If you are interested in using Bitcoin, there are two ways to get it: buying it or mining it.
While cryptocurrency mining is possible to a limited extent with regular computers, in order to make any real gains, you’ll need to buy a mining rig.
A mining rig is a specialized piece of hardware designed to mine Bitcoin and other cryptocurrencies. These rigs can cost thousands of dollars and also consume a lot of electricity, meaning you’ll want to research them carefully before buying one.
Here are our picks for the best Bitcoin miners on the market.
The Dragonmint T16 is a high-end miner notable for having one of the fastest hashrates of any mining rig, as well as setting a world record in hashing speed.
At 16 TH per second, the Dragonmint T16 is one of the most competitive miners available for sale anywhere. While this hashrate comes at the cost of a power consumption of 1,600 watts, the Dragonmint T16’s overall power consumption is lower than its main competitor, the BitMain AntMiner S9.
In addition to this, the Dragonmint T16 features the ASICBOOST algorithm, which allows users to boost hashing efficiency up to 20 percent, albeit with a corresponding increase in power consumption.
The Dragonmint T16’s pricing is a bit high, but for those who want to get the most out of their mining operations, it is a good choice.
The Avalon6 is a popular budget miner due to its low cost and power consumption, though these perks come at a decided cost.
This miner features a maximum hash rate of 3.5 TH per second and only requires 1,050 watts in order to operate. It is also easier to set up than other miners due to its intuitive interface, making it a strong choice for beginning miners.
One major downside to the Avalon6 is that unlike other miners, it does not include a power supply. This helps keep the price down, but in order to operate the Avalon6, you will need to purchase a power supply on your own.
While not particularly high-powered, the Avalon6’s low price and energy consumption make it worth considering if you just want to dip your toe into the world of Bitcoin mining.
The Pangolin Miner M3X is a high-performance luxury unit intended for use by serious miners owing to its large processing capacity.
The Pangolin Miner M3X is less energy efficient than competing miners, drawing anywhere from 1.8 to 2 kilowatts. However, this is balanced by its high hash rate of 13 TH per second, allowing enterprising miners to profit quickly. This high hash rate is derived from its unique architecture, boasting embedded ASIC chips.
The high purchasing cost and expensive electricity requirements make the Pangolin Miner M3X a poor choice for budget miners, but for those who are interested in taking their hashing to the next level and can afford the power costs, it’s a good option.
The BitMain AntMiner L3+ is another budget-priced rig that is ideal for beginning miners.
The AntMain L3+’s main selling point is its hash rate of 504 MH per second, comparable to the AntMiner S5. It features four boards with a total of 288 chips for superior processing power, though its overall output is slightly lower than the AntMiner L3+. This is a problem when considering that its power supply uses 800 watts.
The AntMiner L3+ is a good entry-level mining rig, though more serious miners will want to look elsewhere.
The AvalonMiner 741 is a relatively new entry to the mining market and is produced by Canaan. It is targeted at mid-range consumers and boasts efficient power use and heat output.
The AvalonMiner 741 boasts a hash rate of 7.3 TH per second, comparable to the BitMain AntMiner S7. It also features greater efficiency than the AntMiner S7, using 0.16 joules per TH. The AvalonMiner 741 also includes one of the most efficient cooling systems of any cryptocurrency miner, enabling its 88 chips to function in unison while keeping the ambient temperature down to a reasonable level.
For those looking for a moderately-priced alternative to BitMain’s products, the AvalonMiner 741 is a good choice.
Another high-end Bitcoin mining rig from BitMain, the AntMiner T9 boasts slightly higher hash rates compared to the AntMiner S9, at the cost of lower efficiency.
For those looking for raw power, the AntMiner T9 has it, with a hash rate of 14.5 TH per second. However, in terms of power, it consumes considerably more than the AntMiner S9 relative to its improved hash rates. It is also more expensive and inherits other AntMiners’ problems with heat dissipation.
Ultimately, the AntMiner T9 is the best option for those who want the highest hash rate possible and are not concerned with heat output or power costs.
The BitMain AntMiner S9 is one of BitMain’s high-end models, targeted towards those who want to maximize their Bitcoin earnings.
The AntMiner S9 features a 1,900 watt power supply that is capable of producing 14 TH per second, one of the highest hash rates of any miner. This hash rate is courtesy of the AntMiner S9’s unique architecture, featuring three circuit boards with just shy of 200 chips.
The biggest problem with the AntMiner S9 is that it inherits many of the issues with the AntMiner S7, namely its sensitivity to external temperatures. The AntMiner S9 is also less efficient with power use than the AntMiner S9, even if the latter has more horsepower, and the AntMiner S9 is priced rather steeply as well.
The AntMiner S9 is a good choice for veteran miners who have the space and tools necessary to mitigate its high electricity use and heat output.
Originally released in 2015, the AntMiner S7 is a mining rig that offers a little more juice for miners looking to get the most out of their hardware.
The AntMiner S7 boasts a 1,600 watt APW3 power supply, a unique power supply that was designed specifically for cryptocurrency mining. Like other AntMiner rigs, it is extremely efficient when it comes to power consumption, making it a good option for those concerned about power bills.
One downside to the AntMiner S7 is that it needs a relatively low ambient temperature in order to function at peak performance. At a temperature of 77 degrees Fahrenheit (25 degrees Celsius), the AntMiner S7 will only produce 1,300 watts. As such, you will need to keep it in a cool area in order to get the most out of it.
