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CPU mining. In the first days of bitcoin, mining issue was low and not a lot of miners were competing for blocks and rewards. This made it rewarding to use your computers own central processing unit (CPU) to mine bitcoin. However, that strategy was soon replaced by GPU mining.
GPU mining. An graphics processing unit (GPU) is a powerful processor whose sole objective is to help your computers graphics card in rendering 3D graphics. GPUs are not built for executive decisions (such as CPUs) but to be somewhat good laborers, hence GPUs can execute over 800 times more instructions in the exact same amount of time as a CPU.
FPGA mining. Next came mining using field-programmable gate arrays (FPGAs). These significantly outperformed GPUs and CPUs in the mining process as FPGAs are processors which can be programmed to execute certain instructions, and only those instructions (instead of being repurposed for mining, like GPUs were).
ASIC mining. Similar to FPGAs, application-specific integrated circuits are processors designed for a particular purpose, in our situation mining bitcoin, and nothing else. ASICs for bitcoin were introduced in 2013 and, as of November 2017, they are the best processors available for mining bitcoin and they outperform FPGAs in electricity consumption. .
Mining pools. To offset the problem of mining a block, miners began organizing in cloud or pools mining networks. Whenever a miner in one of those pools solves a block, the reward is shared with everyone in the swimming pool in a ratio representative of how much work you put into the pool (even though you personally never solved the puzzle). .
Cloud mining. Clouds provide potential miners the capability to purchase mining channels in a remote data centre location. There are many obvious advantages, the most obvious being: no energy expenses, no excess heat, and nothing to sell when you opt to hang up your virtual pickaxe.
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Once miners receive bitcoin, they are given a digital key to the bitcoin addresses. You can use this digital key to access and validate or approve transactions.
Desktop pockets. Software like Bitcoin Core lets you send and save bitcoin addresses and connects to the network to monitor transactions.
Online wallets. Bitcoin keys are saved online by exchange programs like Coinbase or Circle and can be retrieved from anywhere.
Mobile wallets. Apps like Blockchain go to these guys store and encrypt your bitcoin keys so that you can make payments using your mobile device.
Paper wallets. Some websites offer paper wallet services, generating a piece of paper using just two QR codes on it. One code is your public address at which you get bitcoin and the other one is the private address you can use for spending.
Hardware wallets. You can use a USB device made specifically to store bitcoin electronically and your private address keys.
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Making money mining bitcoin is much harder today. Some of the issues contributing to the difficulty include:
Hardware prices. The times of mining using a standard CPU or graphic card are gone. As more people have begun mining, the difficulty of solving the puzzles has too increased. ASIC microchips were designed to process the computations faster and have become necessary to succeed at mining now. These chips can cost $3,000 more or more and are guaranteed to additional increase in cost with each improvement and update. .
Rise in corporate miners. Hobby miners must now compete with for-profits and their larger, better machines when mining to make a buck.
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Power costs. Electricity in the United States is more expensive than it is in other areas of earth, making it more difficult to compete with big-miner money.
When discussing the feasibility of bitcoin mining, an unexpected variable rears its head: power consumption. This catches a whole lot of potential miners off-guard. After all, we seldom consider how much energy our electrical appliances are consuming. But computing hashes is a really intensive process, pushing whatever chip youre using to the limit, and to its highest possible energy consumption.
If youre using CPU/GPU/FPGA to mine, the answer is a definite no. As of November 2017, the BTC reward is so modest that it doesnt pay for the energy that your computer will consume to confirm a block.
This leaves us with Pools, ASICs and Cloud Mining. In case youre not willing to set a lot of money into setting up a mining operation, your best option might be to get a cloud mining rig. These are relatively low cost, and need no hardware knowledge to get started, no extra power bills, and you wont end up with a machine that you cant sell when bitcoin mining is no longer rewarding. .