Blockchain Main article: Blockchain
The validity of each cryptocurrency's coins is provided by a blockchain
. A blockchain is a continuously growing list of records
), called blocks
, which are linked and secured using cryptography
Each block typically contains a hash
pointer as a link to a previous block,
and transaction data.
By design, blockchains are inherently resistant to modification of the data. It is "an open, distributed ledger
that can record transactions between two parties efficiently and in a verifiable and permanent way".
For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer
network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.
Blockchains are secure by design
and are an example of a distributed computing system with high Byzantine fault tolerance
consensus has therefore been achieved with a blockchain.
Blockchains solve the double-spending
problem without the need of a trusted authority or central server
), assuming no 51% attack
(that has worked against several cryptocurrencies).
Cryptocurrencies use various timestamping schemes to "prove" the validity of transactions added to the blockchain ledger without the need for a trusted third party.
The first timestamping scheme invented was the proof-of-work
scheme. The most widely used proof-of-work schemes are based on SHA-256 and scrypt
Some other hashing algorithms that are used for proof-of-work include CryptoNight
, and X11
The proof-of-stake is a method of securing a cryptocurrency network and achieving distributed consensus through requesting users to show ownership of a certain amount of currency. It is different from proof-of-work systems that run difficult hashing algorithms to validate electronic transactions. The scheme is largely dependent on the coin, and there's currently no standard form of it. Some cryptocurrencies use a combined proof-of-work
In cryptocurrency networks, mining
is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees
by creating a complementary incentive to contribute to the processing power of the network. The rate of generating hashes, which validate any transaction, has been increased by the use of specialized machines such as FPGAs
running complex hashing algorithms like SHA-256 and Scrypt.
This arms race for cheaper-yet-efficient machines has been on since the day the first cryptocurrency, bitcoin, was introduced in 2009.
With more people venturing into the world of virtual currency, generating hashes for this validation has become far more complex over the years, with miners having to invest large sums of money on employing multiple high performance ASICs. Thus the value of the currency obtained for finding a hash often does not justify the amount of money spent on setting up the machines, the cooling facilities to overcome the enormous amount of heat they produce, and the electricity required to run them.
Some miners pool resources
, sharing their processing power
over a network to split the reward equally, according to the amount of work they contributed to the probability of finding a block
). A "share" is awarded to members of the mining pool who present a valid partial proof-of-work
As of February 2018, the Chinese Government halted trading of virtual currency, banned initial coin offerings and shut down mining. Some Chinese miners have since relocated to Canada.
One company is operating data centers for mining operations at Canadian oil and gas field sites, due to low gas prices.
In June 2018, Hydro Quebec
proposed to the provincial government to allocate 500 MW to crypto companies for mining.
According to a February 2018 report from Fortune
Iceland has become a haven for cryptocurrency miners in part because of its cheap electricity. Prices are contained because nearly all of the country's energy comes from renewable sources, prompting more mining companies to consider opening operations in Iceland.[citation needed
In March 2018, a town in Upstate New York put an 18-month moratorium on all cryptocurrency mining in an effort to preserve natural resources and the "character and direction" of the city.
GPU price rise
An increase in cryptocurrency mining increased the demand of graphics cards
(GPU) in 2017.
Popular favorites of cryptocurrency miners such as Nvidia's GTX 1060
and GTX 1070
graphics cards, as well as AMD's RX 570 and RX 580 GPUs, doubled or tripled in price – or were out of stock.
A GTX 1070 Ti which was released at a price of $450 sold for as much as $1100. Another popular card GTX 1060's 6 GB model was released at an MSRP of $250, sold for almost $500. RX 570 and RX 580 cards from AMD
were out of stock for almost a year. Miners regularly buy up the entire stock of new GPU's as soon as they are available.
Nvidia has asked retailers to do what they can when it comes to selling GPUs to gamers instead of miners. "Gamers come first for Nvidia
," said Boris Böhles, PR manager for Nvidia
in the German region.
📷An example paper printable bitcoin wallet consisting of one bitcoin address for receiving and the corresponding private key for spendingMain article: Cryptocurrency wallet
A cryptocurrency wallet
stores the public and private "keys"
or "addresses" which can be used to receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency. With the public key, it is possible for others to send currency to the wallet.
