THE WHY, WHAT, HOW, WHEN AND WHERE OF BITCOINS: (PT4)

Mining and the Blockchain

Bitcoin-Miner

The Blockchain & Mining.

The BlockChain:  each Bitcoin’s underlying cryptographic software code, is in fact a combination of alphanumeric scripts (e.g.: 111222134445RRR666Trccc/?:000178nB).  A record of this combined with all the activity, the transactions including the mining of each Bitcoin, is recorded; there is a ledger for each and every transaction and every single Bitcoin can be traced (Okay this needs skill, but it is a fact). The Blockchain is a combination of the type of Bitcoin and underlying code (there are many types) each may have code variations, so this underlying code and every transaction and sale of every Bitcoin makes up the Blockchain, which is downloaded to every mining computer. The Blockchain is completely transparent. Unlike money which once in circulation becomes untraceable.

This model of the Blockchain lends itself to other uses for all types of quantifiable and transparent and open source operations. It can even run elections!

Mining Bitcoins: Bitcoins are generated by cracking the complex mathematical coded problems within which they are embedded, requiring significant computing power and a lot of time, and therefore electricity: Bitcoin Wiki.

It takes approximately 10 minutes (on a slow machine) to remove a hashing block # which is like redundant code, not Bitcoin code itself and it can take weeks of continuous hashing # # #  to reach anything of significance; a block which may take two weeks on very fast high spec machines.

Its not difficult to do: mining Bitcoins is fairly simple, the software is free, most people don’t know that its so easy and it only requires a little computer expertise to set up a PC to mine Bitcoins. But there are obstacles, it requires constant operation and can cost more to do so with electricity charges outpacing any Bitcoin results. Most mining is also, now taking place on expensive graphic card based dedicated machines, with lots of collaborators sharing results which are blocks of numerous Bitcoins, which are sub divided and shared to the participants. This is known as a mining pool.

Its possible to earn a small share of results for doing some hashing # and thus removing some of the massive amounts of intervening code that obscures / hides pockets of blocks of Bitcoins.

Rasberry Pie Bitcoin mining.

Its possible to set up a low cost ‘Rig’ to constantly run the mining hardware (and software downloaded onto an SD card) with a Block Errupter. Low cost is of course relative.

YouTube Video: how to set-up the hardware to mine.

Each Block errupter can do 3000 plus Mega-Hashes# per second; and this gives you an idea of how big and how deeply hidden the embedded Bitcoins are! The Software.

Cost – V – results: the cost of mining when all things are considered can be more than the results. Its now easy to build the hardware, but its not an insignificant cost, additionally the cost of running continuously # for weeks on end in electricity charges will mount up.

Some professional mining operations even move to low cost electricity locations – locating the hardware in Iceland for example where charges are fairly low. So you can appreciate that an individual miner is up against it!

Mining Bitcoins when their value exceeds $500 is well worthwhile, so to is being part of a shared collaborative mining pool to be somewhat certain of gaining some revenue.

However if the price drops or you are mining lower value Bitcoins, then it makes little sense and is better to simply buy them: on a risk, chance and futures gamble!

Coins-e   is a Bitcoin Digital Trading Platform. Here you can compare buy and exchange and trade; remember that such trading exchanges charge a fee in the buying/selling price to cover their operation. However unlike the failed MTGox exchange this one gives you the actual Bitcoin code.

Security:  And its very important to save your Bitcoin code OFFLINE to a CD/DVD/SD Card/ USB or even print it out.

ANT Miner:

ANT-Miner

So I ran this ANT Miner set -up (shown above), it has a very high spec;  for a month in a mining pool, and got £3 worth share of a Bitcoin!

So you can see that this is never going to pay out!

Next I will try this same rig on s single mining operation; maybe I’ll get lucky?

Tune in in a month or so for my evaluation…