Bitcoin mining.

[Bitcoin]

3. The Age of Capital.
In 2017, Bitcoin ushered in a bull market, with a year-on-year increase of up to 1700%. The huge investment income has attracted the attention of the world. For a time, bitcoin and blockchain became the hottest topics in the market. Many blockchain companies were born like mushrooms. The A-share market saw the rise of "blockchain concept stocks." The venture capital circle also began to rise. "All in Blockchain", as the most profitable mining machine manufacturer in the industry has also become a hot company.
In December 2017, when the market was the craziest, Bitmain's sales were treated like stars, and customers gave gifts to the sales and invited guests to dinner, just to get orders for ant mining machines. The order has been placed in the spring of the second year. According to Frost & Sullivan's data, in 2016, the market size of ASIC mining machines was only 700 million U.S. dollars, and by 2017 its market size reached 3 billion U.S. dollars; of the mining machine delivery volume that year, Bitmain 940,000 mining machines were sold, Jianan Yunzhi 290,000 units, Yibang International 50,000 units, occupying 88% of the global market share. Under this circumstance, mining machine companies have begun brewing for listing.
On September 26, 2018, Bitmain officially submitted the prospectus to the Hong Kong Stock Exchange, plus Jianan Yunzhi and Yibang International respectively went to Hong Kong to submit listing applications in 2018, and for a while, the mining machine chip company occupied the capital Market headlines, and the outside world can finally glimpse the business revenue of these mysterious mining machine manufacturers. Of course, the results are unexpected and its operating performance is better than most A-share listed companies in the same industry.
In terms of operating income, Bitmain's revenue reached 16.452 billion yuan in 2017, and the highest operating income of A-share semiconductor companies listed in the same period was 26.158 billion yuan from Trina Solar. Therefore, from the perspective of revenue ranking, Bitmain will rank fourth among all A-share semiconductor listed companies, which is lower than the second place of Changdian Technology's 23.85 billion yuan and the third place of Ninestar's 21.3 billion yuan, but higher than Longji shares of 16.36 billion yuan.
From the perspective of net profit, Jianan Yunzhi and Bitmain have maintained a net profit growth rate of more than double for three consecutive years. In 2017, Bitmain's net profit reached 4.583 billion yuan, Jianan Yunzhi's 361 million yuan, and Yibang International's 385 million yuan. If ranked together with listed companies in terms of net profit, in 2017, Bitmain's net profit can be proud of the entire semiconductor industry -- the highest net profit among A-share semiconductor listed companies in 2017 is Longji, but its net profit is only 3.549 billion. Yuan, a net profit of nearly 1 billion yuan less than that of Bitmain.
However, because the blockchain business is too advanced, the HKEx has doubts about the continued operating capabilities of the mining machine manufacturers, and finally rejected the listing applications of the three major mining machine manufacturers. The blockchain company's first attempt to go public went out of business. Then the three major mining machine giants turned their attention to the U.S. securities market: On November 21, 2019, Jianan Yunzhi successfully landed on NASDAQ in the United States and became the world's first blockchain-listed company; in June 2020, Yibang International successful listing in the United States; according to related reports, Bitmain is also preparing to go public in the United States.
(Hangzhou City's light show to celebrate the listing of Jianan Yunzhi as the "first block in the global blockchain")
The ups and downs of the mining machine manufacturers have not reached the end with the listing in the United States. In the near future, they will continue to express their own glory. Perhaps many people will disdain this, thinking that the miner chips are worthless except for the mining of encrypted digital currencies. This kind of erroneous view that is quite popular in the current market, but many people do not realize that the value and significance of the mining machine chip to the semiconductor industry is no less than that of the national integrated circuit fund with hundreds of billions of scale, at least reflected in the following three aspects:
(1) Cultivation of talents in the semiconductor industry.
The problem with my country's chip industry is that the industry itself is a talent-intensive industry, but it is far from attractive to talent. According to the survey of "White Paper on Talents of China's Integrated Circuit Industry (2018-2019)", there were 8.2 million college graduates in China in 2018, and the total number of graduates in integrated circuit-related majors was about 199,000, but only 38,000 integrated circuit-related majors Of graduates enter the industry, that is, only about 19% of graduates enter the semiconductor industry.
The main reason is that the salary level of the chip industry is not high. According to statistics, among the listed companies in China in 2019, the average salary of executives in the financial industry was 22.8 million yuan, the real estate industry was 14.78 million yuan, and the semiconductor industry was only 9.541 million yuan. Without a competitive salary in the market, it is impossible to attract talents, so there is a large talent gap. According to the "White Paper", there is still a gap of 261,000 people in China by 2021.
In comparison, the average salary of the blockchain industry where the mining machine manufacturers are located is very high. According to the relevant data of Liying.com, the average annual salary of technical posts in the blockchain industry in 2019 is 384,000 yuan, which is higher than the 201,000 yuan in the Internet industry. Compared with before 2018, the treatment of the semiconductor industry is much lower than that of the Internet industry, resulting in the majority of integrated circuit graduates flowing into the latter, and the rise of the field of mining machine chips has attracted a large number of excellent talents to devote themselves to the design of mining machine chips. The field includes Yang Zuoxing, the founder of the current bit micro company we introduced earlier.
