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All about Bitcoin Mining
Transcript of All about Bitcoin Mining
How do Bitcoin exchanges work?
* Bitcoins can be exchanged for other currencies like dollars, euros, and yen
* Companies like coinbase.com exchange users Bitcoins for fiat money that is sent to their bank accounts
* Coinbase uses a very secure verification process for it's users exchanges
My coinbase: https://coinbase.com/accounts/530b7de4ee1c5e60ad0002ba
What is a Virtual wallet?
* A virtual wallet is much like a regular wallet that you may own
* it's sole purpose is to hold your virtual currencies
* You can own as many virtual wallets as you want
* Virtual wallets can either be on a website or downloaded to your personal computer
* Each Virtual wallet will come with it's own Bitcoin address
* With your Bitcoin address you can send and receive money to your virtual wallet
Who supports Bitcoins?
* Here is a list of companies that currently are accepting Bitcoins payment --> http://www.coindesk.com/information/what-can-you-buy-with-bitcoins/
* Companies like Google, Amazon, Dell, Ebay, and Tesla all accept Bitcoin and the numbers are growing
* The United Sates Government has the largest Bitcoin wallet with 144,341 Bitcoins, which is equivalent to roughly $86 million.
* Winklevoss twins have purchased about 1% of all the Bitcoins in the world
A Virtual wallet is a file that contains a collection of private keys.
copy and paste as needed to add notes to your brainstorm
Bitcoin is a digital currency in which transactions can be performed without the need for a central bank.
What is Bitcoin?
Whats so good about it?
* Bitcoin is the first decentralized digital currency
* Payments work peer-to-peer without any use of a central bank or single administrator resulting in low fees for Bitcoin transactions
* Can be used in any country
* Virtual wallets can't be frozen, and there are no prerequisite or limits for Bitcoin users
* There is no way of counterfeiting Bitcoin
* Bitcoin users can buy anything that accepts Bitcoin anonymously just like fiat money
What's a Block?
*Each block is also computationally impractical to modify once it has been in the chain for a while because every block after it would also have to be regenerated.
*These properties are what make double-spending of bitcoins very difficult.
*The block chain is the main innovation of Bitcoin.
* Bitcoin mining is the process by which transactions are verified and added to blockchain
* This is also the means through which new Bitcoin are released.
* Bitcoin Miners are paid in Bitcoin for mining, and can be exchanged for fiat money
*Data is permanently recorded in the Bitcoin network through files called blocks
*A block is a record of all of the most recent Bitcoin transactions that have not yet been recorded in any prior blocks
* They could be thought of like a stock transaction ledger
* Currently Spondoolies-tech has the best Bitcoin miner ASIC processor ->http://www.spondoolies-tech.com/products/sp31-yukon-october-batch-1
ASIC stands for application-specific integrated circuit, and it's used for mining Bitcoins efficiently
What are ASIC processors?
What can you do with these blocks?
Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.
What is mining?
What is Blockchain?
Blockchain is a transaction database shared by all nodes participating in a system based on the Bitcoin protocol. A full copy of a currency's block chain contains every transaction ever executed in the currency. With this information, one can find out how much value belonged to each address at any point in history.
* Our first Avilon 230GH/s miner was running in a dorm at Hofstra University
* The plus was that we had free electricity and internet so we could maximize profit
* The downside of this was that the miner creates heat and noise, which disturbed the person in the room
* This led to the miner being shut off
* We learned that miner needs to be an undisturbed place and needs to be running 24/7 so that difficulty rate does not make the miner obsolete
What does the subject make you think of?
Break the subject into parts. Tell how it is made.
Use any reasoning to argue for or against the subject.
or Against It
Examine the subject closely and describe what you see.
What is it similar to? What is it different from?
What did Mtgox do?
* With the profit money we made from our initial investment we purchased more Bitcoins
* We converted the $1700 to 4.07 BTC at the time
* A week after we made this transaction mtgox filed for bankruptcy and people lost their money in bitcoins that where stored on their wallets on Mtgox including us
* We currently still have 4.07 BTC stored on Mtgox with an estimated value of $2100 at current price that we can't touch
* Mtgox is going through legal actions and we plan on seeing these Bitcoins in the future once all legal repercussions are done on the Mtgox exchange
What happened after?
Bitcoin is a free, open source, peer-to-peer electronic cash system that is
completely decentralized, without the need for a central server or trusted
parties. Users hold the crypto keys to their own money and transact directly
with each other, with the help of a P2P network to check for double-spending.
Getting into Bitcoin mining
* Hash Rate is the measurement for processing power
*1000 Milahashes(MH) = 1 gigahash(GH)
*1000 gigahashes(GH) = 1 terrahash(TH)
*my toshiba laptop can do 400MH/s.
