Ultimate Bitcoin guide!

[megadarkwood]

 

I just wanted to combine my threads to make things a bit "Cleaner". Hope you don't mind

I will be adding more

 

Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.

 

In this guide I will go over the basics on mining on a large scale. Some of the topics that I will be covering including are; Is it profitable?, Is it worth it? and a few more things. Hopefully this helps you out and gets you interested in mining!

What is large scale mining?
Large scale mining means to put a big investment into the mining scheme and build a large PC or some sort of system that has multiple GPUs or multiple CPUs. These systems have an extremely high hash rate and are almost the only way to actually make a profit mining bitcoins.

Is large scale mining profitable?
Large scale mining can be profitable but as all types of bitcoin mining it is becoming less and less profitable. As the difficulty of bitcoin mining goes up, profits go down. If you want to get into large scale mining you will either need a lot of money just lying around or you will have to take out a loan. Now, remember that power bills can get prrreettyy crazy...

I want to start large scale mining, what do I need to know?
The first thing that you need to remember is that you will most likely not make a profit for a while. You will need to give your mining setup some time to make the money back and that you will continue loosing money as you mine before you actually make money, why? Because you will have to pay your power bills.

So, how do I get started?
Now you choose your parts, there are a few things that you need to work out. First thing is that you need to find out what your budget is, for this example I will be using a budget of $3,000 but from what I have seen, the minimum budget would be around $2,000. After that, figure out what your power costs are, for me, it is 10cents/kWh. Take this and enter it into here: http://www.bitcoinx.com/profit/, along with your budget into "Cost of mining hardware (USD)", leave everything else as-is.

The next thing that you will have to decide is if you will be using ASIC miners like the Avalon units, or regular computer hardware. Here are some pictures of what each of these setups can look like.

This is a setup that consists of 10 Avalon USB Block eruptors, these go for $15-75 and produce 336m/hash. These are what the "Cheaper" Setups consist of. (They are also mostly ran off of Raspberry Pi's)


Now this is a high end mining system, is has a total of 12 GPUs running off of 3 motherboards (4 to each using PCI-e riser cards). These systems are more expensive but can produce more hash than the USB units pictured above.


After you have decided it will be time to get going on coming up with your plans. I will first talk about the Avalon unit route first and then I will talk about the conventional systems.

Currently, Avalon units are hard to come by, the only place that I have seen them are on eBay and on some sites that accept bitcoins as a payment. I purchased my USB Block eruptor off of eBay for $50 to just play around with and I got 336m/hash stable. If you really want to use these units then you will have to find a seller on eBay that has a large supply.

You will also need USB hub(s) to plug them into and you will also need Raspberry Pi(s). I recommend the Anker Uspeed, and use one of these per Raspberry Pi so that you don't overload it. I am guessing that you already are a part of a mining pool so you just have to set up your miners through your Raspberry Pi like you are setting them up on your computer. Open up your miner and search for all devices and then turn them on. One more thing that I forgot to mention, I also recommend getting a fan to cool these little suckers as they get pretty hot. Any regular USB fan will work just fine.

To figure out how many you will be buying, you will need to take your budget and divide it by the price of your miners. This will be the amount of miners that you can buy (Lets say I got 60). Each hub can hold 9 eruptors including a fan so divide your amount of miners by 9 (I get 6), this is the amount of hubs you will need. This also means you will need 6 Raspberry Pi's. The rest is hard to explain so use this as a starting point and figure out how many miners, hubs and Pi's you can get. (Sorry I can't help )

Now, if you want to use actual computers, it is a little bit easier as you can use sites like PCPartPicker, but harder because you will have to find the hash rates of the parts that you want to use. Most people use AMD GPUs as they are cheaper and have a better Price/Performance ratio (in the mining sense). Here is a site that has a chart of the hash rates for many GPUs and some CPUs: https://en.bitcoin.it/wiki/Mining_hardware_comparison. Pick the card that you want, look around for sales on the high hash cards or look for cheap ones on eBay .etc. You will also need to look into getting a nice motherboard that will live when running multiple cards 24/7. With this said, you will need a nice 80+ Platinum PSU that will actually survive also. You might be wondering, how do I get so many cards running off of one motherboard? You use these, easy peasy lemon squezey. Most people dont use regular cases also, but special racks like the one above.

Thanks for reading! This took me quite a while to type up and I hope it helps
Please ask questions below and if you would like me to add more pictures then tell me, I have a ton of cool ones to post

<3

 

 

I was confused about this a while back but once I did some research and get some help I managed to figure out some of the basics, so I though I would share them. 

 

 

Buying:

Buying bitcoins is usually done for a profit, buying and selling bitcoins (Flipping) can yield a profit but requires a lot of time and patience. I will cover some of this in the Trading section, this section will tell you where to buy your bitcoins and if it is even worth it. First off, the price of bitcoins fluctuate a lot, as you can see here: http://bitcoincharts.com/charts. Why would you want to buy bitcoins? Personally I would only buy bitcoins if they were cheap, under $100 (which they never come down to), so that I could buy products with my bitcoins which would be essentially cheaper.