There is no doubt that the mining machine chip manufacturers, especially in the "national learning core" in 2018, before the upsurge of chip localization, their generous salary treatment has retained a large number of chip design talents for my country's semiconductor industry. Even more commendable is that, compared to university researchers who have never been in contact with the "striping" link, mining machine chip manufacturers provide an excellent platform for China's chip practitioners, whether it is the world's leading 7nm process or the most advanced. The advanced 5nm process can be involved in the design and testing at the first time, and a lot of knowledge and experience have been accumulated in the "dry middle school".
(2) Technology accumulation in frontier fields.
A big misunderstanding of many people's mining machine chips is that their accumulated technology is not useful in other fields. This view may have been correct in the past, but at the time when artificial intelligence is rising and Moore's Law is becoming invalid, these technologies have shown great value and use.
The first is in the field of artificial intelligence. Due to the increasing demand for edge computing, AI has begun to move from "cloud" to "terminal". In all kinds of platforms, the CPU is good at control, and its design determines that in order to reduce the waste of computing power during data transmission at work, it needs to accumulate a certain amount of data before calculating, which cannot meet the strong real-time nature of AI needs; GPUs only use part of the computing resources while burdening high power consumption. Whether it is in the cloud or terminal, it is not an option with a good energy consumption ratio. Therefore, in high-performance, low-power terminals, ASIC chips are becoming increasingly popular. In addition to being unable to expand, ASIC chips have advantages in power consumption, reliability, and volume.

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CHAIN LINK $LINK (Staking and Mining)|13:01

[Bitcoin]

For this reason, market analysis generally believes that with the development of edge computing, ASIC will become the core of future AI chips. The Ovum survey report pointed out that in 2016, the cloud (including enterprises, data centers, etc.) is the main revenue field of deep learning chips, accounting for 80%, but by 2025, this proportion will change, and the edge will reach 80% %, and the proportion of the cloud is reduced to 20%, ASIC's market share is expected to rise significantly as the demand for edge computing increases. It is expected that the market share of ASIC will increase significantly from the current 11% to 48% by 2025.
At present, mainstream ASICs on the market include TPU chips, NPU chips, VPU chips and BPU chips. Due to the long development cycle of ASIC, only large manufacturers have the funds and strength to conduct research and development, and Bitmain is the leader among them, and has accumulated a lot of technology and experience in the research and development of mining machine chips. In addition, Jianan Yunzhi, Yibang International and other manufacturers also have plans for the AI ​​field.
Another application of mining machine chip accumulation technology is in the field of "Moore's Law". In the 1970s, Intel founder Gordon Moore proposed that "when the price is unchanged, the number of transistors that can be accommodated on an integrated circuit will double every 18-24 months." At the same time, computer performance will usually double. However, since 2011, Moore's Law has been difficult to continue. To this end, many semiconductor companies and professional institutions, including Intel, have pinned their hopes on "architectural innovation" to achieve "surpassing Moore".
"Full customization methodology" in the field of mining machine chips is a brand new "architectural innovation" direction: Ant S7, Ant S9, Shenma M3, Shenma M10 designed by Yang Zuoxing using a fully customized methodology, each generation of mining machine Compared with the mining machine chips designed by the traditional method with the same process technology, the launch of the power consumption has been improved by more than 4 times in terms of power consumption × cost optimization ratio. This is far beyond the improvement brought by simply relying on advanced process technology. Therefore, as Yang Zuoxing said frankly, the fully developed methodology has brought about innovations in chip design, and it is expected to continue to advance Moore's Law for 5-10 years.
(3) Promotion of domestic semiconductor industry.
In April 2020, Changdian Technology, an A-share listed company, announced that Wuhan Xindong Technology Co., Ltd. filed a lawsuit with the Wuxi Intermediate People's Court due to unsatisfactory packaging quality, and claimed 175 million yuan from Changdian Technology. It is worth noting that according to the financial report, the annual net profit of Changdian Technology in 2019 is only 89 million yuan.
Many people said it was incredible when they saw this news. This unknown Wuhan Xindong Company can actually claim the net profit of Changdian Technology for nearly a year. In fact, Wuhan Xindong is also a mining machine chip manufacturer in China, but it is smaller and more low-key than the market giants such as Bitmain and Jianan Yunzhi.
Of course, many people have also realized that the status of miner chips in our semiconductor industry chain has been underestimated through this matter. It is the downstream wafer manufacturers and testing and packaging plants that have played an important role, especially in advanced In the field of process technology, its role is more important.
Since 2017, Bitmain and Huawei HiSilicon have become TSMC's two largest customers in mainland China. In October 2017, TSMC announced business revenue for the third quarter. Shockingly, demand from mining machine chips increased TSMC's third quarter revenue by US$350 million to US$400 million. Even because the mining machine chip had a squeezing effect on Huawei HiSilicon's Kirin chip production capacity. According to reports from Jiwei, Bitmain's orders for TSMC's 10nm process in December 2017 exceeded Huawei's HiSilicon Kirin chip.
