cryptocurrency mining

gpu usage in cryptocurrency mining

Shobhit Seth is a freelance writer and an expert on commodities, stocks, alternative investments, cryptocurrency, as well as market and company news. In addition to being a derivatives trader and consultant, Shobhit has over 17 years of experience as a product manager and is the owner of FuturesOptionsETC.com. Hereceived his master's degree in financial management from the Netherlands and hisBachelor of Technology degree from India.

Before 2009, there was no such thing as cryptocurrency. As technology advanced to keep up with the rampant demand, cryptocurrency miningbecame a reality for many on their home computers. Over the years, the mining process and its efficiency have improved with the use of better hardware. Graphics Processing Units (GPU) have been used in the mining process for years, simply because they are more efficient than their immediate counterparts.

Cryptocurrency mining was originally performed using CPUs, or Central Processing Units. However, its limited processing speed and high power consumption led to limited output, rendering the CPU-based mining process inefficient.

Enter GPU-based mining, which offered multiple benefits over the use of CPUs. A standard GPU, like a Radeon HD 5970, clocked processing speeds of executing 3,200 32-bit instructions per clock, which was 800 times more than the speed of a CPU that executed only 4 32-bit instructions per clock.

It is this property of the GPU that makes them suitable and better for cryptocurrency mining, as the mining process requires higher efficiency in performing similar kinds of repetitive computations. The mining device continuously tries to decode the different hashes repeatedly with only one digit changing in each attempt.

GPUs are also equipped with a large number of Arithmetic Logic Units (ALU), which are responsible for performing mathematical computations. Courtesy of these ALUs, the GPU is capable of performing more calculations, leading to improved output for the crypto mining process.

Each standard computer is equipped with a Central Processing Unit (CPU), which is a processing device that acts as a master of the whole computer system. It performs the controlling functions for the whole computer based on the logic of the operating system and the software installed on the computer. Typical functionslike save this file as MS Word, print this spreadsheet, or run that video in VLC Media Playerare controlled by the CPU.

The typical function of a GPU is to perform and control the rendering of visual effects and 3D-graphics sothe CPU doesn't have to get involved in minute details of video-rendering services. It takes care of graphics-intensive tasks such as video editing, gaming display, and decoding and rendering of 3D videos and animations.

This setup allows the CPU to perform the high-level diversified tasks for managing the whole computer, while the GPU is in charge of the video functionsof which it is a specialist. A CPU will perform the function to open a video file in Windows Media Player, but once the file opens, the GPU takes over the task of displaying it properly.

GPUs have been around for years, but face competition from improved, new-age devices. They include the Field Programmable Gate Arrays (FPGAs) and the Application Specific Integrated Circuits (ASICs), which scorebetter than both CPUs and GPUs at performing hash calculations, an essential function toblockchainmanagement in cryptocurrency.

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

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At the beginning, most miners used their own CPU for coin mining, but very quickly this was not enough to mine in quantity. Miners then moved to using their Graphic Cards GPUs because they were able to hash data up to 100 times faster and consumed much less power per unit of work. We sell only products that can actually make you a profit.

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best cryptocurrency stocks for 2021 | the motley fool

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Cryptocurrency has captured investors imaginations. The surging value of digital currencies such as Bitcoin (CRYPTO:BTC) has created immense wealth for early investors. Interest in finding and investing in the next hot cryptocurrency is high.

But with more than 4,000 different digital currencies on the market -- and the world getting pushed further into the digital realm by COVID-19 -- investing in the technology that enables crypto ecosystems to function could be even more lucrative than trying to guess the next big digital asset. And there is no shortage of companies working to develop crypto technology.

The original idea behind blockchain -- a digital ledger that automatically tracks transactions between parties and confirms ownership of a crypto asset -- was creating new financial transaction technology for use on the internet. But crypto assets are now being developed to help secure all sorts of things from medical records to copyright protection to digital identification.

Investors can certainly take positions in crypto assets themselves, perhaps by buying small amounts of several different cryptocurrencies. But a better way to gain exposure to the sector is to invest in companies -- even bigger, more established companies -- that benefit from blockchain and crypto asset uptake. The amount of revenue these crypto service providers derive from blockchain tech is still small, but that could dramatically change in the decades ahead.

Coinbase Global (NASDAQ:COIN) a top cryptocurrency trading exchange, made its public debut in early 2021. The company is a top play on popular cryptos such as Bitcoin and Ethereum (CRYPTO:ETH) and allows users to trade more than 50 digital currencies.

To date, this crypto trading platforms success has been contingent on the increase in crypto prices -- which, in turn, has led to millions of users signing up for an account. Coinbase earns a small transaction fee every time someone places an order to buy or sell a crypto. But the company aspires to be more than just a place to trade. It also sponsors a debit card that allows consumers to spend from the balance in their digital wallet, it started a line of credit product for Bitcoin owners, and it launched a cloud platform for companies using and storing digital currencies.

As cryptocurrencies and blockchain technology become more widely used and accepted, new use cases are being discovered outside of digital payments. For example, NFTs (non-fungible tokens) are being used as a way to guarantee digital art as authentic. NFTs could even be used to verify and authenticate real-world assets like art or real estate. As crypto use proliferates, Coinbase could be a top beneficiary as a platform supporting its spread.

