Since the early days of Bitcoin there has been a good deal of change in the industry, and particularly with regard to the mining of cryptocurrencies. As Ken Addison reports, writing about developments with bitcoin and blockchain for PC Perspective, much has changed since 2011.
Back in 2011 it was possible to mine bitcoin using GPU. The GPU, (which means graphics processing unit), is a part of the video rendering system of a computer, and by using GPU, it is possible to mine in a faster way.
This quickly changed, because led by a strong desire to gain more cash, people began developing Application Specific Integrated Circuits (ASICs) with the purpose of bitcoin mining. This led to a new phase in bitcoin mining where regular people were much less likely to be able to join in the mining process any more.
As of the end of 2013, cryptomining emerged again, during a period when other cryptocurrencies were being taken on. For example, as Addison highlights, “…specifically Litecoin, which was based on the Scrypt algorithm instead of AES-256 like Bitcoin.” With the emergence of other cryptocurrencies, the ASIC developed for mining Bitcoin became useless.
It also led to a phase where Dogecoin came to the fore. Introduced as a “joke currency” on 8 December 2013, Dogecoin grew so fast, that it developed its own online community. In 2014, it reached a capitalization of US$60 million and presently (June 2017), it has a capitalization of US$340 million.
At that time, those that developed these so-called “altcoins” believed that Scrypt was sufficiently different that ASICs could not be developed for it. It was also claimed to mean that GPU mining would be possible for some users once again. However, despite the claims, Scrypt ASICs were quickly developed and GPU mining came to an end once again.
Third wave Cryptomining
These developments brought us to a phase which may be termed “third wave cryptomining.” This occurred during a time when the population in general became less interested in cryptocurrencies, and those that were still involved in these started to develop altcoins instead. These use various algorithms, and one of the major developments has been that of Ethereum.
Ethereum is thought to be a “quirky” cryptocurrency which uses the Dagger-Hashimoto algorithm. It is thought to have made GPU mining more profitable again (along with the increased price of bitcoin). However, GPU shortages have made it difficult to mine this particular cryptocurrency.
There are now a variety of cryptocurrencies to mine and it can be hard to select which one to focus on, particularly since new types of altcoins are appearing all of the time, and the market is also pretty volatile. While Ethereum would initially appear to be a good choice for mining, it is argued that this might be switching to a Proof of Stake approach which would be likely to remove the need for mining.
Another option is to use a service like NiceHash. NiceHash serves the purpose of connecting those that buy and sell computer power. Those that want to mine can pay using Bitcoin to purchase mining power that targets the currency they want to mine in mining pools. The NiceHash miner application is downloaded and the NiceHash servers figure out where the workload goes. Those that sell the Bitcoin are paid and need a suitable walled to get paid. It is recommended to use Coinbase to achieve this. The following video, lets you know more about NiceHash:
NiceHash is opined to be good because its application is able to benchmark the GPUs you have accessible to you to identify the stings optimal for each miner. It can then move between currencies in an automated manner, depending on the demand for different currencies at any different time. While this seems like an excellent solution, it is worth bearing in mind that the organisation does skim off a cut of 3% for acting as a middleman. This means that its users are unable to achieve the highest levels of profit that might otherwise be possible from mining with their hardware. However, it is nonetheless a decent option for users.
One question that needs to be considered and factored in when mining is the cost of electricity. In the past that was a problem because Bitcoin was not as valuable as it is today. Given that the price of Bitcoin has risen, electricity costs are not likely to be so much of an issue anymore. It is also important when getting into this type of endeavour to remember that Bitcoin rates change, and you might not necessarily be able to afford to pay back the costs of hardware particularly rapidly. Also, GPU load that is constantly at 100% has the potential to reduce hardware life.
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