Such phenomena can also be found in financial data. According to the prospectus and financial reports of the three major mining machine companies, from 2015 to 2019, the sales costs of Bitmain [footnoteRef:1], Jianan Yunzhi and Yibang International reached 8.324 billion yuan, 1.939 billion yuan and 949 million yuan. Among the various costs of mining machines, wafer manufacturing costs are about 75%, and packaging and testing costs are about 15%. From this, we can calculate that the three major mining machine manufacturers spend on wafer manufacturing and packaging in each year The cost, as shown in the figure below, in the wafer manufacturing field, the cost of the three major mining machine manufacturers increased from 392 million yuan in 2015 to 8.409 billion yuan in 2019; the cost of testing and sealing increased from 78.48 million yuan in 2015 to 2019 1.681 billion yuan a year, the compound annual growth rate has more than doubled.
Take Changdian Technology, which provides sealing services for the three major mining machine manufacturers as an example. Changdian Technology is the largest domestic and the world's third largest sealing manufacturer. According to the financial report, the operating income of Changdian Technology in 2019 was 23.526 billion yuan, and the net profit just turned into a profit, reaching 97 million yuan. Even so, most of Changdian's profits actually come from government subsidies. In 2019, Changdian Technology disclosed a government grant of 103.587 million yuan. Similarly, in the three years from 2016 to 2018, Changdian Technology's net profit was 106 million yuan, 343 million yuan, and -939 million yuan, corresponding to The government subsidies included in the current profit and loss amounted to 207 million yuan, 351 million yuan, and 155 million yuan. This also means that Changdian Technology, the world's third-largest sealing manufacturer, largely relies on government subsidies to survive.
Obviously, for the mining machine chip, which has reached a billion level and is still growing rapidly, it is very important for domestic sealing and sealing manufacturers.
Similarly, in the field of wafer manufacturing, due to the large-scale, high-performance and low-power calculations required for mining machine chips, the demand for advanced manufacturing processes is very large. Since the mining machine chips are more concerned about performance and the need to seize the market, the price of wafers is not very concerned, so wafer foundries such as TSMC are happy to increase orders for mining machine manufacturers, even to allow mining Machine manufacturers participate in the testing of the latest process technology of 7nm and 5nm.
Taking Jianan Yunzhi as an example, according to the latest news, the current domestic wafer manufacturing giant SMIC has begun to negotiate with Jianan Yunzhi on cooperation on 14nm mining machines. So how big is Jianan Yunzhi's demand for 14nm process chips? According to the annual sales records of various types of mining machines and the number of chips inside the mining machine disclosed by Jianan Yunzhi, Ouke Cloud Chain Research Institute calculated its annual demand for advanced process chips. As shown in the table below, in 2019, Jianan Yunzhi's demand for 16 nm chips is approximately 76.09 million, and it is expected that the demand for 14 nm chips will also remain at the same level.
According to SMIC's official news, as of the end of 2019, SMIC's 14nm production capacity is only 3,000 to 5,000 wafers/month, and it is expected that it will only reach 15,000 wafers/month by the end of 2020. Considering the yield of wafers and the number of wafers on each wafer, we expect that if Jianan Yunzhi gave all orders for 14nm to SMIC, even if the capacity expansion is completed by the end of 2020, SMIC will need to spend 1 -2 months of production capacity to complete all orders.
Therefore, for domestic foundry giants, orders from mining machine chips are definitely a considerable income, which will also promote wafer manufacturers in mainland China to develop more advanced process technology.
The founder of Bitmain Wu Jihan attended Nankai Middle School in Chongqing in his early years, and the Nankai series of schools were founded by patriotic educator Zhang Boling in 1904. Nankai Middle School for nearly a hundred years has nurtured a large number of well-known scholars and political elites for China. However, in the early years, Nankai Middle School was a private school. The funds for running a school mainly came from individual donations from society. However, private donors, such as politician Cao Rulin and warlord Yang Yide, made many donations to Nankai. The students protested, and Zhang Boling said: "Beautiful flowers may be poured out of manure."
Today's mining machine chip manufacturers are more like Zhang Boling's situation. As the blockchain technology is still in its early days, there are many market chaos, and people are also very vocal about the mining machine chip manufacturers. However, as the underlying blockchain technology of the encrypted digital currency, it may not be the "dung water" of some populations, but the future "mannose" -- October 24, 2019, the Political Bureau of the CPC Central Committee on the blockchain The eighteenth collective study of technology development status and trends, national leaders delivered an important speech on this, affirmed that the integrated application of blockchain technology plays an important role in new technological innovation and industrial transformation, and the blockchain technology As an important breakthrough for independent innovation of national core technology. I believe that with the further development of my country's blockchain industry in the future, people will more realize the value of mining machine chip manufacturers.
[Editor in charge: Liu Yukun PT030]

[Bitcoin]

About the author: Ouke Cloud Chain Research Institute is a research institute of Ouke Group. The main research content is centered on the two major fields of blockchain industry and digital currency. It has close cooperation with governments, enterprises, universities and so on. Reputation. Ouke Cloud Chain Group is the world's leading blockchain industry group. Headquartered in Beijing, China, it has branches or offices in more than 10 countries and regions such as the United States, Europe, South Korea, and Japan. Listed on the Hong Kong Stock Exchange.
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Some Interesting Facts About Bitcoin.
First let us know about what is bitcoin and why should you be interested in bitcoin & Bitcoin mining. Most of us are aware about bitcoin but if you are not then let us find out some interesting facts about bitcoins.