Investor interest has grown as crypto asset prices have soared, but trading was never the original idea behind blockchain and cryptocurrencies. Digital payments with fewer intermediaries (and therefore lower cost for businesses and consumers) was a primary goal. Thus, enabling the purchase and ability to hold cryptocurrencies within a digital wallet is a natural fit for Square (NYSE:SQ) and PayPal Holdings (NASDAQ:PYPL) if these assets gain acceptance over time as a form of payment.

In late 2017, Squares Cash App consumer-facing application started allowing Bitcoin trading. In 2020 and 2021, Bitcoin was a huge revenue generator for Square, although the trading feature did little to help Squares bottom line. However, the company is helping to foster use of Bitcoin among its business users (through the Square ecosystem) and could become a top platform for transacting cryptos between companies and their customers. For now, though, Cash App is a top trading app, complete with basic banking features.

Something similar can be said of PayPals Venmo digital wallet and peer-to-peer payments app, which unlocked crypto trading in early 2021. At initial launch, Venmo supported the trading of Bitcoin, Bitcoin Cash (CRYPTO:BCH), Ethereum, and Litecoin (CRYPTO:LTC). With the most users of any peer-to-peer money movement app, Venmo could become a leading cryptocurrency platform with this new feature.

[Cryptocurrency] is a new asset class, but like real estate, there's only so much Earth. So it's defined, and therefore this moving price of the commodity is just how much, within this finite class of a commodity, this new asset class, how much people value it or want it.

Chipmakers NVIDIA (NASDAQ:NVDA) and AMD (NASDAQ:AMD) dont deal with cryptocurrencies directly, but these two semiconductor companies are the leading designers of graphics processing units (GPUs). Best known for powering high-end video game graphics, GPUs now enable computing-intensive applications such as data centers, artificial intelligence, and the creation of crypto assets.

Cryptography and blockchain creation require immense computational power, and GPUs are well-suited for the job. Back in 2018, booming cryptocurrency prices were a driving force for NVIDIAs and AMD's stock price increases, as digital currency miners (people using their computers to create new units of digital assets) scrambled to purchase GPUs for the task. GPUs remain a fundamental piece of hardware for the creation and management of crypto assets. NVIDIA even launched a new lineup of chips specifically for crypto mining in early 2021.

Both NVIDIA and AMD recently announced acquisitions that will likely further cement their positions as leaders in chip technology. NVIDIA is purchasing ARM Holdings, a licensor of chip architecture design for data centers and smartphones, and AMD is acquiring field-programmable chip leader Xilinx (NASDAQ:XLNX). Both NVIDIA and AMD are poised to continue taking market share of the semiconductor industry and leading the way in developing emerging technologies such as blockchain.

CME Group (NASDAQ:CME) operates the worlds largest financial derivatives exchange, allowing investors to trade futures, which bet on or secure the future price of an asset, and options, which grant investors the option to sell or buy an asset in the future at a predetermined price. CME Group's exchange trades a diverse assortment of assets, including agricultural and mining products, energy, stocks, and currencies. Its the latter that makes CME Group a crypto stock.

At the end of 2017, CME established the first market for bitcoin futures, and, at the start of 2020, the company created a market for options on Bitcoin futures. As of February 2021, Ether (units of the crypto platform Ethereum) also has futures available on the exchange. Establishing an exchange for derivatives of the best-known cryptocurrencies has given Bitcoin and Ethereum some extra legitimacy and provided a way for digital currency owners (both individuals and a growing list of businesses that accept cryptocurrencies as payment) to mitigate risk from changes in cryptocurrency prices. Cryptocurrency derivatives are still a small market for CME Group, but adding more exchanges for crypto assets in the future is possible -- and even likely.

None of these stocks is a pure play on cryptocurrency, but its important to remember that crypto asset use is still far from mainstream. Serious obstacles to its widespread adoption lay ahead, including convincing consumers to stop using currencies issued by governments and overcoming regulatory scrutiny from those governments. Nevertheless, if and when crypto assets gain traction, the companies that are early in facilitating their development could reap major financial rewards in the decades ahead.

is ethereum stock a good investment? | the motley fool

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Ethereum is the decentralized, open-source technology that powers much of the crypto world. Applications ranging from decentralized finance to non-fungible tokens (NFTs) to enterprise blockchain solutions rely on Ethereum blockchain technology. Ethereum's native token, Ether (CRYPTO: ETH), is the second-largest coin after Bitcoin (CRYPTO: BTC) by market size and value.

Investors wishing to profit from the growing use of Ethereum technology and Ether coin have several ways to deploy their money. The most obvious and direct way is to buy Ether itself, but the value of Ether is extremely volatile. You can mitigate some risk by purchasing shares in managed funds that invest in Ether for you, with the value of your shares still directly linked to Ether. If you have little appetite for volatility, then you can buy shares of companies with significant exposure to Ethereum technology.

The Grayscale Ethereum Trust (OTC: ETHE) is a managed fund that makes it easy for investors to gain direct exposure to Ether in their brokerage accounts. Each share of the fund is backed by a fixed amount of Ether tokens (on the order of 0.01 Ether tokens per share). While the fund's share price is often lower than the value of Ether each share represents at the prevailing conversion rate, Grayscale charges a not-insignificant annual management fee of 2.5%. Grayscale shareholders cannot exchange their shares for Ether, so there's no price arbitrage opportunity.

Bitwise is a managed fund that invests in Ether on behalf of accredited investors. The minimum investment in the fund is $25,000. The fund's managers seek to minimize transaction costs and also hold the fund's Ether in cold storage, making this investment option a cost-efficient and secure way to access the Ether market. The company charges an annual management fee of 1.5%.

