The History of Bitcoin Mining
by Jerome Morrow | Nov 18, 2014 | Crypto News
You must have heard about Bitcoin mining. Bitcoin miners use special software and hardware to solve Bitcoin-related mathematical problems and as a result get Bitcoins.
Due to constant difficulty increase and more people involved, Bitcoin mining has significantly developed since the creation of this cryptocurrency.Currently, several methods of Bitcoin mining, including hardware mining, software mining, and cloud mining, are available on the crypto-market. On the way to Bitcoin’s success, developers and other IT specialists have managed to overcome numerous obstacles and win some very important battles. Let’s take a look at how it all began and where we are now.
The evolution on the Bitcoin mining hardware went through several crucial stages. When Bitcoin was created in 2009, the algorithms could have been solved by computer processors — central processing units (CPU miners). However, as the mining difficulty increased, miners began to require specialised equipment with more computing power in order to solve the math problems. The second step in the mining hardware development were graphic processing units (GPU miners) from the gaming industry. Eventually, mining developers created specialised devices for Bitcoin mining — the application-specific integrated circuits (ASIC miners). ASICs brought Bitcoin mining to completely new level, since they consumed less energy and at the same time had a significantly higher hashing speed.
On the first stages of Bitcoin mining, most of it was carried out by individual miners, who purchased personal hardware. Although in the beginning this was quite profitable, personal hardware had numerous disadvantages. It was very expensive, time-consuming and, as the mining difficulty increased, it not longer guaranteed financial gain. The rising difficulty required more energy and generated a lot of heat, creating the necessity of special cooling conditions. It has become unprofitable to use this amount of power for only one purpose — Bitcoin mining. And for this reason, many miners had decided to combine Bitcoin mining with other activities that can utilise the heat produced in the mining process (heating for a swimming pool).
Despite the fact that the mining process is mostly performed by mining hardware, the link between the hardware and the blockchain is guaranteed by the mining software. The main purpose of the software is to pass data from the miner to the blockchain and the other way around. This type of software, which is compatible with the major operating systems (i.e. OSX, Windows, and Linux), also allows the miner to follow the general mining statistics, namely the hashrate, the average speed of the miner, etc. EasyMiner, BFGMiner, and CGMiner are among the most commonly used software mining companies.
Introduced by CEX.IO, Cloud mining is an innovative concept, which was introduced in 2012 and implied that the miners form groups (pools) in order to decrease the mining costs and maximise the profit. In the terms of this phenomenon, the whole process takes place in the cloud. The users start to receive a financial reward according to their share right after purchasing the mining power, GHS. Cloud mining gives miners the possibility to avoid such inconveniences as complicated installation, excessive energy consumption, unstable Internet connectivity, complex maintenance, etc. CEX.IO is the first and leading commodity exchange offering users the trouble-free mining environment, where simultaneous Bitcoin mining and GHS trading is possible.
In order to make a profit on Bitcoin mining, miners have to choose their method while taking into consideration such parameters as profitability, stability, installation, timeliness, connectivity, maintenance, and many others. The increasing mining difficulty (Read more at “How to track Bitcoin Difficulty”), as well as willingness to gain a greater profit, will always stimulate developers to find innovative solutions. Remember, the mining era has just begun…
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