A Taste Of Reality

We come across innovative concepts everyday. Bitcoin is one of them which has gained a lot of popularity over the last few months.

It's a crypto currency and a new virtual monetary unit for exchanging goods and services with others in the P2P network.

How do you earn Bitcoins?

This is the interesting part for the tech savvy people. You earn Bitcoins by investing your CPU/GPU clock cycles to use. The more work your hardware does to create a Block of Data, the more you earn! This is indeed good and you have a complete control over it.

How much can you earn?

If you have a latest CPU or a GPU, then you stand a good chance to earn Bitcoins. You can either work on a Block of Data from Bitcoin Network in a Solo mode or be a part of the many pools out there and work along with other miners to build up a block of data.

In the early phase of 2011, when not many were aware of Bitcoin and how to mine them. We did not have many participants who were putting their GPU cycles to use this way. As a result, the difficulty was less and you stood a better chance to earn more Bitcoins.

As the word spread around, more and more users started building up GPU Clusters just to mine Bitcoins.

What are the factors to be considered?

When the Bitcoin Mining Concept started, a new single GPU Core would be sufficient to earn a good amount of Bitcoins.

But today, you don't stand a chance to mine Bitcoins with a single GPU Core. There are people building up Bitcoin Mining Rigs with many GPUs working in parallel.

The way I see it, the probability of you making Bitcoins is directly proportional to how superior your GPU hardware is compared to others.

You get a share of Bitcoins proportional to the amount of work done by your GPU hardware.

Let's look at some stats now. There are various Bitcoin Mining Calculators setup online that give you a projected estimate of how many Bitcoins you can earn depending on your Hash Speed.

With a fairly new GPU like ATI Radeon 6770M, you will get a hash speed of 100M Hashes/sec approx.

Let's look at the projected results for this speed:

Your hash-rate: 100000000 hashes/second
Difficulty: 1755425.3203287 times difficult than difficulty 1
Block time: 2 years, 4 months, 2 weeks, 6 days, 9 hours, 47 minutes, 49 seconds/block
Network total: 10,943 Thash/second

per Second - 0,00000066 BTC
per Hour - 0,00238739 BTC
per Day - 0,05729740 BTC
per Week - 0,4011 BTC
per Month - 1,742 BTC
per Year - 20,928 BTC

Look at the value of Difficulty - 1755425.3203287

This is quite high. The reason being, the number of peers participating in the Bitcoin Network is growing day by day.

It's a race to setup the fastest hardware, the more number of GPUs you can rack in parallel, the more Bitcoins you earn.

How do I earn cash with these Bitcoins?

It's important to understand that this is a Virtual Financial Infrastructure. So, there's an exchange as well. You can actually get money in your preferred currency in exchange for the Bitcoins you have earned.

Some famous ones - MtGox and Trademill.

Where can I view the current value of Bitcoin Exchange?

http://bitcoincharts.com/markets/

This site has a nice interface and it also allows you to put a filter depending on the currency in which you prefer to trade.

Let's extend the calculations based on the stats gathered above.

With an ATI Radeon 6770M GPU, you can earn 20.928 BTC/year at a difficulty rate of 1755425.32.

The current value of BTC in exchange against USD is:

1 BTC = 5,851 USD

In one year, you can earn: 122.44 USD.

The price of an ATI Radeon HD 6770M chipset from a decent brand like XFX in the market today is: 120 USD.

That would mean to say, in about 1 Year's time of running your GPU you can recover the price for which you purchased it? But hold on, you are not running your GPU to perform any other activity which you would have at the time of purchase.

This could have been any of the following:

Playing the Latest Computer 3D Games demanding latest GPUs to run at a good resolution.
Some GPGPU tasks like MATLAB, Digital Image Processing, Audio Signal Processing, Computational Finance, Bioinformatics, Neural Networks.
For Bruteforcing Hashes using the parallel processing power of GPUs with tools like oclhashcat, cryptohaze, EGB and others.

Now, are you doing any of these tasks?

Interesting fact is that, Bitcoin is listed as one of the GPGPU tasks on the wiki as well.

Besides the price of the purchase of your GPU. You also have to incur the price of electricity which will vary depending on your location.

Is it really worth to do Bitcoin Mining?

You decide it. You invest in the best GPUs out there, run them to their maximum capacity throughout for as long as an year and end up recovering the price for which you bought your hardware.

Is it safe?

This question needs some thought. You are connecting to a pool, accepting shares, your GPUs are working on data blocks, there's indeed a high possibility for some malicious code to be downloaded to your PC.

Malwares have already been developed and are out there in the wild which are phishing for Bitcoin Wallets and this is what is being termed as Virtual Pickpocketing.

Bitcoin does provide you a feature to encrypt your wallet.dat file. Be sure to do that, since if you lose that file, you lose all your bitcoins and there's no way you can claim them. Bitcoin clearly states that they are not responsible for your wallet.dat file and it's the user's responsibility to ensure it's safe.

Bitcoin as a concept of Virtual Crypto Currency is good but how exactly it works is even more interesting.