Cryptocurrency

A Little Bit About Bitcoin Generation

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Bitcoins, as well as their numerous forks, are what is known as cryptocurrency. Cryptocurrencies are a special type of electronic currencies: decentralized, not tied to any national currency, not subject to inflation, not controlled by any governing body.

Traditional monetary systems for a long time used the so-called gold standard, which guaranteed that each unit of money issued can be exchanged for a corresponding amount of gold on demand. Cryptocurrencies have a peculiar counterpart to the gold standard called “proof of work”: each unit of money is “issued” if a cryptographic problem is solved. This task is to calculate the value of a function. Over time, the level of complexity of this problem increases.

Bitcoin generation is essentially the calculation of new blocks. A block is a set of data consisting of two main parts: a header and a transaction list. The header includes its own hash, the hash of the previous block, transaction hashes, and service information. The first transaction in the block is the generation of new bitcoins, which, if successful, will be transferred to the finder. Next, all or some of the most recent transactions, not yet included in the previous blocks, are specified.


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The found block will be accepted by all other users if the numerical value of the header number is less than or equal to the target number, the value of which is regularly adjusted. If the block does not match the target, the service information in the header is changed and the hash is recalculated. It takes a very large number of attempts to find the block.

When a variant is found, the node reports it to the other connected nodes, which check the block. If there are no errors, the block is considered added to the chain, and the next blocks will have to include its hash.

As we said above, over time it becomes harder and harder to find a new block that meets the conditions of the problem. The point of our test was to check how many bitcoins and in what time the processors of our dedicated hosted bitcoin mining could generate.

Bitcoin generation

For this test we have chosen servers with the following processor specifications (such parameters as memory capacity and hard drive size do not affect bitcoin generation at all, that is why we do not list them; for the same reason we also do not list them using HyperThreading technology; to make it clearer, we sum up core power of all processors mentioned in the list).

  • Intel Atom D525 2 cores at 1.8GHz = 3.6GHz
  • Intel Core i3 2120 with 2 cores at 3.30GHz = 6.60GHz
  • Intel Core2Duo E8400 2 Cores 3.0GHz = 6.00GHz
  • Intel Core2Quad Q8300 4 Cores 2.5GHz = 10.0GHz
  • 2 x Intel Xeon 5130 2-core 2.0GHz = 8.0GHz
  • Intel Xeon E3-1230 4 x 3.20GHz Cores = 12.8GHz
  • Intel Xeon E3-1270 4-core 3.5GHz = 14.0GHz
  • 2 x Intel Xeon E5504 4-core 2.0GHz = 16.0GHz
  • 2 x Intel Xeon E5620 4-core 2.4GHz = 19.2GHz
  • 2 x Intel Xeon L5630 4-core 2.13GHz = 17.04GHz
  • 2 x Intel Xeon E5-2603 4-core 1.8GHz = 14.4GHz
  • 2 x Intel Xeon E5-2620 6-core 2.0GHz = 24GHz
  • 2 x Intel Xeon E5-2630 6 cores 2.30GHz = 27.6GHz

 

Shortly after starting the test the Atom processor suddenly stopped responding to API queries, not even reaching its current level of complexity. That is why we decided to exclude it from further testing (the difficulty level was 37392766.1364745 at that moment; it took the processor little over a day to reach it).

The rest of the processors reached the required difficulty level, which was 609482679.88835 at the time of testing. After the current level of complexity was reached, we collected data on the computation speed in hashes per second (hashespersec) for an hour. If you want to find out more about Bitcoin and cryptocurrency trading, then bitcoin profit is the place for it.

Conclusions

During the week of testing none of the configurations was able to generate a single bitcoin block. Using even the most powerful server for mining on CPU alone is completely useless. Not so long ago, it was possible to generate bitcoins using several powerful video cards. ASIC USB Block Erupter – a specialized computing device for mining, which has already been written about many times on Habra, has recently become popular, but even they do not guarantee a quick success.

At the moment, due to the increasing complexity, it is almost unrealistic to get a block without having gigantic computing power. Of course, it is possible to connect to a pool – but you will still have to wait a long time. You can also generate alternative cryptocurrencies (Litecoin, Namecoin, PPCoin, etc.), and then convert into bitcoins – but there is no guarantee of success here, either.

You can make money with dedicated servers in other, more traditional ways – of course, they have a lot of problems, but they are much more profitable and reliable.


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