Miners compete against each other to earn rewards in the form of new bitcoins.

But can a mobile phone, like an iPhone, handle this task?

Think about it: if a mobile phone is a compact computer, could it be used for Bitcoin mining? Can you profit from it?

In this article, we’ll explore everything you need to know about mobile Bitcoin mining!

Let’s dive in!

How does Bitcoin mining work today?

Bitcoin mining has become a highly competitive and complex process since Bitcoin’s launch in 2009. Today, it involves specialized equipment, intense competition, and significant electricity costs.

Here’s a breakdown of how it works:

1. Proof of Work (PoW)

Bitcoin mining operates on the Proof of Work principle. Miners must solve a complex mathematical puzzle to add a new block to the Bitcoin blockchain, earning newly minted bitcoins as a reward.

2. Specialized equipment

In the early days, home computers were enough for mining. Now, miners use ASICs (Application-Specific Integrated Circuits), machines specifically designed for Bitcoin mining.

3. Mining pools

Due to the increasing difficulty and competition, individual miners often join mining pools to combine their computational power and improve their chances of success.

Profits are then distributed among pool members based on their contributions.

4. Electricity costs

Mining consumes a lot of electricity, making profitability dependent on electricity costs in specific regions. Many miners set up operations in areas with tax incentives or cheaper electricity, such as Paraguay, China, and Texas (USA).

5. Difficulty adjustment

Bitcoin adjusts its mining difficulty roughly every two weeks.

As more processing power enters the network, the difficulty increases, ensuring a new block is mined about every 10 minutes, regardless of hardware or participant numbers.

6. Mining rewards

The initial block reward was 50 bitcoins, but it halves every four years in events called “halvings.”

The latest halving in 2024 reduced the reward to 3.125 bitcoins. This process continues, making Bitcoin increasingly scarce over time.

What are ASIC machines?

ASICs (Application-Specific Integrated Circuits) emerged in 2013 as a response to increasing competition in Bitcoin mining and the need for more energy-efficient methods.

These hardware chips are specifically designed for Bitcoin mining, far outperforming conventional computers in both speed and energy efficiency. Compared to CPUs and GPUs, ASICs mine Bitcoin much faster and with less energy consumption.

Today, ASICs are the standard for Bitcoin mining, and large-scale operations often take place in mining farms, where many ASIC machines are concentrated.

If you’re considering digital currency mining, it’s important to research and invest in the right hardware, while accounting for electricity costs and market conditions, as profitability can fluctuate.

Is it possible to mine Bitcoin on a mobile phone?

Technically, yes, you can mine Bitcoin using a mobile phone, whether it’s an Android device or an iPhone, as they function like small computers.

However, there are significant limitations and disadvantages. Even the most advanced smartphones lack the processing power needed to compete with ASIC machines, which are specifically designed for efficient Bitcoin mining.

Moreover, mining is a highly energy-intensive process that can strain your phone’s hardware, potentially reducing its lifespan. So, while possible, mobile Bitcoin mining is not practical or efficient.

Is it feasible to mine Bitcoin on a mobile phone?

No, mining Bitcoin on a mobile phone is not feasible due to the complexity, high difficulty, and significant resource consumption involved. Bitcoin mining requires far greater computational power, typically provided by specialized hardware like ASICs.

Since mining is a competitive process, smartphones simply cannot compete with the immense processing power of ASICs, which are specifically designed for this task.

For this reason, mining Bitcoin on a mobile phone is highly inefficient, and it’s not recommended.

How long would it take to mine a Bitcoin on a mobile phone?

Assuming an iPhone has a hash rate of 1 MH/s, it would take around 1,000,000 seconds, or about 11.6 days, to mine one Bitcoin block using a mobile phone.

However, this calculation is purely theoretical, as it assumes mining difficulty remains constant, which is unlikely.

In reality, Bitcoin adjusts its mining difficulty every 10 days, meaning the difficulty would rise significantly during that period, making it impossible to mine a Bitcoin block with an iPhone or any other mobile device.

For curiosity’s sake (and knowing it’s not feasible to profit from mobile Bitcoin mining), here’s an estimate of how long it would take on various phones:

Is it profitable to mine Bitcoin on a mobile phone?

No, mining Bitcoin on a mobile phone is not profitable. In fact, it’s highly inefficient and could even damage the device.

Bitcoin mining requires substantial computational power and specialized hardware to be profitable. By saying that, smartphone processors simply aren’t built to handle the complex mathematical operations involved in mining efficiently or cost-effectively.

So, again, no, mining Bitcoin on a mobile phone is not profitable.

What’s the best app for mining Bitcoin?

Most mining apps available for iOS and Android are unreliable and can be sources of malware.

Many are disguised as legitimate apps but may compromise your device’s security and personal data.

Therefore, be cautious of sites recommending downloading apps focused on mining cryptocurrencies on mobile phones!

What are the risks of mining Bitcoin on a mobile phone?

Mining on a mobile phone can overload the device, leading to excessive battery consumption and high CPU usage.

As we’ve mentioned throughout the article, this can cause the phone to run slowly, shorten its lifespan, and impact the performance of other apps, especially if used for daily tasks.

Moreover, the chances of earning significant financial returns from mobile Bitcoin mining are virtually non-existent.

Watch out for scams when trying to mine Bitcoin on a mobile phone!

Like any financial sector involving money, Bitcoin mining attracts fraudsters who prey on those unfamiliar with the process.

One of the most common scams is the cloud Bitcoin mining scam.

What is cloud Bitcoin mining?

Cloud mining allows individuals to rent computational power from a data center to mine Bitcoin without needing to buy expensive hardware or manage high electricity costs. It enables people to participate in mining without advanced technical knowledge.

Here’s how could Bitcoin mining generally works:

• You install the cloud mining company’s software on your computer.
• The software calculates your machine’s processing capacity, or its computational power.
• Mining starts, and you receive fractions of Bitcoin (satoshis) in your account based on the mining results.

How does this scam work?

Initially, the cloud mining scam seems legitimate, but the problem arises when users try to withdraw their Bitcoin and find that it’s impossible.

Some fraudulent apps even require users to install additional software, which does not deliver real results. This way, scammers can access users’ devices through malware, compromising banking passwords and other personal accounts.

Fraudulent apps on the Play Store

Be cautious when attempting to mine Bitcoin on a mobile phone!

A 2021 investigation by the cybersecurity company Lookout uncovered around 25 fraudulent mining apps on the Play Store.

These scammers managed to steal $350,000 from users—$300,000 through a fake service and $50,000 via deceptive plans promising faster mining speeds.

Overall, the research identified 172 paid Android apps that impacted 93,000 victims worldwide.

Be vigilant when downloading apps claiming to mine Bitcoin on your phone!

Whenever you come across phrases like these below, you are likely facing (or being lured into) a scam:

• Free Bitcoin mining;
• Automatic Bitcoin mining;
• Earn Bitcoin by mining at home with guaranteed returns;
• Mining contracts starting at $150.

How to earn free Bitcoin on a mobile phone?

In the past, people could earn Bitcoin through mining or faucets—websites or apps that gave away small amounts of Bitcoin in exchange for completing tasks or viewing ads.

However, that’s no longer the case today. But there is another way to earn Bitcoin for free on your phone: by playing games.

Here’s a list of games you can download to play and earn free satoshis on your mobile phone:

1. Bitcoin Bounce: Bitcoin Bounce is an endless running game with obstacles to avoid, and the round ends when you die.
2. Turbo ‘84: Turbo ‘84 is another endless running game where the player “drives” a car down a track full of obstacles. The goal is to dodge all of them while collecting tickets for a raffle, boosts to speed up the car, and another in-game currency that allows you to buy better cars, make upgrades, and more.
3. Bitcoin Snake: This is just like the classic Snake game that was on Nokia phones in the ’90s.
4. Bitcoin Bay: Bitcoin Bay is a Bitcoin version of Bubble Shooter, where you shoot balls to match and eliminate them.
5. Bitcoin Miner: A game that simulates a cryptocurrency mining business. It merges click-to-collect mechanics with a strategic approach, as you figure out the best way to build your mining farm.
6. Braindoku: A puzzle game that blends a Sudoku grid with Tetris-like gameplay and rewards you with Bitcoin for solving block puzzles.
7. Tetro Tiles: In Tetro Tiles, you place pieces on a grid similar to Sudoku, trying to complete rows or full blocks to clear space. Clear space, and you continue to the next level; run out of space, and it’s game over.

