a community or start it yourself, investing only your efforts?
What is this system online earnings? If we talk about the literal meaning of the word “mining”, then this is the extraction of various minerals. But on the Internet, this is the process of obtaining virtual cryptocurrency. It covers not only finance, but also various elements of programming. In this case, almost everything depends on the installed video card and processor.
The answer to the question of what mining is and how to make money from it depends on how knowledgeable you are about your own work. computer equipment and the process of transmitting information over the Internet. The basis of this system is the generation of individual parts by building a hash.
In other words, the essence of mining is that many computers not connected to each other solve various mathematical computational problems through a special program. As a result, bitcoins are created, which are transferred to the miners themselves for the work done.
History of origin
The most interesting thing is that, despite global recognition and popularity, Bitcoin mining has a rather dark past. Even now, almost no one knows who exactly and when exactly invented this financial computing system. In addition, over the past few years, many versions of a possible origin have appeared. However, there are also indisputable and generally accepted facts.
It is believed that for the first time it was possible to earn several units of this cryptocurrency back in 2008. Initially, the miner was a certain Satoshi Nakamoto, a Japanese. Although some argue that this is just a fictitious person, but in fact, the first miners were several people at once. At that time, a certain file appeared on the Internet, which carefully described the structure, protocols and principles of operation of the peer-to-peer system. And in 2009, the first full-fledged client was presented.
In a fairly short time, this type of income has gained many fans and followers. But it is worth noting that in some countries, such as Thailand, cryptocurrency mining has been banned.
Basic rules
As in every professional system, there are several formative principles that make it so unique and interesting. So, what mining is can be understood by familiarizing yourself with its basic provisions:
![](https://i2.wp.com/fb.ru/misc/i/gallery/19074/403393.jpg)
Specialized mining equipment
One of the main rules of a successful and profitable business is investment. After all, if you don’t ensure the case good start, then all efforts will practically be in vain. This is why bitcoin mining requires significant investment in equipment. In this case, you can go in two ways: buy a specialized ASIC complex or buy all the elements separately. The first method will provide greater productivity, while the second method turns out to be much cheaper.
ASIC is a specialized system created by student Yifo Guo. Its value and high efficiency lies in the fact that it solves one specific problem - calculating hashes. In addition, it is quite compact and unpretentious. But such a system is very difficult to obtain, because it is quite expensive, and the order will have to wait up to several months.
Standard equipment for mining bitcoins
If you choose a more budget option, then you will need the following tools for mining:
- Motherboard.
- Video cards (preferably several).
- Powerful processor.
- Power unit.
- Capacious hard drive and additional memory.
- Cooling system.
- Riser extension cables for additional video cards.
The challenge is to keep it all in line with the latest technologies and trends. Many? What did you want? What is mining without investment? Zero without a stick.
Required settings
To mine bitcoins, not only the latest computer equipment is used, but also special programs. For example, Bitcoin or CGMiner. But! For them to work correctly, you need to set the appropriate settings. This will help significantly improve the productivity and efficiency of the process.
Setting up mining is very important, requiring some adjustments to the operation of the equipment:
- I is the loading intensity of the video card. It is recommended to increase from 9 to 20 points, depending on the power of the equipment used.
- Thread-concurrency. This is the number of calculations.
- G - number of threads. It is optimal to set the value from 2 to 10.
- Gpu-engine. The frequency depends on it graphics core. The optimal size is 900-1500.
- Gpu-powertune. Power consumption of the video card used. Value from - 20 to +20.
- Gpu-fan. Fan cooling. It is recommended to set it at 85%.
- Gpu-memclock. This is the frequency of the video card RAM - 1500.
These are almost all the necessary parameters. They directly depend solely on the power of the selected equipment.
Mining "Litecoins"
Bitcoins are not the only virtual money that can be mined using special equipment. This is due to the fact that over time, mining cryptocurrency, due to many features, becomes more and more difficult. Therefore, more and more new financial units are being invented. Litecoin mining, like Bitcoin mining, has the same operating principle. But there are several significant differences:
- The technology for calculating blocks depends less on the video card than on the amount of memory and power of the processor used. Therefore, you can use completely ordinary computers, practically without spending money on
- The difficulty of mining litecoins, unlike bitcoins, can not only increase over time, but also significantly decrease. This allows you to mine more litecoins with the same equipment.
