One of the biggest problems I ran into when I was looking to start mining Bitcoin for investment and profit was most of the sites were written for the advanced user. I am not a professional coder, I have no experience with Ubuntu, Linux and minimal experience with Mac. So, this is for the individual or group that wants to get started the easy way.
First thing you need to do is get a “Bitcoin Wallet”. Because Bitcoin is an internet based currency, you need a place to keep your Bitcoins. Got to http://www.bitcoin.org and download the Bitcoin client for your Operating System. Install it and click “New” to get your wallet address. It will be a long sequence of letters and numbers. One of most important things you can do is make sure you have a copy of the wallet.dat file on a thumb drive and print a copy out and keep it in a safe location. You can view a tutorial on how to create a secure wallet by clicking the link on the top of the page. The reason is that if you computer crashes and you do not have a copy of your wallet.dat file, you will lose all of your Bitcoins. They won’t go to someone else, they will disappear forever. It is like burning cash.
Now that you have a wallet and the client, you are probably roaring to go, but if you actually want to make Bitcoin (money), you probably need to join a pool. A pool is a group that combines their computing power to make more Bitcoins. The reason you shouldn’t go it alone is that Bitcoins are awarded in blocks, usually 50 at a time, and unless you get extremely lucky, you will not be getting any of those coins. In a pool, you are given smaller and easier algorithms to solve and all of your combined work will make you more likely to solve the bigger algorithm and earn Bitcoins that are spread out throughout the pool based on your contribution. Basically, you will make a more consistent amount of Bitcoins and will be more likely to receive a good return on your investment.
The pool that I’m involved in is called Slush’s Pool so I will be giving instructions on how to join there but feel free to look at other options. Follow the link to go to their site and click the “Sign up here” link at the top of their site and follow their step by step instructions. After you have your account set up, you will need to add a “Worker”. Basically, for every miner that you have running, you will need to have a worker ID so the pool can keep track of your contributions.
Most of the mining programs out there are pretty complicated to setup and will frustrate your average user. Recently a great program has come out to get the most basic of users started. The program is called GUIMiner. Click the link and download the program (Be careful, some of the ads are set up to look like the file download). Install and run the program and add in your information from Slush’s Pool. Remember that the user name is actually the worker name. The worker name will be your user name, dot, worker ID (username.worker ID) and the password from that worker ID.
Now that you are set up you can start mining. If you feel like you want to make more Bitcoins, you might want to invest in mining hardware.
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I’m confused. You named the page “beginners guide to mining bitcoins”, but then didn’t actually say how to do it. Just something about joining OTHER people’s pools. I’m really, genuinely interested in just using the basic software to make coins, and you don’t actually describe how to do that here.
Where do I tell the minerd (or bitcoind) what wallet to put the “found” coins into? I seem to see that a username and password are required, but you don’t say where to get them (or how to generate them)
etc… please expand this area, and I’ll happily send the first bitcoin I receive to the address above.
Great Question BitBuff!
First I want to cover why I recommend why I suggest joining a pool. The reason is that bitcoins are mined in blocks of 50. You can’t mine just 1 at a time. So unless you have a massive mining machine, the odds of you actually discovering a block at the current difficulty is extremely low. It actually might never happen. That being said, it can still be done, but it would be an extraordinary lucky occurrence. In a pool, you are working together to discover a block and you will receive a lot of smaller payouts with much more consistency.
That being said, if you want to mine on your own you need to run bitcoin.exe. Not bitcoind.exe. When you run bitcoin.exe it will create a wallet for you. I am assuming you are using Ubuntu or Linux because you mentioned the bitcoind.exe program so just run the correct program and you will see your bitcoin address in the program. Just leave it running and see if you get lucky. If you are solo mining don’t expect to see any funds go into the account. You might see nothing for 2 months and then all the sudden there is 50 bitcoins in there. You might never see any go into your account. That’s the risk of solo mining. I would also recommend looking at my article on creating a secure bitcoin wallet as that might help you to understand how the wallet works and how to keep it safe.
Also, there is no username or password required for the bitcoin.exe program. I haven’t used the minerd program but if if requires a user name or password it is probably used for mining in a pool. The user name and password are to let the pool know who you are so they can keep track of how many shares of the next discovered block will be going to you.
I hope this clears things up and please contact me or reply to this post if you have any other questions.
-Thinkweis
If you are interested in some more details about joining a pool, I recommend you visit the Bitcoin mining profitability calculator at
http://bitcoinx.com/profit/index.php
I have a decent run of the mill graphics card that generates 14MHash/s. With the current difficulty it estimates the average time that it would take before I would get “lucky” and find a block would be 13 years, 152 days. On the other hand, mining pools pay a fraction of a BTC immediately.
For an idea of the kind of system you need to mine and make it worth it, take a look at
http://www.bitcoinminer.com/
Your best chance to make an impact in the bitcoin market is to generate a good or service and sell it in exchange for BTC. Or you can just try to speculate on the exchange rate and use it like Forex.
Bitcoin Venture Capital is a great resource in the Bitcoin Community. They have a great program over there and it is worth a look. I have a link posted to their site on the right side of the page for all who are interested.
Let’s say I worked at a large hardware reseller and I had access to 8 or so servers that were sitting in my datacenter completely dormant. Would it be possible to set up a mining operation using these servers. They are a mix of D*** and H* servers and blades. They range in specs from 2.2Ghz to 3.06Ghz and have 16Gb-48Gb of ram. We have an OC-3 going into our datacenter. Could this suffice as a mining unit?
It would be very inefficient. You would probably only get around 15-25 Mhash/sec per CPU and your energy costs would go through the roof. ATI graphics cards are the only real way to mine if you are interested. I would recommend buying Bitcoins for the investment if you are not currently in a position to mine.
hey if i spent $30,000 USD on mining equipment could i ever hope to make that money back?
Right now would be a better time to buy if you ask my opinion. At the beginning they were easy to mine so some people have a stock of them they are willing to let go at a lower price. They mined them when it was cheap so they don’t value them as highly. If you were to spend that much on mining equipment you are looking at a lot of risk but you would have some nice equipment in the end. I would still say to buy now before they get even harder to mine and much more valuable.
Hello,
I am really curious how Bitcoin works. Could somebody explain to what exactly is being “mined” when one mines bitcoin?
I have googled and not found any clear explanation.
Thanks!