There are several aspects about bitcoin like we cannot print bitcoin like dollar, pound, yen or any other fiat currency. Bitcoin can be used digitally if the both parties willing. It can be used to buy things digitally.
Bitcoin is a virtual currency independent of any central authority, it is decentralised money and no single institute controls the BTC networks.
Main drawback of fiat currencies is that banks can print as many as they want. But with bitcoin, there is limited supply maximum of 21 million. The supply of bitcoin controlled by the algorithm.
You can send bitcoins to any other user without disclosing your identity because there is no central validator. And bitcoin transaction cannot be reversed like any other fiat currency, if transaction is recorded on network and more than hour passed then it's impossible to modify.
Have you ever thought how bitcoins generated? As we discussed earlier that bitcoin can't be printed because bitcoin isn't physical as well bitcoin can't be mined like gold. Then why we use Bitcoin mining term to describe bitcoin generation process? Okay let's find out.
Anyone can get bitcoin as a reward by solving a complex mathematical puzzle and this puzzle solving task called Bitcoin mining. And for Bitcoin mining you need faster computer, its called node or miner.
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The Problems With Cryptocurrency Mining: Energy Use & Centralization.
Proof-of-work mining has a few serious problems. Every day, networks like Bitcoin, Dash, and Litecoin become evermore centralized. Industrial-scale mining operations that burn through electricity have put the power to control the networks in the hands of just a few. Individual miners have to rely on mining pools to compete. But mining pools themselves also act as a force for network centralization. Mining is quickly becoming more of a problem than a solution. Even long-standing pillars of the community are speaking out against it. But a few young projects are working hard to out innovate these challenges, and each one has a different solution.
Bitcoin mining uses too much energy.
You may have heard this argument before, but Bitcoin mining is consuming an increasingly large percentage of the world's energy. Today's estimates suggest that mining operations are now consuming as much or more electricity than the entire nation of Denmark. While it's not enough energy consumption to cause a global catastrophe, it is quickly becoming a serious problem.
This is because Bitcoin mining is accomplished through running energy-hungry mining computers 24 hours a day. Each device, such as the Bitmain S9, consumes a steady stream of upwards of 1400W of electricity.
Most mining today is done by massive, factory-style operations. A popular destination for such operations is Iceland. The government of Iceland has warned that they are running out of resources to feed the endless demand for more energy for mining operations. In fact, they have stated that if they allowed every investor or company that wanted to start such an operation to do so, they would be totally unable to keep up with the demand.
The PIVX solution: Do away with mining all together.
Not all cryptocurrencies require mining. PIVX, for instance, doesn't use proof-of-work mining at all. Instead, it uses an advanced version of proof-of-stake. BASICally speaking, instead of running energy intensive mining computers, anyone can buy and hold units of PIVX, and earn a reward for doing so. This is because when a user holds PIV in an online wallet, their computer will continuously stay up to date with the network and help propagate transactions and updates.
With PIVX, blocks occur every minute. In each block, a cryptocurrency reward is given to the winning staker that won the lottery-style draw for that block. This type of "mining" is preferable to Bitcoin style proof-of-work mining. That's because it requires no more energy than just leaving ones computer on. It also doesn't require any expensive (and quickly obsolete) custom hardware.
To put it simply, PIVX will never have an energy crisis because it will never need much energy at all. Estimates put the energy needs of the entire network to be somewhere around just one wind turbine.
The downside? Some argue that proof-of-stake currencies always release the same amount of coins or tokens at the same energy costs, regardless of market conditions. PIVX counteracts this by burning all transaction fees. This helps control the supply, but it's still perhaps not a perfect solution.
The Spectre of Bitmain and the man behind it.
Another popular location for large scale Bitcoin mining operations is China. This is because most mining hardware today is made in China. There are also several territories within the country that have comparatively cheap energy and infrastructure costs.
The biggest of these operations is run by the makers of most of the worlds mining hardware, Bitmain. Not only does Bitmain make the mining hardware that runs the majority of the network, they also set up cavernous mining farms with tens of thousands of machines.
In response to this, the co-owner of bitcoin.org and bitcointalk.org known as Cøbra released a paper outlining his concerns for the centralization of Bitcoin mining, and the risks that he feels Bitmain represents. Cøbra writes:
"More and more of the network hashrate is starting to become concentrated into the hands of one man [Jihan Wu] and his company [Bitmain]. The security of our network essentially depends on them acting honourably, and us being prepared to respond to it. They get more powerful each day."
Further, Cøbra warns of potential political implications, saying: "[Bitmain is] in a position where the Chinese government can take over their equipment at any time; something they will no doubt do if Bitcoin grows enough to allow them to use their control of the hashrate to push a Chinese geopolitical agenda."
DigiByte and DigiShield, multi-algorithm protection.
DigiByte, an increasingly popular cryptocurrency project that's been around since 2014 uses five different mining algorithms at the same time. This means that SHA-256, the algorithm of choice for Bitcoin miners, only represents up to about 20% of the network hash rate at most.
Jared Tate, the founder of DigiByte, confidently stated at the Texas Bitcoin Conference that if Bitmain were to turn all of it's miners towards the DigiByte blockchain, they could never gain more than a small percentage of the network. The sudden jump in hashrate wouldn't cause network difficulty issues because of DigiShield, a technology that can retarget difficulty almost instantly.