It’s important to note that you won’t get rich playing these games. However, even though you might only earn small fractions of Bitcoin, accumulating Bitcoin this way is a fun way to grow your satoshi balance.

Why isn’t mining Bitcoin on a mobile phone worthwhile?

Bitcoin mining has evolved into an industrial-scale operation, requiring significant investments in high-performance equipment, energy management, and deep technical knowledge to be profitable.

While many may dream of mining Bitcoin from home, this opportunity is only within reach for those who can fund the necessary infrastructure and have the geographical advantage of being in regions with cheap and affordable energy.

Oh, in order not to frustrate your expectations regarding mining, if you still want to mine Bitcoin from home, you can check out this article: Bitaxe, a homemade Bitcoin mining hardware

In conclusion, mobile Bitcoin mining is technically possible but not feasible in terms of financial returns today. 

Furthermore, the lack of knowledge about the subject creates fertile ground for scammers to develop fraudulent schemes, aiming to steal money and access the devices of individuals interested in quick gains.

Remember, unrestrained ambition can lead to significant losses. 

Therefore, instead of trying to profit from mobile Bitcoin mining, we recommend gaining knowledge on how to invest in Bitcoin independently and securely without resorting to schemes that promise miraculous results in the short term, potentially wasting your valuable time and hard-earned money.

The post Is it possible to mine Bitcoin on a mobile phone? appeared first on Area Bitcoin.

And that was enough for this small and powerful hardware device to gain fame among the public.

Mining has long fascinated Bitcoiners worldwide; after all, who wouldn’t want to earn Bitcoin for free and without KYC? If this once seemed like a distant dream, Bitaxe has rekindled the hope of solo mining, conducted directly from home, at a low cost, and in an open-source manner.

The philosophy of Bitcoin is deeply rooted in decentralization and the possibility for anyone to operate their own node, promoting individual sovereignty. However, there are criticisms of Bitcoin mining today, especially regarding the lack of competition among mining hardware manufacturers and the centralization of mining pools.

In Bitcoin’s early days, when Satoshi Nakamoto launched the network, miners used CPUs, i.e., simple computers, to mine. However, over time, they began using GPUs and later FPGAs. 

During that period, mining was less commercial and more collaborative, with users sharing software designs and configurations. Discussions on the Bitcoin Talk forum at that time revealed a much more open environment, where everything was open-source and accessible to anyone.

The introduction of ASIC machines brought a significant change. Developing and producing ASICs is expensive and requires significant investments, which moved mining out of the hands of ordinary individuals, turning it into a highly profitable business. 

While economically sensible, especially in a mature market with several companies developing ASICs, there is still room to make mining more accessible.

This is where Bitaxe comes in, aiming to allow Bitcoiners to explore mining more openly and accessibly, reviving the initial spirit of open source and information sharing.

Let’s dive deeper into what Bitaxe is all about.

What is Bitaxe?

Bitaxe is the first open-source ASIC mining hardware for Bitcoin. This means that anyone can access, modify, and customize Bitaxe according to their needs, making Bitcoin mining more accessible and efficient for everyone.

This small ASIC miner supports both solo and pool mining, allowing users to choose the approach that best suits their needs and preferences.

With Bitaxe, you not only help secure the Bitcoin network but also promote decentralization and diversity in the mining ecosystem.

Moreover, Bitaxe is an economical solution for those who want to enter the world of Bitcoin mining. Whether you are an experienced miner or a curious novice, this miner offers a unique opportunity to contribute to the Bitcoin network and potentially profit from mining.

Who created Bitaxe?

Bitaxe was created by Skot, an electrical engineer with extensive experience in electronics.

His interest in open-source systems began in high school when he lived in a small town with few radio stations playing music that he and his friends didn’t enjoy.

So, they decided to build their own FM radio transmitters using information available online. They managed to get the radio on the air and broadcast to their neighbors, but they faced some legal barriers in the process.

Years later, Skot discovered Bitcoin and noticed that no one was creating open-source home miners. Even without knowing how or where to start, he decided to dive into the idea.

However, the project grew, and Skot is no longer working alone. Bitaxe is now developed with the help of the Open Source Miners United group, which has about 2,500 members.

Challenges of Open-Source Bitcoin Mining

Currently, besides Bitaxe, which is still a small initiative, there is no other open-source mining hardware or firmware for Bitcoin. This absence is notable, considering that Bitcoin itself is inherently an open-source technology.

The primary reason for the lack of open-source projects in Bitcoin mining is the high cost and risk associated with developing ASICs (Application-Specific Integrated Circuits). 

Developing these chips requires significant capital investment, often in the tens of millions of dollars, along with years of development and large teams. Therefore, companies that make these investments are generally not comfortable sharing their technologies, as this would compromise their business models and financial returns.

Another factor is the focus of ASIC developers on large-scale industrial miners. These machines are designed to operate in industrial data centers, being noisy, hot, and requiring robust electrical infrastructure, making them unviable for typical home use. 

These large industrial miners constitute a more lucrative market for ASIC manufacturers. As a result, the equipment is optimized to maximize efficiency and performance on a large scale, often to the detriment of the needs of individual miners.

All this considered, Bitaxe emerges as a beacon of hope, returning to the collaborative and open-source roots of Bitcoin mining, offering an alternative for those who wish to explore and contribute to Bitcoin mining in a more accessible and transparent manner.

The development process of Bitaxe

To create Bitaxe, Skot started by acquiring an Antminer S9 and began the process of reverse engineering due to the lack of available documentation. These ASIC chips are not designed to be used independently, requiring a meticulous approach.

Skot used oscilloscopes, logic analyzers, and other equipment to understand how they worked and to learn more about Bitcoin mining.

What is Reverse Engineering?

Reverse engineering in the field of electronics is the process of disassembling and analyzing electronic components, circuits, and systems to understand their internal functioning.

This process may involve the physical disassembly of devices, the analysis of integrated circuits, the extraction of firmware codes and embedded software, and the creation of schematic diagrams from the observed components.

As time passed, the S17 chip became more accessible and available on the market. Skot was able to order some of these chips directly from China, carefully measured them, and created his own datasheet. 

He analyzed the pin connections based on the Antminer’s design, allowing him to assemble a rudimentary breakout board with exposed pins. This enabled the chip to be connected to a computer for a better understanding of how it worked.

The importance of Reverse Engineering

Many electronic components come with data that clearly explains what voltages to use, what each pin does, and the mechanical parameters. However, this is not the case for these ASIC chips, which are not available on the open market and are exclusive to Antminers. 

Therefore, reverse engineering was essential to uncover how they worked.

Other projects and initiatives

Skot is not the only person doing this type of work. Third-party firmware projects for Antminers, like Brains, Luxor, and Epic, have also involved reverse engineering the chips and protocols to create their own firmware.

However, Skot took a different approach. Instead of developing commercial firmware for Antminers, he extracted a chip from an S19, which contains about 320 chips, and installed it on his own circuit board with a dedicated power supply. This allowed the chip to operate independently of the rest of the Antminer.

This initiative not only demonstrates the technical feasibility of working with these chips independently but also opens the door for other developers to explore new possibilities in Bitcoin mining, reviving the initial spirit of experimentation and innovation within the Bitcoin ecosystem.

Bitaxe features

Bitaxe is a compact device, about the size of a Raspberry Pi.

A Bitaxe consists of:

• A circuit board
• A fan for heat dissipation
• A small screen to monitor the mining process
• A power supply

But undoubtedly, the key component of Bitaxe is the chip.

1. Chip

At the heart of Bitaxe is the efficient Bitmain BM1397 ASIC chip, which provides a high hash rate and low power consumption.

The chips used in the latest version of Bitaxe, the Bitaxe Supra, come from the Antminer S21 model, as shown in the image below. 

Thanks to this configuration, Bitaxe achieves an efficiency of 17.5 watts per terahash. However, the total hash rate of Bitaxe is significantly lower than that of an S21, as it uses only 1/324 of the chips.

In summary, Bitaxe reaches the maximum hash rate that a single chip can offer, which is approximately three-quarters of a terahash, or 750 gigahash.

