Bitcoin mining is about using powerful computer systems to verify transactions made by bitcoin users. The reward for this is paid out in bitcoins. There is still money to be made in mining for bitcoins, but the landscape has changed drastically in only 3 years time.
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If you want to know how to make money mining Bitcoin, then the first thing that you will need to understand what Bitcoin really is. Bitcoin is ultimately crypto-currency, which means that it is ultimately a means of exchange, and should not be considered as a virtual commodity.
The real purpose of Bitcoin mining is to add transaction records to Bitcoin’s public transaction ledger. This virtual ledger is called a block chain, since it consists of a chain of blocks which are designed to confirm transactions to the rest of the network whenever they take place.
What makes Bitcoin mining important is that it increases the security of the Bitcoin network, which basically means that the more people actively mine Bitcoin, the harder it is for outside parties to attack or subvert the network. Presently, it’s almost impossible to attack the network thanks to the very large number of Bitcoin miners present in the system, which basically means that Bitcoin mining is a very secure process.
The History of Bitcoin Mining
Originally, Bitcoin miners used the CPU on their laptops and computers for mining, but when more and more users entered the system, it soon became clear that this method was not fast enough to help them turn a profit. Because of these changes, miners eventually began to use the Graphical Processing Unit or GPU in computer graphic cards because of its ability to hash data fifty to a hundred times faster than conventional CPU.
As Bitcoin became more and more popular, new custom hardware began to appear. Among these were Field Programmable Gate Array processors, which could be attached to computers using a conventional USB connection, and the Application Specific Integrated Circuit or ASIC, which mine at unprecedented speeds while using relatively small amounts of power. Eventually, due to the popularity of Bitcoin mining, several reputable manufacturers began producing more and more products dedicated to Bitcoin miners, such as Butterfly Labs and KNC.
Today, people can find all types of software and devices which are specifically designed to mine Bitcoins. Despite the availability of so many tools, however, it’s also important to remember that it takes a lot of time and preparation to turn a profit through Bitcoin mining, which is why it’s always important to invest in the necessary hardware before you start mining.
Bitcoin Mining Calculators
Aside from mining Bitcoin, you will also need to use a Bitcoin calculator to calculate how much profit you could potentially acquire based on your current setup. Bitcoin calculators are important mainly because they calculate your projected profit based on certain conditions. The tricky part, however, is that Bitcoin mining always involves changing conditions, and thus requires constant up-to-date information not only from the Bitcoin network, but also your setup.
The good news though is that Bitcoin calculators are relatively simple devices. They are designed primarily to take your expected earnings in both Bitcoins and dollars over a certain amount of time (days, weeks and months), based on your hash rate and the hardware that you’re using. You can then use this information to plot out your projected earnings over the course of a week or a month.