Unlike most other publicly traded cryptocurrency miners, which specialize in just one coin, HIVE Blockchain (TSXV: HIVE) mines both Ether and Bitcoin. The company has historically focused on Ether, and, at the end of 2020, 65% of its digital assets were held in Ether. However, after acquiring a Bitcoin mining operation in 2020, the cryptocurrency miner now has more capacity to mine Bitcoin than Ether.

NVIDIA (NASDAQ: NVDA) and AMD (NASDAQ: AMD) make graphics processing units (GPUs) for PCs, but these two chipmakers' GPUs are also well suited for mining Ether and other coins that use Ethereum technology. Hobbyist cryptocurrency miners have long been buying the graphics cards of NVIDIA and AMD to use in their mining rigs, and NVIDIA has started to design GPUs specifically for Ethereum-based coin mining. AMD is expected to soon develop a similar offering.

NVIDIA and AMD have been significantly benefiting from the growth of Ethereum technology. But it's important to mention that the Ethereum platform, and by extension all of the coins that use its technology, is moving away from the method of cryptocurrency mining that requires sophisticated computer processing units. Ethereum 2.0, the next-generation technology the platform is incrementally transitioning toward using, uses proof-of-stake rather than proof-of-work as the method by which distributed consensus is achieved. Proof-of-stake enables those with the largest coin holdings, not the most computing power, to validate cryptocurrency transactions.

Coinbase (NASDAQ: COIN) is the largest cryptocurrency exchange in the U.S. The company charges transaction fees to buyers and sellers of a wide range of cryptocurrencies, including Ether. Coinbase stands to increase its revenue as more people develop interest in cryptocurrencies. In addition, high cryptocurrency prices tend to drive increased trading activity. Investing in Coinbase adds portfolio exposure to both Ether and Ethereum technology since many of the cryptocurrencies traded on Coinbase use the Ethereum blockchain.

CME Group (NASDAQ: CME) sponsors the world's largest exchange for derivatives such as options and futures contracts. In early 2021, the company launched an Ether futures exchange, which enables investors -- many of them institutional -- to speculate on Ether price movements and reduce their portfolio risks. The exchange also increases the price stability of Ether. Investors can buy shares in CME Group to benefit from the institutional adoption of Ether, but doing so is not a pure play on the cryptocurrency.

Originally proposed in a 2013 white paper by software developer Vitalik Buterin, Ethereum is a blockchain technology in the form of software. As an open-source technology, it is available to any developer building an application that can benefit from the blockchain method of validation. While Ether and other cryptocurrencies are what Ethereum is mostly associated with, the Ethereum technology is enabling widespread innovation in industries as diverse as insurance, logistics, and healthcare.

Developers using Ethereum technology write programs called smart contracts, which are deployed to Ethereum-powered blockchains. The blockchain's network of computers executes the contract, smartly, by performing certain actions only when the conditions specified by the contract are completely met. The immutable nature of the blockchain -- the structural and logistical impossibility of altering blockchain data after it is created -- is what gives users confidence in the blockchain technology itself.

While Bitcoin is merely a value store that can be transferred to others, the Ethereum blockchain and Ether are two parts of a blockchain ecosystem. You can think of Bitcoin as an app on your smartphone, while Ethereum technology is more like the device maker, providing a platform for a wide range of software developers. Ether benefits significantly from the ubiquity of Ethereum technology because companies using smart contracts are obligated to pay, in Ether, for the network computing power they use to execute their contracts.

Investing in some of the above companies is the best way to gain portfolio exposure to Ethereum technology, but if you would rather buy Ether directly you can do so on any of the cryptocurrency exchanges. These exchanges provide users with accounts, known as wallets, and the ability to trade fiat money for cryptocurrencies, including Ether. The exchanges earn money via transaction fees and by capturing the spreads between cryptocurrency bid and ask prices.

Once you have Ether or other cryptocurrency in your wallet hosted by an exchange, you can either hold the cryptocurrency in that same wallet or transfer it to a wallet that you fully control. If you plan to own your cryptocurrency tokens for a long period of time, transferring them to your own wallet is a wise move. If the exchange gets hacked, your private cryptocurrency keys could be exposed, and you could lose all your cryptocurrency holdings.

Ethereum technology is at the core of most blockchain applications. Many believe blockchain will play a significant role in the future of finance and many other industries, making exposure to Ethereum technology a potentially very profitable addition to your investment portfolio.

The value of Ether itself is much more volatile and unpredictable than the growth of Ethereum technology. You can mitigate some of that risk and should take steps to guard against hacking, but ultimately the value of any investment directly linked to Ether is likely to fluctuate.

Ethereum is a blockchain technology in the form of software. As an open-source technology, it is available to any developer building an application that can benefit from the blockchain method of validation. While Ether and other cryptocurrencies are what Ethereum is mostly associated with, the Ethereum technology is enabling widespread innovation in industries as diverse as insurance, logistics, and healthcare.

While financial transaction technology was the original idea behind blockchain -- and this has gained early traction among established companies -- crypto assets are being developed to help secure all sorts of things, from medical records to copyright protection to digital identification. Investors could take a position in crypto assets themselves (perhaps buying a small amount of a basket of different cryptocurrencies), but investing in companies that are betting on blockchain and crypto asset uptake is the best way to get exposure to the movement.

a beginner's guide to cryptocoin mining

Mining cryptocoinsis an arms race that rewards early adopters. Bitcoin, the first decentralized cryptocurrency, released in early 2009.Similar digital currencies have crept into the worldwide market since then, including a spin-off from Bitcoin called Bitcoin Cash.

