What is mining and how does it work?

How does Bitcoin mining work and why are video cards so important to it? In order to answer these questions it is best to proceed in stages, as we explain the definitions of the various terms mentioned above.

Bitcoin is a virtual currency created in 2009 following an idea by Satoshi Nakamoto, and is used today for the purchase of real world goods such as food, vehicles etc. Although anyone can produce these coins, their value fluctuates and their availability is limited.

The act of generating/obtaining cryptocurrencies is defined as mining and in order to carry it out users must be active online, while supplying the calculation power of their own PC in order to improve security on the web: the more power provided, the greater the profits, received in virtual currency.

To become a miner, it is essential to join a group known as a pool, in which those present offer the resources of their own computer in order to allow the completion of complex calculations.  Before doing this however, participants must open a personal account and download a program in Java.

When the pool resolves a cryptograph, it receives a sum in Bitcoins which is divided between the members of the group according to how much they have contributed in terms of resources supplied.

In order to carry out mining all you need to do is to equip yourself with a PC, a web connection, a wallet for the cryptocurrencies and Java. It doesn’t matter whether you use Mac, Linux or Windows, if you are using standard microprocessors you need to have video cards with dedicated memory and excellent performance.

Considering that nowadays, a normal computer can allow you to earn just 2 euros per year, anyone wanting to obtain greater earnings must purchase extremely high performance equipment to be dedicated specifically to this business.

Such processors, known as ASIC miners are quicker, can buy a greater number of hashes and increase the chance of closing the blocks. This kind of PC is also designed to be left on to work day and night without interruption.

While the most popular models of hardware include Hash rate 9.0 TH/S and Antminer S3+ Bitmain, software also plays an important role: BFGMiner, MinePeon, Cgminer, BitMoose and Poclbm-mod are definitely among the most widespread.

As mentioned above, video cards also play a vital role, so they should be chosen with great care. The first thing to avoid is definitely any model with less than 4 GB of memory.

In addition, performance capabilities, measured in Megahash per second (MH/s), must also be considered. This corresponds to the number of checks on the hash carried out by the graphic card:  the higher the hash rate the better.

The calculation tools which help you to work out what to get include the Profitability Calculator by Nicehash and the calculator by Cryptocompare, while the best-selling cards are Radeon RX 580 8 GB, Radeon RX 480, Radeon RX 570, GTX 1070, GTX 1060 6 GB.

There are lots of models on the market which although not as cheap, guarantee great performance, however professional miners tend to rule these out, because they increase energy costs and reduce earnings.

As is clear from what the description above, Bitcoin mining is now an extremely widespread activity which involves a growing number of people.  Despite this, it is this increase in size which is causing it to become more and more difficult to make a profit out of.

The first thing to do in order to obtain good results is to find out more on the subject and equip yourself with all the necessary tools to obtain real earnings.

Processors, video cards and all the right software components can really make a difference.

Translated by Joanne Beckwith