In my previous blog on whether cryptocurrency can usher in a Utopia, I elucidated about a complete e-currency system that was bereft of a centralized authority and how a system determines the adding of coins to the e-coffer through ‘mining’ strategies. But how does one decide how many coins to produce and when to stop?
Well, Bitcoin’s mysterious creator has a solution. Once the algorithm creates 21 million Bitcoins, the algorithm dies, marking the end of making more Bitcoins. This makes Bitcoins inflation-proof as their value either stabilizes or is only poised to grow when there are no more coins added to the list. The total number of Bitcoins mined till date is close to 12 million and calculations based on the mining rate and block reward, points to circa 2140 for the mining of the last Bitcoin.
Some independent inventors have filed an application, US 20140019693, Titled: ‘Parallel processing of a single data buffer ’. Even though the title seems nowhere related to bitcoin mining, experts in the field have identified the patent to claim the entire method of bitcoin mining. The same has been brought out by the examiner in the file wrapper as well.
Earlier, mining was limited to people in the Bitcoin network aiming to get their transactions verified. But the sudden surge in the number of e-retailers accepting Bitcoins and increment in the values of Bitcoin, along with technological advancements, has made Bitcoin mining a lucrative business. More and more users are joining the network in order to even make a living.
A surprising addition to Bitcoin mining is a Nevada-based gaming company, IGT, who owns patents US8523657and US8449378 that describe gaming systems which allow a user to wager Bitcoins for playing games. The reward for completing the games is in BitCoins as well. The patent also mentions that the processor running the game can be programmed to mine Bitcoins in parallel using the conventional hash-solve techniques. Although termed gambling, it is evident that the company is trying to bring out the fun part of bitcoin mining.
And the requirements for mining – a computer, Bitcoin software and patience.
The simple PC is failing though
While this sounds really easy, the ground reality is pretty polar. The huge number of Bitcoin miners in the network has made it difficult for anyone with a PC to get involved. Specific processing hardware has been introduced in the market just for mining Bitcoins to curb their sheer numbers. What started with a simple CPU has now moved on to ASIC’s, passing GPU’s and FPGA’s in between. ASIC’s are Application Specific IC’s which are designed for a specific purpose – in our case Bitcoin Mining. FPGA’s are Field Programmable Gate Arrays which, unlike ASIC’s, are programmable and can be used for multiple purposes. Since ASIC’s are designed for a very specific purpose, they are faster than FPGA’s but are also expensive and cannot be used for anything other than mining. As the competition is increasing by the day, a miner with the fastest device is set to prevail in the market. So, it is assumed that the miner with the highest investment will have the best returns.
Computer designers tout ROIs in 2 weeks… and low power bills!
A lot of system design companies have introduced specific Bitcoin mining systems at competitive prices. Butterfly Labs, a company working specifically on the Bitcoin industry, has introduced several systems such as the BitForce series of products. These come with multiple variants based on processing speed. The cost of these devices vary from $250 for 5GH/s to $25,000 for 500GH/s. The company has also introduced cloud-based mining services in which the user can mine Bitcoins at home with the bulky hardware situated in a remote location.
KnCMiner is another company developing Bitcoin hardware for miners which is breaking previous records of returns-on-investment. The company had introduced Mercury, Saturn and Jupiter products but has now discontinued all of them with the introduction of its Neptune device that is touted to take the mining industry to an all new level. With a speed of 3,000 GH/s and a price tag of nearly $10,000, the Neptune is believed to provide positive ROIs in just two weeks!
Top Bitcoin mining hardware providers
However, processing speed is not all that matters for mining Bitcoins. Power consumption is another huge factor. High levels of electricity is required not just by mining devices, but also to compensate for the enormous heat generated while processing. Companies such as Spondoolies, GAWMiners, Cointerra, Hashfast, etc., are introducing new products in the market with the intention of beating other devices in processing speed coupled with usage of minimal watts per GH.
Join a mining pool for regular returns
Mining is rapidly becoming a popular business opportunity among IT professionals world over. A large network of miners have led to the formation of mining pools that allow users to combine their processing power in order to beat other individuals and mine more Bitcoins. Joining a mining pool is considered as a safe option as the entire team can share a pool of coins mined by them. This means that even if a user has an outdated mining hardware, he/she can still enjoy regular returns through a pool.
While there are patents filed, do they impact the Bitcoin industry? The whole Open Source nature of the industry, along with the lack of any centralized authority has made it hard for patent assignees to attack any specific company or individual. Besides, there is always the groan of environmentalists on the large amount of electric power used for a technology that in no way contributes to solving a world problem. But if cryptocurrency is making waves, there must be a string that can tie it together to make it more relevant to world problems. That’s something I shall cover in my next blog. Until then, Happy Mining!
(Featured image source: https://pixabay.com/en/bitcoin-crypto-currency-currency-495996/)