Bitcoinsare not a good choice for beginning miners who work on a small scale. The current up-front investment and maintenance costsnot to mention the mathematical difficulty of the processdon't make it profitable for consumer-level hardware. Today, Bitcoin mining is reserved for large-scale operations only.

Dogecoins and Feathercoins would yield slightly less profit with the same mining hardware but are becoming more popular daily. Peercoins can also be a reasonably decent return on your investment of time and energy.

As more people join the cryptocoin rush, your choice could get more difficult to mine because more expensive hardware will be required to discover coins. You must heavily invest if you want to stay mining that coin or take your earnings and switch to an easier cryptocoin.

As a hobby venture,cryptocoin mining can generate a small income of perhaps a dollar or two per day. In particular, the digital currencies mentioned above are accessible for regular people to mine, and a person can recoup $1,000 in hardware costs in about 18 to 24 months.

As a second income,cryptocoin mining is not a reliable way to make substantial money for most people. The profit from mining cryptocoins only becomes significant when someone is willing to invest $3,000 to $5,000 in up-front hardware costs, at which time you could potentially earn $50 per day or more.

Suppose your objective is to earn substantial money as a second income. In that case, you are better off purchasing cryptocoins with cash instead of mining them and then tucking them awayin the hopes that they will jump in value like gold or silver bullion. If your objective is to make a few digital bucks andspend them somehow, you might have a slow way to do that with mining.

Smart miners keep electricity costs to under $0.11 per kilowatt-hour;mining with 4 GPU video cards can net you around $8.00 to $10.00per day (depending upon the cryptocurrency you choose), or around $250-$300 per month.

There is a slight chance that your chosen digital currency will jump in value alongside Bitcoin at some point. Then, possibly, you could find yourself sitting on thousands of dollars in cryptocoins. The emphasis here is on "small chance," with small meaning "slightly better than winning the lottery."

If you do decide to try cryptocoin mining, proceed as a hobby with a small income return. Think of it as "gathering gold dust" instead of collecting actual gold nuggets. And always, always, do your research to avoid a scam currency.

You also need a strong appetite for reading and constant learning, as there are ongoing technology changes and new techniques for optimizing coin mining results. The most successful coin miners spend hours every week studying the best ways to adjust and improve their coin mining performance.

what is cryptocurrency mining? - dummies

Dummies has always stood for taking on complex concepts and making them easy to understand. Dummies helps everyone be more knowledgeable and confident in applying what they know. Whether its to pass that big test, qualify for that big promotion or even master that cooking technique; people who rely on dummies, rely on it to learn the critical skills and relevant information necessary for success.

how does bitcoin mining work? what is crypto mining?

Bitcoin mining is the process by which new bitcoins are entered into circulation, but it is also a critical component of the maintenance and development of the blockchain ledger. It is performed using very sophisticated computers that solve extremely complex computational math problems.

Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial typessee mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?

However, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin (throughout, we'll use "Bitcoin" when referring to the network or the cryptocurrency as a concept, and "bitcoin" when we're referring to a quantity of individual tokens).

The primary draw for many mining is the prospect of being rewarded with Bitcoin. That said, you certainly don't have to be a miner to own cryptocurrency tokens.You can alsobuy cryptocurrencies using fiat currency; you can trade it on an exchange like Bitstamp using another crypto (as an example, using Ethereum or NEO to buy Bitcoin); you even can earn it by shopping, publishing blog postson platforms that pay users in cryptocurrency, or even set up interest-earning crypto accounts.

An example of a crypto blog platform is Steemit, which is kind of like Medium except that users can reward bloggers by paying them in a proprietary cryptocurrency called STEEM.STEEM can then be traded elsewhere for Bitcoin.

The Bitcoin reward that miners receive is an incentive that motivates people to assist in the primary purpose of mining: to legitimize and monitor Bitcoin transactions, ensuring their validity. Because these responsibilities are spread among many users all over the world, Bitcoin is a "decentralized" cryptocurrency, or one that does not rely on any central authority like a central bank or government to oversee its regulation.

Miners are getting paid for their work as auditors. They are doing the work of verifying the legitimacy of Bitcoin transactions. This convention is meant to keep Bitcoin users honestand was conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the "double-spending problem."

Double spending is a scenario in which a Bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn't an issue: once you hand someone a $20 bill to buy a bottle of vodka, you no longer have it, so there's no danger you could use that same $20 bill to buy lotto tickets next door. While there is the possibility of counterfeit cash being made, it is not exactly the same as literally spending the same dollar twice. With digital currency, however,as the Investopedia dictionary explains, "there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original."

Let's say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the bills' serial numbers would see that they were the same number, and thus one of them had to be false. What a Bitcoin miner does is analogous to thatthey check transactions to make sure that users have not illegitimately tried to spend the same bitcoin twice. This isn't a perfect analogywe'll explain in more detail below.

Once miners have verified 1 MB (megabyte) worth of Bitcoin transactions, known as a "block," those miners are eligible to be rewarded with a quantity of bitcoins (more about the bitcoin reward below as well). The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly.

The good news: No advanced math or computation is involved. You may have heard that miners are solving difficult mathematical problemsthat's not exactly true. What they're actuallydoing is trying to bethe first miner to come up with a 64-digit hexadecimal number (a "hash")that is less than or equal to the target hash. It's basically guesswork.

