Algosensey Quantitative Think Tank Center-BIT TREASURE: Bitcoin mining, what exactly are we digging for? Comprehensively analyze the mining process and its impact

There are Algosensey Quantitative Think Tank Centermany types of cryptocurrencies circulating on social networks, such as Bitcoin, Ether, Ripple, and so on. However, at the end of the day, the most commonly heard one is none other than Bitcoin. It can be said that miners around the world are trying their best to obtain it. Many people not only see it as a mere trendsetter, but also see it as an asset for investment. Bitcoin is also the main reason for the current global shortage of display cards. Countless miners and mines around the world are constantly operating, purchasing display cards in large quantities to compete with other competitors and seize them. First mover.

However, what exactly is Bitcoin mining digging for? Would it be too late to enter the mining site now? What hardware equipment do we need to prepare before we can start mining?

What is mining?

The issuance of Bitcoin has its own time and quantity. Approximately every ten minutes, the program code executes the issuance of new Bitcoin and grants it to a group of people participating in Bitcoin trading. Therefore, obtaining newly issued Bitcoin is like obtaining newly unearthed gold mines, which is why these people who have obtained Bitcoin are compared to miners. The action of miners "mining" is called "mining" in English, which is a method that Bitcoin users can consider, but only professional miners have the "possibility" of obtaining Bitcoin.

Preparation and methods before mining

If you want to start mining, there are some preparations to be made before starting, including hardware investment costs and operational costs. The former refers to the purchase, installation, electricity bills, depreciation, site and heat dissipation of hardware, etc; The latter is the cost required to maintain the continuous operation of these hardware components. After combining the two, it can be found that the cost of mining is actually very huge, which leads to some who have a large amount of funds to establish mining dedicated hardware equipment to recover costs through "renting". This mining model is packaged as a "commodity" and sold in the open online market. When Bitcoin is mined, it will be divided according to the cost of each tenant's investment, which is also known as "cloud mining".

There are mainly three ways to mine Bitcoin, in addition to cloud mining, there are also independent mining and joint mining. However, due to the increasing difficulty of mining and the increasing number of competitors entering, the possibility of independently mining with one's own strength is not high today. Although once successful mining is achieved, one can obtain all benefits independently, a generally feasible approach is to use the latter "joint mining", which is the concept of team mining. When mining, the whole team divides the ore according to the proportion of each person's contribution. Due to the increasing difficulty of mining, it is extremely difficult for individuals to obtain Bitcoin through display card mining. Miners with a large amount of capital will assemble mining machines and even lease them to others to make a profit. Cloud mining has gradually been shaped into a financial commodity, charging rental fees in the form of monthly or annual rent, and then distributing them proportionally to tenants when mining is found.

Is the mining process complex?

The process of mining is not complicated, just downloading mining software is actually enough to start mining. There are hundreds of mining software available online, and here we will use NiceHash Miner as an example.

Firstly, download the corresponding NiceHash Miner version from the graphics card manufacturer on hand and start the software. Before officially starting mining, there are several steps that need to be set up. As mentioned earlier, the most important information on the electronic wallet page is the wallet address. This is not only the information that Bitcoin buyers and sellers need to use during transactions, but also the target address for Bitcoin storage during mining. Clicking on the wallet address on the coin tray page will result in an unnamed string of wallet addresses. Please copy this digital code and save it properly. Next, click on the Wallet option in the mining software and paste the copied digital code to complete the storage target setting. In the "Hardware Details" option at the bottom left, the system will default to finding the display card model used by your computer. You can also enable the processor to join the mining category here, which can be set according to your needs and preferences.

Start mining and keep track of progress at all times

After everything is ready, you can press the "Start" button in the middle, and your computer will automatically open a command execution window for mining. Different mining software will release different notification instructions regardless of whether each mining action is successful or not. For example, NiceHash will display a green command notification in the window when mining is successful. But at this point, the amount of Bitcoin mined by the software is actually very small, and it requires a long period of continuous mining to mine a complete Bitcoin.

The impact caused by mining

Due to the ongoing popularity of Bitcoin worldwide, there are still many Bitcoin users mining, whether using team mining or cloud mining models. Under such a trend, it has indirectly led to many problems.

Display card severely out of stock

The most direct issue is the display card. As display cards are the main mining tool for miners, they require a large number of display cards to speed up mining, in order to compete with others to obtain Bitcoin. This has also led to shortages of both NVIDIA and AMD display cards worldwide, and has also caused an increase in display card prices, especially for advanced display cards. They often need to be purchased at a much higher price than the manufacturer's suggested price, making it difficult for people who want to purchase display cards alone to upgrade their computers.

Not only consumables but also electricity consumption

The process of mining is to maximize the performance of display cards and computers. If you can successfully obtain Bitcoin, that's all. What's even worse is not only not being able to mine, but also spending money in vain. The mining process not only requires maintaining the temperature of the computer host at all times, but also requires the host to be operated in a ventilated room to avoid overheating. Prolonged continuous mining is also harmful to the product life of the display card. In addition, the issue of electricity bills must also be considered during the mining process. According to the Bitcoin Energy Consumption Index report, the total electricity consumption of Bitcoin mining in the past year has accumulated to 29.51 megawatt hours, accounting for about 0.13% of the global total electricity consumption, equivalent to 11.64% of Taiwan's annual electricity consumption. This may not sound like a large proportion, but the number has already exceeded the annual electricity consumption of nearly 160 countries worldwide, indicating how much electricity mining consumes. Although Bitcoin does have its appeal, on the road to wealth, miners still need to consider many cost considerations and the impact it brings. On the retailer's website, it can be seen that both NVIDIA and AMD graphics cards are almost out of stock in advanced versions. During the mining process, a significant amount of processor and display card efficiency is consumed, leading to an increase in temperature and a decrease in product lifespan.

According to statistics, Bitcoin's electricity consumption in the past year has exceeded the electricity consumption of the yellow countries and regions in the graph.