Bitcoin is pseudonymous rather than anonymous in that the cryptocurrency within a wallet is not tied to people, but rather to one or more specific keys (or "addresses").
Thereby, bitcoin owners are not identifiable, but all transactions are publicly available in the blockchain. Still, cryptocurrency exchanges
are often required by law to collect the personal information of their users.
Additions such as Zerocoin
, Zerocash and CryptoNote
have been suggested, which would allow for additional anonymity
Bitcoin mining is a term that everyone in the cryptocurrency and even many outsiders are familiar with. This is a process performed by high-powered computers (also known as nodes), which solve complicated computational math problems submitted by
While distinct, there are certain similarities between bitcoin mining and actual mining for precious metals such as gold, for example. Both processes are carried out with the intention to earn a reward.
Furthermore, bitcoins actually exist in the bitcoin protocol but they haven’t been brought out yet – just as gold exists in the ground but it hasn’t been mined yet.
But the aim of bitcoin mining is, however, twofold. For once, when the above-mentioned high-powered computer or any other type of mining hardware, for that matter, successfully solves the complex math problem on the network of Bitcoin, they produce a new bitcoin.
On the other hand, by solving the computational math problems, bitcoin miners are actually making the payment network a secure through the proof-of-work consensus algorithm.
WHY IS BITCOIN MINING NECESSARY?
In order to break down bitcoin mining, there are a few important considerations that need to be taken into account.
Consumers tend to trust different types of printed fiat currencies because they are backed by central banks. In the US, for instance, this is the Federal Reserve. This is even true for digital payments made with fiat currencies.
Bitcoin, however, is not regulated by any central authority. It can be said that it is ‘backed’ by the computing power, which secures the network. This vast network of computers and mining hardware records transactions and make sure that they are accurate.
Unlike central authorities, however, bitcoin miners are spread throughout the entire world and record the transactional information on a public ledger available to anyone. This ledger can be viewed using a block explorer and there are many different websites that provide this service.
In other words, bitcoin mining is necessary for two different reasons – first, it is needed to create new bitcoin and second, it’s needed to confirm the transactional information. So, in theory, if you don’t want to buy Bitcoin, you can earn it through mining. Whether or not that’s efficient for you as an individual miner, however, is a different story.
HOW DOES BITCOIN MINING WORK?
In order for a bitcoin miner to get block rewards, there are two conditions which need to be met. First, the miner needs to confirm a certain amount of transactions and second, which is the trickiest part, solve a complex computational math problem.
Put simply, if that’s at all possible, each miner is competing with all of the others to come up with a 64-digit hexadecimal number which is referred to as a “hash” which is less than or equal to the hash which is targeted. In other words, the computer will be spitting out different hashes at a certain rate per second guessing all of the possible 64-digit numbers until they reach the correct solution.
Therefore, computational power is essential – the more powerful your mining equipment, the larger hash rate per second you’d be able to achieve. This is why the Bitcoin mining hardware is particularly important. Naturally, the cost of mining would be based on a the operation costs such as electricity, internet connection, hardware maintenance, and so forth.
This is the main reason for which back in 2013 bitcoin miners started to use machines which were specifically designed for mining cryptocurrencies. These are called Application-Specific Integrated Circuits or ASIC mining, for short. ASIC mining devices can cost a serious amount of money but are more efficient than traditional computers.
There are a few important things to be considered when it comes to BTC mining. These are some of its pillar components, so to speak.
One of the things to be aware of in the world of Bitcoin mining is blocks. Transaction data is recorded in files which are called blocks.
Think of it as a page from your city’s recordbook. Blocks are organized into a chain in chronological order – hence, blockchain.
New transactions, as they are being confirmed by miners, go into new blocks, with each new block is being added to the end of the chain. This is why blockchain is also referred to as records of blocks.
- Block Rewards
Is Bitcoin mining profitable? This is probably the most commonly asked question. Unfortunately, there is no one answer. Block rewards are what miners compete for. Other cryptocurrencies such as Bitcoin Cash, for instance, also have their own block rewards which differ from those of Bitcoin.
At inception, every single bitcoin block reward was worth 50 BTC. However, the protocol works in a way where the block reward is being halved after 210,000 blocks have been discovered. This takes roughly around four years to complete. As of July 9th, 2016, the reward for discovering one block is 12.5 BTC.
