A
Beginner's Guide to Mining for Bitcoins
Bitcoins are a new
"alternative" digital currency used all over the world to pay for all
kinds of goods and services. Bitcoin ownership is not tracked not be a single
entity, like a bank or a stock exchange, but by a peer-to-peer network kept up
by ordinary people all over the world. By loaning your computer's unused
processing power to this network, you can earn bitcoins on the side in a
process called "mining." This guide will teach you how to get
started.
Please note that this guide is
oriented mainly towards Windows users. Guides for Linux and Mac OS users are
forthcoming.
1)
Figure out whether you have an integrated or dedicated GPU.
The bitcoins you can earn with your
computer's time depend on the quality of your GPU. GPUs - graphics or video
cards - are much more efficient at processing the calculations required by the
Bitcoin network than are CPUs, which are what most people think of when they
hear the word "processor." The quality of your GPU determines how
much you can earn through bitcoin mining.
Unless you have a dedicated gaming
computer, your computer unfortunately probably has what's called an
"integrated GPU," meaning that your GPU is part of your computer's
motherboard. Integrated GPUs are cheaper and less effective than
"dedicated" GPUs, which are separate pieces of hardware.
To find out what GPU you have, do
this:
In any version of Windows, open the
"Run" dialog and type "dxdiag". Click on the
"Display" tab. Your GPU will be described in the "Device"
box in the upper left-hand corner of the screen.
At 346.16 Mhash/s:
Or, un-congratulations, if that's
the number you're getting.
If you see something like this, with
the phrase "Intel Chipset Family," you have an integrated GPU, and
mining for bitcoins probably isn't a good use of your and your computer's time.
While it's possible to mine Bitcoins using just a CPU, you would in most cases
be earning the equivalent of a few cents a week. Most people feel that it's not
worth it, especially when you take into account the wear and tear on your
computer and the cost of electricity.
If you still want to try it out,
keep reading.
2)
Look up your GPU's efficiency.
In terms of bitcoin mining, not all
GPUs are created equal. Even if you have a dedicated GPU, it may not be the
right kind to make mining profitable for you.
Your GPU's mining power is measured
in megahashes-per-second (Mhash/s), hashes being the "problem" that
your GPU is solving for the network. The faster your GPU can work, the more
you'll earn by mining.
However, buying a more expensive GPU
doesn't necessarily mean you'll be mining faster - sometimes a $100 GPU can be
more effective than a $200 one. It can be hard to tell what sort of performance
you're going to get out of your card. Fortunately, the bitcoin mining community
has come together to make an extremely useful Wiki, and its mining hardware comparison page details the efficiency of all kinds of GPUs.
Here's an example of a laptop
computer with an inexpensive dedicated GPU:
This computer's graphics card is an
NVIDIA GeForce GTX 260M. Now that we know the model name and number, we can
look up the card's efficiency.
First, we scroll down to the NVIDIA
table.
As you can see, the first column is the model of the GPU,
and the second is its efficiency. Let's scroll down to find the GTX260M.
Now we know the card's efficiency.
But what does it mean?
3)
Determining how much you'll actually be earning.
So, the user who tested it got 22.5
hashes per second. Is that good or bad? Fortunately, there's a calculator
application to tell you that here. In the hash rate field, type in
22.5. The exchange rate field is the exchange rate of bitcoins to American
dollars, and can be found in the upper-right-hand corner of this page.
At 22.5 hashes per second, if you
left your miner running for a week, you'd earn slightly less than a dollar. So,
that's not very good.
The wiki also has a table of
inexpensive GPUs and their rates. Note that these GPUs are ATI Radeons.
So the 5830 gets 302 megashes per
second, and the 5850 gets 346.16. What does that work out to in money?
At 302 Mhash/s:
At 346.16 Mhash/s:
So, the 5830 would earn a little
more than $12 working for a week straight, and a 5850 a little less than $14.
That's not too bad for the cost - given that they're both averaging around
$140-$160 on eBay, they ought to be paid off within three months. And you might
get a better Skyrim experience. (I could just use the Skyrim reference to date
these values, but for the record, these are the prices as of mid-August, 2012.)
4)
Before you go out and buy anything, though...
Keep this in mind: Your GPU's
earning power will probably go down over time.
You see that box at the top of the
mining calculator labelled "Difficulty Factor"?
The difficulty factor determines,
basically, how many hashes you have to solve to get a payout. The difficulty
rises as bitcoin useage rises - which is what's currently happening - and falls
as bitcoin useage falls - which, if it falls hard enough to cause a decrease,
will probably mean that bitcoin value is dropping hard, too.