- The process of calculating this cryptocurrency is much faster, which means the user earns significantly more real money.
Despite the obvious benefits compared to bitcoins, litecoin mining began to lose ground. Now getting money is almost as difficult.
Solo mining
The name of this online earnings fully corresponds to its essence. Solo Bitcoin mining is the process of solving various cryptographic equations entirely alone.
The process of mining virtual currency is carried out through pooling, where several dozen or even hundreds of people united by one network build the correct hash. Also, those who have their own mining farm can work independently.
Each option has its pros and cons. It is worth noting that one can save a lot on the organization, since pools take a certain percentage for each transaction. However, solo mining requires fairly powerful computer hardware. And only a fairly wealthy person can afford it.
Pros and cons
Before engaging in such a popular activity, you should carefully weigh the pros and cons. On to the pros this method can be attributed:
- It does not require personal intervention. You can simply download the program and calmly go about your own business while the computer earns money. And the faster the mining speed, the more money you will have.
- Production depends only on the power of the equipment used.
- All mining programs are carefully checked for viruses, and therefore they are absolutely safe for your computer.
- Each pool has an affiliate program, thanks to which you can invite friends and earn a certain percentage from it.
- Payments can be received in several ways, and you can withdraw absolutely any amount, even a small one.
The disadvantages of this program include:
- Every year the extraction process becomes more and more complicated, and therefore requires more and more powerful equipment.
- Cryptocurrency is also subject to influence from external global money markets.
- There are some internal problems, for example, there is no clear regulation of the exchange of litecoins and bitcoins.
The most popular cryptocurrency payment systems
Pay Per Share. There is a fixed fee for each transaction. Great for intermittent mining. The only drawback is the rather large commission.
RBPPS. It differs in that the reward is credited only after checking the correctness of the calculations. Accordingly, the commission here is quite low.
PPLNS. This is payment for the last few operations that took place in the last round. Used for continuous mining. The system works only for found and accepted blocks.
If you are interested in modern computer equipment or even just regularly watch the news on TV, then, of course, you have heard about cryptocurrencies and mining. But what kind of beast is mining anyway? All these strange people "miners" who buy video cards in bulk and assemble them into so-called "farms", - who are they?
This is undoubtedly a very interesting question that worries people who are not initiated into this topic. After all, whatever one may say, today cryptocurrencies and mining already have quite a strong influence on our lives. Even if we put aside international financial relations as a topic of little interest to most people, the incredible shortage of powerful video cards and their rise in price greatly affects many of us. Be it enthusiastic gamers or schoolboy Petya, who went hungry for six months, collecting money for school lunches in order to buy a powerful card for a new game, and now is forced to collect for the same amount of time. Even just parents who wanted to please their child New Year, but now they can’t do it because the purchase is beyond the budget. The shortage has hit everyone, including the miners themselves, who are now much more expensive to update their equipment.
But what do mining farms calculate? What are all these sacrifices for? Most people are very far from this topic, some only guess how it all works, and some build conspiracy theories about supercomputers. What calculations take place during mining and why mining is needed at all is a rather interesting question, but in reality everything is much simpler than it seems. Sit back, in this article we will look at this question, and also talk a little about mining in general.
Mining farm as a new device in the world of computer technology
We think it's best to start the explanation with a very simple analogy. We all know what the Internet is, we all use it every day. But the Internet is not a thing in itself; for its functioning it requires servers that are scattered all over the world and store certain information. It’s the same here: mining farms act as a kind of analogue of a server for cryptocurrency, although their main task is not storing information, but computing operations.
Now, in addition to Bitcoin, there are many different cryptocurrencies on the market, and they all have different requirements for the necessary equipment. While the cryptocurrency is young and the complexity of its blockchain is low, operations for its functioning can be carried out at home personal computer. But over time, the complexity of calculations increases and a conventional computer becomes insufficient, and this happens in the vast majority of cases.