2. Power Consumption

One advantage of this device is its quiet and discreet operation. With a consumption of only 12 watts, similar to a cell phone charger, Bitaxe generates neither noise nor heat, making its cost practically imperceptible on your electricity bill.

3. Automatic Adjustment

One of the most interesting features of Bitaxe is its automatic adjustment capability.

This feature allows the miner to automatically adjust power, heat, and efficiency settings, optimizing its performance without the need for constant manual intervention. This way, users can maximize the miner’s potential, whether in small-scale mining operations or in mining pools.

Now that we’ve covered some of the main features of this small miner, let’s see how you can set up your own.

How to set up a Bitaxe? (Practical Guide)

Before explaining how to set up Bitaxe, it’s important to note that there are two ways to get one:

1. Building Your Own at Home (DIY)

All design files for Bitaxe are open-source and available on the bitaxe.org website. So, if you have technical skills and experience in electronic soldering, you can download the files, have the circuit boards manufactured in China at a very low cost, and order the parts online.

The website also provides a complete list of all the necessary components and an explanatory document detailing the essential tools for assembly.

Many people have chosen this route and successfully built their own Bitaxe, including beginners in electronic soldering, demonstrating the project’s viability. This is a self-sufficient mining method where you build your equipment from scratch.

2. Buying a Pre-Assembled Bitaxe

For those who prefer a ready-made solution, the Bitaxe website lists stores that sell this small miner already assembled. 

It’s important to mention that these stores respect the open-source license, giving due credit to the project and maintaining the original specifications. 

There are sellers in North America, Europe, Australia, and China. 

When you visit the site, you can check the prices and choose the option that best suits your needs.

When you buy from one of these sellers, you’ll receive a Bitaxe by mail, fully assembled, in the box, with a power supply, and ready to use. Some sellers also offer desktop stands or cases to conceal the circuit board, depending on your preference.

Setting up a pre-assembled Bitaxe

Step 1: Connecting to WiFi

To start using Bitaxe, the first step is to connect it to your WiFi network, as it operates exclusively via WiFi. 

On the Bitaxe screen, a WiFi network will appear for you to connect to. Use your phone or computer to connect to this network created by Bitaxe. 

Next, a screen will automatically appear, prompting you to enter your home WiFi credentials so the miner can connect to your network.

Simply enter your WiFi network name and password.

At this point, you can also define the Stratum mining pool you want to use by entering your username, password, and other operating parameters. If you prefer, you can adjust these settings later. The crucial step is to click “save” so the device restarts and connects to your network.

Step 2: Accessing the AxeOS Dashboard

Bitaxe comes pre-configured with defaults that allow you to start mining immediately if you wish.

However, it’s recommended to note the IP address displayed on the screen, type it into your browser while connected to your network, and access the complete Bitaxe dashboard, known as AxeOS.

This panel provides all the necessary mining statistics, allowing you to check your performance, best difficulty achieved, temperature, fan speed, and other important information.

Step 3: Connecting to a pool

In the AxeOS dashboard, you can also configure your Stratum information using Stratum v1, which is compatible with any pool that supports this protocol.

This way, you can choose to mine solo or connect to a mining pool.

Additionally, it is recommended to choose a pool that is not a proxy pool. Here are two pool suggestions for you to connect to:

• CK Pool: an open-source solo mining pool.
• Public Pool: another solo mining pool, very easy to host. It’s a one-click installation on Umbrel. You can install Umbrel and then install your own solo mining pool with one click, point your Bitaxe to it, and thus have an end-to-end sovereign money system.

Now, just leave your small miner running! Once configured, Bitaxe will start mining and continue to operate continuously. It has a small front screen that allows you to monitor its operation without constantly needing to access the dashboard.

Related article: Nerdminer: What is it? How does it work?

Can you make money with Bitaxe?

This is one of the biggest questions for those interested in solo Bitcoin mining. So, can you make money mining from home using Bitaxe?

You should consider this type of mining as “lottery mining.” When mining individually, you have an extremely low chance of obtaining the full block reward, which can exceed $200,000 depending on the value of Bitcoin.

To illustrate the improbability, if you keep Bitaxe running for an entire day, your probability of solving a block is about one in eight million. In other words, it’s like winning the lottery! The cash prize is also similar to the lottery, varying according to the price of Bitcoin.

However, it’s interesting to note that by keeping your mining equipment running continuously, it’s as if you’re buying a lottery ticket every day. 

And indeed, there was one lucky miner who achieved this feat.

In July 2024, a miner found a Bitcoin block using, apparently, 6 Bitaxes. He started mining 19 days before the event, and only 24 hours before finding the block, he connected a series of other Bitaxes, increasing his hash rate to 3 TH.

As you can see below, the block found was 853742. 

As a result, this miner received a reward of $212,000! 

Lucky, right?!

This block has already made history and rekindled the hope of many Bitcoiners in being able to mine Bitcoin from their homes and receive a reward.

I want to buy a Bitaxe, but how much does it cost?

Today, you can find Bitaxes available for purchase in stores worldwide for an average price of $150. Be sure to check for additional taxes and fees, which may vary depending on your country.

This is a super affordable price compared to a typical ASIC machine, which costs an average of $4,000.

Thus, Bitaxe makes it possible for more people to experience Bitcoin mining firsthand and even dream of finding a block and receiving a reward for it.

How can Bitaxe revolutionize Bitcoin mining?

Imagine if millions of people worldwide started mining with Bitaxe. What would be the impact on the current size of the Bitcoin network? 

Let’s explore this idea!

One exahash corresponds to one million terahashes. So, if we had a million Bitaxes operating at one terahash each, we would reach one exahash.

With the current network difficulty (as of July 2024), if one million Bitaxes were mining individually, one of these miners would solve a block and receive the full reward every four days.

Although a single Bitaxe has little chance of success on its own, many people are acquiring multiple units. Additionally, these devices are affordable and easy to use, significantly lowering the barrier to entry for mining.

The profile of the Bitaxe miner is very different from that of the traditional mining industry.

The solo miner with Bitaxe is not concerned with the price of hash and tends to keep their devices running long-term, regardless of costs or profits. This could change the entire dynamic of the mining market.

Another benefit of having fully distributed and decentralized miners is that they are virtually immune to regulation. Due to their low power consumption, no one will notice if you have Bitaxes running in your home.

Moreover, adding more miners to the network doesn’t require additional infrastructure costs.

In summary, the mass adoption of Bitaxe could transform Bitcoin mining, making it more accessible, decentralized, and resistant to regulation.

Conclusion

Bitaxe is revolutionizing home Bitcoin mining, and despite current barriers, there are signs that the future will follow this path.

Observing developments in the sector, it’s clear that efforts are focused on making Bitcoin mining decentralized and open-source again, putting it back in the hands of individuals.

Companies like Block, founded by Jack Dorsey, are developing new mining machines with three-nanometer technology, a project that requires significant investments and several years of development.

Other companies, like Intel, have considered entering the market, while some have opted out. New and established competitors, such as BitDeer, are also exploring mining hardware development.

The opening up of Bitcoin mining could happen as the technology becomes more common and accessible, but this will depend on various factors, including development costs and market structure.

Bitaxe represents a significant and important step in this direction, and we hope this is just the beginning of a new era in Bitcoin mining.

Until next time, and opt out!

The post Bitaxe: The Home Bitcoin Mining Hardware appeared first on Area Bitcoin.

That said, Stratum V2 is a recent update to the mining protocol that emerged ten years after its first version, Stratum V1. This update is significant as it changes several aspects of how mining will be performed going forward.

Stratum V1 was introduced to replace a protocol that had vulnerabilities as mining became more popular.

As mining continues to gain importance alongside the adoption of Bitcoin, a change in how it is performed has become necessary.

In this article, we’ll explain what Stratum V2 is and what new features this protocol offers compared to its previous version.

Excited? Stay tuned!

How does Bitcoin mining work?

Before diving into protocols, it’s important to understand the fundamentals of mining itself and how it has evolved over time.

With that in mind, Bitcoin mining is similar to searching for something precious, like gold, except in the Bitcoin network, the “precious thing” is the hash of each block.

In gold mining, miners dig until they find gold. Once found, they possess something scarce and valuable. Gold is rare, and over time, it becomes harder and more expensive to mine. This is because deeper digging is required, demanding more modern and efficient equipment to access increasingly complex sites.