The AntMiner S7 is a good option for those who are more experienced at mining and have a cool room in order to store it.
BitMain is one of the most popular manufacturers of cryptocurrency mining hardware, and their AntMiner S5 is easily the best ASIC miner on the market, offering a blend of performance, efficiency, and affordability.
The AntMiner S5 is not BitMain’s most advanced model, but what it lacks in raw power, it makes up in its economical nature. It comes with a 115 volt power supply capable of drawing 560 watts, meaning that it consumes little power compared to similar miners. This makes it a good option for those who live in areas with expensive electricity.
In terms of mining itself, the AntMiner S5 produces 1 GH/s per 0.51 watts, an improvement over the AntMiner S3. The AntMiner S5 is also affordably priced, making a strong choice for those who merely want to dip their toe into the mining world.
Overall, the AntMiner S5 is a good mid-ranger miner, appropriate for both mining newbies and experienced miners.
1. What is cryptocurrency mining? Mining is the process by which cryptocurrencies such as Bitcoin generate new coins as well as validate existing transactions. In the context of cryptocurrencies, “miners” are computers that create new coins by solving difficult math equations as well as process transactions between individuals on the blockchain. In exchange for this process, miners are awarded a portion of new coins generated in proportion to the amount of processing power they contribute to the network. Miners are also awarded fees for processing transactions which are paid by those who are making the transactions. This incentivizes miners to validate blockchain transactions, and users can elect to pay higher fees to have their transactions processed more quickly.
2. What is proof-of-work? Proof-of-work is a type of cryptocurrency algorithm that allocates new coins and fees to those who contribute to the blockchain’s operation through mining. It is distinguished from proof-of-stake algorithms, which award coins and fees to users who stake their existing coins to help maintain the blockchain’s operations. Bitcoin uses a proof-of-work algorithm, as do most cryptocurrencies, though proof-of-stake algorithms are becoming increasingly popular.
3. What is ASIC? ASIC, short for application-specific integrated circuit, is a type of computer chip that is customized for a specific use. ASIC chips cannot be used for general purposes and are hardwired to support one function only. In the context of Bitcoin mining, an ASIC miner is a computer that is specifically designed to mine Bitcoin, as distinguished from more general hardware that can serve other functions.
4. What is hashrate? Hashrate is the measure of how quickly a computer can mine Bitcoin or another cryptocurrency. The higher the hashrate, the faster the computer will mine Bitcoin. Hashrate is largely dependent on how powerful the computer’s hardware is, but it can also be affected by the computer’s Internet connection; a slow connection will result in a slower hashrate. Cryptocurrency miners will also have a faster hashrate if they are kept in a cool environment; since they generate large amounts of heat, poor ventilation can impact their performance, in the same way that a regular computer will work less efficiently if it is too hot.
5. Is it possible to mine Bitcoin with a personal computer? Bitcoin’s algorithm is designed to be mined with computer CPUs and GPUs in addition to dedicated mining rigs. However, due to the popularity of specialized mining hardware and Bitcoin’s deflationary structure, mining Bitcoin with a personal computer is no longer economically viable. This is because the maximum number of Bitcoins that can ever exist is capped at 21 million, meaning that as the amount of Bitcoin in circulation increases, mining becomes increasingly slower and more difficult. This supply limit exists to maintain the value of Bitcoin and prevent it from becoming worthless due to an excess of coins. With Bitcoin having been in existence for over a decade, mining has become increasingly complex and processor-intensive, locking computer owners out from being able to mine coins. In addition to this, mining takes a toll on personal computers due to increased energy consumption and heat output. Not only will your computer consume much more energy if used to mine Bitcoin, excessive, continuous heat output can damage your computer, particularly if your computer has poor ventilation (such as if you’re using a laptop). Additionally, CPU mining is much less efficient than GPU mining, meaning that computers that lack dedicated GPUs will always struggle to generate new coins. No computer can match the efficiency of a dedicated Bitcoin miner, so mining Bitcoin with your laptop or desktop is a bad idea.
6. What do I need to mine Bitcoin? You need a dedicated mining rig that can process Bitcoin transactions quickly. Miners are generally sorted by their maximum hashrate and power consumption. The higher the hashrate, the faster the miner will mine Bitcoin; however, a faster hashrate will mean greater power consumption as well. Generally, mining rigs with higher hashrates will be more expensive. Bitcoin miners require a continuous source of electricity as well as a high-speed Internet connection in order to connect to the Bitcoin blockchain. Finally, Bitcoin miners require a cool environment due to the large amounts of heat they generate. This means keeping them away from windows and heat sources and ensuring that the room they are located in is kept at room temperature or close to it.
7. Why is electricity consumption important when mining Bitcoin? While most computers do not consume much electricity during normal operation, the intensive process of solving math equations and validating transactions causes Bitcoin miners to work harder and consume more electricity than a personal computer. This means that when purchasing a Bitcoin miner, you need to factor in the cost of electricity in your local area; if electricity is too costly, any gains you make from mining could be wiped out by your power bill. This means that Bitcoin mining is easier and more profitable in locations where electricity is inexpensive. Countries with cheap electricity, such as Venezuela and Georgia, have become cryptocurrency hubs for this reason. You can easily find mining calculators online that will show you the expected return on your investment by calculating the hashrate and power consumption of your chosen mining rig along with the cost of electricity in your area.