Resourceful people came up with the idea of using ordinary gaming video cards for these purposes, since the architecture of their chips is much better suited to the needs of calculating cryptocurrency blocks than central processing units, which means that at the end we get a huge acceleration in work. It is believed that video cards in mining are now the top devices, and it is very difficult to argue with this. Mining equipment based on video cards is assembled for pennies and in modern realities pays for itself quite quickly. In addition, if the situation on the cryptocurrency market is such that it becomes unprofitable to maintain a farm, video cards can always be sold ordinary users, which cannot be said about some special equipment.
Thus, the mining farm has become a new device in the world of computer technology and is now very popular. Of course, due to the rise in the value of almost all cryptocurrencies, there has been an unhealthy hype around video cards, which means that manufacturers are forced to raise prices in order to reduce the risk of losses to zero in the event of a massive return of cards. This is due to the fact that not all miners operate their cards in the conditions in which they should be used. They often work in attics, basements with high humidity, or in close quarters, where the temperature is much higher than normal, which cannot have a positive effect on the operation of the farm. But a guarantee is a guarantee, so the manufacturer must still return the money for the failed card.
This begs the question: is mining in modern realities or is it not worth even trying? Well, this article is not entirely about that, and a more narrowly focused article will better explain everything to you. However, it is worth saying: in order to mine, you essentially do not need a large farm, at least not immediately. If you still decide to try to join this “celebration of life”, then it is quite reasonable to first use your game card, which you already have, just to find out what it is. Perhaps this is not your topic at all. But if you like it, then decide whether to invest additional money or not.
What is mining and what problems are solved in it?
Now let's get to the fun part. The topic of what kind of calculations miners make on their home farms looks very foggy and shrouded in darkness. This mystery has prompted many people to build conspiracy theories and conspiracy theories.
And indeed, if you think about it, the world’s most powerful Chinese supercomputer Sunway TaihuLight has an approximate computing power of 93 Petaflops, and one GTX 1080Ti video card has 0.0106 Petaflops. This means that the supercomputer is equal in power to the 8774 GTX 1080Ti. Agree, this is just funny. In one Moscow region, the total number of miners significantly exceeds this capacity, to say nothing of the miners all over the world, of which there are now simply an incredible number. Well, all this can’t just happen. Isn't it true?
A variety of assumptions have been put forward, they say, this is all a planned action, and cryptocurrencies were invented to lure people into providing interested parties with a “free supercomputer”, and when the task is completed, they will all depreciate sharply. As for the calculations themselves, it’s even more fun: some think that this is how they calculate the possible damage from nuclear explosions at the start of a large-scale war, others assume that new types of weapons are being developed this way, and so on and so forth. But if you look at all this with a sober look from the outside, then this, of course, seems no less nonsense than talk about Nibiru and reptilians on REN-TV.
As we wrote above, mining equipment helps the functioning of the cryptocurrency blockchain network. Namely, it helps to solve math problems cryptography It is precisely because this system is built on the principles of cryptography that this type of electronic money is called cryptocurrency. Yes, yes, you understood absolutely correctly, in fact, this system is a close relative of Web Money, Qiwi, Yandex Money and other similar systems. Using cryptocurrencies, you can carry out transactions for the purchase, sale or exchange of goods in the same way, the only difference is that this system is completely decentralized and does not depend on the banking system of a particular country.
Due to the fact that cryptocurrencies do not depend on states, transactions are carried out very quickly and with the lowest possible commission, and the emission of funds is several times less than emission and inflation paper money. But there are also disadvantages to such a system: since it is completely decentralized from banks and states, its functioning requires separate resources and equipment.
This is how we very, very smoothly approached what specific problems the mining equipment solves. As we already understood, computing power is needed to conduct transactions within a cryptosystem. It is this power that miners provide, confirming transactions. In other words, the miner acts as a kind of digital notary who confirms the validity of the transaction and stores it in the system. The system itself is built on a blockchain, consisting of individual blocks, which, in turn, consist of the sum of the hash, which includes all transactions for certain time and random numbers for system security. It all looks quite complicated, but if you look at it, it’s not at all like that.