With Bitcoin, a very similar scenario unfolds. On the Bitcoin network, miners compete against each other through trial and error to be the first to find the hash that validates each block of information.

Miners leverage computational power and invest in high-capacity machines to try to find the block’s hash as quickly as possible.

When they do find the hash—that is, the correct solution—they present it to the network. The nodes then verify if the proposed block adheres to the network’s rules.

If everything checks out, this block is added to the blockchain, propagated across the network, and all participants include this block in their copies of the blockchain. Ultimately, miners receive Bitcoin as a reward for completing this task.

This process is known as proof of work.

In summary, this is what mining represents. However, this process has evolved significantly over time. In the early days, a miner could simply connect their computer to the Bitcoin network and begin mining.

Today, with the evolution of mining technology and machinery, the process has become more costly, and it’s practically impossible for a miner to earn rewards on their own.

This is why miners now often join mining pools.

What are mining pools?

Mining pools are collaborative groups that allow individual miners to combine their computational power, enhancing their chances of finding a block on the Bitcoin network. The term “pool” refers to this collective pooling of resources.

As we’ve seen before, given the intense competition and high computational requirements, it’s nearly impossible for a solo miner to find a block on their own. In a mining pool, multiple miners contribute their machines’ power to improve their collective chances of success.

By pooling resources, these groups can find blocks more efficiently and quickly than individual miners could alone. So, when a pool successfully mines a block, all participants share in the rewards, proportionate to their contributed computational power.

Today, several large mining pools with significant computational capabilities dominate the Bitcoin mining ecosystem.

Mining protocols

Mining protocols have evolved significantly since the early days of mining to enhance performance and the way miners communicate with the network.

Getwork Protocol

One of the earliest protocols to be developed was Getwork, an open-source protocol that enabled solo miners to start mining directly.

This protocol utilized HTTP for connections to the Bitcoin network. However, HTTP is generally used for web pages and is not ideal for coordinating Bitcoin mining nodes.

As mining grew in popularity and required increased security, the limitations of the Getwork protocol became apparent. By 2012, as the mining hashrate surged, its inefficiencies were more evident.

During this period, mining pools also started to gain traction. While miners initially could mine solo with their own machines, the expansion of mining activities made joining pools a more viable option.

Consequently, the Getwork protocol no longer satisfied the evolving needs of miners, particularly with the shift towards organized mining in pools. This led to the proposal and adoption of a new protocol: Stratum V1.

Stratum Protocol (V1)

Recognizing the limitations of the Getwork protocol, Marek “Slush” Palatinus, who created and founded Slush Pool in 2010, developed the Stratum Protocol (V1). This new protocol was designed to enhance communication between miners and mining pools.

Thus, Stratum V1 revolutionized the way miners interact with mining pools, making the process much more efficient. Since its introduction, it has become the standard protocol used in Bitcoin mining.

The Stratum V1 protocol not only allowed for greater scalability in mining operations but also improved communication between miners and the Bitcoin network, as well as within their respective pools.

Additionally, Stratum introduced the capability for miners to modify more fields in a block header through the “extranonce” feature, further optimizing the mining process.

Other benefits of Stratum V1 include:

• Stratum mining pool
• Block confirmation issue resolution
• Work-based Vardiff support
• Block hash support solution
• Log rotation
• Initial low-difficulty share confirmation
• Support for multiple wallets
• Immediate addition of new wallets
• Support for MySQL/PostGres/SQLite database
• Adjustable database commit parameters
• Ignore password verification for workers
• Support for coins that use Proof-of-Work and Proof-of-Stake
• Support for transaction messaging

What is the Stratum V2 update?

Stratum V2 is an update to the Bitcoin mining protocol that significantly enhances its security, efficiency, and decentralization, granting miners increased control over the inclusion of transactions in blocks.

The new Stratum protocol update, which comes 10 years after the first, promises to make mining even more efficient and secure than the previous version.

The Stratum V2 (SV2) protocol, developed by Pavel Moravec and Jan Čapek in collaboration with Matt Corallo and other experts, enhances data transfer speeds, lowers the infrastructure requirements for mining equipment, and improves security.

One of the main innovations of Stratum V2 is the inclusion of three subprotocols. This update enables miners to select their own transaction sets through a negotiation process with pools, enhancing decision-making decentralization.

Subprotocols of Stratum V2

1. Job Negotiation Protocol

The job negotiation protocol allows miners to negotiate a block template, including the transaction set, with a pool. This makes pooled mining more akin to solo mining, thereby increasing decentralization.

The results of the negotiation can be reused across all mining connections with the pool, significantly reducing computational intensity.

This protocol is separate and optional from the Mining Protocol and can be offered as a third-party service for mining farms.

2. Template Distribution Protocol

The template distribution protocol is employed to gather information about the next block from Bitcoin Core.

Specifically, it facilitates communication with a component of Bitcoin Core known as “bitcoind,” which implements the Bitcoin protocol for Remote Procedure Call (RPC) use.

Essentially, bitcoind enables the integration of the Bitcoin protocol with other software.

3. Work Distribution Protocol

The work distribution protocol is designed to transmit newly negotiated work to interested nodes, which may be proxies or actual mining devices. This protocol complements the Job Negotiation Protocol.

Therefore, if miners are not negotiating their own work (i.e., choosing their own transaction sets), the jobs are distributed directly from pools to proxies and mining devices.

Features of Stratum V2

• Enhanced security: Implements advanced security measures to protect against attacks, with robust encryption and authentication mechanisms, ensuring secure communication channels between miners and pools.
• Decentralization and miner autonomy: Empowers individual miners, allowing them to choose which transactions to include in the blocks they mine.
• Efficiency in data transfer: Reduces bandwidth requirements and improves overall mining process efficiency by optimizing data transfer between miners and pools.
• Flexible infrastructure: The protocol is designed to be adaptable and flexible, accommodating various mining setups and configurations.
• Multilevel authorization: Allows different levels of authorization, providing an additional layer of security.
• Reduced attack surface: By simplifying and streamlining communication protocols and reducing the amount of data transferred, SV2 decreases the potential attack surface for malicious actors.
• Diverse pool ecosystem: By lowering entry barriers for creating mining pools, SV2 encourages a more diverse and distributed pool ecosystem, reducing the risk of one pool gaining too much power over the network.
• Reduced bandwidth usage: SV2 reduces the amount of data that needs to be transferred between miners and pools. This reduction in data transfer not only speeds up the mining process but also makes it more accessible for miners with limited internet bandwidth.
• Optimized infrastructure: Simplified communication protocols reduce the computational and infrastructure requirements for mining operations. This optimization means lower costs and greater efficiency, making mining more sustainable and profitable, especially for smaller operators.

What is the impact of the Stratum V2 protocol on Bitcoin?

The most significant impact of the Stratum V2 protocol on Bitcoin is that it levels the playing field among mining pools, ensuring that no single pool dominates.

In practice, for everyday users, Stratum V2 might not seem to change much. However, the biggest impact will be on miners and the industry surrounding mining.

After all, today there is a major discussion about the centralization of mining by large pools.

Therefore, the Stratum V2 protocol aims to decentralize this process further, ensuring that all pools have equal power. In theory, this means that every participant in the network has equal influence, based on their computational power, and miners gain more control over their transactions.

Consequently, it becomes more challenging for governments or large corporations to manipulate the mining process through alliances with specific pools.

Conclusion

Mining is an important process for Bitcoin, functioning as the mechanism that drives the network. Miners are essential for discovering blocks, processing transactions, and broadcasting this information across the network, thereby maintaining the blockchain’s openness and immutability.

Therefore, it’s vital that this process is executed with the highest security and without compromising the network’s decentralization, which is one of Bitcoin’s fundamental principles.

For regular Bitcoin users, understanding this protocol and its implications is another way to stay informed about developments within Bitcoin. However, this does not necessarily mean you need to take any specific action in your daily life.

Nevertheless, it is important to recognize that advancements in the Bitcoin industry, such as Stratum V2, can indirectly impact all network users.

I hope this article has enhanced your understanding of Stratum V2.

Until next time, and opt out!

The post Stratum V2: The New Era of Bitcoin Mining appeared first on Area Bitcoin.

These machines were built and developed as Bitcoin mining evolved.

In the beginning, it was possible to mine Bitcoin using conventional computers and even notebooks. However, as the network advanced and more people adopted the currency, it became necessary to use more advanced and powerful means to compete in hash rate (computing power).