So is Bitcoin mining profitable? It depends. One would have to calculate the current block reward based on the current prices and compare that to the cost of mining, which varies from miner to miner.
It’s worth noting that the reward for successful Bitcoin miners will drop once again in May 2020 and it will decrease to 6.25 BTC per block from the current 12.5.
- Hash Rate
To put it in the most basic terms, hash rate represents the speed at which bitcoin mining hardware can guess the correct hash. Therefore, the faster your hash rate is the higher the chances of discovering the new block you have. BTC mining has become highly competitive and, as such, you need to consider getting powerful bitcoin mining hardware. Individual miners, can, on the other hand, take advantage of cloud mining or mine a coin with lower difficulty, but more on that later.
The difficulty of bitcoin mining is adjusted frequently in order to maintain an average time of about 10 minutes to process a block. The rate is recalculated every 2,016 blocks.
In case you wonder why ten minutes – it’s because bitcoin developers have decided that this is the time needed for a steady and diminishing flow of producing new coins.
WHAT IS A MINING POOL
When it comes to cryptocurrency mining, a mining pool is the combined resources by miners who are sharing their overall computational power over a network in order to split the reward equally based on the amount of work that they have contributed to discovering a new block.
A “share” would be awarded to each member of the mining pool who manages to present a valid partial proof of his work. Mining pools became popular as the difficulty of bitcoin mining increased over time and when it became apparent that individual miners could no longer compete with bigger pools and large-scale mining operations.
WHAT IS CLOUD MINING
Cloud mining, on the other hand, is what allows individual miners to participate in the process without having to purchase particularly expensive bitcoin mining hardware.
If you want to take part in BTC mining but you don’t want to spend the time and resources to get powerful machines, you can use shared processing power provided by remote data centers. The only thing you’d need is a home computer. Generally, there are three types of cloud mining that you can take advantage of. These include:
- Hosted Mining
You can lease a mining machine which is hosted by the provider.
- Virtual Hosted Mining
This is a method which would require you to create a virtual private server and after that install your own mining software.
- Lease Hash Power
Cloud mining also allows you to lease a certain amount of hash power without having the best bitcoin mining hardware. This is likely to be the most popular method of all. Most of the providers offer comprehensive calculators that you can take advantage of to determine the current profitability based on the resources you are ready to spend.
However, it’s important to pay special attention when it comes to cloud mining as there are fraudulent service providers. It’s crucial to make proper and in-depth due-diligence, especially if you intend to lease hash power. One of the largest cloud Bitcoin mining companies out there is Genesis Mining.
ENERGY CONSUMPTION: THINGS TO BE AWARE OF
Mining bitcoin is intentionally designed to be energy intensive. The computational power needed to solve the abovementioned complex math problems requires a lot of electricity to power up the specialized mining hardware.
On the flipside, it requires even more resources to attack the network than to defend it, making Bitcoin the most secure blockchain today.
In fact, there is an entire pseudo-environmentalist brigade which aims to have the regular user believe that Bitcoin mining would somehow be the death of the planet. A lot of their arguments revolve around the fact that large data centers used for carrying out the math computations use tremendous amount of electricity. However, Bitcoinist
recently outlined three reasons for which this rhetoric is complete nonsense.
According to clean energy researcher Katrina Kelly-Pitou, the entire debate on the overall electricity consumption by bitcoin mining facilities is headed in the wrong direction. The research outlines that electricity consumption can increase while, at the same time, have minimal impact on the environment. This is because those facilities gradually begin to use more efficient, sources of energy which are renewable. Not only does this make mining more profitable, but it also lowers the impact on the environment. The researcher also outlined that banks use three times more electricity than Bitcoin’s network.
What is more, a brand new report concluded that 80 percent of Bitcoin mining is running on renewable energy. This is unsurprising since miners are naturally incentivized to seek the cheapest and cleanest sources of energy, many of which are renewables such as hydroelectricity (e.g. Iceland).
If you’re worried about Bitcoin consuming too much energy, you might want to think twice about lighting up the Christmas lights this year. That’s right – the lights that American consumers alone use to decorate their homes for the occasion make up a gigantic 6.63 billion kilowatt hours of electricity consumption every single year. That’s more than the entire national energy consumptions
of a lot of the developing countries every year. For example, both Ethiopia and El Salvador used less electricity per year.