Mining calculations are distributed among all participants, who close blocks of transactions. But if everyone wrote the same blocks, then sooner or later chaos would occur in the system. Therefore, each block is assigned its own unique, so-called “beautiful” hash, which the miner must find. This simultaneously serves as proof of work and ensures the reliability of transactions. Since the miner receives a reward for each block, the complexity of the calculations in the system increases with each closed block. This is done so that over time the issue of currency does not grow exponentially and stability is maintained. Also, the complexity of the system increases if the number of participants increases, and the reward is divided between them in accordance with the invested computing power.
Thus, today’s number of miners is explained by the banal desire of people to make money popular topic. However, if suddenly mining cryptocurrencies becomes not very profitable and some of the participants leave, this does not mean that transactions will become slow and the system will collapse. The system protects itself and in the event of a decrease in computing power, the complexity of the network will also decrease, thus always maintaining the level of complexity that will allow closing a data block in the allotted time.
How do miners make money?
We have explained what miners calculate, now it remains to talk about how they earn money. As mentioned before, the reward is credited to participants for each found (or in other words, open, closed) block of transactions within the blockchain. Typically, the block time and reward for it are fixed, for example 10 minutes and 50 cryptocurrency coins. These indicators vary from currency to currency, but the essence remains the same. The younger the cryptocurrency, the less computing power is needed to find a block, but the more popular it becomes and the more it acquires new participants, the more complex the system becomes, and eventually there may come a time when the computing power of a single miner is simply not enough enough to find the required hash value in the allotted time.
In such cases, miners are united in so-called pools. In a pool, all “miners” combine their efforts to find one block, and the reward received for it is divided among themselves equally according to the provided computing power. Nowadays, the vast majority of miners use this method, since it is much simpler and more profitable than buying additional equipment yourself.
To take advantage of this advantage, you need to determine whether it is more profitable to mine on your farm, and then simply apply to join the pool. It is usually best to choose the pool with the highest capacity. These pools don’t always want to acquire new members, but in most cases you will be welcomed with open arms. Exactly how much money a farm will bring depends only on its computing power and the total power of the pool. The higher these indicators, the higher the earnings.
But we know that most of you are interested in specific earnings figures for cryptocurrency miners. It's very important role depends on the difficulty of production and the exchange rate relative to the US dollar. When the complexity is optimal, and the rate is constantly growing, then the earnings of the average home “farmer” can be 20–30 dollars a day. When the exchange rate falls and the complexity increases, earnings can drop to 3-4 dollars a day or even lower. Most miners are very dependent on the payback time of the equipment, since they buy many cards at once and are forced to update them from time to time.
Bitcoin mining
Bitcoin is the first and most popular cryptocurrency in the world. At the start in 2009, only five cents were given for one Bitcoin, in 2013 - already about a hundred dollars per coin. And now the price of this coin is breaking all conceivable and unimaginable records, it is becoming more expensive every day and already costs more than fifteen thousand dollars.
At first, Bitcoin was very easy to mine, but as the currency grew in popularity, special chips called ASICs were invented. They were created only for the purpose of mining Bitcoin, therefore, thanks to such a narrow focus, they were much more powerful not only than conventional processors, but also video cards. Over time, enterprising guys began to build entire hangars with miners on ASIC systems and very soon forced ordinary home miners on video cards out of the market.
Now, due to the complexity of the Bitcoin system, mining it on video cards is completely unprofitable. Nobody forbids an ordinary miner to buy an ASIC farm, and many do so, but the price for them is very high, and in the event of a collapse in the currency exchange rate, such a “farmer” can quickly go to the bottom.
We will not tell you what exactly is calculated when mining Bitcoin, since in the given examples, by and large, it was its model that was described. It is only worth noting that the Bitcoin encryption algorithm is called SHA-256 and is used in a large number of cryptocurrencies built on its prototype. This algorithm was written by the US National Security Agency long before the advent of Bitcoin itself and was used as a mechanism for encrypting websites using the SSI security protocol.
