In recent years, cryptocurrencies led by Bitcoin (BTC) have entered the mainstream business world, as well as the financial market. For institutional investors and retail investors, the supply and demand of cryptocurrency have a significant impact on their trading and investment decisions. For Bitcoin, they generate new tokens through its mining mechanism.
The concept of Bitcoin was originally proposed by Satoshi Nakamoto on November 1, 2008，and was officially born on January 3, 2009. It designs and releases open-source software according to Satoshi Nakamoto’s ideas and constructs a decentralized network on it. Bitcoin is a virtual encrypted digital currency in a decentralized form. Point-to-point transmission means a decentralized payment system. Mining has become increasingly demanding in terms of computing power. Mining has evolved from CPU mining to GPU mining, and then to the era of ASIC mining.
CPU Mining
On January 3, 2009, Satoshi Nakamoto mined the first batch of 50 bitcoins (with the “Genesis Block”) using the CPU chip of his personal computer. In the early days of Bitcoin, mining was less difficult, and most mine on graphics cards on their PCs.
During this beginning stage of bitcoin mining, the benefits of mining on PCs outweighed the costs (including electricity costs, machine depreciation, etc.). According to previous reports, hundreds of bitcoins could be mined within a week using a PC.
GPU Mining
As mining became more difficult, and with the design of halving the bitcoin rewards. Ordinary CPUs were no longer able to run at the speed needed to meet the increased difficulty of the mining algorithm. So in 2010, there was a release of the first software design specifically for mining with a computer graphics card.
The computing power of GPU in one graphics card is equivalent to dozens of CPUs in parallel computing. So the mining efficiency will be greatly improved. Therefore, many people switched to GPU mining and assembled one or more advanced graphics cards to build their own mining appliance.
FPGA and ASIC Mining
As more and more people enter the mining industry. The overall computing power of the Bitcoin network continues to reach new highs, and advanced mining equipment, field-programmable gate arrays (FPGA), emerged. The first FPGA miner in China appeared in 2011. Manufactured by Nangeng Zhang, nicknamed “Pumpkin Zhang”, and the appliance is called the “Pumpkin Miner”. However, due to the high power consumption of FPGA mining. Ultimately, it took only six months for it to be phased out of the market.
In 2012, there was the first release of ASIC miner, Butterfly Miner. Initially, the computing power of ASIC miners was about 200 times that of graphics card mining. However, the power consumption rate was not much different, and it soon became popular in the market. ASIC miners have rapidly evolved to be the 3rd generation of bitcoin miners. Many have continued to innovate and evolve in terms of mining chip technology, from the initial 110nm, 55nm, 28nm, all the way up to 14nm.
In 2013, Nangeng Zhang launched a new ASIC miner named “AvalonMiner”. Later they founded Canaan Creative, a mining company focused on mining chips. In the same year, another mining company, Bitmain, was also established. Bitmain launched the first generation of Antminer in 2014. In 2016, Antminer S9 was launched with 189 ASIC chips built-in, as its flagship product. Through the ups and downs of the market in the following decade, Bitmain’s Antminer, together with AvalonMiner, has been leading the mining industry.
Mining Pool
In 2010, the first Bitcoin mining pool, Slush Pool, emerged. In the Bitcoin mining market, the mining advantage of individual miners, in terms of computing power and energy efficiency, is getting low. “Mining pools”, which consolidate a large amount of computing power resources. Have emerged rapidly in the market in the following years. Compared to individual miners with little computing power, mining pools have a significantly higher chance of success. They enable the pool participants to share bitcoin rewards. When a pool succeeds in mining a block, all miners in the pool will receive rewards in bitcoin, in proportion to their contribution of computing power. On the other hand, the pool takes a fee in the process.
According to the mining pools history from BTC.com Explorer, it is observed that everyone mined with their own personal computers (PCs) in the early days of bitcoin mining. However, as more and more people participated in the mining process and the computing power continued to rise. This approach was too inefficient. As a result, professional pools of computing power quickly emerged. Ultimately allowing miners to connect their computing power devices to the pool, joining computing power to mine.
