Do You Know How to Mine

Most of the new leeks entering the coin circle have heard of bitcoin mining, but they know little about what bitcoin mining is and how to mine. Who would have thought that bitcoin mining has formed a complete industrial chain, upstream and downstream, respectively composed of mining machine manufacturers, multi-level sellers, ore pools and miners. Mining machine manufacturers are in the core position, and other links are building a business model around mining machine manufacturers.No.1 | three elements of bitcoin miningThe three core elements that determine whether bitcoin mining is profitable are currency price, computing power and electricity charge. When bitcoin prices enter the downlink irreversibly, computing power and electricity charges become factors related to the survival of the mine. Whoever can gain an overwhelming advantage in the competition of computing power and electricity bill is more likely to survive in the cold winter and make a lot of money when the next bull market comes.

From the birth of bitcoin in 2009 to now, the computing power of the whole network has increased by 30 billion times. The surge in computing power makes the mining revenue of a single machine nearly halve every two months. How to compete with the computing power of the whole network to dig more bitcoin is a key field in this death game.

The price of currency and machine both fell, and the electricity price became the core factor of profit and loss. Electricity prices vary from 10 cents to 20 cents, which can even be directly related to the survival of the mine. "Mining machines are not worth money. If the mining revenue falls close to the cost of electricity, it will be cheaper than whose electricity bill. If people with electricity bills of more than 50 cents have to sell machines at a loss, the electricity of 30 cents can still be turned on." said a founder of a mining pool.

No.2 | crazy minerBitcoin prices continued to rise since September 2017, peaked in December, and rose nearly 500% in just three months. According to online data, the price of a bitcoin doubled from $4000 in September 2017 to $8000 in November, and rose to an ultra-high peak of $19500 in December. What follows is the madness of the mining machine market. When the market is the most fanatical, the mining machine prices one day, and all kinds of irrational behaviors in the market occur one after another.The dominant mining machine in global digital currency mining is ASIC mining machine, and bitland occupies 70% - 80% of the ASIC mining machine market share, which makes it the most influential party in the industrial chain.

Miners are most afraid to buy mining machines when the price of coins is high. When the price of coins falls, the price of machines will also fall; Machine prices have plunged and mining profits have become less.No.3 | computational power dilemmaBitcoin is a competitive game based on computing power. As a bitcoin miner, if you want to dig more bitcoins, it means that your mining machine needs to compete with the computing power of the whole network. Bitcoin based on blockchain technology has a unique calculation rule: on average, one block is excavated every 10 minutes, and each block contains more than 12.5 bitcoins. In order to maintain the block out rate, bitcoin will increase the calculation difficulty about every 13 days.

From the birth of bitcoin in 2009 to now, the computing power of the whole network has increased by 30 billion times. There are more than 2 million mining machines gathered in dozens of mining pools around the world for bitcoin mining. The more computing power in the whole network, the less revenue of a single miner, because the output of bitcoin is fixed in the whole network. Theoretically, 144 blocks can be excavated in the whole network in one day. The mining bonus of one block is 12.5btc, and the total mining output of bitcoin in the whole network is 1800btc every day. In fact, the mining output will be more, about 2000btc to 2200btc.

Your mining machine computing power accounts for several percent of the total computing power of the whole network, which means that you will receive a corresponding proportion of mining revenue in these more than 2000 BTC outputs.Not only bitcoin, miners of other digital currencies are also facing the dilemma of sharp rise in computing power and sharp decline in mining revenue. An Ethereum miner told reporters that one of his mining machines could dig out one eth every month in October 2017. However, after about two months, only 0.6 eth will be dug, and only 0.45 eth will be dug by March 2018. The surge in computing power makes the mining revenue of a single machine nearly halve every two months.No.4 | condensed ore pool

The era of fighting alone has passed, and smart people have invented "mine pool" - a program that can combine scattered personal computing power into joint operation. When your personal computing power only accounts for one hundred million of the computing power of the whole network, after connecting to the mine pool, the computing power of you and others will gather to become one tenth or even more of the whole network, which gives the mine pool the opportunity to obtain more mining revenue through the advantage of computing power. After the 3% - 5% handling fee is charged by the ore pool, the income will be distributed to the miners.

2012 is called the "first year of the mining pool". In that year, the computing power of all mining pools has accounted for 50% of the global total computing power, which means that the era of individuals using home computers to dig bitcoin is over.The essence of mining machine is a collection of chips, not a complete computer. Its system, like a router, can only perform computing operations. Therefore, when the mining machine excavates, the ore pool needs to issue tasks to the mining machine, inspect the mining machine after completing the tasks, and issue revenue rewards.In order to attract more miners to join the aggregation computing power, the ore pool will design a more generous reward mechanism. A simple analogy is that if mining is abstracted into a dice game, the rules of the game should have rewards only when you roll more than "5", but many mining pools will design that you can get a small part of rewards as long as you roll more than "3". This allows miners to join the mine pool more enthusiastically than digging by themselves.

With the growth of Chinese miners in the world, China's ore pools are also rising at the same time. Considering the network speed, miners will give priority to their own country's ore pool, so the ore pool and miners are one. According to the real-time data of btc.com, in April 2018, the top ten mining pools in the world, Chinese mining pools occupied eight seats, holding 75% of the computing power of bitcoin in the whole network. Among them, btc.com and ant ore pools in bitland firmly occupy the first and second places.The mining pool solves the problem of insufficient computing power of a single mining machine, but it also raises people's concern - in theory, as long as someone can master 51% of the computing power of the whole network, he can launch "51% attack" and control the whole bitcoin network.How to balance the power of the mining pool has also become the next problem of bitcoin mining.

No.5 | power gameElectricity price and machine price are the two core costs of bitcoin mining. When both currency price and machine price fall, electricity price becomes the key to profit and loss. The difference between electricity prices is 10 cents to 20 cents, which can even be directly related to the survival of the mine.

When individual miners dig, infrastructure often fails. Eager for low electricity bills and professional infrastructure, bitcoin mining has gradually developed from individual miners to large-scale mines. The mines are divided into self owned and managed modes. Since the self owned mode requires a large amount of accumulated costs to invest in mining machines in the early stage, at present, most mines adopt the trusteeship mode - property services similar to real estate. The mines find mining sites with low electricity charges to trusteeship mining machines for customers. The mining revenue belongs to the customer, and the mine only charges part of the management fee.

When bitcoin enters the bear market, whose electricity bill is cheaper also determines whether the mine can survive the cold winter. In order to find low-cost electricity, the bitcoin mining Corps has launched a power search migration that has lasted for several years across the country.