The bad news: It's guesswork, but with the total number of possible guesses for each of these problems being on the order of trillions, it's incredibly arduous work. In order to solve a problem first, miners need a lot of computing power. To mine successfully, you need to have a high "hash rate," which is measured in terms of megahashesper second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).

In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically "minting" currency. For example, as of Nov. 2020, there were around 18.5 million bitcoins in circulation.

Aside from the coins minted via the genesis block (the very first block, which was created by founder Satoshi Nakamoto), every single one of those bitcoins came into being because of miners. In the absence of miners, Bitcoin as a network would still exist and be usable, but there would never be any additional bitcoin. There will eventually come a time when Bitcoin mining ends; per the Bitcoin Protocol, the total number of bitcoins will be capped at 21 million.

However, because the rate of bitcoin "mined" is reduced over time, the final bitcoin won't be circulated until around the year 2140. This does not mean that transactions will cease to be verified. Miners will continue to verify transactions and will be paid in fees for doing so in order to keep the integrity of Bitcoin's network.

Aside from the short-term Bitcoin payoff, being a coin miner can give you "voting" power when changes are proposed in the Bitcoin network protocol. In other words, miners have a degree of influence on the decision-making process on such matters asforking.

The rewards for Bitcoin mining are reduced by half every four years. When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020, therewardhalved again to 6.25BTC. In November of 2020, the price of Bitcoin was about $17,900 per bitcoin, which means you'd earn $111,875 (6.25 x 17,900) for completing a block. Not a bad incentive to solve that complex hash problem detailed above, it might seem.

If you want to keep track of precisely when these halvings will occur, you can consult the Bitcoin Clock, which updates this information in real-time. Interestingly, the market price of Bitcoin has, throughout its history, tended to correspond closely to the reduction of new coins entered into circulation. This lowering inflation rate increased scarcity and historically the price has risen with it.

Although early on in Bitcoin's history individuals may have been able to compete for blocks with a regular at-home computer, this is no longer the case. The reason for this is that the difficulty of mining Bitcoin changes over time.

In order to ensure the smooth functioning of the blockchain and its ability to process and verify transactions, the Bitcoin network aims to have one block produced every 10 minutes or so. However, if there are one million mining rigs competing to solve the hash problem, they'll likely reach a solution faster than a scenario in which 10 mining rigs are working on the same problem. For that reason, Bitcoin is designed to evaluate and adjust the difficulty of mining every 2,016 blocks, or roughly every two weeks.

When there is more computing power collectively working to mine for bitcoins, the difficulty level of mining increases in order to keep block production at a stable rate. Less computing power means the difficulty level decreases. To get a sense of just how much computing power is involved, when Bitcoin launched in 2009 the initial difficulty level was one. As of Nov. 2019, it is more than 13 trillion.

All of this is to say that, in order to mine competitively, miners must now invest in powerful computer equipment like a GPU (graphics processing unit) or, more realistically, an application-specific integrated circuit (ASIC). These can run from $500 to the tens of thousands.Some minersparticularly Ethereum minersbuy individual graphics cards (GPUs) as a low-cost wayto cobble together mining operations.

The photo below is a makeshift, homemade mining machine.The graphics cards are those rectangular blocks with whirring fans.Note the sandwich twist-ties holding the graphics cards to the metal pole. This is probably not the most efficient way to mine, and as you can guess, many miners are in it as much for the fun and challenge as for the money.

The ins and outs of Bitcoin mining can be difficult to understand as is. Consider this illustrative example of how the hash problem works: I tell threefriends that I'm thinking of a number between one and 100, and I write that number on a piece of paper and seal it in an envelope. My friends don't have to guess the exact number; they just have to be the first person to guess any number that is less than or equal tothe number I am thinking of. And there is no limit to how many guesses they get.

Let's say I'm thinking of the number 19. If Friend A guesses 21, they lose because of 21>19. If Friend B guesses 16 and Friend C guesses 12, then they've both theoretically arrived at viable answers, because of 16 < 19 and 12 < 19. There is no "extra credit" for Friend B, even though B's answer was closer to the target answer of 19. Now imagine that I pose the "guess what number I'm thinking of" question, but I'm not asking just three friends, and I'm not thinking of a number between 1 and 100. Rather, I'm asking millions of would-be miners and I'm thinking of a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the right answer.

In Bitcoin terms, simultaneous answers occur frequently, but at the end of the day, there can only be one winning answer. When multiple simultaneous answers are presented that are equal to or less than the target number, the Bitcoin network will decide by a simple majority51%which miner to honor.

Typically, it is the miner who has done the most work or, in other words, the one that verifies the most transactions. The losing block then becomes an "orphan block." Orphan blocks are those that are not added to the blockchain. Miners who successfully solve the hash problem but who haven't verified the most transactions are not rewarded with bitcoin.

"Hexadecimal," on the other hand, means base 16, as "hex" is derived from the Greek word for six and "deca" is derived from the Greek word for 10.In a hexadecimal system, each digit has 16 possibilities. But our numeric system only offers 10 ways of representing numbers (zero through nine). That's why you have to stick letters in, specifically letters a, b, c, d, e, and f.