However, nowadays, it is no longer viable to mine Bitcoin at home, as before. Additionally, while it is technically possible to keep an ASIC at home, it is not very common.

Currently, these machines are the most advanced available for mining, and several large companies are part of the Bitcoin mining industry.

That said, let’s understand how ASIC miners work!

How does Bitcoin mining work?

Before we go on to understand how ASIC miners work, it is important to understand how Bitcoin mining works.

In short, on the Bitcoin network, miners compete with each other, through trial and error, to discover who first finds the hash that completes each block of information. Therefore, the miner who finds the hash first wins the reward, and the block is mined.

This process occurs repeatedly on the Bitcoin network, resulting in the emergence of new blocks. Thus, the greater the computational power used, the greater the chances of the miner finding the hash and the faster the block will be mined.

Therefore, the Bitcoin network adjusts so that the mining of new blocks occurs in an average of 10 minutes. The difficulty of solving this equation is adjusted as the computational power of the network increases.

In the beginning, when only Satoshi Nakamoto was mining, the difficulty was not very high. However, as more participants joined and started mining, the hash rate increased so the difficulty increased too.

At the end of 2023, mining difficulty on the Bitcoin network reached its record high of 475.9 EH/s (exahashes per second), indicating that the network was breaking its record in computational power and security.

Therefore, for mining to continue operating efficiently, maintaining network security, and enabling the inclusion of new participants, equipment had to be updated as technology evolved.

Evolution of mining equipment

As previously stated, mining has evolved over time and, of course, the equipment used has also advanced.

When the first Bitcoin block was created on January 3, 2009, Satoshi Nakamoto was the only person on the network, thus being the sole miner.

At that time, the mining difficulty was low compared to today, making it possible and viable to mine Bitcoin using a common computer.

However, over time, more sophisticated equipment became necessary, and the machines evolved, as you can see in the image below:

2009 – CPU Mining

Common computers, used to access the internet and operate everyday applications, are equipped with a Central Processing Unit, better known as a CPU. This is the computer’s brain, responsible for executing program instructions through basic operations such as arithmetic, logic, and input/output.

In 2009, when the Bitcoin network was still small and little known, mining using CPUs was sufficient to meet initial demands.

At that time, the CPU, with its ability to perform complex operations, was capable of solving the cryptographic puzzles necessary to mine new blocks and receive Bitcoin rewards.

However, as Bitcoin’s popularity grew and more miners joined the network, the mining difficulty increased significantly.

CPUs, despite being versatile and capable of performing multiple tasks, were not specialized in mining and began to become inefficient compared to the new technologies that emerged.

It was then that it became necessary to use more advanced and specialized hardware, such as GPUs (Graphic Processing Units).

2010/2011 – Mining with GPU and FPGA

Starting in 2010, after the emblematic Bitcoin Pizza Day, when a bitcoiner shelled out 10,000 bitcoin for two pizzas, the currency began to gain real market value.

At that moment, Bitcoin became worth 10 cents on the dollar, and this increase in value encouraged the development of more advanced and efficient mining methods at the time.

GPUs

GPUs, or Graphics Processing Units, are components capable of performing a variety of mathematical operations in parallel while running other applications, making them ideal for processing games, among other tasks.

Due to their efficient calculation performance, GPUs have been programmed to perform the specific calculations required in Bitcoin mining.

With this advancement, Bitcoin block production increased sixfold. GPUs only cost twice as much as CPUs, yet offered an excellent return.

However, with the continued adoption of Bitcoin, FPGAs emerged in 2011. These are pre-programmed circuits that were adapted to mine Bitcoin.

FGPAs

FPGAs, or Field-Programmable Gate Arrays, are types of board models that can be programmed to perform specific tasks. Compared to GPUs, they offer up to twice the efficiency in Bitcoin mining.

To operate effectively, FPGAs require a specific configuration of software and hardware. Their ability to be programmed for specific activities is what made them extremely efficient.

The emergence of ASICs

It was from previous advances that ASICs emerged in 2012. However, unlike other machines that were adapted for Bitcoin mining, ASICs (Application-Specific Integrated Circuits) were created exclusively for this purpose.

In 2013, the Chinese company Canaan launched the first set of mining-specific integrated circuits, ASICs.

ASIC miners have been designed in such a way that their software and hardware are solely for Bitcoin mining, meaning that these machines have no use for any other activity. This differs from GPUs, which can be used in regular computers for a variety of purposes, such as gaming.

Because they were optimized for this single task, ASICs are extremely efficient, and no other machine has yet been able to match this advancement.

Evolution of ASICs

Canaan Creative ushered in the era of ASIC mining for Bitcoin, but it wasn’t long before other companies, like Bitmain, emerged and dominated the scene, becoming the largest ASIC manufacturer in the world.

As mining and Bitcoin gained prominence, several other companies and manufacturers emerged, bringing various innovations and improvements to the sector.

Currently, mining operates on an industrial scale, resulting in a vast and complex mining ecosystem, as can be seen in the photo below.

One of the main evolutions in ASIC miners to date has been the development of their chips and semiconductors. Initially, the chips measured 130 nm. Currently, the most advanced machines have chips of just 5 nm.

This miniaturization not only allows for a greater number of units per machine, increasing its efficiency but also improves cooling—a critical factor, considering that overheating can reduce performance or even cause failures.

In this context, one of the significant advances in mining was the emergence of immersive mining and water-cooled machines.

However, despite these advances, the average lifespan of an ASIC is still approximately 18 months, due to the accelerated pace of development and the constant need for more efficient hardware.

In addition to Bitmain, technology giants such as Intel are entering the ASIC market, indicating growing competition and a promising future for innovations in mining hardware.

What are the main ASIC models for Bitcoin?

ASICs are specifically designed to optimize Bitcoin mining, offering efficiency and processing power far beyond what CPUs or GPUs can provide.

This sector has seen rapid evolution, with several generations of ASICs offering constant improvements in energy efficiency, performance and cost-effectiveness.

Thus, the main ASIC models available on the market are:

• Antminer S19j PRO
• Bonanza Mine 2
• Antminer S19 XP Hydro
• Antminer S21

Would you like to explore each of them?!

Antminer S19j PRO

In 2022, Bitmain set a new milestone in Bitcoin mining with the launch of the Antminer S19j Pro. This model quickly became one of the most efficient and widely used machines, known for its robust hash rate and remarkable energy efficiency.

The S19j Pro is ideal for miners seeking a balance between cost and performance, offering a consistent and reliable return on investment.

The choice of this model reflects a safe bet on a device proven to be effective and long-lasting in the competitive Bitcoin mining market.

Bonanza Mine 2

Shortly after the launch of the S19j Pro, Intel launched the Bonanza Mine 2, a 15% more efficient machine at half the price.

The Bonanza Mine 2 is a low-voltage, highly energy-efficient Bitcoin ASIC capable of delivering 40 terahashes per second (TH/s).

At the time, this launch not only diversified the ASIC market but also ushered in a new era of competition and innovation, highlighting Intel’s commitment to contributing to the advancement of Bitcoin mining.

Antminer S19 XP Hydro

Following the release of the S19j Pro, Bitmain continued to innovate by launching the Antminer S19 XP Hydro. This model not only raises the bar for energy efficiency but also introduces a water cooling system.

The S19 XP Hydro currently costs around $4,200, which is a significant investment.

However, its innovative design and operational efficiency make it an appealing option for serious miners aiming to maximize productivity and minimize operating costs, especially in hotter climates where cooling is a major concern.

Antminer S21

But all those models are now in the rearview because, in September 2023, Bitmain unveiled its latest model, the Antminer S21, capable of generating around 0.03 BTC per month.

Moreover, this machine also comes in a water-cooled version.

​​The S21 Hydro ASIC model from Bitmain is designed to mine the SHA-256 algorithm and delivers a maximum hash rate of 335 TH/s while using up to 5360W of power.

It’s currently on the market from $5,000 to $6,500.

What is the best Bitcoin miner?

Both the S19j Pro and the S21 Hydro are considered the top Bitcoin miners on the market.

However, for those looking to dive into Bitcoin mining professionally, it’s crucial to weigh the process’s costs in addition to the machine costs.

For serious miners aiming for top-notch performance and willing to pay more for higher returns, the S21 Hydro stands out as the best pick.