 

What can you buy with bitcoins?:

You can buy many things with bitcoins, Electronics, Bitcoin Miners, FOOD and much more. You can see a complete list here: https://www.spendbitcoins.com/places/. Here are two places that carry electronics: https://btcshop.org/, https://www.bitcoinstore.com/.

 

Where do you buy bitcoins?

You can buy bitcoins in many different ways. Most places don't accept Paypal as it is not as secure as other methods. The most popular place to buy bitcoins is Mt. Gox. There have been many claims about Mt. Gox so it has a bad reputation. All of the links I post here are for you to use at your own risk. Another place that is pretty popular is LocalBitcoins, LocalBitcoins is kind of like a eBay but for bitcoins so depending on the person you buy from it can get pretty risky but is the fastest method of buying BTC.

 

Should I buy bitcoins?

If you can get them for cheap then go for it. If not then don't. Simple as that, some things can be bought for cheaper online with bitcoins then with regular cash but if you cant get the bitcoins for the right price then there is not point!

 

Selling:

Selling bitcoins is mostly done for a profit as if you mine your own bitcoins and sell them you technically can make free money. I will talk more about mining later but for now I will tell you where and how to sell. Selling bitcoins can be difficult as you have to watch the market and sell at the right time or you might lose money, this requires a lot of time and patience, which if you don't have then you are going to have a really bad time.

 

Can you make a profit by selling bitcoins?

Yes, you can make a profit by selling bitcoins but, like I said before, you have to be very patience and have knowledge of the market. I personally watch the markets here: http://bitcoincharts.com/charts/ when I am looking to sell. When the bars are at the highest point they have been at for a while then you quickly sell and boom, monneyyyyy!! 

 

Where do you sell bitcoins?

You can sell bitcoins on many sites, LocalBitcoins is one of the sites that provide the fastest sales, but like I said before, it is like eBay so be careful. For Canada, there is VirtEx, I have used it once and it was a really smooth transaction, but again, use the links that I post here at your own risk.

 

Notes:

If you have any questions please ask them and I will answer them. If you have a suggestion for a topic that I should post here then also please post it and I will look into it.

 

Useful links:

http://howtobuybitcoins.info/

 

 

Now, you might be wondering what the difference between Litecoins and Bitcoins are. If you are new to mining you SHOULD be looking at litecoin mining, why? Well I will tell you now!

 

First I will go over the pros and cons of each type of "Coin"...

 

Litecoins:

Litecoins are for people that were a bit late to the bitcoin scene, the costs of entering the litecoin scene is much lower. This is because of the different hash algorithms that the different currency use. Bitcoin uses the SHA256 Hash function, making it more efficient for GPU mining, while Litecoin uses scrypt, which requires fast access to large amounts of memory (RAM), making it more efficient to CPU mine, lowering the entry price by quite a lot. Another thing that draws more attention from people to Litecoin is the faster transaction time. The difficulty of Litecoins adjust so that approximately every 2.5 minutes a block is generated, compared to the 10 minutes of Bitcoins. There is one thing that is bad about this faster transaction/block time, it is that the blockchain can become more bloated... Another thing that Litecoins has to offer is that there are 4times as many coins that will come into existence than bitcoins, 84million Litecoins compared to 21million Bitcoins.

 

Bitcoins:

The one main thing that is a main attention drawing point is that the price of a Bitcoin is higher than the price of a Litecoin. This causes more people to be tricked because they think that they will make more money. Why is this not true? Because of a few reasons and all of these reasons are in a chain that starts with one reason, this reason is that the difficulty of mining bitcoins are going up substantially, causing the time of mining a bitcoin to go up, causing people to buy more hardware to mine, causing power costs to go up, causing profitability to decline, and so on.

 

Conclusion:

Now, if you want to really get into mining you have 2 choices, use a lot of money and get into the large scale mining scene (Look at my other guide) and mine bitcoins, OR, use much less money and start mining Litecoins. 

 

 

Edited October 17, 2013 by megadarkwood

[epkoc]

nice guide. too bad my power bills are extremely high. why is the difficulty going up? i will loose money mining but im going to try it

[megadarkwood]

nice guide. too bad my power bills are extremely high. why is the difficulty going up? i will loose money mining but im going to try it

The difficulty goes up because more and more people are mining, if it was like it was at the beginning then everyone would have millions of dollars.

[KieranThePCGuy]

Very detailed guide. Very good read, thanks! UK Electricity is soooo expensive

[megadarkwood]

Very detailed guide. Very good read, thanks! UK Electricity is soooo expensive

Thanks!

[megadarkwood]

Just asking, what do you guys what to see next? I have a 4 day weekend ahead of me and need something to do

[bobo347844]

The difficulty goes up because more and more people are mining, if it was like it was at the beginning then everyone would have millions of dollars.

Or the price would drop really low due to oversaturation

[megadarkwood]

Or the price would drop really low due to oversaturation

Not really, the price will keep on going up. Most likely never go down.

 

Also, I am working on a new guide

[megadarkwood]

Added another guide!

[megadarkwood]

Fixed up a bit of the formatting.