However, if you decide to set up a mining rig in your garage, you can most definitely expect a more expensive electricity bill next month.
BEST BITCOIN MINING HARDWARE: THINGS TO CONSIDER
There are a few key parameters to look out for when it comes to choosing the best bitcoin mining hardware. These include:
Naturally, you want to be aware of how much electricity does your miner consume. The lower this number, the better.
As we explained above, the hash rate is essential for bitcoin mining. The larger this number is, the better the machine is, generally.
This measurement accounts for the efficiency of your machine. If this particular number is low, it means that the machine will consume less power for the same amount of work done by the machine.
There is a range of different devices produced by some of the largest companies in the field such as Bitmain Technologies, Canaan Creative, Halong Mining, Innosilicon Technology, and others of the kind.
WHAT ELSE CAN YOU MINE?
Bitcoin is not the only cryptocurrency which can be mined. It’s worth noting, though, that if you are using a specialized cryptocurrency mining hardware you’d have to check the compatible digital currencies, as some of the devices would only allow you to mine selected cryptocurrencies. However, apart from Bitcoin, other popular choices include Bitcoin Cash, Monero, Dogecoin, Litecoin, and so forth.
If you managed to make it thus far, you should have a general understanding of the main principles behind bitcoin mining and why it is essential to its network.
At the same time, bitcoin mining represents an alternative method to acquire the digital currency. Of course, if you don’t feel like investing time and efforts into it, let alone designating specialized bitcoin mining hardware, you can always check our detailed guide on to how to buy cryptocurrencies.
We’ve gone in depth on how to buy Bitcoin with Paypal, credit card, debit card, and even with cash. We’ve also covered some of the most popular platforms where you can buy Bitcoin.
Once you’ve done that, you can hop to our comprehensive guide to Bitcoin wallets and determine whether you want a web-based one or an offline, hardware solution instead.
Canadian investors have decided to put money and effort into a wind-powered crypto mining undertaking in Romania. To make it happen, they have finalized a deal to acquire a wind farm capable of producing enough energy to light the bulbs in over 30,000 homes. Driven by enthusiasm about the project, they have even added “Blockchain Power” to their company’s name. submitted by
Who Told Them About China? It is unclear if the Canadians knew in advance about the closed-door meeting in Beijing on the use of electricity by bitcoin miners. Regardless, they have obviously made a strategic decision to spend their money several time zones to the west of the People’s Republic – in Dobrogea. The region is shared by the poorest EU member states – Romania and Bulgaria. It is a flat, wheat growing land, with no hills or mountains to stop the constant air currents from all cardinal directions. Wind farms are a common sight there.
The Ontario-based Transeastern Power Trust has just finalized a deal to acquire the Dorobantu wind park that had been developed there by OMV Petrom with a €90 million investment. The company intends to use the farm to power the mining facilities it is planning to set up in its vicinity. Cryptocurrencies, including bitcoin, will be mined there, according to Romanian media reports.
Transeastern completed the acquisition of the 45MW wind park using $23 million of short-term bridge financing and €2.8 million vendor financing from OMV Petrom. The debt will be repaid from the proceeds of the previously announced $40 million private placement scheduled to close in the first week of January. The utility company has already announced a decision to change its name to Blockchain Power Trust, in line with its focusing on mining virtual coins.
We believe we will be the pioneers of a new and robust business model, switching from a utility company to a vertically integrated cryptocurrency mining operation.
These are the words of Mr. J. Colter Eadie, Chief executive officer of Transeastern. He also added that the name change and the implementation of a new trading symbol will better reflect the Trust’s expansion into cryptocurrency mining powered predominantly by its self-generated, 100% renewable energy. The company is working on similar projects through its subsidiaries elsewhere in Europe, including the Netherlands.
Winds Will Blow Even If Coal Burns Out The Canadian company has already entered into a non-binding agreement to buy mining equipment for which it expects to pay approximately $23 million. According to Transeastern, its new mining farm will have a processing power of 90.7 PH/s. That translates into generating about 30 bitcoins per day.