For those with a tighter budget but still in search of quality and efficiency, the S19j XP Pro is also a fantastic choice.

How much does an ASIC miner cost?

The cost of an ASIC miner can vary widely based on the model and its efficiency, with prices ranging from $1,000 to $6,000.

Thus, investing in an ASIC mining rig is a significant move for anyone considering entering the Bitcoin mining scene.

Here are the current prices for the main ASIC miners on the market:

• S19 Pro – U$1,300
• S19j Pro+ – U$1.400
• S19 XP – U$3.200
• S19 Pro Oct – U$1.800
• S19 XP Hyd – U$4.200
• S19 Pro+ Oct – U$1.800
• S21 – U$3,900
• S21 Oct – U$5.800

Is it worth mining Bitcoin with ASIC in your country?

It depends. Mining Bitcoin with ASIC is generally not worthwhile in areas with high electricity costs and where additional investment in infrastructure and maintenance is required.

As highlighted throughout this article, while it’s possible to purchase an ASIC and start mining at home, these machines consume a significant amount of electricity, leading to hefty electricity bills in the quest to mine a block.

Thus, even if you do earn some rewards, they may not be sufficient to cover the incurred expenses.

Simply buying an ASIC and expecting profits won’t cut it. The reality is stark: the competition is intense, and your machine requires a conducive environment and access to inexpensive energy.

You’ll likely need to invest not just in sound insulation and cooling systems but also in understanding how to conduct proper maintenance to ensure the longevity of your equipment.

Conclusion

Bitcoin ASIC miners were developed out of necessity, spurred by the evolution of the currency and its growing network.

As discussed, there are various models of these machines, evolving as Bitcoin and the market advance.

We’re currently witnessing the third generation of mining machines, and it’s likely that development will continue into the future. Therefore, we can anticipate the emergence of new models and methods to keep network efficiency and security at peak levels.

I hope this article has provided you with a deeper understanding of ASICs and Bitcoin mining.

Don’t forget to share it with a friend, and see you next time!

The post What are ASIC miners? appeared first on Area Bitcoin.

Getting involved in a hands-on Bitcoin project can be a great opportunity to better understand how Bitcoin operates and engage with the technology. Using NerdMiner, a solo mining software you can have at home, is a great place to start.

What is Bitcoin Mining?

Bitcoin mining is the process by which new bitcoins are generated and transactions are confirmed on the Bitcoin network. This is achieved by a network of computers (or nodes) participating in a probability game, where the one who finds the result unlocks a bitcoin as a reward.

Therefore, when a Bitcoin transaction is made, it needs to be verified and recorded on the blockchain, which is a public and distributed record of all transactions made on the Bitcoin network.

Bitcoin miners compete to solve complex mathematical problems, and the first one who manages to solve adds the new block of transactions to the blockchain.

Thus, as a reward for this work, the miner receives a certain amount of bitcoins. Currently, the reward is 6.25 bitcoins, but this amount is halved approximately every four years in an event known as “halving”.

Additionally, miners have the possibility of receiving transaction fees as an additional form of reward. Therefore, when someone makes a Bitcoin transaction, they can choose to include a transaction fee to encourage miners to confirm the transaction.

The higher the fee, the more incentivized the miners will be to include the transaction in the next block.

Computing Power

Bitcoin mining is today a process that requires substantial computing power and consumes a lot of energy.

In the early days of Bitcoin, it was possible to mine with common personal computers. However, as more people joined the network and the “difficulty” of mining increased, specialized mining equipment known as ASICs (Application-Specific Integrated Circuits) were developed, which are much more efficient for Bitcoin mining.

ASICs have a high cost, potentially reaching up to 50,000 Reais per machine, depending on the chosen model. Besides the high cost, the maintenance of these machines requires some technical knowledge.

To give you an idea of how difficult it currently is to mine individually, the likelihood of a miner extracting a Bitcoin block using an AntMiner S19 XP, which is the best available equipment, is only 1 in every 29 years. As a solution to this problem, mining pools were created, where miners combine their computing power, with each being rewarded according to their proportionate contribution.

With the professionalization of the industry and the increased difficulty for ordinary people to access Bitcoin mining due to the high investment required, a solo mining project called NerdMiner emerged.

What is NerdMiner?

NerdMiner, or NerdSoloMiner, is a free and open-source project created by BitMaker, which allows you to create your own miner for under 40 dollars.

The idea is to try to mine a Bitcoin block with low-end hardware that can be built at home and kept on an office desk. This allows ordinary people to have the opportunity to participate in mining without the need for significant investments or complex infrastructure.

How does NerdMiner work?

NerdMiner is a cryptocurrency mining project that allows users to create their own low-cost mining rig. It uses low-end hardware, which can be assembled at home and operated on an office desk.

Therefore, a Bitcoin miner competes with other miners in the search for a specific number through probabilities. To do this, it is necessary to generate hashes through a process called proof of work. The chances of earning the reward are directly related to computational power, that is, the miner’s hash rate.

The higher the hash rate, the greater the probability of a miner discovering the block and receiving the reward. However, considering that miners join their hash rates in pools to further increase their chances, a solo miner is at a significant disadvantage.

Due to it being a game of hashes, the reduced hash rate offered by NerdMiner is comparable to buying a lottery ticket every ten minutes. In terms of capacity, NerdMiner operates with only ~1 Watt of power and achieves a hash rate of more than 20 Kh/s.

How to build a NerdMiner?

Bitcoin mining has sparked interest in many people around the world. However, the initial cost and complexity involved in setting up a mining rig can be challenging for beginners. That’s where NerdMiner comes in.

Here’s how to create your own NerdMiner and join Bitcoin mining in a more accessible way!

Hardware

Start by selecting the necessary components to assemble your Bitcoin miner. This usually includes a motherboard, processor, RAM, one or more storage devices, a power supply, and an appropriate cooling system.

Setup and Connection

After assembling the hardware and installing the operating system and mining software, set up your NerdMiner. Enter the necessary information, such as your Bitcoin wallet address, into the mining software.

Test and Monitoring

Run tests to ensure that your miner is operating correctly. Monitor performance, check hash rates, hardware temperature, and power consumption to ensure stability and efficiency.

Step by step

You can buy the device assembled or buy the parts separately and assemble it yourself.

To create a NerdMiner, you will need the following:

• TTGO T-Display S3
• A USB cable
• A bought or 3D-printed case
• A fan

Once you have everything, follow the steps available here:

1- Access the online ESPtool
2- Load the firmware with the binaries from the src/bin folder.
3- Connect your board and select each file from src/bin with its address
4- Connect the NerdMiner to the Internet.
5- Put in your Bitcoin address and mining pool
6- Start mining Bitcoin

The cool thing is that the device comes with several screens to monitor your work process and also to show network mining statistics.

Mining Bitcoin with the Jade Wallet

Following in the footsteps of the NerdMiner project, Blockstream launched a firmware in April 2023 that enables mining using their Jade Wallet. That is, anyone who owns Jade can now mine in the same way as NerdMiner does.

To do this, simply follow these steps:

1. Update your Blockstream Jade to a miner-supported firmware. If you want, you can revert back to a non-miner-supported firmware.
2. Visit the add-on page and connect your Blockstream Jade. You will need to use a web serial-compatible browser like Chrome. Then, enter the address to which you wish to mine and click ‘Start.’
3. Your Jade will automatically start mining, so there’s no need to initiate your device or access a wallet. You can then see the current block height and your hash rate on Jade, as well as the block reward and the address to which your Bitcoin will be sent if you mine a block.
4. The downside is that you will always need to be connected to a computer, as Jade does not have an internet connection, and the software also doesn’t allow you to start it up on the device.

On the other hand, NerdMiner is completely independent, and you can connect multiple mining devices to the same wallet, thereby remotely increasing your chances of success.

With Jade, you’ll be mining solo without access to statistics to check whether your shares are being accepted. You can’t perform a ping test to check the quality of your connection. You just have to trust the information displayed on the Jade device.

The hash rate is approximately 80 Kh/s.

Is it worth mining this way?

The processing capacity of this hardware is significantly lower than that of ASICS. It is easier to win the Mega Millions lottery five times in a row than to mine a block of Bitcoin, so it’s essentially a lottery and something with insanely low probabilities of happening.

