What hardware do I need to mine Bitcoin? Typically, machines are operated in mining farms in parts of North America, Russia, China, and other regions that can offer low electricity prices. Lower electricity prices mean lower operating costs and better profit margins.
Many mining farms provide plug-and-play solutions, including device purchasing, hosting, transportation, deployment, maintenance, and so on. If it is not feasible for you to purchase a mining machine or spend time maintaining the hardware, there are platforms that allow you to rent hashrate. Learn how to use popular hashrate rental platform NiceHash to mine with f2pool here. Mine more efficiently The lower the unit power consumption compared to the hashrate, the higher the mining efficiency.
For some old-gen rigs, miners will sometimes have to temporarily turn their devices off or flush the firmware to underclock them for lower power consumption when the bitcoin price makes them unprofitable to run under normal conditions. Check out the f2pool Popular Miners page for detailed information such as hashrate and power consumption for Bitcoin mining machines.
How do I set up the software and create an account? Step 1: Create a wallet address Creating a wallet address is always the first step when diving into a new blockchain network. You can choose to run a full node as a wallet or use another wallet solution.
An extensive list of wallet options is available on the Bitcoin. You can also choose an exchange address. For security reasons it displays the public key only, not the private key. To ask bitcoind to expose the private key, use the dumpprivkey command. The dumpprivkey command shows the private key in a Base58 checksum-encoded format called the Wallet Import Format WIF , which we will examine in more detail in Private key formats.
It is not otherwise possible for bitcoind to know the private key from the public key, unless they are both stored in the wallet. Tip The dumpprivkey command is not generating a private key from a public key, as this is impossible. The command simply reveals the private key that is already known to the wallet and which was generated by the getnewaddress command.
Elliptic Curve Cryptography Explained Elliptic curve cryptography is a type of asymmetric or public-key cryptography based on the discrete logarithm problem as expressed by addition and multiplication on the points of an elliptic curve. Figure is an example of an elliptic curve, similar to that used by bitcoin. An elliptic curve Bitcoin uses a specific elliptic curve and set of mathematical constants, as defined in a standard called secpk1, established by the National Institute of Standards and Technology NIST.
Because this curve is defined over a finite field of prime order instead of over the real numbers, it looks like a pattern of dots scattered in two dimensions, which makes it difficult to visualize. However, the math is identical as that of an elliptic curve over the real numbers.
As an example, Figure shows the same elliptic curve over a much smaller finite field of prime order 17, showing a pattern of dots on a grid. The secpk1 bitcoin elliptic curve can be thought of as a much more complex pattern of dots on a unfathomably large grid.
Geometrically, this third point P3 is calculated by drawing a line between P1 and P2. This line will intersect the elliptic curve in exactly one additional place. This tangent will intersect the curve in exactly one new point.
You can use techniques from calculus to determine the slope of the tangent line. These techniques curiously work, even though we are restricting our interest to points on the curve with two integer coordinates! In some cases i. This shows how the point at infinity plays the role of 0. Now that we have defined addition, we can define multiplication in the standard way that extends addition. Generating a Public Key Starting with a private key in the form of a randomly generated number k, we multiply it by a predetermined point on the curve called the generator point G to produce another point somewhere else on the curve, which is the corresponding public key K.
The generator point is specified as part of the secpk1 standard and is always the same for all keys in bitcoin: where k is the private key, G is the generator point, and K is the resulting public key, a point on the curve. Because the generator point is always the same for all bitcoin users, a private key k multiplied with G will always result in the same public key K. The relationship between k and K is fixed, but can only be calculated in one direction, from k to K. Tip A private key can be converted into a public key, but a public key cannot be converted back into a private key because the math only works one way.
Our goal is to find the multiple kG of the generator point G. That is the same as adding G to itself, k times in a row. In elliptic curves, adding a point to itself is the equivalent of drawing a tangent line on the point and finding where it intersects the curve again, then reflecting that point on the x-axis.
Figure shows the process for deriving G, 2G, 4G, as a geometric operation on the curve. Tip Most bitcoin implementations use the OpenSSL cryptographic library to do the elliptic curve math. Elliptic curve cryptography: Visualizing the multiplication of a point G by an integer k on an elliptic curve Bitcoin Addresses A bitcoin address is a string of digits and characters that can be shared with anyone who wants to send you money.
Because paper checks do not need to specify an account, but rather use an abstract name as the recipient of funds, that makes paper checks very flexible as payment instruments. Bitcoin transactions use a similar abstraction, the bitcoin address, to make them very flexible. The bitcoin address is derived from the public key through the use of one-way cryptographic hashing.
Cryptographic hash functions are used extensively in bitcoin: in bitcoin addresses, in script addresses, and in the mining proof-of-work algorithm. Tip A bitcoin address is not the same as a public key. Bitcoin addresses are derived from a public key using a one-way function.
Base58Check is also used in many other ways in bitcoin, whenever there is a need for a user to read and correctly transcribe a number, such as a bitcoin address, a private key, an encrypted key, or a script hash. In the next section we will examine the mechanics of Base58Check encoding and decoding, and the resulting representations. Figure illustrates the conversion of a public key into a bitcoin address. Public key to bitcoin address: conversion of a public key into a bitcoin address Base58 and Base58Check Encoding In order to represent long numbers in a compact way, using fewer symbols, many computer systems use mixed-alphanumeric representations with a base or radix higher than For example, whereas the traditional decimal system uses the 10 numerals 0 through 9, the hexadecimal system uses 16, with the letters A through F as the six additional symbols.
A number represented in hexadecimal format is shorter than the equivalent decimal representation. Base is most commonly used to add binary attachments to email. Base58 is a text-based binary-encoding format developed for use in bitcoin and used in many other cryptocurrencies. It offers a balance between compact representation, readability, and error detection and prevention. Base58 is a subset of Base64, using the upper- and lowercase letters and numbers, but omitting some characters that are frequently mistaken for one another and can appear identical when displayed in certain fonts.
Or, more simply, it is a set of lower and capital letters and numbers without the four 0, O, l, I just mentioned. Example The checksum is an additional four bytes added to the end of the data that is being encoded. The checksum is derived from the hash of the encoded data and can therefore be used to detect and prevent transcription and typing errors. When presented with a Base58Check code, the decoding software will calculate the checksum of the data and compare it to the checksum included in the code.
If the two do not match, that indicates that an error has been introduced and the Base58Check data is invalid. For example, this prevents a mistyped bitcoin address from being accepted by the wallet software as a valid destination, an error that would otherwise result in loss of funds. For example, in the case of a bitcoin address the prefix is zero 0x00 in hex , whereas the prefix used when encoding a private key is 0x80 in hex.
A list of common version prefixes is shown in Table These four bytes serve as the error-checking code, or checksum. The checksum is concatenated appended to the end. The result is composed of three items: a prefix, the data, and a checksum.
This result is encoded using the Base58 alphabet described previously. Figure illustrates the Base58Check encoding process.
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