*our first avalon miner did 230gh/s
*our most recent Cointerra Terra miner does 1.6th/s
*the goal is to achieve 10 machines, pushing 110th/s
-*this goal would accumulate approximately $30,000 in 1 month
*1 month would pay off 7 machines. 2 months pays off all 10 total +$20,000 profit
*difficulty rate is shooting up every month so 2 months is our limit to these machines.
Summary of What We Learned
* learning what we did wrong, we anticipate 100% up time on all future miners
*knowing what we know, our estimates should now be more accurate, given we havent made an ROI yet.
*2 of the new machines ~$8000. 2 machines = 11.0th/s
* With current difficulty & price of BTC being 480$, 1 month yields 2900$
* That means it roughly takes 3 months to make the ROI
*Difficulty raises 5-20% each month
* The more machines, the less time it takes to make the ROI
Stumbling on BTC
* Bitcoin has been around since 2006
* In 2013, in our senior year of high school 1 Bitcoin was approximately $20
* Stumbling across the idea of Bitcoin at the time we watched how the price fluctuated and learned the pattern of Bitcoin prices
* We finally decided in purchasing a Bitcoin
* We invested 40$ each, 80$ total, into buying how ever many Bitcoins we could get
* 80$ got us around 1.7 btc at that time
* We would purchase Bitcoins at low prices and waited until Bitcoin prices shot up to maximize our profits
What is Mtgox?
* At that time we used a trading exchanged called Mtgox to buy/ sell Bitcoins
* Over a period of time we realized that the price per BTC would shoot up to prices between $45 and $120
*One day the price shot up to $1000 per BTC, and our initial $80 investment turned into $1700
* We want to make this a long term investment
* Predictions say that virtual currencies are the future and will be a great part of our society in 5 years
* After the miners are paid back we will all split the profit made when the Bitcoins are sold in future evenly at 33% each
* The time to invest and use Bitcoins is now
* No taxes on mining --> http://online.wsj.com/articles/n-y-proposes-licensing-plan-for-bitcoin-businesses-1405611198
* Currently Spondooliestech has the best Bitcoin miner because of processing power and least power consumption
* They made by order and take about a month to be made and shipped
* The SP31 YUKON Bitcoin miner runs at 5.5 TH/s and draws about 3000 watts of power
* At current difficulty rate 1 The SP31 YUKON makes 1 BTC in 10 days
* So the price of the miner at
can be made back in under 3 months without electricity cost
* Each Spondooliestech miner costs $3920.00 per unit --> http://www.spondoolies-tech.com/products/sp31-yukon-october-batch-1?gclid=CjwKEAjw-JqgBRCAyqjoic27nlQSJABBTpFEGzl-6QhdVSa5VmxZF3eT_abdQeMrDDPyq6Yau7stBxoCq8bw_wcB
What am I investing in?
* From our experience and knowledge we can now run these miners smoothly and efficiently
* From investments we would purchase these miners and mine for Bitcoins
* We will save all the Bitcoins that are mined and only sell at the highest price
* From investing we will make Coinbase accounts so that investors have a virtual wallet on United States most secure Bitcoin exchange for future use
* All Bitcoins will be saved on an external hard drive and placed in a safe to be secure and unable to be hacked
Bitcoin Address --> 1MuRtfqds4sjQVEVfvXDZZhCYf1jWxF3vY
* Cost, processing power, and electrical consumption are all taken into account in Spondoolies-tech SP31 YUKON
* New blocks are added to the end of the record (known in Bitcoin as the block chain), and once written, are never changed or removed
*Each block memorializes what took place immediately before it was created
* ASIC processors are used to effectively solve for Blocks
* Once the block is solved miners are paid in the newly generated Bitcoins from the block solved
* A couple of months after the Avilon 230 GH/s miner we bought a 1.6 TH/s Cointerra miner
* This miner was pulling 3000 watts of energy and could not be on one breaker
* The 1.6 TH/s Cointerra miner had to be plugged into 2 different outlets on 2 different breakers
* At first we used extension cords to run the miner at Jorge's house
* The miner ran fine for a month until the extension cords melted and fried half the processor from the power consumption
* We learned that the miners needs to be on 2 different wall outlets, on 2 different breakers, with no extension cords
Putting It All Together
From our previous miners and over 2 years of experience we have set up a 1.6 TH/s Cointerra running perfectly undisturbed for a month now. Jorge has done all the electrical wiring straight from the box so that the miner can run on 2 separate breakers in one room. The miner is also running in Jorge's basement, which is a cool and isolated environment for the miner. We have paid our investor $910 in hand and are currently working on finishing our next 2 Bitcoins.