However, bitcoiners have embraced the idea of being able to mine at home again, no matter how slim the chances are. At the very least, the experience will be fun, and you’ll learn a lot about mining in the process.

The post Nerdminer: What is it? How does it work? appeared first on Area Bitcoin.

But should Bitcoin migrate to Proof of Stake in order to use less energy and increase scalability?

Before answering this question, let’s understand each of these mechanisms!

What is Proof of Work? How does it work?

Proof Of Work is a way of proving results by solving cryptographic puzzles through trial and error.

Computers compete to find the correct answer. Thus, the computer that first finds this answer will receive bitcoin as a reward and close the block of information.

To accomplish this, electricity, computational power, and powerful machines are needed to convert energy into immutable blocks of information, which are then lined up chronologically.

This chain of blocks demonstrates the computational power necessary to alter or corrupt the data recorded in this timeline of information. So, the more blocks, the more challenging it is to change, and the safer the information is.

PoW is the bridge between the digital and the physical because it anchors the creation of new BTC in real-world expenditure. Therefore, this means that bitcoin is not created from “nothing,” without any cost. The cost is the energy and the necessary equipment to participate in the network.

How much does it cost to attack the Bitcoin network?

The cost to carry out a 51% attack on Bitcoin is approximately $40 billion in quantum computers and $28 million in energy per day. Furthermore, there’s no guarantee that the attack would be successful.

Such an attack would require mobilizing the entire ASIC production industry, draw attention due to the sudden scarcity of these machines on the market, and alert the network to an attack attempt.

Thus, attacking the Bitcoin network is not a simple matter as it involves coordinating machines and energy. It’s an attack that would take time and a great deal of planning.

Moreover, Bitcoin’s network hashrate has been continually increasing, so an attacker would need to anticipate that the network’s future computational power will be even greater than the present.

Therefore, carrying out this operation quickly and secretly so that the network does not notice is extremely difficult.

Energy, Bitcoin, and Waste

The Bitcoin network encourages miners to be as efficient as possible. Therefore, the cheaper the energy, the cheaper it will be to mine a block.

That’s why 59% of miners are located in regions with renewable energy sources, regions with energy surplus, places where energy is so abundant that a large part of the production is even discarded, and places where energy tends to be incredibly cheap.

This image from the Bitcoin Mining Council demonstrates that Bitcoin’s energy grid is more sustainable than countries aiming for more energy sustainability. Therefore, if Bitcoin were a country, it would be the most sustainable one.

In addition to being more energy-efficient, Bitcoin has the most secure network because it has the most computational power allocated.

When we compare Bitcoin with other protocols that also use Proof of Work, the computational power (the hashrate) of other networks is much lower than Bitcoin’s network:

The energy expenditure to produce each block might seem like a waste to those who don’t understand the process, but it’s the only way to have a digital network that assures the value cannot be corrupted.

You cannot create energy from nothing. It’s a law of physics!

This law states:

“Energy cannot be created or destroyed; energy can only be transformed.”

Just as you also transform time and energy into wages. In this case, you spend energy and time working, and you receive your salary as a reward.

It’s the same thing with the Bitcoin network! This

mechanism ensures the network’s integrity because you cannot print energy; you can only convert available energy into immutable information.

Therefore, the more blocks that pass, the harder it is to change this timeline. The information blocks are protected by the thermodynamics of mining, by the conversion of energy into money, into Bitcoin.

This security, however, does not allow for agility and scalability in the production of new blocks, and that’s why the Bitcoin network can only scale on other layers.

The blockchain layer serves to secure the value of all layers above it. It’s an incorruptible value layer that can only scale by guaranteeing this value to adjacent faster layers.

That’s why the Lightning Network has been growing and becoming the next evolutionary layer of the Bitcoin network, aimed at payments and decentralized applications.

What is Proof Of Stake and how did it emerge?

Many people disagree with the way Bitcoin is structured.

Thus, many protocols want to have everything on the blockchain layer, such as agility, scalability, and security, trying to overcome the famous blockchain trilemma, which states that you can’t have everything on layer one.

But, even so, many people still want to find a way to do this. That’s how Proof of Stake (PoS) came about, removing the mining process.

Proof of Stake does not involve mining, but VALIDATION. In this mechanism, the validator needs to prove to the protocol that they have coins locked in it. In other words, the more coins you have, the more validation power you have.

Ethereum, Cardano, Solana, Polkadot, and other protocols already use PoS, even if partially, or in conjunction with other consensus mechanisms.

But how does Proof of Stake work?

In PoS, the creator of the next block is chosen through a lottery-like process, so validators need to lock tokens in the network. Thus, the more tokens you have locked or staked in the network, the higher your chances of winning this lottery and validating the next block, and also receiving the reward for it.

In PoS, it’s the quantity of staked tokens that protect the network. Thus, attacking the network would mean acquiring a significant portion of the staked coins allocated to the protocol.

This system does not require energy expenditure, so many PoS advocates argue that it is more sustainable than PoW. But, just because it doesn’t use energy, doesn’t mean that PoS is more efficient. This is because you can’t create value from nothing. Value comes from work, effort, and the energy allocated to create something.

Therefore, if the network’s coins have no cost to be produced, if they are created at zero cost, this means that their value is also zero.

This is a major concept that many people don’t understand. So, if a network creates coins out of nothing, just by typing values into a blockchain, it’s because the real value of these coins is also zero.

It would be like writing a number on a piece of paper and saying that it’s money.

This means that there’s no incentive to ensure the security and immutability of the network. Therefore, if an asset costs zero to be created, it can be easily counterfeited or defrauded. Thus, it’s expensive to produce something that guarantees it won’t be counterfeited. This is one of the basic physical characteristics of the most solid money ever created: gold.

Proof of Stake opens the possibility of centralizing the network by centralizing the coins, just like what happens in the fiat system where banks centralize all liquidity, and central banks centralize monetary policies.

In Bitcoin’s PoW, even if someone has many BTC, that person cannot influence the network’s decisions in the next block.

To have influence and monopolize, it is necessary to centralize energy, powerful specialized machines. This is not a simple and easy thing to do; it would take years, and the network would have time to anticipate and protect against these movements.

The Energy Securing Value

It’s like trying to make popcorn without turning on the stove; without the energy to transform corn into popcorn, you add no value to the final product.

You’ll never be able to sell this corn as popcorn because it hasn’t actually become popcorn; it didn’t undergo the action of fire (energy) to cause that transformation.

Blockchains using proof of stake produce many tokens, many corns, but they lack the energy component that gives value and transforms something purely digital and valueless into an asset with absolute digital scarcity, decentralized, verifiable, and immutable.

It is the energy expenditure that guarantees immutability and trust that the network will not be monopolized, even if the coins are.

PoS is also not immutable because to use less energy, you need to sacrifice resistance to censorship and decentralization. Whoever has more tokens has more validation power.

On the Ethereum network using PoS, for example, the biggest depositors are centralized exchanges like Coinbase, Kraken, and Binance. In addition to a DAO called Lido that has 31% of the staked deposits and also has its governance tokens centralized in the hands of investors, founders, and insiders.

This shows the high degree of protocol centralization, companies abide by governmental compliance laws. If pressured by entities, they can censor transactions or network users. This was quite exposed during the sanctions case against the Tornado Cash protocol supported on the Ethereum network.

Including, PoS systems seek to achieve immutability through the idea of punishment “slash”.

The idea is that if you misbehave, you pay a penalty by losing your funds.

The problem is that this punishment does not prevent the swindlers from operating. On the contrary, PoS can only punish bad actors after the fact has happened, which may be too late to recover the lost value.

This is drastically different from PoW mining.

In PoW mining, attackers need to pay an upfront cost to mine the block. That is, to attack, you have to pay first. We emphasize that, no one, at least for now, has the energetic and equipment backing to reach 51% of the Bitcoin network’s computing power.

Furthermore, this PoS punishment depends on “social consensus,” which means it depends on other people deciding what was valid and what was an attack. And that’s when these systems cease to be decentralized because they end up depending on other people to decide what to do.

Definitely buying an opinion is much easier than buying ASIC machines, going to a country with abundant energy and starting to compete for rewards.

To some extent, all systems need social consensus. After all, the value of bitcoin is subjective, and that is a social consensus. But, there is no social consensus in Bitcoin when it comes to determining which chain is valid or not. Therefore, the longest and safest chain will always be valid.

