Bitcoin mining is a particularly controversial activity in mainstream media which willingly attack it from the angle of its supposed monstrous carbon footprint.
However, this sector also fascinates, including within the community, partly due to a certain opacity. Who are these miners and do they really control the price of Bitcoin ? How do they survive in this bear market and what to expect from this famous halving that everyone evokes with fear or hope? Where are the mining farms and how do they work? Could I embark on the adventure with a little equipment or must we necessarily go to an industrial scale to be profitable? Like you, I have asked myself all these questions and many more to answer them in this matter. Let’s discover the wonderful world of bitcoin mining together.
Before delving into deeper and more complex subjects it is important to take up the basics. In other words: what is bitcoin mining, how does it work and what is it necessary for the operation of the Bitcoin network. Let’s discover together the wonderful world of Proof of Work and mining machines Asics. Unfortunately, I could not go into detail about the functioning of Bitcoin in this file and I advise the most neophytes to learn upstream on the subject before continuing reading.
The validation of a transaction block that can be added to the longest chain goes through proof of work verification. This operation is based on two principles:
- on the one hand, make the actors of the consensus a task to limit intentions to interact dishonestly with the network.
- on the other hand to find this famous task to be accomplished so that it is relatively complex to carry out, but very easily verifiable. I will give a few examples to illustrate my point.
If the concept seems exotic, there are however contexts in our daily environment involving actions governed by proof of work. One of them is particularly well known, it is the Captcha.
Created in 2000 at the University of Carnegie Mellon, these Completely Automated Public Turing test To tell Computers and Humans Apart (and yes, it wasn’t a Russian or Danish term), are therefore tests allowing to discriminate the authentic human user of the vulgar spam bot.
Captcha was mainly developed for websites in order to limit malicious attacks by denial of services (Ddos) for example. Today these small vision-based tests are found in all forms of the internet and illustrate the concept of proof of work very well. Indeed if the action takes less than a minute to be executed by the user, the verification is even more dazzling on the server side.
The Captcha thus embodies a good illustration of the Proof of Work. Obviously, mining bitcoins is not just about solving Captchas all day long as we will see in the next part.
What is bitcoin mining?
It’s certain Reddit that the user 2Panik offers the community an original explanation of the principle of bitcoin mining which will speak particularly to players of RPG and other fantasy lovers. This dossier offers me the ideal opportunity to present it to you:
- The virtual world of Bitcoin is populated by players playing together, but with their own goals and lifestyle. They improve their characters as the interest in this game grows.
- About every 10 minutes, a Boss (monster) appears which must be defeated for the smooth running of the game. Defeating it will offer rewards to entice players to face it.
- The players then gather in groups (pool) to defeat it since only the fatal blow brings the rewards. It’s easier to be in a group and share the spoils than to try the adventure alone.
- Once the Boss emerges from nothing, players have nothing more to do than watch their characters face it, using variously performing equipment, automatically.
The monsters that appear become increasingly tough as players progress while the rewards decrease. In fact, the more players there are, the more the rewards are complicated to obtain, but they are also halved during recurring special events, known in advance, called ” halving “(Which means” division by 2 “in English, that’s good).
Rewards can be freely exchanged between players and even with other users who do not have equipment. Finally a team of volunteers is set up for watch for cheating attempts by certain dishonest players.
If you have mastered the operation of bitcoin mining, you should have recognized the main players in the system during the explanation. Indeed the players are therefore the minors and the Boss the next block in the chain. As for the loot, these are Coinbase transactions that reward the miner who validates the block first. Guilds represent pools minors and volunteers are the fulls-Nodes.
At the beginning of the Bitcoin network, miners were mainly enthusiasts who discovered this revolution before the majority. So these pioneers were running their personal computers – all the most traditional machines – to get bitcoins.
It should be emphasized, and we will talk about this in the study of the distribution of bitcoins, at the time the rewards were really much more generous than today. To give you an idea, half of all available bitcoin (10.5 million of the 21 million that will eventually be mined) had already been mined on November 28, 2012.
The original miners simply used the processors of their computers, then the graphics cards found in consumer machines. But little by little, specific machines were developed for mining bitcoins or other cryptocurrencies sharing the same algorithm of mining. Age of Asics could start, these printed circuits specifically dedicated to carrying out a very specific task. They are very effective in their fields, but absolutely not versatile.
Here is a summary of the main machines dedicated to bitcoin mining and their characteristics. The main criteria to take into account when choosing one machine over another are the computing power, the efficiency in terms of power consumption and the price, of course:
Bitmain price: $ 101
The S9 is the machine dedicated to bitcoin mining, probably the most emblematic of the sector. Indeed launched in 2015, it is the main machine found on farms with affordable electricity (the lower limit is around 5cts / Kwh). It also allowed significant increases in the computing power deployed on the Bitcoin network from 2015-2016 until tripling the difficulty of the time (it will be recalled in passing that the Bitcoin network is thus configured, that he adapts his difficulty in real time to the power of the machines that mine his blockchain). With its computing power of 14 TH and its efficiency of 0.1 Joule per GH bringing its electrical consumption to 1350w it was indeed a very good opportunity for miners.
Developed by a new player in the sector Halong mining, the DragonMint has as its name suggests without ambiguity, 16 Tera Hashs per machine. The development and research around this machine has been colossal since a hundred people have dedicated themselves to its development and that nearly 30 million dollars were necessary to finance it. With its electrical efficiency of 0.075J / GH bringing its consumption to 1480W these machines are therefore approximately a third more efficient than their competitors Antminer S9.
Bitmain price: $ 1,270
Latest machines from factories Bitmain launched in May 2019, the Antminer T17 bring with it a new level of computing power. Each unit of this mining machine offers 40TH for a consumption of 2200W. Its energy efficiency is also greatly improved compared to the S9 model, almost halved since it is 0.055J / GH.
The sector is dynamic and particularly competitive, there are still many other machines dedicated to bitcoin mining with their own characteristics, energy efficiency and price.
This concludes the first episode of this dossier devoted to bitcoin mining. Now that we have laid a few foundations, we can quickly go further by exploring the ecosystem and its actors. If you have any comments or questions, please let us know!