What miners are doing with those huge computers and dozens of cooling fans is guessing at the target hash. Miners make these guesses byrandomly generating as many "nonces" as possible, as fast as possible. A nonce is short for "number only used once," and the nonce is the key to generating these 64-bit hexadecimal numbers I keep talking about. In Bitcoin mining, a nonce is 32 bits in sizemuch smaller than the hash, which is 256 bits. The first miner whose nonce generates a hash thatis less than or equal to the target hash is awarded credit for completing that block and is awarded the spoils of 6.25 BTC.

The screenshot below, taken from the site Blockchain.info, might help you put all this information together at a glance. You are looking at a summary of everything that happened when block #490163 was mined. The nonce that generated the "winning" hash was 731511405. The target hash is shown on top. The term "Relayed by Antpool" refers to the fact that this particular block was completed by AntPool, one of the more successful mining pools (more about mining pools below).

As you see here, their contribution to the Bitcoin community is that they confirmed 1768 transactions for this block. If you really want to see all 1768 of those transactions for this block, go to this page and scroll down to the heading "Transactions."

You'd have to get a fast mining rig, or, more realistically, join a mining poola group of coin miners who combine their computing power and split the mined Bitcoin. Mining pools are comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners.

In other words, it's literally just a numbers game.You cannot guess the pattern or make a prediction based on previous target hashes. The difficulty levelof the most recent block at the time of writing is about 17.59 trillion, meaning that the chance of any given nonce producing a hash below the target is one in 17.59 trillion. Not great odds if you're working on your own, even with a tremendously powerful mining rig.

Not only do miners have to factor in the costs associated with expensive equipment necessary to stand a chance of solving a hash problem. They must also consider the significant amount of electrical power mining rigs utilize in generating vast quantities of nonces in search of the solution. All told, Bitcoin mining is largely unprofitable for most individual miners as of this writing. The siteCryptocompareoffers a helpful calculator that allows you to plug in numbers such as your hash speed and electricity costs to estimate the costs and benefits.

Mining rewards are paid to the miner who discovers a solution to the puzzle first, and the probability that a participant will be the one to discover the solution is equal to the portion of the total mining power on the network.

Participants with a small percentage of the mining power stand a very small chance of discovering the next block on their own.For instance, a mining card that one could purchase for a couple of thousand dollars would represent less than 0.001% of the network's mining power.With such a small chance at finding the next block, it could be a long time before that miner finds a block, and the difficulty going up makes things even worse.The miner may never recoup their investment.The answer to this problem is mining pools.

Mining pools are operated bythird partiesand coordinate groups of miners.By working together in a pool and sharing the payouts among all participants, miners can get a steady flow of bitcoin starting the day they activate their miners.Statistics on some of the mining pools can be seen onBlockchain.info.

As mentioned above, the easiest way to acquire Bitcoin is to simply buy it on one of the many exchanges. Alternately, you can always leverage the "pickaxe strategy." This is based on the old saw that during the1849 California gold rush, the smart investment was not to pan for gold, but rather to make the pickaxes used for mining.

To put it in modern terms, invest in the companies that manufacture those pickaxes. In a cryptocurrency context, the pickaxe equivalent would be a company that manufactures equipment used for Bitcoin mining. You may consider looking into companies that make ASICs equipment or GPUs instead, for example.

The legality of Bitcoin mining depends entirely on your geographic location. The concept of Bitcoin can threaten the dominance of fiat currencies and government control over the financial markets. For this reason, Bitcoin is completely illegal in certain places.

Bitcoin ownership and mining are legal in more countries than not. Some examples of places where it is illegal are Algeria, Egypt, Morocco, Bolivia, Ecuador, Nepal, and Pakistan. Overall, Bitcoin use and mining are legal across much of the globe.

The risks of mining are often that of financial risk and a regulatory one. As mentioned, Bitcoin mining, and mining in general, is a financial risk. One could go through all the effort of purchasing hundreds or thousands of dollars worth of mining equipment only to have no return on their investment. That said, this risk can be mitigated by joining mining pools. If you are considering mining and live in an area that it is prohibited you should reconsider. It may also be a good idea to research your countries regulation and overall sentiment towards cryptocurrency before investing in mining equipment.

One additional potential risk from the growth of Bitcoin mining (and other proof-of-work systems as well) is the increasing energy usage required by the computer systems running the mining algorithms. While microchip efficiency has increased dramatically for ASIC chips, the growth of the network itself is outpacing technological progress. As a result, there are concerns about the environmental impact and carbon footprint of Bitcoin mining.

There are, however, efforts to mitigate this negative externality by seeking cleaner and green energy sources for mining operations (such as geothermal or solar), as well as utilizing carbon offset credits. Switching to less energy-intensive consensus mechanisms like proof-of-stake (PoS), which Ethereum is planning to do, is another strategy; however, PoS comes with its own set of drawbacks and inefficiencies.

honeyminer - welcome

Honeyminer gives anyone easy access to sophisticated mining software. Imagine earning meaningful passive income just by having your computer turned on, all while taking part in the blockchain revolution.

It depends on the power of your computer specifically the graphics card(s). Computers built for gaming or newer PCs bought in the last year will make the most. Older computers and laptops will be able to mine as well, however not at the same levels as newer ones. On the high end, newer computers can earn $1-3 per day per GPU. (based on todays value of bitcoin)

Some antivirus software may flag Honeyminer as an unknown application. Thats because Honeyminer is brand new. Honeyminer software is written in the United States, compiled completely in-house, code-signed by DigiCert, and fully audited for security compliance.