[ShadyHost]

I just bought one of those avalon units:

[megadarkwood]

I just bought one of those avalon units:

 

One will be fun to experiment with but you might want more if you want to actually make a profit

[RuecanOnRails]

One will be fun to experiment with but you might want more if you want to actually make a profit

 

@ShadyHost I don't want to alarm anyone, but I wouldn't recommend purchasing these for anymore than $5 including shipping. They will never see an ROI. They are fun to play with and learn due to their cheap price, but don't buy more than one. My suggested price of $5 is for purchasing, and having it mining today, their value decreases daily.

[ShadyHost]

@ShadyHost I don't want to alarm anyone, but I wouldn't recommend purchasing these for anymore than $5 including shipping. They will never see an ROI. They are fun to play with and learn due to their cheap price, but don't buy more than one. My suggested price of $5 is for purchasing, and having it mining today, their value decreases daily.

I snagged mine for $15 with free overnight shipping. Where would you suggest buying these?

[RuecanOnRails]

I snagged mine for $15 with free overnight shipping. Where would you suggest buying these?

 

I wouldn't suggest buying them at all. You won't get a return on them. They are sadly old and outdated hardware. You'd be better off buying $15 worth of bitcoins directly. Or investing in a better hash per dollar ASIC.

[ShadyHost]

I wouldn't suggest buying them at all. You won't get a return on them. They are sadly old and outdated hardware. You'd be better off buying $15 worth of bitcoins directly. Or investing in a better hash per dollar ASIC.

like the erupter blade?

[RuecanOnRails]

like the erupter blade?

Nope, nothing like that. You need to look at the $ per G/hash. The erupter is 330 mhash at $15, you would need 3 to hit 1 G/hash making it $45 per G/hash.

 

Something like this.

https://bitmine.ch/?product=coincraft-desk

200G/hash at $1500 will get you $7.5 per G.hash. It's not the best $/Hash but it's at a good price point currently and claims to be shipping in December.

[ShadyHost]

Nope, nothing like that. You need to look at the $ per G/hash. The erupter is 330 mhash at $15, you would need 3 to hit 1 G/hash making it $45 per G/hash.

 

Something like this.

https://bitmine.ch/?product=coincraft-desk

200G/hash at $1500 will get you $7.5 per G.hash. It's not the best $/Hash but it's at a good price point currently and claims to be shipping in December.

$1500 all at once for a preorder sounds pretty scary. Especially since most of these units won't ship for a few months and there is a chance they will get delayed. 

 

I would rather spend $150 or so on some usb sticks that might pay for themselves in the next few months. 

[RuecanOnRails]

$1500 all at once for a preorder sounds pretty scary. Especially since most of these units won't ship for a few months and there is a chance they will get delayed. 

 

I would rather spend $150 or so on some usb sticks that might pay for themselves in the next few months. 

 

$1500 is the cheapest you will find with a good hash to $. I agree, I wouldn't buy it because it could get delayed. Even if there are no delays, there's no way to know what the difficulty will be. It's a lost cause, and a big risk to purchase any ASICS. The best hash to $ right now is cointerra's Terraminer IV which costs $6000, hashes at 2 T/hash and ships in January. http://cointerra.com/product/terraminer-iv-2ths-networked-miner-january-batch/

 

One thing I can tell you is that those usb sticks will never make any money. There is absolutely no chance of seeing profit from them, it's not a case of maybe it will.

 

 

Right now we are in a hardware arms race for ASICS and hashrate. Unless you go BIG and pre-order there is no chance of seeing an ROI. The profit margins from going big would also very likely be smaller then what you would see from buying the coins directly and playing the market with a few of them.

[judywhite]

Nice share. The hash rate difficulty for both bitcoin and litecoin is noticeably increasing. Good hash rate is at 80 khash/s. Also, some mining video cards are running out of stock. I hope this will not lead to any scarcity. Mates, I'm planning to buy R290X next week, been wondering how expensive AMD video cards now. Any thoughts?

[sgtsmokey]

I have a powerful system already and wanted to mine while i am at work or college. And when i see a guide like this one, i only see half a guide.
 

 

What software do i need and how do i get started if i already have the hardware!

[Fred Castellum]

I have a powerful system already and wanted to mine while i am at work or college. And when i see a guide like this one, i only see half a guide.

 

 

What software do i need and how do i get started if i already have the hardware!

Your a bit late on the bitcoin train bud. Profitability from mining has dropped recently, your best option is low cap coins. 

[AK0490]

I have a powerful system already and wanted to mine while i am at work or college. And when i see a guide like this one, i only see half a guide.

 

 

What software do i need and how do i get started if i already have the hardware!

This should tell you what you need to get started. http://linustechtips.com/main/topic/105547-how-to-mine-scrypt-based-currencies-and-cash-out-guide/

[sgtsmokey]

Your a bit late on the bitcoin train bud. Profitability from mining has dropped recently, your best option is low cap coins. 

yh but once i know what i need for one, i can do the other.

 

but if solving problems is what gets you coins why arent more problems created to make coins. where do these calculations come from that give coins. and why arent more created