Bitcoin Mining – Centralization | mining

So often we are contacted regarding mining. The concept of mining is something that interests many. Bitcoin was envisioned as a decentralised peer to peer protocol that would allow transfer of value over the internet. A fair way to pay people was to devise a method to reward those that helped support and secure the network. The idea was to allow anyone with a pc to mine btc by simply providing hashing power to the bitcoin network.

Over time we have seen the race to mine the bitcoins get harder and harder. While the network continues to become strong, the idea of mining for a common man is long gone. The current pools and centralized mining centers have drifted the power of mining in favor of countries with cheap power. The fact that even the bitcoin blockchain now sits at 74GB with roughly 15gb of data transferred within 24 hour has made it very difficult for your everyday Joe to run a bitcoin node.

I would like to suggest people who do often call inquiring about mining to understand the concept first. Mining is not free money. You are basically securing the network mining. Hence it requires enormousness amount of electricity. The AISC miners specifically designed to mine bitcoin are now running at speeds of 14ths with 1.3 kwh electricity consumption and yet you will hardly make 0.5 btc at the time of this writing and it will decrease over time. Remember there are only 21 million bitcoins out of which about 12 million have already been mined. So basically you are entering into a race to mine the balance bitcoins while the blocks become harder to mine. The rewards on AISC’s have also decreased over time due this same reason. I would strongly suggest everyone who is still interested in this to first google bitcoin calculator and see if it will even be feasible for him over a period of 1 year before trying to get into mining.

Alternately people are now looking into GPU mining and mining altcoins such as ethereum and etherum classic. In either case the problem still persists of having cheaper power to run GPU’s. If you look back through this blog I have written a tutorial on how to mine with cpu, the same concept can be used to mine with GPU, however instead of using the cpu miner software you have to look for gpu miners such as cgminer etc.

The Rise of Ethereum

Since the unleashing of the bitcoin code onto the world as an open source digital asset, many have tried to fork the code and do much more with the with the underlining technology known as blockchain. While many have simply forked and the SHA256 algorithm with competing products based on other algorithms such as scrypt nscrypt and now dagger.

Ethereum creator Vitalik Buterin envisioned a sort of a programmable blockchain. Based on smart contracts its a very powerful tool. In this Article I will try to cover the basics of ethereum so that you get clear picture of what it is and why its important. I think the best words of what ethereum is are on its website “Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.” Similar to bitcoin blockchain the ethereum blockchain requires ether to make or setup contracts and build decentralized apps based on those contracts. It is important to note that ether or ehterium being used directly will be very costly, but using it as contract based setup makes it cheap, fast, secure and unstoppable.

Mining ether is one topic being googled alot recently since it has risen in price while bitcoin price has fallen of a bit. This is even more visible when the rates of bitcoins start to rise we see the fall of price in eth or ether the fuel of ethereum blockchain. Mining is done through a program called geth which is a communicator between ether network and your system. Block generation time is very small so mining is not that difficult since there are no ASICs available for this algorithm you can look into mining it with cpu or gpu. A full tutorial on how to mine eth the fuel of ethereum can be found here.

Is ethereum the new bitcoin, most certainly not. Its a reprogrammable blockchain which can be used with contracts based programming to improve and build decentralized apps with incentives.