8. Do I need a high-speed Internet connection to mine Bitcoin? Bitcoin miners must be continuously connected to the Internet in order to have access to the blockchain, and miners that have faster Internet connections will be able to process more transactions and access new blocks faster. As such, you will need to invest in high-speed Internet if you plan to mine Bitcoin.
9. What is a Bitcoin mining pool? A mining pool is a collective of miners that have joined together in order to mine Bitcoin more efficiently. In a mining pool, your mining capacity is united with that of many other users, and collectively, you can process transactions and mine new blocks faster than on your own. To put it in an analogy, mining for Bitcoin on your own is like trying to pan for gold in a stream on your own, while joining a mining pool is like forming a gold mine with other workers. In exchange for joining a mining pool, you will have to pay a percentage of your earnings to the pool to ensure its continued operation. The tradeoff is that you will be able to mine Bitcoin faster. It’s ultimately up to you to determine whether you want to join a mining pool, but given the popularity of Bitcoin mining and the increased difficulty of mining solo, you may wish to maximize your gains by using a pool. You can join a pool by searching for pools online and following their instructions.
10. Why is heat output important when mining Bitcoin? All computers produce heat when they are turned on, and the more work the computer performs, the faster it will generate heat. Excess heat will make a computer perform more slowly as well as cause gradual damage to the computer’s internal parts. In extreme cases, a computer may even shut down if it gets too hot in order to avoid damage. To mitigate heat production, all computers, including Bitcoin miners, require proper ventilation to keep the internal components working. Computers can also be affected by the temperature around them; mining rigs in hot rooms will function less efficiently. To prevent this, mining rigs should be kept in cool areas at room temperature or close to it, away from windows, the sun, and household objects that produce heat.
11. Is it possible to mine other types of cryptocurrencies with a Bitcoin miner? Mining rigs are generally configured to run on only one type of cryptocurrency hash function. If the same hash function is used by multiple cryptocurrencies, then a miner configured to use that hash function can mine any one of those currencies. Bitcoin uses the SHA-256 hash function, meaning that Bitcoin miners can mine other SHA-256 cryptocurrencies, such as Bitcoin Cash. In comparison, Litecoin uses the scrypt hash function, meaning that you cannot use a Bitcoin miner to mine Litecoin. Additionally, cryptocurrency miners can only mine one type of cryptocurrency at a time.
12. Why are Bitcoin mining rigs so expensive? Mining rigs are generally produced in small numbers because they are created by small firms that lack many resources. Additionally, since a mining rig can only be programmed to work with a specific hash function, individual types of miners need to be manufactures for different types of cryptocurrencies. Due to the popularity of Bitcoin mining, a low supply combined with high demand means that mining rigs are generally pricier than general-use computers. However, Bitcoin mining rigs are generally easier to buy these days and can be found on Amazon, eBay, and other major platforms.
Bitcoin mining can seem intimidating due to the wide variety of mining rigs on the market and the expense involved in buying and running one.
There are numerous factors that go into Bitcoin mining, including the processing power of your chosen mining rig, your Internet connection, and the cost of electricity in your area. Expensive electricity or a slow mining rig can result in you losing money on mining, meaning it’s not a field you want to jump into without proper research.
Additionally, Bitcoin mining has become an increasingly competitive field, making it more difficult for newcomers to break in. Given Bitcoin’s increasing popularity and its maximum supply limit, mining will likely become harder as the years wear on.
Despite this, it is still possible to make a profit from mining Bitcoin provided you purchase the right miner and are able to keep track of your expenses. Bitcoin mining, if done right, is a low-effort enterprise that will allow you to make money with minimal work on your part.
If you’re interested in Bitcoin mining, do your research to find a Bitcoin mining rig that will meet your needs. Also make sure you know how much electricity costs in your area and be sure to provide a location that will allow your rig to work with maximum efficiency, without having to worry about heat output or Internet access.
Best Bitcoin mining software of 2020
If you are interested in mining Bitcoin, you need two things: a Bitcoin mining rig and mining software.
Bitcoin mining software is used to operate your miner, connect to the blockchain, discover and mine new blocks, and ultimately reward you with fees and newly created Bitcoin.
There is a large amount of Bitcoin mining software available on the Internet, and finding the most effective one—and the one that is most appropriate for your rig—can be difficult.
Here are our picks for the best Bitcoin mining software out there.
One issue when it comes to mining multiple cryptocurrencies is that they each use different command line tools, which can make managing them needlessly time-consuming. For users who want to mine different types of cryptocurrencies simultaneously, EasyMiner makes the process a cinch.
EasyMiner is a GUI-based, open source mining program that is compatible with Bitcoin, Litecoin, and a number of other coins. It is also compatible with ASIC miners, cgminer, cudaminer, minerd, and other popular mining engines. For Litecoin miners, the program comes with a “MoneyMaker” mode, which allows you to begin mining Litecoin out of EasyMiner’s stratum pool. If this isn’t to your liking, you can also use EasyMiner’s “Solo” mode to select your own pool.
EasyMiner features custom hash algorithms that match up with coins that the users is interested in mining. The program also uses Network Hardware ID Layer (NHIL) for added wallet and pool stratum security.
EasyMiner is currently only available for Windows, which limits its usefulness somewhat. However, users who need to manage multiple different types of cryptocurrencies will get a lot out of EasyMiner.
Awesome Miner is a mining software suite designed for managing multiple rigs on the fly, as well as different types of rigs, such as ASICs and FPGAs.
