aNewDomain.net—Bitcoin is the digital crypto currency that has been sweeping the Internet since 2009. It was created by the nebulous entity Satoshi Nakamoto, allowing Silk Road and others to transact millions of mostly anonymous dollars in sales each year. As with all technology, Bitcoin comes with a light and a dark side. Bitcoins are created by a process called mining, but if your wallet gets lost, they can also be destroyed.
To create Bitcoins, you first download a miner program, then start downloading the blockchain where Bitcoins are encrypted. Blockchains are almost 8GB currently and always increasing in size as transactions happen and blocks are added to it. You can opt for a DVD in the mail if you have data caps and don’t want to waste bandwidth downloading the entire blockchain. How nice.
After that, you turn your Central Processing Units (CPUs) and hopefully your Graphics Processing Units (GPUs) loose on solving cyphers and mining Bitcoins. GPUs do this much better than CPUs.
As Bitcoin mining becomes more popular, new tools with higher processing power have surfaced, such as Field Programmable Gate Arrays (FPGAs) and Application Specific Integrated Circuits (ASICs). Avalon is one company that sells such mining rigs, and its website guarantees each unit to be a 60,000 megahertz or greater power house. Compared to an Intel Core i7 processor, which performs at about 6.7 MHz or 6.7 million hashes per second, there is simply no contest.
At the rate these hashes are getting solved, you probably need Avalon’s top of the line miner to have any hope of scoring some free Bitcoins. But how free is it? Let’s look at the costs.
The top of the line miner box currently offered by Avalon goes for about $1,300, if you can get your hands on one. The power consumption of one of these boxes is 620 megawatt-hours at 120 volts AC. Of course you probably want to order a few of these to really make sure you get that return on your investment.
Keep in mind these are all estimates and constantly changing, but at the current rate, there is more than $188,000 being spent on 1,258.05 mwh doing 80,644.13 gigahertz. That is some serious money and electricity going toward mining about 4,000 BTC for a gross of more than $420,000, or just under $240,000 minus the cost of power. This is happening each and every day.
Is it worth it? Well, the more hashes solved, the harder it becomes to mine. Back in 2009, you could have had a decent chance at solving a block and winning yourself a free 50 BTC with just a normal computer. Now, that same computer and its new high end graphics card would take decades – if ever – to solve a hash. And you only get 25 BTC now.
Remember, the prize for solving a hash gets cut in half every four years. The only way to really get in on mining bitcoins now is to join a mining pool, or spend tens of thousands of dollars on a few dedicated mining rigs.
See my article how PCs are getting hacked to mine bitcoins.