The article I linked to gives a more
detailed analysis of why this happens, but what you need to know is this: Your
Mhashes/s rate will probably be worth less over time. Blockexplorer.com gives
us an estimate that the next rise in difficulty will bring it up from
2190865.9701029 to 2353124.03142649. How does this make a difference in our
numbers? Let's run the 5850 again:
The weekly payout has now dropped by about a dollar USD,
which is about a 7% change. That's a lot. And this is only the next rise in
difficulty; there'll probably be another one after that. Now, the value of the
bitcoin itself may well go up as more people use it, meaning that you break
even or better. But do keep in mind, before you put in an order for a new GPU
or computer, that what you're doing here is making a risky investment. If all
you're interested in is money, buying a share of SPY on
ScottTrade might be a better deal.
However, if you're ready to go ahead:
5) Get a bitcoin wallet.
A bitcoin wallet is basically a randomly-generated address
that leads to a public list of bitcoin transactions. Any payment you make or
receive at your address is a matter of public record - but because there's no
personal information associated with it, no one can see exactly who you are,
and who you've been making transactions with. You can have as many addresses as
you want, and you can make a new one any time. For example, here's an address I
just set up on Instawallet:
1542hU1P3uf4oMV2bZc1yXcVHevoMtSPz6
(You should send some money to it!) To look up transactions
an address has engaged in, go to Blockchain.info and
paste it into the search box.
To access and use the money, you need to use some sort of
client. There are a lot of different wallet clients out there, but I'm going to
describe two of the most popular methods:
a) Go to Instawallet.org.
Annnd you have a wallet! Instawallet will automatically
generate a random wallet for you and send you to the page for it. You just need
to bookmark the page and make sure not to lose the URL. The address you'll use
to collect money while mining will be labelled "Bitcoin address for
receiving payments into this wallet."
Instawallet is not the most secure way to store your
bitcoins. For more security, you should,
b) Download a Bitcoin client.
I listed Instawallet first simply because it's the easiest
thing to do. If you want a bit more control over your wallet, you can host it
on your own computer using a bitcoin client. Just install a client, wait for it
to finishing syncing up, and start using the wallet it creates for you.
There's a list of clients here. I personally prefer Multibit - it's more stable than Electrum
and faster than Bitcoin-Qt or Armory.
Now that you have a bitcoin wallet, it's time to start
mining.
6) Sign up for a mining pool.
To go a bit deeper into how mining works: When your GPU is
working on hashes, what it's actually doing is finding part of a larger unit
called a block. When a block is completed, the party who completed it gets 50
bitcoins. To simplify a lot, this means that if 99 people work on one block,
then the 100th is the one to complete it, the 100th gets the 50 bitcoins and
the first 99 get nothing.
Mining pools are basically groups of people who have agreed
to work together and split the 50 bitcoins among themselves by hashes solved.
The pool administrator generally keeps back a certain percentage of what the
pool earns for maintenance costs and to have a balance to pay out. Most pools
pay out whenever someone works their way up to a certain amount of bitcoins,
rather than paying out whenever the pool solves a block.
There are a lot of pools to choose from, but you're probably
best of starting with a large, stable one. You can spot these pools easily by
going to Blockchain.info and looking
at the most recent named payors; in general, about half of them will be mining
pools. As of the time at which I'm typing this, the mining pools Mt.Red, Bitclockers,
BTC Guild, EclipseMC, and Slush are visible on the front page.
All of these are large and fairly stable mining pools.
You'll need to sign up for all of these pools on their
homepages. They'll provide you with the information you need to input into a
miner to get started.
7) Make sure your GPU has the latest drivers.
Your GPU will need drivers with OpenCL support in order to
do the processing required for mining. Most recent GPU drivers support OpenCL.
For an NVIDIA GPU on a Windows PC, you can download the most recent drivers here, by
searching for your specific GPU. For an AMD CPU, go here.
Before installing a new video driver, you should always
create a Windows System Restore point; some computers use specialized versions
of their GPU's drivers created by the PC manufacturer. If your computer can't
use the official NVIDIA or AMD drivers, you want to be able to revert back to
the manufacturer ones.
8) Download and configure a miner.
There are a number of miners out there, but for a beginner
using Windows, I recommend GUIMiner. It comes
preconfigured for many popular pools, including most of the ones I listed
above. Download it, extract it to any directory, and open guiminer.exe.
You'll need select the pool that you signed up for from the
drop-down box, then type in your miner username and password. Note that your
the username and password it wants aren't the ones you use to
log in to the pool's website. You'll need to set up a
"worker" which has its own username and password on the pool's
website; that's what you need to type into the blanks.
When you have your information entered, click "Start
mining" at the bottom of the window. If you entered everything correctly,
in a moment your mining speed should appear in the lower right-hand corner.
9) Congratulations, you're mining!