Awesome Miner is one of the most feature-rich mining software programs, with support for cgminer, bfgminer, srbminer, and dozens of other popular mining engines. It is also compatible with all major mining algorithms, including SHA-256, Scrypt, and X11.
Unique among mining software programs, Awesome Miner has a centralized dashboard that allows users to manage their rigs from a single place, and it also allows users to switch and manage pools for multiple miners with a single click. It also comes with a C# script engine for creating custom triggers, and can also be used to set up privileged API access.
Awesome Miner is currently only available for Windows computers, but it offers a web interface that can be used on computers, smartphones, and tablets.
While Awesome Miner isn’t terribly useful for users who only own one mining rig, for those who are supervising large mining operations, it’s a good tool for minimizing overhead and monitoring multiple machines.
Given that mining hardware is an expensive investment, many miners choose to use cloud-based mining services when they start out, due to the fact that they are much less expensive and don’t require any hardware purchases. If you’re interested in cloud mining, Genesis Mining is by far the best option.
Genesis Mining users, upon signup, are joined to a mining pool with multiple users, and profits are divided among all members. Genesis Mining offers a number of packages, and its base price is $0.14, one of the lowest in the industry. Depending on the package you choose, you can have a hashing power of anywhere from 250 GH/s to 600,000 GH/s, though higher hashrate plans are obviously more expensive.
Genesis Mining plans last for one year and allow users to check their stats at any time by logging in. Genesis Mining also offers a rewards program; anyone who refers new users to the site is awarded additional hashing power. Genesis Mining also does not charge maintenance fees, allowing its users to get paid the maximum profit from their investments.
Genesis Mining is not ideal for serious miners, as in the long-run, its packages cost more than purchasing a mining rig. However, users who want to dip their toe in the world of mining without a large upfront purchase should consider checking it out.
BitMinter is a mining software suite distinguished by its cross-platform compatibility and its built-in mining pool.
BitMinter is designed for use with Windows, Mac OS X, and Linux computers and uses a graphical user interface (GUI), making it easy for newbies to get their heads around. Uniquely, it is based on the Java Network Launch Protocol (JNLP), meaning it doesn’t need to be installed, further reducing the learning curve for new users.
Additionally, unlike other mining software, BitMinter boasts its own mining pool, which makes getting started a snap. BitMinter’s documentation allows users to sign up to its mining pool, configure their hardware, and start mining immediately without any delays. Additionally, BitMinter’s pool pays out 99 percent of its income to users, making it one of the fairest mining pools on the Internet.
BitMinter is compatible with a large amount of mining hardware, including AntMiner U1/U2, Chili, Block Erupter USB, and more.
For those who want to start mining quickly and need a software suite with cross-platform functionality, BitMinter is the ideal choice.
MultiMiner is a software program intended for newbies and those who want to get started mining without having to worry about the finer details of mining software.
In contrast to most mining software programs, which use a command line interface, MultiMiner is a desktop application with a graphical user interface (GUI), which makes it easy to get running. MultiMiner is available for Windows, Mac OS X, and Linux operating systems and can be operated with minimal mining knowledge.
MultiMiner is notable for allowing users to switch between mining different coins based on their existing hardware. The program’s engine is capable of analyzing ASICs, FPGAs, and any other hardware attached to it and allows you to select which coins you want to mine, allowing you to derive maximum profit from your hardware with a minimum of tweaking.
In addition to this, MultiMiner has a number of advanced features, such as automatic detection of network devices and remote monitoring of other MultiMiner setups. It is compatible with a number of mining devices, including HashBuster Micro and Block Erupter.
While MultiMiner may not be appealing to experienced miners, it’s an ideal choice for those who want to get started mining and don’t want to have to worry about the finer details.
BFGMiner is a mining software suite geared towards experienced Bitcoin miners who want to get into the nitty-gritty of running their rigs.
Written in C, BFGMiner is an FPGA- and ASIC-compatible program that offers remote interfacing, monitoring, and dynamic clocking. It has a built-in network and proxy server and boasts threaded code, allowing work retrieval and submission tasks to be assigned to separate threads without impacting overall performance.
Adding to this, BFGMiner supports the GetBlockTemplate mining protocol and can generate additional work preemptively without waiting for existing work to be completed. It also offers detailed statistics on your mining rig’s performance and has a watchdog thread that can restart idle threads without causing your miner to crash in the process.
BFGMiner boasts drivers for Drillbit Thumb, Ztex FGI boards, and other Bitcoin mining rigs, and it is also compatible with scrypt miners such as ZeusMiner and GAW War Machine.
While BFGMiner may be too complex for first-time miners, its breadth of options and flexibility make it a good choice for experienced users who want to get the most out of their mining operations.
CGMiner is one of the oldest mining software tools available on the Internet, and has stayed strong through its intuitiveness, flexibility, and functionality.
CGMiner is written in the programming language C and is compatible with Windows, Mac OS X, and Linux, as well as several other operating systems. It is designed to work with both ASIC and FPGA hardware and boasts a command line interface with ventilation control, remote interfacing, and full monitoring of your rig.
In addition to this, CGMiner stands out for its scalable networking scheduler. CGMiner can scale to a hash rate of any size without causing network delays, a very important feature when you are trying to mine Bitcoin quickly in a competitive environment. CGMiner also supports multiple mining pools as well as preventing stale work submission on new blocks for added efficiency.
