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Free Bitcoin Mining

The last four to five years have seen a dramatic shift in investment choices made by traders around the world, with cryptocurrency trading being the dominant form of trading in major parts of the world. In particular, Bitcoin is still the leader in this field, originally designed as a system of secure online payments, which later evolved into a profitable investment option. The widespread attention Bitcoin has garnered has led many to ask the question, “how to earn some Bitcoin”. While there is a myriad of ways Bitcoin and cryptocurrencies, in general, can be acquired, Bitcoin mining is one of the most effective methods of producing one’s own Bitcoin. The concept of mining is as new as the crypto-craze itself, and a thorough understanding of the concept is required to start investing in it.

Reasons For Mining

The reasons for mining vary greatly from one miner to another, depending on numerous factors centered around a monetary incentive usually. The most obvious reason is that miners do it for a profit if operated efficiently. This however, requires a thorough understanding of the Bitcoin mining landscape, something which has been ever changing since Bitcoin’s inception way back in 2009.
There are two ways an individual can choose to start mining; Solo mining, and Pooled mining.

Solo Mining: Since mining is a chance endeavor, many users take the decision to start solo mining Bitcoin. This has however changed with time, as it was previously thought to be more profitable than current profit levels. Indeed, since the difficulty level of mining has drastically increased as the Bitcoin network grew; many solo miners find it difficult to turn a profit. Building mining farms by compiling several machines for high computational power is the only way to profit from such endeavors.

Pooled Mining: Mining pools have been created in recent times to counter the increase in difficulty levels of producing newer blocks. Pooled mining involves the user joining a mining pool to mine blocks as a group. This increases the chances of winning a block, while the profit is distributed among all participants, taking into account certain variables like individual hashrates and mining time.

Mining Processes Explained

The mining landscape for Bitcoin as mentioned earlier has changed beyond recognition, especially in the last 3 years. Due to a variety of factors such as recent changes in technology, an influx of professional mining farms, as well as an increased difficulty level. There is, in fact, an ongoing debate whether mining Bitcoin still remains a profitable venture. Currently there are three main processes involved in mining Bitcoin, namely CPU mining and GPU mining along with ASIC mining.

  1. CPU Mining: CPU mining was the first type of Bitcoin mining in existence before GPU mining took over. CPU mining has lost its profitability over the years, especially after Bitcoin’s meteoric rise to the mainstream. This caused the difficulty level in finding new blocks to exponentially rise, making it difficult for normal CPUs to mine. Profit margins dramatically decreased over time, as miners struggled to balance with the level of energy consumption involved in the process.

While it is advised not to mine Bitcoin with a CPU because of profitability, many people have started joining mining pools to build distributed networks of people who mine Bitcoin together. This dramatically decreases the work load on each machine. There are several applications to get users started on CPU mining, such as CPUMiner and Bitminter.

  1. GPU Mining: GPU Mining started to become popular because of the increased computational power they posses, taking the load off a computer’s CPU. GPU mining has evolved to make it more suitable for mining Bitcoin and a variety of other cryptocurrencies as well, with higher levels of proficiency in performing repetitive computations. The main reasons for this lies in the fact that GPU mining involves Arithmetic Logic units, which makes them capable of performing more calculations with reduced processing times. Some of the effective graphics card used for GPU mining include,
  • Nvidia GeForce GTX 1070: Features a 8GB GDDR5 ram with a core, clocked at 1,506 Mhz
  • AMD Radeon RX580 : Features a 8GB GDDR5 ram With a core clocked at 1,257 mhz
  • Nvidia GeForce GTX 1060: Features a 6Gb GDDR5 ram with a core clocked at 1,506 MHz
  • AMD Radeon RX Vega 56: features a 8GB HBM2 memory with a core clocked at 1,156 Mhz
  • Nvidia GTX 1080 Ti: Features a 11 GB GDDR5X memory with a core clocked at 1,480 mhz

 