Ethereum Mining
The second most popular cryptocurrency after Bitcoin is Ethereum. This is a fairly young project, and it was born quite recently - in 2015. It was the sharp rise in price of this coin at the beginning of 2017 from eight dollars to two hundred that is the reason for the massive loss of video cards from store shelves. Since the cryptocurrency is young, it was mined very well on video cards, but now that everyone has rushed to mine it, the complexity of the network has increased greatly.
Unlike Bitcoin, Ethereum mining is still available on graphics cards and will be relevant for some time. The reason for this, not least of all, is the lack of ASIC chips for Ether.
The mathematical problems that are solved when mining Ethereum are very similar to the problems solved in Bitcoin. These are all the same openings of new blockchain blocks to confirm transactions. The main difference between the systems is that Ethereum uses the new DaggerHashimoto algorithm. The algorithm works like hashing the metadata of the last block of the system, for which a special code called Nonce is used. Nonce represents the usual binary number, which sets unique value hash. Selecting a “beautiful” hash is now possible only by methodically searching through all possible options. This hashing option greatly complicates encryption and requires a large amount of memory. In this regard, the introduction of ASIC systems into Ether mining becomes very complicated, which will undoubtedly have a positive effect on the decentralized cryptocurrency.
Mining other cryptocurrencies
Of course, Bitcoin and Ethereum are not the only cryptocurrencies on the market. Today there are almost a hundred other cryptocurrencies. However, not all of them are as successful and worthy of attention. Therefore, we present to your attention a list of the ten most worthy and interesting, in our opinion.
![](https://i0.wp.com/cryptomagic.ru/wp-content/uploads/2017/12/2017-12-19_194924.png)
Basically, all presented cryptocurrencies operate on the same principle, which has proven itself well since Bitcoin. In most cases, they differ from each other only in the encryption algorithm and some improvements compared to their ancestor.
The only fundamental difference between the coins can be considered the use of POW (proof of work) and POS (proof of ownership) systems. Some of the presented cryptocurrencies require calculations using the POW system, that is, robotic proofs, this is classic mining. And some, like NEM, are built on a POS - proof-of-ownership system. In this case, an ordinary computer will be enough for mining, but you will need to buy a certain amount of coins first. In any case, to make money on cryptocurrencies, it is better to choose one that demonstrates slow but stable growth.
Where does cryptocurrency come from?
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The process of issuing bitcoins is called “mining” - the only way to obtain cryptocurrency, built on computers solving mathematical problems.
How do miners work?
The essence of mining is that computers located in different points Earth, solve mathematical problems, as a result of which bitcoins are created. The process of their extraction is not controlled by a single issuing center, and distribution ensures safety.
All Bitcoin transfers are recorded in a publicly accessible transaction log. They are passed along the chain to miners, whose job is to select from millions of combinations a single hash that is suitable for all new transactions and secret key, which will ensure the miner receives a reward of 25 bitcoins at a time. Many “miners” simultaneously compete for the reward, trying to be the first to guess the hash. Once the hash is guessed, the block with all transactions is closed, miners move on to the next one.
The hash that miners look for consists of the hash of the previous block, the sum of the hashes of transactions over the last 10 minutes, and a random number that the miners change so that the final hash satisfies the conditions of the system. It is the change in these conditions that determines the difficulty of finding a hash; they change once every 2016 closed blocks and are automatically selected so that the calculation of every 2016 blocks takes 2 weeks.
After 6 blocks in a row have been calculated, money transfers, included by miners in the very first of these blocks are considered confirmed, however, many stores consider the calculation of one or two blocks involving the desired transaction to be a sufficient condition.
Miners can be compared to those who distribute a file on a closed torrent tracker. They are the ones who ensure the operation of the p2p network - they give anyone the opportunity to download a movie or music album, receiving a rating for it, and, therefore, the opportunity to download files from others in the future. In the case of Bitcoin, miners, who play the role of “distributors,” maintain the operation of the monetary system: they conduct transactions and maintain an “agreement” on a single state of the entire network. Only for investing resources they receive not an ephemeral rating, but bitcoins, easily convertible into real money.