Finally, CGMiner boasts a menu for quick setting changes and allows for self-detection of new blocks using a mini-database that can allocate your miner’s resources to areas where they are most likely to be useful. CGMiner is also compatible with many different mining rigs, including Minion, BlackArrow, Hexfury, and more.
Overall, CGMiner is the best Bitcoin mining software for both newbies and experienced miners, offering a mix of accessibility and performance.
1. What is mining software? Mining software is software that is used to manage mining rigs. Mining software allows you to monitor the status of your mining hardware, including hashrate, power consumption, and more, as well as make adjustments and diagnose problems. This makes choosing a good mining program essential to your operations.
2. Why do I need mining software? Mining rigs generally lack operating systems and software of their own because they are stripped-down computers designed solely to process cryptocurrencies. Mining software allows you to control your mining rig, identify problems in its operation, and customize it so it can meet your needs. Additionally, most mining software allows you to monitor your rigs remotely, allowing you to keep tabs on your Bitcoin mining operations even if you are not physically located near your rigs. Many mining programs offer apps that can be downloaded to your smartphone or other mobile device or web interfaces that can be accessed anywhere you can connect to the Internet.
3. What type of mining software should I use? The type of software that is best for you is one that is compatible with your mining rig and meets your specific needs. Mining software programs are generally only compatible with certain types of rigs and cryptocurrencies, meaning that you need to make sure that your chosen software can work with your hardware and the cryptocurrency you want to mine. There are many different types of algorithms used by different cryptocurrencies, and mining software that is not compatible with a certain type of algorithm cannot be used to mine cryptocurrencies that use it. For example, Bitcoin uses the SHA-256 algorithm, meaning that your mining rig and software must be compatible with SHA-256. Mining software suites will also generally list the types of hardware they are compatible with. Another factor when selecting mining software is what you plan to use it for. If you are managing multiple mining rigs, you will want to select software that allows you to control and monitor them from a central dashboard, saving you the trouble of having to configure each one individually. The same goes if you are planning to mine different types of cryptocurrencies at the same time. If you are a relative newbie when it comes to mining, you may want to select a GUI-enabled software program so you can get your mining operation started more easily. Finally, you should make sure that your chosen mining software is compatible with your existing computers or devices. While many mining programs are cross-platform, some are only designed to work on Windows or another operating system. Some mining software programs also allow tablet and smartphone use, so you may want to consider them if you would like to monitor your hardware remotely.
4. What is the difference between command-line mining software and GUI software? Command-line software is software that is controlled through a command-line interface. A command-line interface is a plain text window in which the user enters commands via the keyboard, similar to MS-DOS. Command-line interfaces are favored by experienced users because they have a minimum of processor overhead and have more advanced features, but they can be difficult for newcomers to grasp because they require a certain level of programming knowledge. Command-line programs require users to know what commands the program will accept, adding a difficulty curve for those who are not familiar with how command-line software works. GUI software is software that uses a graphical user interface, in which the user interacts with the program via a mouse or touchscreen, though most GUI programs also have keyboard shortcuts. Most operating systems and modern computer programs, such as Windows and Mac OS X, use graphical user interfaces, as do mobile operating systems on tablets and smartphones, due to the fact that they are easier to use and can display more information than a command-line program is capable of doing. GUI programs are good for inexperienced users because they do not require programming knowledge to operate, but they often have less features than a command-line program. Additionally, because GUI programs are more complex than a command-line interface, they require a greater amount of processing power. GUI mining software has become more popular in recent years as Bitcoin mining has become more advanced and users have learned how to make mining easier, but command-line programs are still widely used by miners for their greater flexibility and low processing overhead.
5. Should I pay for mining software or use free software? The answer to this question depends on what you need your mining software to be capable of. Paid mining software can be expensive, but it often offers better technical support than free software, along with guaranteed updates and patches. Open-source free software doesn’t cost money, but can often be more difficult to get running and diagnose due to a lack of documentation. However, open-source software can be customized more easily due to its code being accessible to all users. If you are an advanced user and have some knowledge of programming, a free, open-source program may meet your needs. Users who are less interested in the nitty-gritty of managing mining software may want to opt for a paid program that allows them to manage their rigs with a minimum of tweaking and technical problems.
6. What is cloud mining? Cloud mining is a form of mining that uses cloud computing instead of hardware. Many people who are curious about cryptocurrency mining are often put off by the high cost of hardware rigs, which can run into the thousands of dollars and eventually become obsolete as Bitcoin approaches its maximum supply limit. Additionally, in some parts of the world, hardware mining is more difficult to profit off of due to high electricity costs. This has led to cloud mining becoming a viable alternative for some users. With cloud mining, the user rents time on a hardware rig or rigs owned by other users, who offer hashing power in exchange for maintenance fees and/or a percentage of profit. This allows users to start mining cryptocurrency without the expense of start-up costs, and also frees the user from having to pay increased electricity bills or tinker with the rig themselves. Most cloud mining services offer a clean GUI dashboard that allows users to mine without having to use a command-line interface or learning how to program.
7. Is cloud mining better than traditional hardware mining? Over a long-enough span of time, cloud mining is less profitable than hardware mining due to the costs involved in paying other users for access to their rigs. Cloud mining’s advantages lie in its ease of use and lower startup costs. With cloud mining, you don’t need to spend thousands of dollars on a mining rig, pay increased electricity bills, or worry about hardware configurations: you can have someone else do all the hard work for you. If you are wondering whether to get involved in cryptocurrency mining, cloud mining is a way for you to dip your toe in the water without spending large amounts of money. However, if you plan on becoming more involved in mining and/or are a more advanced user, hardware mining will give you more bang for your buck.
