How can I earn Bitcoins, what is mining Bitcoins?

BlockErupterUSB-FrontBack-crop

Bitcoin is a cryptocurrency which can be used for payment of goods and services. Part of the reason Bitcoin exists, is due to the voluntary computer systems out on the Internet running the program that supports the Bitcoin network. These voluntary computer systems are often called “miners” in the Bitcoin community. Miners do the calculations to ensure payments are only able to be spent once, and they update the master ledger or “block record” with transaction data. There is also a slim chance these miners can get free Bitcoins – which is the motivation to join and support the network.

The History of mining Bitcoins

In the beginning, computer CPUs powered the Bitcoin network. The early clients had a feature where you could sign your CPU up for mining and get a shot or share at the free Bitcoins that are released. Quickly, people learned the video GPUs were superior for this task and the trend shifted toward GPUs while CPUs became mostly obsolete for the task of mining. In 2012, ASIC mining came onto the scene and revolutionized mining again, this time making GPUs obsolete since ASICs could typically do more an order of magnitude more calculations for the same or less electricity.

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Fast forward to October 2013 – I decided to try my hand at mining. First, you need to get a mining rig, which consists of hardware and software to power it. I purchased an inexpensive USB block erupter ASICminer device on eBay for my experiment, and until it arrived had a few days to test my laptop’s GPU processor as well. I’m running a MacBook Pro with OS X 10.8.5 and the software I found that worked best was Asteroid. Just download and install the Asteroid app, it’s free and already has the command level program included that drives your hardware. I started Asteroid and it does a good job at finding whatever hardware you have available in a few seconds or less.

Where to mine?

You can choose to start mining on your own, but this will be futile for getting Bitcoins. As of late 2013, the “guilds” or networks of miners are the ones taking nearly all the free Bitcoins that are distributed. These mining guilds distribute the workload of mining across all their members which allows many miners to work together. Without going into too much detail, those who have the most processing power on the Bitcoin network will tend to get the majority of the free Bitcoins released into the system. Guilds that get the free coins then pay it out to their members based on the amount and difficulty of “shares” they contributed to finding the block of free coins, minus their overhead and fees. So, unless you are starting off with 10+ GHz/sec (decent speed as of October 2013) mining rig, it really behoves you to work with a guild. I joined the BTC guild since they are well established, large, and also take a good proportion of the free coins that are released.

Tell me about mining already!

OK, so I’m signed up with BTC guild, and running Asteroid. Within Asteroid, point the “mining pool” to the guild or pool you signed up for already. Use the pull down to make sure you have at least one piece of hardware that can hash and that it’s checked. On the right, press the play or start button to start mining.

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