The decision in the event of bugs or malicious actions always goes in the direction where more energy was employed: the longest chain.

In PoS, what counts is the validator’s last word, not the previous record history, making their systems highly subjective when it comes to a decision that should be technical, mathematical, and thermodynamic.

That’s why systems using PoS ended up swapping decentralization for scalability and speed.

Without this anchor in the real world, in energy, proof of stake brings no extra benefit over traditional centralized systems that already exist!

In fact, it makes the network much more susceptible to bugs, bribery, and monopoly.

Here’s a question for you to ponder: how different is this from the current political system where you simply buy voting power?

Another point of centralization is that the largest validators of protocols using PoS are exchanges. That is, precisely those who have the highest volume.

This shows how much proof of stake resembles the current fiat system. The centralization of monetary policies rests with the teams of each protocol, and those who have all the liquidity are the exchanges.

Through proof of stake, exchanges become the banks of the crypto world.

Those thinking about innovation without first looking at decentralization are trading immutability for speed.

Speed can be achieved in layers above bitcoin, but immutability cannot be achieved in adjacent layers in PoS protocols.

It’s like building a building in a swamp; if the base isn’t solid, the floors above could collapse if there’s any shaking in the foundation.

That’s why the Bitcoin protocol has no intention of switching to proof of stake.

In proof of work, Bitcoin has fundamentals very similar to those of gold itself. Gold remains the world’s most valuable asset. It’s impossible to recreate, copy, or produce more gold than exists. Gold represents all the trust we have in the immutability and stability of the way atoms are arranged.

Cheaper, more versatile, or more scalable metals are not as valuable as gold is, and the same goes for decentralized protocols.

Value lies in preserving the fundamentals and preserving all the energy spent mining each block through properties that remain unchanged.

Bitcoin mirrors this same immutability of gold in the digital world. Therefore, wanting to change Bitcoin is to not understand or want to destroy its entire value proposition.

After all, the most environmentally responsible solution is the one that ensures security and efficiency in maintaining value in the long term. Blockchains using PoS could be BTC sidechains, but as a main chain, they offer inferior properties to PoW.

Bitcoin will not change its consensus mechanism because it focuses on maintaining very solid properties.

Bitcoin wants to be the new gold, an asset that protects value for millennia and not the new Apple that in a few decades may be replaced or surpassed by another innovative company.

Think about it and don’t forget to share this post!

Opt out and stack sats.

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How Bitcoin Mining Works

As we mentioned, with gold, miners keep digging until they find the precious metal. On the Bitcoin network, miners try to find the block hash through trial and error until they find the correct combination and close each block of information. These solved calculation blocks are queued in such a way that one block of information is tied to the next block, creating a blockchain.

Once the correct answer is found, the miners present the calculation, the closed block, to the entire network to verify everything is correct. If all checks out, the network moves forward, adding the next block to this chain of information. This entire process is called proof of work, where the entire network follows the calculations of each block and checks that the math is correct and there’s been no cheating. This is how a blockchain reaches consensus on what’s processed on the network.

The miner who first closes the block receives bitcoin as a reward. Today, this reward is 6.25 bitcoins per block, and every four years this reward is cut in half, in an event called halving, reducing the number of bitcoins entering the market.

Bitcoin Miners and Nodes

The logic of the Bitcoin network is like putting together a puzzle. There are 2 types of participants: miners and nodes. Miners are the participants who pick up the puzzle pieces and try to form the game image, and nodes are like that meddling aunt who keeps looking over your shoulder to see if you’ve got the right piece.

When the miner finds the missing piece, everyone can easily see it – just look at the picture and see if the piece was correct or not. It’s a very transparent mechanism, and everyone follows the results in real time.

We use the puzzle analogy because Bitcoin uses game theory. The entire network competes to arrive at the mathematical result first and receive Bitcoin before they run out. Miners are racing against time. This is because there is a limited number of Bitcoins the network can create: 21 million units.

In the 14 years since Bitcoin’s launch, more than 90% of the supply has already been created. The network’s starting point was the most important and profitable time for miners to receive Bitcoin. The start of a blockchain is the most vulnerable period, the network needed to strengthen and decentralize as much as possible. That’s why in the early days of Bitcoin, from 2009 to 2013, anyone with a home computer, a CPU like the one in the picture, could mine and receive many Bitcoins.

It was easy to mine, anyone with a computer could participate in the processing and receive bitcoin as a prize. But once the network matured and more participants entered, the difficulty of these calculations also increased. This is the well-known difficulty adjustment that happens on average every 2 weeks. This means the more participants there are, the more computers compete to solve the blocks.

What is Difficulty Adjustment?

The Bitcoin network adjusts the difficulty of the calculations according to the number of participants. If the network is empty and few people are willing to participate, the algorithm adjusts the calculations to make it easier for people and manage to close the blocks in the predicted time of 10 minutes per block. Therefore, the difficulty adjustment impacts how much computing power (also called hashrate) miners will need to calculate each block. We’ve noticed that this computing power is getting higher and higher:

A higher hashrate has some implications: the first is that the network becomes more secure. To attack a network with a high hashrate requires very powerful machines and a lot of energy, which becomes increasingly difficult as the network grows. Over time, computers needed more computing power to perform more complex calculations, which requires more powerful machines and a higher consumption of electrical energy. This is why over time, those who used home computers (CPU) needed to buy dedicated video cards (GPUs, like in the photo below) to mine Bitcoin.

After a while, these GPUs also started not being enough to perform these calculations, as they became increasingly difficult. Thus, an entire mining industry was created around Bitcoin, and specific machines were developed for this purpose: ASICs.

An ASIC is the dream of many Bitcoiners and it takes several of these machines to have strong enough computing power to compete with the rest of the network and secure Bitcoin. These machines are usually housed in gigantic warehouses with thousands side by side, working day and night mining.

Is it possible to mine from home?

Bitcoin mining today is a major industry because mining requires a heavy investment in infrastructure. You need specific machines (ASICs), as well as a cooled environment to prevent overheating, maintenance, and management of electricity costs.

In many countries, it’s hard to find Bitcoin miners because of the high cost of electricity. Miners usually set up their base in countries with abundant and cheap electricity, like Paraguay, or in cold places where you don’t need coolers to cool down the machines, which would already be a cost less, like Iceland. There are also regions that encourage mining, such as Texas (USA).

However, if you have the money to cover this high fiat cost and the patience to hold and wait for Bitcoin to appreciate over the next decades, this DCA without KYC might be worthwhile. You need to do the math, put it down on paper and see if it makes sense for you.

Can miners steal Bitcoin for themselves?

That would be the biggest self-sabotage for miners and, again, game theory appears to bring logic to the situation.

The Bitcoin network was created so that all participants cooperate with each other and are rewarded for protecting and running the network. Therefore, any contrary action either has no effect or ends up not being worthwhile for the malcontent.

Miners are dependent on the Bitcoin network. Therefore, they are the last ones interested in changing how it operates, as it would impact their rewards.

Indeed, if a miner starts behaving erratically, other miners will start invalidating the data processed by the unstable one.

Most miners are interested in protecting the network because if the network starts to malfunction, Bitcoin itself will lose its value and the miners’ work ends. The Bitcoin network uses game theory to run and to encourage miners to be guardians of the network and always protect their livelihood. In addition, any suspicious movement is immediately detected by the nodes and communicated to the network. Just like putting a piece from another game into the puzzle, that meddling aunt who just watches and checks will alert everyone that you’re cheating.

These nodes are run by people around the world, and you can even run one from your home computer. You don’t receive Bitcoin as a reward for running a node as miners do, but you have the power to monitor the network, to be the whistle-blower if someone decides to cheat in the game. These nodes ensure decentralization and help protect the Bitcoin network.

Mining Market Evolved

Unless you want to invest in a mega mining farm in another country and focus on that, mining Bitcoin with few resources and without understanding these technical details is not worth it.

Don’t be deceived, this market has already evolved quite a lot and is no longer just a nerd thing where you just plug in your computer and make a fortune. It’s a market that is increasingly advanced and professional. Mining has become a mega business and there are even Bitcoin mining company shares on NASDAQ.

From our perspective, if your focus is to benefit from Bitcoin’s exponential rises, the answer is simple: learn how to invest in Bitcoin and save it safely in the long run so that you can enjoy the Bitcoin standard in the future.

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