Bitcoin mining can seem bewildering at first, with a wide variety of rigs and software programs available.
There are many factors that go into choosing a mining software program, including what type of cryptocurrency you are mining, what type of rig you own, and how many rigs you own. Another factor is your computer knowledge; an advanced and/or command-line program may be more difficult for you to get a handle on if you are not sufficiently versed in software.
Compounding this is the increasingly competitive nature of cryptocurrency mining, with new users joining every day. This makes it more difficult for newcomers to stake their claims, and as cryptocurrencies like Bitcoin become more popular and near their maximum supply limits, the difficulty level will only increase.
Despite all this, cryptocurrency mining is still a worthwhile investment if you are willing to put in the time and effort. Mining has also become easier in the years since Bitcoin’s launch, since hardware rigs are more commercially available and mining software is also simpler to grasp, with many programs now featuring graphical interfaces and extensive documentation.
Cloud mining is also an important advancement in the realm of mining software. Cloud mining allows newcomers to become acquainted with mining without having to spend large amounts of money on hardware, and it also makes it easier for those who live in areas with expensive electricity to defray the costs of mining coins.
If you’re interested in Bitcoin mining software, do your homework to find a program that will accomplish your goals. Regardless of what hardware you own, your level of computer knowledge, or how many rigs you own, you can find a software program that will make your mining operations painless and profitable.
What is Blockchain Technology?
If you’ve paid attention to Bitcoin or cryptocurrency in general in recent years, you’ve no doubt heard about the “blockchain,” the technology used to power these currencies.
Many news sources will breathlessly talk about the blockchain and the potentials it holds, but few will actually define what it is. This is a shame because blockchain technology is what defines cryptocurrency, and while you don’t need to be an expert on it to buy or sell crypto, a basic overview of it will help you make better crypto investing decisions.
Defined in short, a blockchain is a list of blocks (digital records) that are linked through cryptography. (1) The blockchain forms the heart of Bitcoin and every other cryptocurrency; indeed, blockchain technology is what makes cryptocurrency a viable concept, ensuring its resilience and longevity in an unstable marketplace.
If you’re unsure about investing in cryptocurrency, understanding how the blockchain works will allow you to better comprehend the value of Bitcoin and other crypto.
Blockchain technology was invented in 2008 by pseudonymous computer programmer Satoshi Nakamoto as part of the development of Bitcoin. (2) While blockchain technology had been theorized and experimented with as early as 1991, Nakamoto’s implementation of it was the first one that was stable enough to be used as the basis of a cryptocurrency.
A blockchain can be thought of as a digital ledger, one that is virtually impossible to tamper with. Each block in a blockchain consists of a cryptographic hash of the previous block, a timestamp, and relevant transaction information. (3) Each block is linked to the ones preceding and following it, hence the “chain.” When a transaction occurs on the network, a new block is created and added to the blockchain, with every computer connected to the blockchain verifying it for authenticity.
Blockchains are managed through peer-to-peer networks using a single protocol in which all computers connected to said blockchain share in its functioning and upkeep. (4) This means that every system that participates in the use of a particular cryptocurrency—wallets, exchanges, and merchants, for example—is connected to that currency’s blockchain.
Every interaction between users is recorded on the blockchain in such a fashion that blocks cannot be altered after the fact without altering all subsequent blocks. This requires a majority consensus from all other blockchain users, effectively rendering fraud and theft impossible due to the expense and time necessary to seize control of a large network.
The invention of blockchain technology is what made the creation of Bitcoin and other cryptocurrencies possible. Fiat currencies, the currencies that most people use in their day-to-day lives, are backed by central authorities that give them security and value. For example, the U.S. dollar is backed by the federal government, while the euro is backed by the European Union.
No such authority exists for cryptocurrencies, which compensate through decentralized security via the blockchain. In order to modify a transaction on the blockchain (to invalidate a transaction or steal money, for example), an individual user needs to obtain a consensus from the other users, which is extremely difficult to do. (5) This allows currencies like Bitcoin to avoid double-spending—where users are able to spend units of currency more than once—and other issues that prevented effective cryptocurrency development.
Another advantage of blockchain technology is that it is completely transparent. All transactions that occur on a given currency’s blockchain are recorded, logged, and visible to anyone who seeks that information out. (6) While there are some cryptocurrencies such as Monero that are capable of anonymizing the identity of individuals in transactions, most crypto transactions can be viewed publicly, allowing for open use of the currency.
The blockchain’s nature as a decentralized, secure system means it has the potential to disrupt world business by simplifying it. Many existing online business models rely on providing middleman services between two people who wish to engage in a financial transaction. For example, PayPal is a payment processor that connects merchants to customers, taking a small fee as its cost for transferring money via their platform. With blockchain technology, however, customers and merchants can deal with each other directly, with the blockchain ensuring the integrity of their transaction; hence, PayPal’s role is made obsolete.
The same goes for services such as Uber and Airbnb. Using the blockchain, it is possible for someone who wishes to rent out their property to connect with prospective customers without the need for a service such as Airbnb. Middleman services essentially act as guarantors of the transactions they handle; with the blockchain, the system itself guarantees the transaction.
