(we will straighten out the explanation later and clarify a few more details)
Lets talk about how a basic mining machine would work in your house and the idea of mining has changed so much from a basement operation with perhaps one or 2 mining rigs to large warehouse mining operations in Texas and now with the ability to do it on your laptop.
So lets combine the history of it with what coin mining is because people are mining all kinds of coins now and using different technologies like GPU and ASIC.
So in the beginning of 2009 there was Bitcoin and from there the first bitcoin “mined on the genesis blockchain” was by the old man of Crypto Satoshi Nakamoto.
We’ll explain mining shortly but basically from computer clubs and crypto clubs around the country people started learning about crypto and learning about mining and the blockchain.
They heard that for a few hundred dollars you could be a part of this facinating industry and make good money mining Bitcoin…whatever that meant at the time.
Many of these people were real computer nerds and had been building their own computers or upgrading their own systems for a few years so it wasn’t a major leap to doing mining.
They were new like everyone to the software and the idea of buying crypto but many new how to add multiple graphics cards to a rig and get things cooled down.
So the first type of mining was with graphics cards perhaps 4 on a standard motherboard with a cpu and a harddrive and some fans and a monitor with an operating system (Windows, Hive OS, Ibuntu-Linux) to see whats going on.
Many miners swear by using HiveOS whereas many Windows users stick with windows and claim that it has some benefits especially when it comes to overclocking.
HiveOS is considered to be more of a professional mining tool and many others need its remote feature for keeping track of off site rigs.
Then the operator had to learn enough about crypto and how to set up and account and how to get the mining software going with the video cards.
This was a mining rig and was left on 24 hours a day 7 days a week with various meters on it to tell how much revenue was being made each day.
It became an art and a science and the perfect business for certain computer savvy people mostly those who had been putting together their own computers for years anyhow.
Many people had no idea why miners would put a handful of video gaming cards in a box and make money with it but that was because of how powerful video cards are.
Video cards are able to process huge amounts of calclations which is why there are designed to render the graphics in video games and in 3danimation software.
It just so happens that crypto also requires a processor cable of performing complex and multiple math calculations as part of the hash to solve the crypto block chain.
Soon people began to have 3 or 5 or 10 rigs in their houses and noticed how hot the rooms would get with this power hungry rigs.
Whats in a typical mining rig
- motherboard (to support multiple graphics cards)
- graphics cards (4 to 6 or more) MIS, Nvidia,
- powersupply (if very large you use server powersupply)
- CPU main chip (most use PC systems, some are Mac, Linux, Raspberry Pi)
- frame to hold 4 or 6 units
- PCie splitter
- cables and blowers and accessories
- mining software (Windows or Hive OS or a linux platform Ubuntu or Raspberry Pi)
- a crypto account on an exchange and a wallet
- way to cool a room, fire extinguisher, repair person or DIY for fried boards
Larger companies set up warehouses full of mining rigs to do this task and eventually people starting complaining about how much energy was being wasted to do mining on a large scale.
But here we can say a few words about what mining is and why people did it.
Its all about the blockchain and keeping the blockchain transaction lists secure using distributed computing.
So instead of having one central computer doing all the processing of the millions of transactions per hour we have a system like the internet where thousands of computers around the world are sharing in the work and getting paid some fees for their participation as miners.
Now miners get paid some partial fees from the users of crypto when they buy and sell things and miners can get rewarded more if they win the prize of solving the equation with their hasing on their mining rigs.
So these miners have their computers running 24×7 all working with the same blockchain ledger of transactions and they are trying to basically make things all work out by doing mathematical calculations using hashing.
The winner back in the early days of just bitcoin got rewarded by getting part of a bitcoin for their success.
So it paid to have a better rig so you could win more of the so called contests.
Later other coins came out and different rigs were required to mine certian coins.
There are rigs best suited for Ethereum and others for litecoin etc.
Lets talk about what makes this decision.
This is when the concept of charging those who were buying and selling crypto a gas fee on Ethereum blockchain.
Soon other coins and blockchains were created and miners tried to mine these coins.
Some mining rigs didn’t run multiple gpu cards but were called asic rigs (application specific integrated circuit).
This is where the topics come up of POW (proof of work) and POS (proof of stake) and other terms like mining versus minting and foraging.
Today you can use your own personal computer to mine coins.
There are about 3 ways to get into the mining business today.
- set up your own rig
- pool together with others to operate and share like a coop
- take a chance by buying into a strangers rig
A Chinese company called Bitmain seems to be the largest manufacturer of bit mining machines with the popular $19,000 Antminer S9 being in high demand in December 2021.
Other names popup like Avalon miner and Helium miners which are often based on the Raspberry Pi small computers.
The big crypto mining companies are largely in China but have set up shop almost everwhere else.
One of the biggest mining operations is Bitdeer in Texas ( a spinoff from the China company BitMain) and there is another one nearby called Riot Blockchain.
Some other terms used in this industry are density (you can have 5 graphics boards in a box or just have one that packs more into a small space or is more dense)
Now its all about the hashrate with your individual MH/s or megahashes per second.
Many miners are deciding that its time to stop mining by themselves and they are looking at getting into some form of mining pool in which there are a handful of options like:
- proportional pool
- pay per share
- peer to peer pool
The main benefit seems to always be that you can combine the MH/s with the disadvantage being that you don’t have as much control over your destiny and your day to day mining decisions.
Some of the common mining pool programs are:
(under construction Dec 16,, 2021)
Well..here is where the word mining comes up and gas fees.
It takes alot of brain power or computer processing power to process these worldwide transactions and there is some extra skill involved in doing this process which they call mining so if they can solve this math problem or sorts first then that miner gets a reward.
Usually the reward is a part of a bitcoin or crypto coin.
Just like a bank must pay a company do run its database servers, these people running computer mining rigs around the world get paid either in earing a crypto coin or by earning fees like gas fees paid by the customers who are selling or buyin things with crypto.
Another question that comes up is how many bitcoins are there and is there a limit?
Yes there is a limit and this is one of the main differences between crypto and the banks and how money is made.
Unlike the way banks and governments operate with money where they just print more when they need it all cryptocurrency companies agree before they start that there will be a certain limit to how many coins they will produce and no more.
So with Bitcoin it was agreed at the beginning that there would eventually be a total of 21 million bit coins and no more.
There are about 3 million left to be mined.
So that makes Bitcoin rare and helps it to keep its value going up instead of being affected by inflation.
Its all about economics with the supply and the demand of products in this case Bitcoin.
When bitcoin started we had thousands of individual computer operators with a few computers in their basements mining bitcoin as it is called.
Then large comanies set up huge warehouses full of computers to do the same thing and we all realized that incredible amounts of heat and wasted electricity was caused by mining with a lot of computers.
So there have been changes made to the way crypto is mined and the fees charged called gas fees.
Here is some mining trivia.
Satoshi was the first crypto miner and he mined the first whats called “bit coin genesis block” which was the first block on the block chain.
Although few can say what Satoshi looks like or if he was even a person, he apparently stayed with the foundation (I assume by working remotely) for about 10 years and if he is a person would have about $200 billion worth of bitcoin with him/her/it/they.
There are now over 6,000 cryptoocurrencies in late 2021.
(under construction Jan 2022)