  1. ASIC Mining: ASIC mining or Application-Specific Integrated Circuit mining is a specialized mining process using ASIC units. Although originally introduced for carrying out a wide array of tasks, ASIC units have come under heavy demand with the rise of Bitcoin’s popularity. ASIC mining involves significantly greater execution power, dwarfing that of both CPU and GPUs and has quickly evolved to be the dominant method of mining used today. One estimate suggests that a Bitcoin ASIC miner can finish hash calculation 100,000 times faster than the best CPU
    There are many reasons for ASIC mining adoption. Firstly, since ASIC hardware units are custom built for a single hash algorithm, making them ideal for mining a particular cryptocurrency. They are expensive units due to the custom nature and niche market with a high end ASIC unit costing somewhere between $2800 to $3000.

Some of the notable ASIC mining rigs include:

Antminer S9 (or S9i)
Power usage: 1,320W | Hash power: 13.5 TH/s | Daily profit: 0.00179041 BTC (estimated)
Antminer S7

Power usage: 1,293W | Hash power: 4.73 TH/s | Daily profit: 0.00061590 BTC (estimated)

AvalonMiner 821

Power usage: 1,200W | Hash power: 11 TH/s | Daily profit: 0.00143233 BTC (estimated)

WhatsMiner M3

Power usage: 1800W-2,100W | Hash power: 12.5 TH/s | Daily profit: 0.00162765 BTC (estimated)

 

GPU Mining ASIC Mining
Greater Availability of video cards With lesser Costs Lesser Availability
Easy to set up More Complex
Smaller Sized Setup Space Consuming
Pay off Considerably Slower Pay off is higher
Decent Resale value No guarantee of Resale Value

 

Mining Profitability: Before and After ASIC

As mentioned before, CPU mining is highly non-existent these days, and GPU mining is facing tough competition from newer technology such as ASIC chips. This has considerably changed the profit margin of Bitcoin mining over the years.

Before ASIC Mining: Almost 7- 8 years back, mining Bitcoin using only a computer CPU was the most profitable venture for several factors.  For instance, the first wave of Bitcoin miners owned their own systems, reducing equipment costs to a bare minimum. Big mining centers also sprung up in numbers, increasing the competition between miners. With time, the profit margin experienced by individual miners dramatically decreased, as miners began to weigh several costs including the level of electricity consumption. The situation worsened greatly after ASIC miners came into play, with large mining centers possessing more computational power and generating more profit.

After ASIC Introduction

The mining landscape experienced a dramatic shift, when ASIC miners came into use. While the lion’s share of profit is made by big ASIC mining rigs, Bitcoin mining can still be profitable if certain adjustments are made.  For instance, Some GPU’s can be modified to either increase computational power or reduce energy consumption while performing mining sections. Thus it is always advised for a prospective miner to do a cost/benefit analysis before making a decision. While there is no hard and fast rule to make these calculations, certain variables are listed below to assist in making the calculations.

  • Anticipated Period of time to Spend on mining
  • The current value of Bitcoin at the time of mining(Usually in USD)
  • Power Consumption Costs including electricity rates
  • Efficiency of the hardware in question

ASIC Mining has faced criticism and a community backlash citing the decrease in mining profitability as the main reason. Many cryptocurrencies have thus started employing different hash algorithms, designed to resist ASIC mining. A popular example is Zcash, which uses the equihash algorithm. On the other hand, many developers are starting to change their coin’s hash functions for ASIC mining.  For example, Vertcoin employs the Lyra2RE algorithm has made provisions to fork the chain if ASIC mining for Vertcoin is introduced.

Concluding Thoughts

With the introduction of newer technology at an increasing pace, it is difficult to say with certainty whether the mining landscape could further change or not. Many individual miners have shifted to mining in pools to give fierce competition to major mining centers.  At the moment however, ASIC mining is arguably the advised method of Bitcoin mining.  However, potential miners are urged to conduct their own market research, as well as conducting Profit/loss estimates before making a final decision.  The current value of Bitcoin and the exiting level of difficulty in finding a block also becomes an increasing factor as more and more Bitcoin are being mined globally. However increases in both the price and the level of difficulty will force many miners to seek newer alternatives in the coming future.