The potential for blockchain technology to revolutionize business in this manner has attracted attention across the world. For example, in the Eastern European nation of Georgia, all real estate has been added to the Bitcoin blockchain to make transactions faster and more transparent. (7) In 2016, IBM opened a blockchain research center in Singapore to study potential uses for the technology. (8) Banks and other financial institutions have also begun researching ways to use blockchain technology to improve their business models.
Finally, blockchain technology allows for fast and easy distribution of content over the Internet. While the original purpose of the blockchain was to allow for fast and secure peer-to-peer currency transactions, it can easily be adapted to serve as a low-cost content distribution system. Because every transaction on a blockchain is validated and processed by all machines connected to it, sending information over the Internet at little to no cost becomes easy.
Much in the same way that blockchain makes middleman services such as PayPal obsolete, content providers such as Netflix could potentially be made obsolete. Since files sent via a blockchain are embedded in the structure of the blockchain itself, there is no need for applications such as iTunes or Spotify, as the files can simply be sent peer-to-peer, akin to file-sharing programs, albeit legal. (9)
While Bitcoin was the first major use of the blockchain, the technology has already been adapted in ways that can facilitate all of these uses. Most notably, Ethereum, one of the top competitors to Bitcoin, introduced the concept of “smart contracts,” which helped extend the blockchain technology into everything from securing medical records to speeding up financial transactions in the mainstream banking world. (10) Websites such as Steemit and DLive allow users to create content (blog posts or video streams) using blockchain technology, which dramatically lowers costs compared to traditional content platforms.
In short, blockchain technology is revolutionizing the world. From its origins as the backbone of Bitcoin and other cryptocurrencies, it is rapidly being expanded into every sphere of life. It is no stretch to say that in the near future, the vast majority of business transactions, from buying groceries to paying rent, will involve blockchain technology in some form or another.
1. Is the blockchain safe to use? This is the number one concern of anyone engaging in financial transactions: security. There is no such thing as a 100 percent secure system, as any computer system can be hacked or abused given enough time and resources. However, the blockchain’s consensus-oriented design makes hacking it nearly impossible. Because every block must be validated by every other machine connected to the blockchain, any unauthorized changes must be approved by a majority of users on the network, which is extremely unlikely to happen due to the massive amounts of money and coordination it requires. While some blockchains are less secure than others, blockchain technology itself is one of the most resilient technologies out there when it comes to fraud and malfeasance.
2. How many blockchains exist? There’s no way to definitively answer this question because new blockchains are being created all the time. Additionally, while many blockchains are publicly accessible, there are also a great many private blockchains that are not accessible via the wider Internet. In general, there are three types of blockchains: public, private, and consortium. (11) Public blockchains are publicly accessible and are generally secure due to their large userbases. Cryptocurrencies, for example, use public blockchains. Private blockchains are only accessible to a select group of users and, while faster than public blockchains due to their smaller userbases, are more susceptible to attack for the same reason (since a smaller userbase means it is easier to gain a majority and thus take control of the network). Consortium blockchains fall between these two extremes.
3. Who can create a blockchain? Anyone with the appropriate skills can create a blockchain of their own for whatever purpose they want. Blockchain technology is a relatively advanced skill, requiring considerable knowledge in programming as well as a base of users in order to make the blockchain work. Many developers choose to use public blockchains such as Ethereum to build applications due to their large userbases, wealth of documentation, and large public profiles. However, due to the bottlenecks and other issues with public blockchains, many developers opt to develop their own blockchains in order to have their needs met. For example, while Ethereum is a powerful blockchain, its relatively slow speed of 15 transactions per second means that anyone looking to develop a program that relies on speed will not be able to use it effectively. Most custom blockchains are built precisely to serve the needs of a particular service or community, and are typically made either from scratch (which takes longer but allows for total control and flexibility) or forked from an existing blockchain (which is faster and cheaper but allows for less control over the final product).
4. What is forking? In software development, a fork is when an existing program or project is split into two entirely separate programs. In the context of blockchains, a fork is when a blockchain splits into two separate blockchains that are no longer connected despite their common origin. Forks can be accidental—such as when two updates are not compatible and end up forcing the creation of a new ledger—or they can be implemented by design. Intentional forks are separated into soft and hard forks. A soft fork is when blocks that would have been regarded as valid become invalid and is backwards compatible due to old nodes continuing to recognize new blocks, only requiring a majority of miners to switch to the new protocol. A hard fork is a fork that makes previously valid blocks invalid or vice versa and requires all systems on the network to update to the new protocol; old users will be rejected by the network, meaning hard forks are not backwards compatible. Hard forks can result in two separate blockchains continuing to exist in parallel or it can result in one blockchain dying off due to obsolescence. The most famous example of a cryptocurrency hard fork was the Ethereum fork of 2016, which occurred due to the theft of three million Ether in the DAO hack. (12) The fork resulted in the creation of Ethereum Classic, maintained by developers who believe that Ethereum abandoned its original mission by forking the blockchain. More recently, in 2017, Bitcoin was hard forked into Bitcoin and Bitcoin Cash, the latter of which features a larger block size allowing for faster transactions, a common feature request among some Bitcoin users as the currency became more popular. (13)
5. What is mining? Many cryptocurrencies, most notably Bitcoin, rely on miners in order to function. Cryptocurrency mining is when a computer connected to the blockchain validates new transactions and records them on the ledger. (14) This is done through solving difficult math problems via a hash algorithm. When a problem is solved, a transaction is confirmed on the blockchain. In exchange for solving these problems, which require processing power, miners receive a monetary reward for every problem they solve, which is taken from the transaction itself as a “mining fee.” Mining is often a good means for those who own computers to make money, though mining popular cryptocurrencies such as Bitcoin requires considerable amounts of processing power and electricity that is beyond the budget of many users. Not all blockchain-based systems use mining—Ripple, for example, is a prominent cryptocurrency that does not use miners—but a great many do as a means of speeding up the rate of transactions on their systems.
