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CPU mining. In the early days of bitcoin, mining difficulty was low and not a great deal of miners were competing for cubes and rewards. This made it rewarding to use your computers own central processing unit (CPU) to mine bitcoin. However, that strategy was soon replaced by GPU mining.
GPU mining. A graphics processing unit (GPU) is a powerful processor whose sole purpose is to help your computers graphics card in rendering 3D graphics. GPUs are not built for executive decisions (like CPUs) but to be somewhat good laborers, hence GPUs are able to execute over 800 times more instructions in the same amount of time as a CPU.
FPGA mining. Next came mining using field-programmable gate arrays (FPGAs). These significantly outperformed GPUs and CPUs in the mining process as FPGAs are chips which can be programmed to execute certain instructions, and only those instructions (instead of being repurposed for mining, like GPUs were).
ASIC mining. Similar to FPGAs, application-specific integrated circuits are chips designed for a particular purpose, in our situation mining bitcoin, and nothing else. ASICs for bitcoin were introduced in 2013 and, as of November 2017, they're the best processors available for mining bitcoin and they outperform FPGAs in electricity consumption. .
Mining pools. To offset the problem of mining a block, miners started organizing in cloud or pools mining networks. Whenever a miner in one of these pools solves a block, the payoff is shared with everyone in the pool in a ratio representative of just how much work you put into the pool (even though you personally never solved the mystery ). .
Cloud mining. Clouds offer prospective miners the capability to purchase mining rigs in a remote data centre location. There are many obvious advantages, the most obvious being: no energy costs, no extra heat, and nothing to sell when you opt to hang your digital pickaxe.
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Once miners get bitcoin, they are given a virtual key to the bitcoin addresses. You can use this digital key to access and validate or approve transactions.
Desktop pockets. Software like Bitcoin Core allows you to send and save bitcoin addresses and connects to the network to track transactions.
Online wallets. Bitcoin keys are stored online by exchange programs such as Coinbase or Circle and can be accessed from anywhere.
Mobile wallets. Apps like Blockchain shop and encrypt your own bitcoin keys so that you can make payments using your mobile device.
Paper wallets. Some sites provide paper wallet solutions, generating a piece of paper with just two QR codes on it. One code is the public address at which you get bitcoin and the other one is your personal address you can use for spending.
Hardware wallets. You can use a USB device made especially to store bitcoin electronically and your personal address keys.
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Making money mining bitcoin is much harder today. Some of the problems contributing to the difficulty include:
Hardware prices. The times of mining using a standard CPU or graphic card have been gone. As more people have begun mining, the problem of solving the puzzles has overly increased. ASIC microchips were developed to process the computations faster and also have become necessary to succeed at mining today. These processors can cost $3,000 or more and are guaranteed to further increase in cost with every improvement and upgrade. .
Rise in corporate miners. Hobby miners should now compete with for-profits and their larger, better machines when mining to earn a buck.
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Electricity costs. Power in the United States is significantly more expensive than it is in different parts of earth, making it further challenging to compete with big-miner money.
When discussing the feasibility of bitcoin mining, an unexpected factor rears its head: electricity consumption. This catches a lot of potential miners off-guard. After all, we seldom consider how much power our electrical appliances are consuming. But computing hashes is a very intensive process, pushing whatever chip youre using into the limit, and also to its maximum energy consumption.
If youre using CPU/GPU/FPGA to mine, the answer is a definite no. As of November 2017, the BTC reward is so small it doesnt cover the energy your personal computer will consume to verify a block.
This leaves us with Pools, ASICs and Cloud Mining. If youre not willing to put a good deal of money into setting up a useful source mining operation, your best option might be to get a cloud mining rig. These are comparatively low cost, and require no hardware knowledge to begin, no extra electricity bills, and you wont end up with a machine that you cant market when bitcoin mining is no longer profitable. .