Helmet and pickaxe
The difficulty increases as more and more effort is spent on mining - more and more power is brought into play. Initially, simple mining was enough home computer, then “digital miners” moved on to calculations on top gaming video cards, and then even to specialized devices for mining. At first these were simply reprogrammed chips, and then ASICs, special-purpose integrated circuits, characterized by high hash calculation speed and low power consumption, came into use.
For example, the power of one Radeon video cards The HD 7990 (Nvidia solutions are not suitable for mining) produces 1.2 gigahashes per second with a consumption of several hundred watts, and a modern Red Fury ASIC system costing $125 already generates 2.5 gigahashes per second with a consumption of 2.5 watts. Almost no one is engaged in mining without using ASIC anymore, since it is not commercially profitable.
After purchasing hardware, the miner’s business actually consists of wasting electricity in exchange for bitcoins (Internet bills in this case are quite small, since it is enough to work minimum speed- as long as the connection remains stable). The cost of mining one bitcoin can be 900 rubles or 20,000 rubles, depending on the equipment used and tariffs. In 2011, the purchase of a top-end gaming video card for mining paid for itself in about two weeks, but as the complexity of the calculations grew, it became increasingly expensive to mine bitcoins alone.
Therefore, miners began to gather in pools that unite several tens, hundreds or thousands of “miners” into a single link: if a block is successfully found, each of them receives their share in accordance with the size of their contribution to the common cause. The system sees the pool as one miner producing hundreds of gigahashes per second, but in practice it is a main server that distributes tasks to the miners included in its pool. Unlike solo mining, mining within a pool brings in funds faster, but does so in small portions.
In recent months, stories about unique Bitcoin farms have increasingly appeared in the media, the largest of which is located in Hong Kong. On November 25, a factory was launched there with liquid cooled, the power of which was 4% of the total power in the network - 35 terahash per second. It produces about 26 bitcoins per day, which is tens of thousands of dollars at the time of writing. And in April 2013, Kaspersky Lab announced the discovery of a Trojan that turns users’ computers into Bitcoin farms without their knowledge.
The development of human civilization cannot be imagined without money. Without this universal measure of the cost of goods and services. Various objects have been used as money at every stage of human development, such as weapons, stones, food and goods, and finally coins and banknotes. But the process cannot be stopped, and in the 21st century electronic money has become the main one. Nowadays, the wallet contains mainly plastic cards, and on the Internet there are many payment systems, for example, PayPal or WebMoney, created exclusively for electronic purposes. But they can also give way to the leadership of new “money” - cryptocurrencies.
What is cryptocurrency?
Cryptocurrencies were originally intended to pay for goods and services, and are no different from traditional money. The main difference, besides complete anonymity of payments, is method of receiving (issuing) new monetary units And structure of their storage and payment network.
Cryptocurrencies do not have a single bank or issuing center, and all monetary units are stored in the crypto wallets of network users. This is how they fundamentally differ from other payment systems. Crypto wallets are combined into a single network “bank”, and payments are made directly between users without any intermediaries, while maintaining maximum confidentiality. In addition to a new method of storing funds, cryptocurrencies also offer new way issuing monetary units using mining.
Cryptocurrency mining
So, we decided to start mining. What is it and how to make money on it? Mining is nothing more than the process of creating new crypto coins using a special algorithm. All cryptocurrencies are based on the algorithm of the well-known Bitcoin, and new crypto coins are issued to whoever finds a new one block - a unique set of data to confirm the authenticity of payment transactions. The speed of finding and the number of reward crypto coins are different in each currency; in the Bitcoin system, the current reward is 25 bitcoins for one new block. Mining software is downloaded from official cryptocurrency websites.
How to start mining
Theoretically, the process of searching through possible block options can occur on any computer equipment, but in reality, the mining speed directly depends on the power of the equipment. All cryptocurrencies have a special parameter called complexity, which constantly increases and makes it difficult to find a new block. To generate cryptocurrency, special conventional units of measurement have been introduced, called hash. Mining hardware power is usually measured in megahash (MHash) And gigahashah (GHash). Since the complexity of mining the most expensive cryptocurrencies has long been unattainable on a single computer, they are used to search for new blocks. farms and mining pools.