Chinese coal may burn out for crypto miners and gorgeous “Gorges” dams may dry out, but it is still a huge global village. From Romanian winds and Dutch waves, to bursting geysers in Iceland and sun catching mirrors in Arizona – there is a lot of energy to prove the work for Bitcoin.
And it’s not just about North Americans or Eastern Asians: Bitcoin is growing big in obscure corners of good ol’ Europe, too. Romanian cryptocurrency exchange CoinFlux announced last year that almost $24 million (100 million RON) worth of cryptos had been traded on its platform since its inception in late 2015, And those were figures from times when bitcoin was trading for a thousand dollars.
The Transeastern “Blockchain Power” Trust from Canada seeks to provide investors with “long-term, stable distributions, while preserving the capital value of its portfolio through investment”. Bitcoin mining sounds like something the company can utilize to deliver on that promise.
Do you think miners will relocate to other regions after China’s decision to quit preferential policies for them? Tell us in the comments section below.
Lately there seems to be a new way to get virtual currency to the people. submitted by
Like with Ripples, SpainCoin wants to give any spaniard coins, AuroraCoin to every citizen from Iceland.
What is your opinion, is this good or bad for Bitcoin? Will Bitcoin be the global virtual currency and the others the local version, which might have more users than Bitcoin?
Or will everyone just try to change their assigned SpainCoins to Bitcoin?
These other currencies might have more users than Bitcoin has right now. In the case of SpainCoin it could get distributed to 45.000.000 People... or will it just be an epic flop?
EDIT: Perhaps every Bitcoin expert should launch some locally distributed Virtual Currency to all the people of their country: ColumbiaCoin, ChileCoin, ThailandCoin.... if people can get these for free they perhaps start to use virtual currency... right now there is almost no one who uses this... I think this is something where we can learn from Ripple...
The rollout date for the Airdrop pub campaign has not been determined yet, but I hope to be able to schedule it to start in two to three weeks. I am spending $6,000 on it in the hopes that the two brand.com articles will go viral. Since raison d’etra of the Wall Street Project is to get MSM coverage, they should be coordinated as one combined campaign.
The focuses of the campaign will be the zip codes around the MIT campus. From there, it will expand out to the bluest of the blue state areas of Massachusetts, Connecticut, Rhode Island, New York, and New Jersey. That should be where the highest concentration of environmentalists are found on the ease coast. It would cost $1,500 more per article to go national.
How much lead time will be required for planning the Walk Down Wall Street? It will probably be easier for the Airdrop pub campaign to fit your schedule than vice versa, provided that we have sufficient time to get prepared after the date is set.
It will take a few days more to be ready to fix the schedule on my end.
Also, I want to have at least two environmental themed BlackCoin videos ready for rollout at the same time. I am on the third draft of the script for the BlackCoin Ladies version.
I have worked out the script in my mind for the second one based on having this guy do it: http://www.fiverr.com/ct_connect/be-the-virtual-interactive-presenter-having-your-web-page-as-the-background
Naturally, he will be standing in front of the BlackCoin
webpage at the start. Then, as he talks, he will pull up the relevant articles from the Wall Street Journal and New York Times websites, pictures of the Grand Coulee Dam Hydroelectric Plant in Washington State, fiery pictures of geothermal volcanic places in Iceland, and pictures of the Bitcoin mining warehouse in Washington State.
Ecochav provided me with the link to that one as well as the one below. I recommend that we have this guy do a news program on the combined campaign. http://www.fiverr.com/voiceactopresent-the-news
Won’t that blow your socks off? Maybe give you a couple of orgasms.
What do you think this campaign will do to the price of BLK.
I have had enough experience with live outdoor events that I know that there is a need to try to schedule around times of high probability of rain. You can get pretty good weather predictions three to five days in advance. Therefore, I suggest that the exact date not be fixed until near the drop dead time for scheduling in advance.
Once I am ready on my end, I think I can pull the trigger about a day in advance.
Ecochav will probably need more than two weeks to get three videos ready, It may cost around $2,500 to get the three videos ready. If we are going to do the, we should do it right. Funds are going to have to be raised for the videos.
With all of the planning going on publically in on BlackCoin
for over two weeks, don’t you think that the likes of Coindesk will take notice?
Of course we should get Max Bourges to give us some advice on these plans.
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