Efficiency in Bitcoin mining (Part 2)
How does a ‘miner’ look like?
Butterfly Labs is one of the companies that sell ASIC-based Bitcoin miners, machines that compute SHA-256 very quickly. The smallest, ‘Jalapeño’, computes 5 GH/s which is about 5 billion hashes per second, its price being $274. The prices for larger ones (500 GH/s) can even go as high as $22, 484.
Jalapeño is nothing but a black cube with a metal finish, the only exterior connectors being on the back: a mini USB port and a power plug. It also has some small LEDs: near the power plug to keep you posted on its status and a red one in the front to indicate power. It is a simple device, it talks via serial-over USB. You need a mining application on your computer so that you can use it and, like mentioned in the previous post, a ‘wallet’ and a ‘pool’, the latter being actually optional.
‘The tools’The very first thing you have to do after you buy such a device is to set up a ‘wallet’, a place where you can keep the Bitcoins you generate through mining. It also allows you to engage in Bitcoin transactions – you can create your own Bitcoin address and you can share it with other people, being thus able to send and receive Bitcoins.
After the ‘wallet’ phase, you should join a ‘pool’ as mining is best done when the work is shared, as well as the ’reward’. As previously said, this is optional; you can also mine by yourself, but it would be harder and less profitable because it would take you considerably more time.
PerformanceThe Butterfly Labs miner does nothing else but compute SHA-256 as fast as it can. So, if we look at it from a benchmarking perspective, the only question is whether it attains or not its target of 5 GH/s.
It is important to note that when hashing, it delivers a bit more than its rated hashes/s, hovering at between 5.4-5.6 GH/s. Now, let’s take a look at how much energy it consumes. When idle, it pulls out about 30W of power and when on, around 50. So, it would consume nearly $100 per year, in electricity. At current Bitcoin mining levels it produces 0.1 BTC every 12 hours. However, although it’s impossible to speculate on BTC-to-dollar rates in the future because of the market volatility; at the current exchange rate, the miner would be worth its money in about ten days. If the value remains more or less the same, it would generate thousands of dollars per year.
Let’s have a look at a more concrete example. In order to help you estimate your mining profitability, special calculators have been designed and they take into account several factors.
Bitcoin mining profitability calculator
Credits:
The most famous exchange is MtGox. Other examples would be MoneypakTrader.com, BIPS, BitBox, BTC-E, Camp Box and many others.
What do you have to do?First, choose an exchange. Let’s take the case of Camp Box (they allow you to withdraw funds in the form of USPS orders, unlike other cases where you have to give your bank account details). Enter their website, create an account, and generate an address to receive the Bitcoins. Afterwards, you get back to your ‘wallet’, click the option ‘send money’, enter the generated address for your account, select your entire store of Bitcoins (e.g.: 2.90123) and then ‘send payment’.
After the transaction, you have to choose ‘trade now’ and then initiate a ‘quick sell’ order. You should see somewhere at the top of the screen the current bid price (e.g. $129 per Bitcoin). Next, you have to type in your BTC amount, enter the rate and preview the order. After you ‘execute the sell’, a confirmation should appear. The exchange takes a commission (around $2) and afterwards you should see in your account the amount you had in BTC, exchanged in dollars. Last, you transfer your money (either through USPS order, bank account transfer etc.).
Quite simple, right?
References:
Hutchinson, L. (2013), Hot a total n00b mined $700 in bitcoins
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