DigiByte may have protection from centralized mining. But it could still incur that large energy cost that is associated with proof-of-work mining. Although today, it's nowhere near the energy consumption scale that Bitcoin mining sees.
With PIVX, on the other hand, these sorts of issues can never happen. The proof-of-stake model means that anyone with consumer level hardware and a few units of PIV can participate on the network. This leads to broad decentralization, and a much stronger resistance to attacks. Especially the kinds that rely on a single point of failure.
In PIVX, it is impossible for one person or one company to dominate the network. This is because network domination would require a massive majority ownership of almost all available PIV units. Nearly 99% of the supply according to estimates. And that just isn't feasible or realistic.
The only argument against this type of network model from an economic standpoint is that wealthy individuals could control large portions of the network. As such, they could get the lion's share of the rewards. Even so, such individuals still pose no threat to the network itself.
ASIC mining leads to centralization.
For those cryptocurrencies that are lucky (or unlucky) enough to have ASIC miners, the centralization of proof-of-work mining seems to be an inevitability. Today, Bitcoin mining is done almost exclusively by centralized entities. These entities include large mining operations, as well as mining pools that conglomerate the resources of many small miners into a single mining entity.
While the topic of mining centralization may be controversial to some, it is a simple truth that the more centralized something becomes, the easier it is to shut down. Centralized services are also far more vulnerable to attack, such as the classic 51% attack that experts have been warning about for years.
The popular cryptocurrency Dash is facing such a threat now. According to mining pool operator P2Pool Mining, around 50% of all blocks on the Dash blockchain are being mined at just one single pool owned by Bitmain. While the pool provider is careful with its language, they suggest in no uncertain terms that having so much of a single networks mining occur in one spot is dangerous.
In the P2Pool Mining statement, they suggest that the issue began to develop shortly after the launch of a Bitmain created, Dash compatible X11 ASIC miner was released. Specifically, the Antminer D3.
Resisting the ASIC invasion.
Mining centralization can be such a problem that some proof-of-work based cryptocurrencies take great care in designing their networks to be ASIC resistant, or even ASIC proof. But given enough incentive, it seems likely that ASICs could be developed even for currencies that are supposedly designed to resist them.
Litecoin, for example, was designed to use the Scrypt algorithm so that Bitcoin ASICs could not mine it. However, Bitmain eventually developed a Scrypt compatible ASIC miner, the Antminer L3.
In the case of PIVX it is effectively immune to the interference of ASIC mining devices. DigiByte finds it's immunity through DigiShield and by divvying up network rewards by algorithm. Other projects like Vertcoin have also so far been successful at preventing ASIC development, but it's difficult to say if ASICs for their algorithm of choice won't eventually exist.
Luckily for PIVX and other currencies like it, there is simply no way to create an ASIC miner for a proof-of-stake protocol.
Summing it all up.

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Learn to find gold by joining a prospecting club - Gain access to gold bearing Mining claims|12:40

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Philippine Mining Club - Over The Years part 1|3:14

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So what does all this mean? Cryptocurrencies like Bitcoin, Litecoin, and Dash are facing a growing problem. That being, rising energy costs and usage, the centralization of mining. Not only that, but also a company that has a virtual monopoly on nearly all ASIC mining hardware.
PIVX was created with a few goals in mind. One of the most important goals among them was to make a cryptocurrency network that was as maximally distributed, decentralized, and consequently as secure from attack as possible. In the last year, the PIVX team has even added some serious privacy features. This puts it on par with other privacy coins, and in many ways even surpasses them. Not only that, but PIVX is the only cryptocurrency today that has both serious and secure privacy features, as well as proof-of-stake mining. 2018 is going to be a major year for PIVX as dozens of new features are slated to come out.
DigiByte has seen steady growth this year. It's team has been working hard to promote it's advantages at conferences and in interviews. While it still relies of proof-of-work, it at least, has protections from centralization and 51% attacks. They also are largely insulated from the potential influences of Bitmain. Their tech is also highly adaptable and being implemented in a number of other projects.
While Bitcoin and other cryptocurrencies are still trying to get their act together and solve old problems, could these newer cryptocurrencies be the way forward and help solve the current issues with proof-of-work consensus?
What problem can be solved by Bitcoin mining? | by Andrey Costello | Coinmonks | Nov, 2020.
Bitcoin is frequently criticized for its massive energy consumption. The Texas-based company Layer1 Technologies has its own solution to this problem.
Bitcoin is still the most important cryptocurrency people know about, and it serves as the entry point of the crypto space. However, every innovative project has to pay its price. For Bitcoin, it is its high carbon footprint created by mining.
Bitcoin, especially its mining process, gets a lot of criticism because of its energy use. But the new company Layer1 Technologies, supported by Peter Thiel, is trying to do the unthinkable -- stabilise the energy system, generate profits by producing fewer BTCs and make the US a significant player in the Bitcoin mining industry.
Unlike most of the USA, Texas has an unregulated power system that separates utilities into three separate functions:
Generation -- power plants, solar power plants, wind farms, etc; Transmission -- power transmission lines, which are still regulated by the state of Texas; Retail power suppliers -- customer service and billing of electricity.