After Honeyminer is installed, you can turn it on and off as you please. Your computer should run perfectly normal with it on, the one exception would be if you were playing a graphics-intensive video game, you may want to pause Honeyminer as the same graphics card is used to mine.

For now, yes as we wanted to allow people easy access to their profits. We realize some of you will want the option to hold some or all of the coins you mine and we are building functionality to support that.

Not at this point. Our first goal was to create a 'set it and forget it' app for anyone to mine the most profitable coins. There may be some of you that have a favorite coin to mine and we will be building functionality to support that. For now you can rest assured that Honeyminer will identify the best coins to mine for you.

Technically yes, as this helps any rig run on autopilot. However we realize that more experienced miners require much more detailed monitoring capabilities and we will be building that (and a bunch of other cool stuff) into Honeyminer Pro.

cryptocurrency mining 101: what is it and what you need to get started

Cryptocurrency is a relatively new invention getting its official start in 2008 when a certain Satoshi Nakamoto made a virtual currency that he called Bitcoin. Various other cryptocurrencies have since sprouted with the most recent count being at more than 2,400. But unlike real-world money where a countrys treasury oversees its production, new cryptocurrencies are made entirely within the digital realm via a process called mining. If you feel you can do more with virtual currencies than just being an end user, youll want to know what cryptocurrency mining is and what youll need to get started.

Assuming youre familiar with accounting, you may recall that an accountant records every financial event that a company goes through in a tabular document known as a ledger. The same thing applies in the world of cryptocurrency, with all transactions recorded in a digital ledger known as a blockchain. The accountants equivalent in the cryptocurrency realm is what is known as a miner. So if you want to get into cryptocurrency mining, its best to visualize yourself as less of an actual miner looking for gold inside some underground tunnel and more of a bookkeeper.

To sum it up, cryptocurrency mining is essentially the digital equivalent of bookkeeping. Just as an accountant gets paid by a business for keeping its books, a miner receives a certain amount of cryptocurrency for their accounting services from online merchants accepting it as a payment method.

Lastly, other accountants can easily understand all transactions in a ledger, but those in a blockchain are so secure that even those who know their way around cryptocurrencies cant see the details of each financial event unless they have special software that can crack the encryption embedded in those transactions.

As discussed earlier, every transaction included in a cryptocurrency blockchain has strong encryption that makes it impossible for people especially hackers and others who are on the wrong side of cybersecurity to crack it open and steal sensitive user data. For this reason, a cryptocurrency miner needs special software to get past each blockchain transaction encryption.

You may initially think that you can use the desktop computer that you have right now to mine cryptocurrency since you often make transactions online using it anyway. Unfortunately, if youve installed cryptocurrency mining software on your only desktop and you let it run, you wont be able to use the computer to do other things.

Mining software uses up so much computing power that a desktop computer or even external graphics processing units or GPUs that miners used when cryptocurrency popularity exploded arent enough anymore. Instead, mining requires a specially-designed rig consisting of a power supply and a motherboard with application-specific integrated circuits or ASICs built into it.

As cryptocurrency mining is an exclusively online endeavor, youll need a strong and stable Internet connection. After all, you arent alone in mining your chosen cryptocurrency, and you wouldnt want a fellow miner to beat you in a race to crack the encryption of transactions in a cryptocurrency blockchain just because your Internet connection went down for a few minutes.

Of course, you can only claim to have gotten rich doing cryptocurrency mining if you have real-world currency to back it up. Thus, you should get yourself registered in an online currency exchange that accepts your chosen cryptocurrency to mine.

As technology advances at an alarmingly rapid rate, the idea of a decentralized form of digital currency has gradually turned into concrete reality thanks to the ever-growing popularity of cryptocurrencies such as Bitcoin and several others. Cryptocurrency may have its legions of users, but much of its existence has to do with miners who ensure that its always in circulation. You might have found yourself enamored by the idea of cryptocurrency mining after someone you know had gotten rich because of it. But before diving right in, youll want to know first what cryptocurrency mining is and what youll need to get started, as discussed above, so that you wont go into it blindly only to regret it later.

what is cryptocurrency mining? earn passive crypto income benzinga

Mining in the cryptocurrency industry is the process of verifying the blockchain slowly adding data as users make transactions on the network. It involves hard math called hashing (done by computers) and results in a slow accumulation of resources just like mining for minerals.

People all around the world contribute their computers power to a shared global computer (blockchain) in exchange for payment. Mining is the process of contributing power, and miners earn newly minted coins. Think Amazon Web Services, but powered by the people instead of Bezos. No central company or government owns or controls the blockchain, its all decentralized.

Mining is the term used for the process of validating and recording new transactions on a blockchain, as well as hashing them to prevent shenanigans from sliding under the radar. However, depending on the consensus model of the blockchain, typically proof of work or proof of stake, the mining process will be different.

Validating and recording all the new transactions that come across the network is not an easy task. Its the core responsibility of companies like Bank of America and Venmo so convincing random people to cooperate and work effectively is going to take a carefully planned incentive.

Satoshi Nakamoto incentivized people to maintain Bitcoins blockchain by rewarding them with newly-minted Bitcoin. This created a permanent and transparent inflation strategy that gave miners confidence their work will be rewarded with a currency worth holding on to.

Miners are the people who dedicate significant computational power (often entire networks of dedicated mining computers) to solving hashing puzzles in order to add new blocks to the blockchain. Miners who have less computing power often join mining pools; this way, users can earn a more steady stream of income from mining.

