From CPU To ASIC: The Evolution Of Bitcoin Mining
By Andrey Costello on ALTCOIN MAGAZINE
Bitcoin mining has gained public attention in almost every corner of the world. Today it is a huge industry with several big players and billions of dollars in circulation. But ten years ago this whole thing was once nothing more than a lucrative hobby for a closed range of enthusiasts. Back then you could earn an enormous amount of BTC just with one mid-range computer. Let’s look at the Bitcoin mining evolution step by step.
Satoshi Nakamoto And His First Bitcoins
On 18 August 2008 was registered the domain name “bitcoin.org”. On 31 October 2008, the mysterious cryptocurrency creator Satoshi Nakamoto published a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System.
The Bitcoin network was created on 3 January 2009 when Nakamoto mined the first Bitcoin block (genesis block) creating the first 50 bitcoins. Satoshi did not have any specific equipment for Bitcoin mining, because back then Bitcoin network difficulty was so low, that anyone with standard multi-core CPU was able to produce BTC at a rate of 50 per block.
The difficulty of mining is a special metric, that determines how difficult is to find a new Bitcoin block at the current level of hashrate. In other words, the more Bitcoin miners join the game, the harder it to mine BTC. That is why modern mining facilities utilize the power of thousands of specifical devices. But we will get to it later.
First coins were not valuable, meaning that no one wanted to buy them for US dollars or any other currency. The first deal with Bitcoin happened almost a year after the cryptocurrency network was launched. On 17 March 2010, now-defunct BitcoinMarket.com started operating as the first Bitcoin exchange. In May 2010 the first real-world transaction with BTC was made — Laszlo Hanyecz bought two pizzas for 10 000 BTC. Nine years later his meal would be worth more than $8.6 million.
GPUs Come Into Play
In October 2010 the code for mining bitcoin with GPUs was released to the general public. From this time mining with CPUs quickly became outdated, because graphic cards have shown much greater performance with relatively low energy consumption.
For a short period of time, Bitcoin mining has transformed into a really attractive passive income source. Yes, difficulty rose steadily even at that time, but even a regular consumer could make enough money with his hand-made mining farm. Enthusiasts were utilizing consumer computing at its maximum. A crowdsourced standard evolved wherein several GPUs were plugged in one inexpensive motherboard with minimum DRAM.
But that miracle of making money out thin air was not going to last forever. As difficulty rose to new highs GPUs also became outdated in terms of performance. Their owners were forced to switch to the new type of mining equipment or leave the industry forever.
FPGA And ASIC: New Standards For Bitcoin Mining
FPGAs are semiconductor devices that contain programmable logic blocks and interconnection circuits. FPGAs were used long before Bitcoin became a thing. This type of equipment used three times less power than an average GPU setup. But FPGAs started hitting their bottlenecks in mining pretty soon, so in 2013 most Bitcoin miners switched to a new standard called an application-specific integrated circuit (ASIC).
By that time Bitcoin mining transformed into a whole new industry with big companies and centralized mining facilities. One of them is Bitmain founded in 2013 by Jihan Wu. In the next 5 years, Bitmain has taken the largest share in Bitcoin mining and ASIC production.
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