As a result, there is a complex market in Texas with private electricity generators that offer retail electricity suppliers different wholesale prices from different locations in the greater Texas area. Deregulation of energy production has led to a dramatic increase in natural gas production as well as renewable energy sources, which provide a cheaper and cleaner solution to long-term energy demand.
It is important to note that any use of electricity is as clean as the energy system itself. Texas leads the U.S. in the production of wind energy, which provides peak power at night. The state also produces an abundance of renewable energy from solar farms, which provide maximum power in the middle of the day. However, the increase in renewable energy use in Texas over the last decade has had some side effects.
Energy consumption depends on the day, season and year. Warm periods are coming, so people are increasingly using air conditioning, which is the biggest driver of retail energy demand in Texas. And that is not surprising. On a typical day, energy demand rises sharply at the start of the day, drops significantly during working hours, and then peaks in the afternoon when people return home after work. The day's peak unfortunately coincides with the minimum energy period from renewable sources.
However, the excessive abundance of renewable energy from the sun and wind in the middle of the day undermines the economy of electricity production, as net energy production (network load) continues to grow without any outlets. This leads to a situation known as the "Duck Curve", where too much energy is simply generated, which is eventually reduced, wasted or sold at negative prices. Conversely, as demand increases at the end of the day, energy generators tend to rapidly increase the energy load, usually from fossil fuels.
Further development of renewable energy sources -- wind and solar -- exacerbates the "Duck Curve" and creates a negative feedback loop. It is also difficult to stop coal-fired or nuclear power plants because the economies of both require them to operate continuously, which actually creates a minimum price. This leads to the phenomenon that every additional unit of solar and wind energy reduces the profitability of renewable energy, which further contributes to negative pricing and creates instability in the energy system.
This dilemma is compounded by the fact that transporting electricity over long distances causes significant losses and storage is not yet economically feasible to securely hold enough energy for night-time consumption. In the short and medium term, we still have two solutions to this unique problem:
Energy consumption during periods of overproduction to prevent reduction (waste) and negative prices; Stopping energy consumption at high demand to prevent the use of more expensive non-renewable energy sources.
Although this sounds simple, energy demand is inelastic and the life cycle of human energy consumption usually does not coincide with peak production of renewable energy.
By coincidence, Bitcoin solves the above problems:
Bitcoin mining consumes energy at a relatively constant speed; From an energy point of view, a BTC mining operation is a flexible load, i.e. it is relatively easy to shut down as it does not require any continuous operations.
Responding to demand is the process of reducing production and consumption of energy at times of peak energy demand. When energy demand peaks, for example during the summer heat in Texas, energy costs can rise rapidly from $100-150 per megawatt hour (MWh) to thousands of dollars per megawatt hour. Layer1 is benefiting from this option by negotiating long-term demand response contracts with ERCOT, the Texas energy regulator. In fact, Layer1 agrees to switch off at any time, receiving an annual bonus (19-25 MWh) depending on the expected demand for electricity. Layer1 claims that this demand response agreement will effectively reduce their energy costs to less than one cents per kWh.

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Synergy Mining club - CHINA 2018|0:25

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The Cambridge Bitcoin Electricity Consumption Index reports an average cost of five cents per kilowatt-hour ($0.05/kWh) based on their most recent and several previous studies. While Layer1's cost advantage of four cents seems small, in a market where electricity is the biggest cost, cost savings over time have a major impact.
Responding to demand helps stabilise the energy system by eliminating price surges, leveling off energy demand and adjusting economic incentives -- reducing negative pricing -- so that the growth of renewable energy sources can continue. The Layer1 strategy now has an obvious disadvantage: their mining devices are less frequently used. However, in exchange for a guaranteed income, this can be an effective hedge for the miners against BTC volatility.
As Texas is deregulated, there are few permit requirements for Bitcoin mining projects, making it easier to buy land, build mining facilities and get started. For more complex operations, it would even be possible to contract with solar or wind farms as part of a project to receive government subsidies and become energy producers themselves. Almost all other US states publicly subsidised utilities with natural monopolies and high barriers to entry that prevent new power generation companies and retailers from operating.
Due to Texas' renewable energy potential and lack of market regulation, Bitcoin mining could grow throughout the state. To this end, Bitmain launched its mining farm in Rockdale, Texas, in October 2019, which aims to provide mining capacity of over 300 megawatts. It is possible that other companies and entrepreneurs are already looking for partners and will establish similar businesses in the coming years.
Bitcoin mining's Three Body Problem.
Bitcoin mining is a complex phenomenon that connects hardware and software, the energy and financial markets. Invisible rules govern every aspect of it. The performance of an individual operation is determined by various external factors that are often hard to quantify and almost impossible to forecast.
From a macro perspective, we can identify three principal forces that drive the mining industry as a whole: the emission schedule, the climate cycle, and hardware iteration. Each influences a different component in the miner's profit calculation:
= Mining Revenue - Mining Expenses.
= (Block Reward + Fees) * Price * the Miner's hashrate / global hashrate - (Electricity Expense + Hardware Depreciation)
The emission schedule drives block reward (revenue).
The climate cycle indirectly drives the industry-average electricity expense (operating expense).
