The recent bitcoin price rally has seen the digital currency hit a peak of just over $1000 with one bitcoin is currently worth almost as much as an ounce of gold. This has led to an explosion in bitcoin MINING which is a highly profitable venture if you have a powerful machine to solve cryptographic puzzles and generate more bitcoins. Several computer hardware companies have now emerged that make ultra powerful machines based on the specialized ASIC hardware to allow bitcoin minting. Mining is the process by which bitcoins transactions are verified and blocks of transactions are added to the centrally located and accessible ledger of past transactions or block chains. Here is a simple step by step procedure on how you can carry out bitcoin mining:
The past hardware standards that have been used in bitcoin mining include your own CPU, a GPU and the FPGAs. The GPU basically refers to graphic processing unit hardware add ons that increase the overall output of your CPU. These were however valid around 2011 and have since been overtaken by more powerful computing standards as the mining process has become more competitive. The FPGA chips enable you to customize your computer for mining but the best computing hardware for this process are the specially designed ASIC based devices. These are specially designed for bitcoin mining and cost a fortune but you can justify the cost after a month of mining action. You can place an order with the manufacturers such as Avalon and ASIC Butterfly for the latest shipment of ASIC-enabled devices. Prices can go as high as $5000.
Estimate your Profitability
Before you blow that $5000 or $10,000 on a powerful ASIC machine, estimate your potential profitability to ensure you don’t waste your investment. Some of the factors that you can put into consideration when calculating your profitability include the hash rate, time frame, power consumption, cost of mining hardware, and the current bitcoin price. There are websites that you can use to predict your future profitability such as http://www.bitcoinx.com/profit/. You can determine the Bitcoin rates at some of the bitpoint exchanges such as Mt. Gox, TradeHill and CryptoXChange. The Mt Gox is by far the most popular exchange for bitcoin trade and prices have so far hit a peak of $1073 there.
Download the Bitcoin Software
You will need two types of software to carry out your bitcoin mining. These include the bitcoin client software and the mining software. The client software will offer the link between you and other clients in the network so that you can interact, transact and monitor the block chain or ledger of past transactions. On the other hand, the mining software carries out the cryptographic work which will ultimately generate the bitcoins. These vary based on your OS. You can check out the bitcoin website at www.bitcoin.org for a list of some of the most popular bitcoin mining software.
Join a Bitcoin Mining Pool
Succeeding in bitcoin mining all by your lonesome is almost impossible. One of the best ways to increase your success rate is by becoming a part of bitcoin pool and working with several teams of bitcoin miners. Several mining pools are currently in existence and you can research and become a member of the ones that have built a credible reputation in generating bitcoins. The key to bitcoin mining is its slow and steady approach. Try it out today!
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