6. What is encryption and how does it work? Encryption is a means of obscuring data or information so that it cannot be decoded—decrypted—by anyone who does not know how. Blockchains use encryption to prevent transactions from being tampered with by external actors. Only the nodes involved in the transaction are able to decrypt it, making blockchains a secure means to engage in business.
7. What is a ledger? If you’re familiar with auditing and accounting, a ledger is a record of financial transactions at a given business or other institution. Ledgers have been used for thousands of years to keep accurate financial records. In the context of the blockchain, it is at heart a distributed ledger: a ledger that is kept accurate through constant communication and confirmation from all nodes connected to the network. The blockchain itself is a ledger of transactions represented in computer code, its decentralized nature preventing any one individual or group from engaging in fraud. Given the nature of blockchain technology, blockchains can expand up to an infinite size as they accumulate transactions.
8. What is double spending? Double spending is when one digital token (unit of currency) on a cryptocurrency network is spent twice or more. Imagine if you had a dollar and were able to spend it multiple times and you have an idea of what double spending is. It is obviously impossible to spend physical currency more than once without counterfeiting it (which is illegal), but since digital currencies consist of replicable computer files, it is possible to spend the same tokens repeatedly without an anti-fraud system built in. (15) Double spending, if allowed to spiral out of control, leads to hyperinflation and losses for organizations and businesses who are victims of it. The blockchain is designed to prevent double spending through distributed verification of all transactions. By requiring all nodes on a blockchain to process and verify the transaction, the network ensures the integrity of all transactions that occur without needing a central authority.
9. What is the difference between the Bitcoin blockchain and the Ethereum blockchain? While all based on the same fundamental technology, there are often steep differences between different types of blockchains. Bitcoin and Ethereum are the two most popular and well-known cryptocurrencies and their blockchains are incredibly divergent. The most important differences between them is their algorithm, transaction time, and scalability. Bitcoin uses the SHA-256 algorithm, while Ethereum uses the proprietary Ethash algorithm. This is more relevant to miners as it means that Bitcoin and Ethereum require different types of hardware to mine. Bitcoin also takes an average of ten minutes to conduct transactions, while Ethereum takes 12 to 14 seconds. Ethereum is also scalable while Bitcoin currently is not.
10. What types of records are found in a blockchain database? All blockchains contain both transactional records and block records. While both can be readily accessed, it is also possible to integrate one with the other.
11. What kinds of records can be stored on a blockchain? Any type of record can be stored on a blockchain; there is no limit. This flexibility has resulted in many industries using blockchains for record-keeping.
12. What is a Merkle tree and what does it have to do with the blockchain? Also known as a hash tree, a Merkle tree is a common data structure in cryptography. In a Merkle tree, certain nodes are identified as “leaf nodes,” which are designated with the hash of a block. (16) Non-leaf nodes are responsible for storing the child nodes’ cryptographic hashes. This type of data structure streamlines the processing and verification of transactions on a blockchain, because it eliminates the need for transferring entire blocks between nodes in order to verify them. Initial experiments in the early 90’s theorized about the use of Merkle trees to speed data processing, but it wasn’t until the blockchain was formally invented in 2008 that the Merkle tree was utilized for this purpose.
The blockchain is the key technology that powers cryptocurrencies such as Bitcoin and distinguishes them from attempts to create digital currencies in the past.
The versatility and security of the blockchain makes it the first technology of its type to allow digital currencies to compete with traditional fiat ones. Even better, given the blockchain’s distributed nature, no one single authority can dominate a blockchain, freeing cryptocurrencies such as Bitcoin from political and financial manipulation.
Beyond these advantages, the nature of the blockchain makes it a revolutionary technology. In eliminating the need for middleman businesses, the blockchain makes it possible to connect consumers and merchants like never before. Financial services such as PayPal and merchant services such as Uber and Airbnb could be turned upside down by the blockchain’s ability to allow customers and sellers to engage in transactions that are automatically verified and guaranteed by a decentralized network that is nearly impossible to hack.
In short, the blockchain is a technology that has the ability to change the world. It is part of what has given Bitcoin and other cryptocurrencies their resilience in a market where exchanges go bust and prices constantly fluctuate. Free of human error due to its distributed nature, developers and businesses are finding new uses for the blockchain every day, from real estate transactions to secure digital communication.
While becoming an expert on the blockchain isn’t necessary if you want to get involved in crypto, understanding its basics will allow you to make better investment decisions. Not all blockchains are created equal, and knowing about how the blockchain functions will make it possible for you to spend your money wisely. Ultimately, the blockchain is a technology that will come to dominate our lives due to its versatility and usefulness, so it behooves you to understand how it functions.
Cryptocurrencies9 months ago
Ethereum, the platform for decentralized apps
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Ripple, the blockchain for banks
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EOS, the blockchain for commercial scale
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Cardano, a top smart contract cryptocurrency
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Monero, the blockchain of anonymity
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Stellar, the protocol for the future of money
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Bitcoin, the original blockchain
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Bitcoin Cash, the hard fork of Bitcoin