The hardware iteration drives the miner's hashrate, energy efficiency, as well as hardware depreciation (capital expenditure).
When the first halving occurred in 2012 most people were mining with PCs and GPU rigs at home. Distribution of hashpower was scattered around the world. The dominant force in the market was just the block reward decrease. As the mining cost-of-production doubled, a noticeable amount of hashpower dropped and temporarily switched to the more profitable Litecoin. By the time the second halving took place in 2016, commercial ASICs were already available and industrial mining facilities were put in business.
Long before the third halving transpired in this May, market commentators engaged in heated discussions on possible outcomes. Some echoed that the price will grow exponentially due to the supply shock. Others speculated that 20-30% of the network hashrate would disappear. Because the timing of the halving block overlaps with a transition in the climate cycle and hardware upgrade from 16nm to 8/7nm, all three forces were moving in conjunction.
The Emission Schedule.
Bitcoin is the product of hashpower. The industry wouldn't exist without incentivizing miners to continuously invest in hardware and burning electricity to augment Bitcoin network's settlement assurance. In absence of a vibrant blockspace market, the block rewards are their primary source of revenue. Over the years, the value of the rewards has significantly grown due to Bitcoin price appreciation, which in turn nurtured the mining business into a billion-dollar industry.
*2020 June-December implied rewards based on 6.25BTC per block and Jan-May price.
Unlike most physical commodities, Bitcoin has a well-defined quadrennial emission reduction schedule mandated by its protocol. Everyday a fixed supply of new coins gets created, and a varying percentage of that gets redistributed to the rest of the Bitcoin economy. Since miners are the only natural suppliers of Bitcoin, and the largest cohort of consistent sellers, profit margin is a key factor in determining the supply side dynamic.
Intuitively, reducing block reward by half immediately doubles every participants' cost-of-production. Some older generation machines may become too inefficient to operate. Consolidations tend to happen during these times. Miners with access to competitive power sources will purchase these machines in bulk at dirt cheap price, and the machine secondary market becomes far more active.
A miner is a bi-variate call option in physical form. The complexity in pricing and difficulty in transporting goods makes the machine secondary market opaque, illiquid, and highly reliant on insiders. But the poor price discovery at times brings great arbitrage opportunities for resourceful miners. For instance, in late 2018 Bitcoin price experienced a steep decline down to the $3,000 level. A noticeable percentage of the hashpower dropped, spawning a wave of "mining death spiral" headlines. Some miners were able to scoop up large quantities of the Antminer S9s that were temporarily flushed out. In just four months, Bitcoin price propelled into a frenzy bull market. Not only have these buyers made a handsome profit off of the coins they mined, the resale value of the machines also increased by 3x. This demonstrates that unprofitable hardware still have option value.
(Source: proprietary data, courtesy of Jinping Gou)
These consolidation activities change the hardware market composition. The market composition tells us how much energy the overall mining activities are consuming. There are a lot of naive attempts at calculating a "price floor" at which miners would stop selling. Every miner's entry time, amount of capital, cost basis, and risk tolerance is different, hence the industry-wide cost-basis is actually a very wide spectrum. Nonetheless, there will be selling at every level. To assess the entire network's selling pressure, we need to understand the exact composition of machines. This data is rather challenging to collect since no single party in the industry has access to the entire transaction flow of machines and their energy cost. The Blockware team is one of the latest to try to do this by surveying individual facilities. In the halving opus published in March, they estimate network's hardware composition as the following:
Post-halving the network hashrate dropped to.

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94 EH/s from the.
109 EH/s level in March. Assuming all machines that left the network were the S9s in the bottom categories, we can update the composition table:
*Antminer S9i specs (13.5TH/s, 1,310W) at $21 per unit. Antminer S17+ specs (70TH/s, 2,800W) at $1,232 per unit.
**Linear depreciating over 18 months for S9i, and 36 months for S17+.
Using the data above, we can calculate a rough weighted-average selling pressure at various price levels, as a percentage of the global daily trading volume:
Showing a relatively tight price range since global trading volume changes greatly as price moves.
*6.25 BTC per block. Transaction fees not included.
Note that this analysis is for illustrative purposes only. Here all old generation machines are represented by S9 and new generation machines by S17. Needless to say, miners purchase machines from multiple manufacturers, and same generation machines from different manufacturers have very different specs. In reality the variance of market composition is much larger. In addition, this analysis is a static snapshot. Hardware composition is highly fluid, machines are actively switching hands as the market seeks a new post-halving equilibrium. The upcoming flood season in Sichuan also has a drastic impact on a majority of the miners' electricity cost. As more miners employ financial instruments such as collateralize lending, futures, or even hashpower markets, the network's miner selling pressure will be partially mitigated or delayed.
A takeaway from observing how the mining composition evolves over time is that hashpower is "not fungible", in other word, every unit of hashpower is unique . One TH/s of hashpower today is produced at a different cost-basis from that of yesterday.
The Climate Cycle.
The Climate Cycle is the byproduct of the geographical concentration of mining operations. Over the years, the Bitcoin mining industry inadvertently benefited from a massive over-investment in hydropower in southwest China. Excess cheap electricity, massive power capacity, cheap labor cost, and physical proximity to manufacturers make it an ideal location for mining. It is estimated that over 65% of the world's hashpower is concentrated in these provinces.
