We live in the decade of huge mining pools generating hash rate, 60% of which located in China, do you remember the times when you could mine Bitcoin easily with your laptop? Back to those times with BTCMEX today.
Throwback Thursday by BTCMEX
Releasing the Bitcoin whitepaper, Satoshi Nakamoto wrote “Proof-of-work is essentially one-CPU-one-vote”, which means in the early cryptocurrency years it was enough to have only one CPU - central processing unit - or just one personal computer to mine Bitcoin. Simple Pentium 4 Intel CPU in your laptop would do. On January 3, 2009, the first block - or Genesis block - on Bitcoin's blockchain was mined by Satoshi Nakamoto. For the first few months following Bitcoin's launch, Satoshi Nakamoto and Hal Finney were the only people actively mining Bitcoin on the network.
Multi-core CPUs produced BTC with a low difficulty at a rate of 50 per block. An ordinary miner was able to earn approximately 5 dollars per block. For nearly the first year after Bitcoin launched, the difficulty level of mining remained static at 1. four gigahashes to mine a block producing around 1.29 megahash a second, which meant it would take you roughly 50 minutes with a single CPU to mine a block of Bitcoin.
The game started to change in October 2010, when the code for mining Bitcoin with GPUs - graphic processing units - was publicly released. Mining was still easy and affordable with a single GPU. While the idea for mining Bitcoin via GPUs had been circulating in the Bitcoin community, Satoshi put the brakes on this idea, arguing that in the short term, it would be more beneficial to the new and vulnerable network to not allow GPU mining. In December 2009, Satoshi posted to the Bitcointalk forum:
“We should have a gentleman's agreement to postpone the GPU arms race as long as we can for the good of the network. It's much easier to get new users up to speed if they don't have to worry about GPU drivers and compatibility. It's nice how anyone with just a CPU can compete fairly equally right now.”
The agreement was obviously broken, with people mining with GPU profiting and controlling the hash rate. Unlike CPUs, GPUs are designed to perform the type of repetitive calculations necessary to render video graphics on your computer - making them much better suited to perform the type of bulk calculations necessary to mine cryptocurrency. In September 2010, a Bitcointalk user named Puddinpop open-sourced the code to a Bitcoin client that enabled mining with GPU cards.
The idea of mining pools was predicted by Satoshi, and introduced by the Bitcointalk used Slush on November 10, 2010. Pooled mining allowed miners to connect together their hardware and earn block rewards in proportion to the hash rate they contributed. Today pooled mining dominates Bitcoin, with the top pools located in China controlling around 60% of the hash rate.
Between 2011 and 2012, FPGA - field-programmable gate array was introduced. FPGAs required three times less power than a simple GPU. But It was hard to optimize FPGAs around Bitcoin's SHA-256 hashing algorithm, and they suffered frequent malfunctions.
The invention of ASICs - application-specific integrated circuit - is what fostered Bitcoin and brought cryptocurrency from hobby to industry. On January 30, 2013, Bitcoin developer Jeff Garzik received the first Bitcoin Avalon A3256 ASIC. It was optimized to perform one specific function and won't be able to do much besides hash SHA-256. They gain in efficiency and performance.
ASICs only improved in terms of performance and efficiency. Bitmain's S9 miner is capable of performing 13 TH/s, or 216x more hashes per second than the first Avalon ASIC miner. Today’s mining exists in the form of mining farms with racks of ASIC chips.
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Please, note, that the article is a part of BTCMEX Blog, the views and opinions expressed here are the contributing author’s only, and do not necessarily represent the views of the company.
Julia Bulakh for BTCMEX