Mining farms
Mining algorithms are quite specific and require computer equipment multiple support parallel computing. Mining on a computer processor is not very effective due to the shortcomings of their architecture, but it turned out that the algorithms work quite successfully on graphics cards from ATI (currently a division of AMD). The first generation of mining rigs were racks with a large number of simultaneously running ATI video cards. At the beginning of the development of cryptocurrencies, these farms worked quite efficiently, and their power was increased by simply adding video cards. But the increased complexity of mining has made them economically unprofitable.
Modern mining farms are designed based on field programmable gate arrays (FPGA) or specialized ASIC processors. They are more reliable and consume significantly less energy than farms that use video cards for mining. Performance comparison table different generations farms shows that the productivity of new farms is 20-30 times greater, and mining currencies such as Bitcoin on video cards does not make sense. The only drawback of mining systems based on logic arrays and ASICs is their high cost, which is inaccessible to the average user.
Mining pools
After a sharp increase in the complexity of the most popular cryptocurrencies, many hastened to conclude that such a tempting process as mining is inaccessible to most users. That this is now the lot of only large investors with powerful data centers, they thought. But the situation has changed for the better after the emergence of joint cryptocurrency generation pools. Technically, a pool is a mining process in which the mining process is distributed among all network participants, and, accordingly, the time required to find new blocks is reduced.
All blocks are recorded in a single cryptosystem after mining is confirmed. What kind of database is this? This is information about payment transactions; in any cryptocurrency system it is stored and updated on all user crypto wallets, which guarantees the stability of the system, and the loss of one computer from the general payment network does not in any way affect its performance. The reward is also distributed among all pool participants.
Mining for beginners is possible only in a common pool; this is the only way for an ordinary user to participate in the mining process and profit from the creation of cryptocoins. Pools offer a variety of profit distribution models, including the power of client equipment. Therefore, it is recommended to realistically assess the possible mining speed on your computer. Slow computer with an outdated video card will most likely reduce the overall performance of the pool, and the profit will be small.
Cloud mining pools
An increasingly popular method for the joint generation of cryptocurrencies. To get started, the user does not need to have his own equipment. It is enough to pay the data center a certain computing power in mega- or gigahashes/sec and you don’t need to do anything further. The data center independently allocates the ordered power level and sets necessary equipment. The paid capacity will consistently generate profit in the form of a portion of the entire cryptocurrency mined by the data center. You can mine any cryptocurrency, but most large cloud miners work with Bitcoin or Litecoin.
How much can you earn?
Now that we have covered the technical basics, let's move on to how to correctly calculate earnings from mining. The possibility of profitable self-mining does not currently make commercial sense. Even if you have sufficient funds to purchase a productive farm or a modern ASIC miner, it is better to include them in the general pool. Or invest in a cloud pool and eliminate the hassle of maintenance and upgrades. If you choose a reliable pool, then it is quite possible to earn $300-500 per month by mining Bitcoin or Litecoin.
Choosing the right pool is the most important thing in such a complex activity as mining. Reviews about pools are quite contradictory and are mostly general in nature without the necessary specifics. This is a rather closed type of activity, and profit margins are usually not advertised. But with due persistence, everything can be found.
Now there are enough new cryptocurrencies on the market with low current complexity and hardware requirements that distribute hundreds of coins to owners of outdated equipment. But it must be remembered that all these currencies have no real value on the crypto market, and such activity in the hope of possible profits in the future is very similar to speculative mining. That this has nothing to do with normal activities, I think, is clear to all market participants.
Also pay attention to the size of possible commissions; it will not be very good if they absorb most of the profit.
Monitor the situation on the cryptocurrency market
Constantly look for more profitable options for mining and cashing out cryptocurrency, take into account the possible legislative consequences of working with crypto money, check the reputation of crypto exchanges and exchange offices. Follow the news: the crypto market is developing dynamically, and it is very important not to miss out on a promising currency. Mining requires constant attention and time. Set up the program remote access to the miner using a tablet or smartphone, for example, Teamviewer, for control from anywhere in the world.
Happy mining to everyone!