If you mine crypto with just a few mining computers, then you should join a mining pool. If you mine independently, youre essentially playing a game of luck. Youll have a very slight chance of solving a block on Bitcoins blockchain, and if you do, then youll receive the entire block reward of 6.25 bitcoin. However, this is extremely unlikely, and youd be better off joining a mining pool to receive a steady stream of a small portion of block rewards.

Proof of stake blockchains are also verified by a decentralized community, but without the intensive computing. Instead of mining, proof of stake chains employ validators who stake money to earn more. Validators stake or lock up money for the right to validate a chunk of blockchain interactions, and earn the network fees associated. These fees add up quickly, and can earn a validators between 5-20% annual yield on their staked value.

With added benefits like quick transaction times, cheap transactions and sustainability, cryptocurrencies are turning to proof-of-stake consensus to power their blockchains. Proof-of-Stake doesnt require computational power to secure blocks on the blockchain; instead, proof-of-stake uses financial stake to incentivize users to work in the best interest of the cryptocurrency.

Currently, Ethereum is in the works of upgrading to proof-of-stake with its ETH2 upgrade. Although the launch date isnt set, its expected to transition to ETH2 by early 2022. Staking Ether tokens on Ethereum 2.0 can earn you rewards that equate to about 7% annual interest. This interest is paid in Ethereum, so if the price of the token appreciates, then your interest rate will effectively be higher. You can sign up for Gemini to begin staking Ethereum today, or you can join the staking waitlist on Coinbase to stake Ether on the platform once approved.

Gemini is a cryptocurrency exchangeand custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x. Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Geminis mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader. In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.

Gemini is a cryptocurrency exchangeand custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.

Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Geminis mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.

In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.

Coinbase is one of the Internets largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs. You can even earn cryptocurrency rewards through Coinbases unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality. Though Coinbase doesnt offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.

Coinbase is one of the Internets largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.

You can even earn cryptocurrency rewards through Coinbases unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.

By including the hash of the block before it, each block is chained to the block before it all the way back to the beginning.An edit to any historical block will require recomputing every hash that comes after it.

To add a new block to the blockchain, a computational puzzle must be solved to compress the blocks data into a 256-bit hash. Mining is the act of solving this puzzle, or finding the hash a task that is not so easy. The 1st miner to successfully hash the block, making it safe to share across the internet, is awarded Bitcoin for their work. The winner shares their results with all the other miners, who verify the encryption is safe and the work is done. This is called proof of work.Once verified by the other miners, the winner securely adds the new block to the existing chain, and all the other nodes update their copies.

You many have heard of the Bitcoin halvening. Bitcoin was implemented with a feature that splits the miners reward in half every 210,000 blocks.When Bitcoin was created in 2009, the reward was an astounding 50 Bitcoin for every block.

Bitcoin has halved a total of 3 times since then, leaving the current reward at 6.25 BTC as of May 2020. Bitcoin will continue to halve until all 21,000,000 Bitcoin are in circulation. Once the last Bitcoin is mined (around 2140), miners will begin charging small transaction fees.

Many individual miners lack the necessary equipment to ever mine a block on their own. To still have a chance at making some profits, they join mining pools.Mining pools allow miners to combine (or pool) their hashing power and split the earnings. Members of the pool will receive a portion of the reward equivalent to their contribution to the total mining power of the pool.

Most computers are capable of mining Bitcoin but arent efficient enough to profit (earn a reward more than the cost of the electricity required to attain it.) This is why areas with the cheapest electricity costs have the highest concentration of mining power.

Nearly any computer can run crypto mining algorithms, but some are much better than others. A modern computer has a CPU (central processing unit) and a GPU (graphics processing unit). If the CPU is the brain of the computer, the GPU is the muscle used for mining.

ASIC computers are so specialized that they can often only mine 1 specific cryptocurrency. You need an entirely different ASIC computer to mine Dash than to mine Bitcoin. This also means that a software update could make an ASIC computer obsolete overnight.

ASIC computers are entirely useless for anything other than crypto mining but they smoke every GPU on the market. Mining with ASIC computers carries more risk than GPUs, but its much more cost effective. ASIC computers comprise the majority of mining power on most blockchains, including Bitcoin.

Certain miners and mining pools with the largest ASIC operations tend to centralize mining power on the network. For this reason, Ethereum and many other cryptocurrencies are designed to prevent ASICs from mining on their network. By only allowing GPU mining, it becomes much more expensive to dominate the network.

The cryptocurrency industry is still young, and mining has a long way to go before reaching maturation. Whether or not you should pursue an investment related to mining is up to your risk tolerance. Nearly any industry this new and underdeveloped is likely to contain a lot of uncertainty, but with uncertainty comes the potential for profit. Just be careful.

Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.

Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.

Disclaimer: As per the European Securities and Markets Authority (ESMA), the percentage of retail clients losing money on CFD trading must be updated every three months. Please note that eToros new results are 67% in regards to retail investor accounts losing money when trading CFDs with eToro. Due to this change, we require you to immediately update all of your eToro related promotions, web properties, and campaigns featuring CFD disclaimers to 67%.

Advertiser Disclosure: TD Ameritrade, Inc. and Accretive Capital LLC are separate, unaffiliated companies and are not responsible for each others services and products. Editorial Disclosure: Reviews are as determined by Benzinga Money. Opinions expressed here are solely the authors and have not been reviewed, approved or otherwise endorsed by reviewers.