May-October is the flood season in Southwest China. It is also a festival period for mining businesses as the large supply of surplus hydro capacity significantly cuts down miners' operating expenses. For small-medium scale miners, the flood season can reduce the cost by as much as 40%. For large miners who own proprietary facilities, the flood season electricity cost is practically negligible. Over 80% of the miners in Xinjiang, Inner Mongolia will migrate in flocks to Sichuan, Yunnan, and Guizhou to take advantage of the discount, and they move back or sell their equipment after the dry season arrives in November.
The thriving mining industry is a boon to the local power plants business. Many converted or constructed their facilities into data centers to host miners.
Example of hosting ads in Sichuan hydropower zone. Rough translation:
"(. )100 MW capacity can start construction immediately (...) Bare electricity 0.15 RMB per KwH, all-in 0.22 RMB per KwH"
(Source: Wechat group)
Gradually, the industry structured itself around these climate patterns. Like ancient rituals, every year before the flood season arrives, major mining conferences get organized in Sichuan's capital Chengdu. Some facilities are only open to external customers during the flood season. Manufacturers plan their new product release right before it arrives. Miners race to source the latest and greatest machines in bulk.
Hashrate growth during flood seasons:
At the beginning of 2020, due to general macro uncertainties, investors and miners reverted to a mode of cautious response. The production of new machines temporarily halted due to supply chain shock from COVID. After the Halving, more machines left the network, leaving the supply of hosting capacity greater than the demand. Many facilities in Sichuan and Yunnan areas are having trouble finding clients. Their desperation further reduces average electricity prices. Compared to last year's 0.24-0.26 RMB / KwH all-in cost, this year's average can be as low as 0.10-0.20 RMB / KwH .
The impact from block reward halving will be partially absorbed by the lower power cost. Many facilities had to sign contracts with power plants that promise a minimum usage of electricity. In order to attract business, some of them are offering "joint-mining" programs, where the miners pay de minimis monthly cost, and split the mining revenue with the facility owner. Effectively transferring part of the market risks to the hosts themselves.
However, this doesn't mean low operating expense is absolutely guaranteed. While hydropower facilities are cheaper during the flood season, they are generally located in extremely remote areas. The power supply and internet connectivity may not be as stable. Sometimes they even risk getting flooded:
A local mining farm based in Sichuan, China was DEVASTATED by the recent heavy rainfall in the region, video attached 1/2 pic.twitter.com/CvdEAUeq3x.
Another risk is that local government policies change from time to time. Prior to 2018, most of the local officials had no clue what mining is. The facilities report their activity as data centers for big data or cloud computing projects. In 2018 a committee led by the PBoC dictated cryptocurrency mining as a "false innovation", citing that mining is extremely wasteful and must "cease in orderly fashion". Some mining operations did indeed shut down under the pressure. But in late 2019, the National Development and Reform Commission (NDRC) removed mining from a list of activities to be eliminated . Note that the NDRC also oversees the energy industry. Massive amounts of hydropower squandered during flood season is a longstanding issue. The officials are beginning to realize that Bitcoin mining is a highly effective way of transforming excess local capacity into a global digital commodity.
A few months ago, some cities in Sichuan announced a joint-venture program called "Hydropower Consumption Demonstration Zones'' to support the development of the "blockchain industry". Unfortunately, despite more facilities opened for business, this year's rain volume hasn't been as great as expected. At the time of writing, electricity generated by hydropower plants is being transferred to other parts of Sichuan for residential use as the summer heat kicks in.
Last week, a county in Sichuan issued another notice that orders hydro power plants to halt accepting mining businesses. Although insiders on the ground do not expect the order to be enforced, it shows the complexity of the flood season energy scene. It's not a magic switch that turns on and off to immediately cut down miners' electricity bills.
The Climate Cycle is a rather unique phenomenon during this stage of cryptocurrency mining. If mining operations migrate to more diverse locations in the future and become less concentrated on a single power source, this cycle will cease to play such a significant role.
Hardware Iteration.
Manufacturers are constantly in an arms race to produce the leading product. For a long time Bitmain's Antminer S9 dominated the market. According to the IPO documents the company filed in 2018, Bitmain machines occupied.
74.5% of the ASICs on the market. But in the past two years, competitors such as MicroBT's Whatsminer and Canaan's Avalon are rapidly eating into Bitmain's market share.
In 2017, Whatsminer sales accounted for.
7.2% of the network hashrate. In 2018,
35%. The shoebox miners are commodity products. While there are qualitative factors that can help a manufacturer standout, such as customer service, delivery time, and supply chain management etc., the competition forces manufacturers to relentlessly focus on two key metrics: unit price and efficiency .
The efficiency is measured by Joule per Th/s. The lower the metrics is, the less energy it consumes to compute a hash function. Each generation of mining hardware is defined by its improvement in efficiency.
*As of May 31th, 2020.
**Based on 6.25 BTC block reward, 15,138,043,247,082 difficulty, $9,500 BTC price.
Improvement in machine efficiency has a significant impact on earnings. Using the current Bitcoin difficulty, and average price of an used Antminer S9i ($21 per machine, 97.0J per TH/s) , we can calculate the approximate days to breakeven at various price levels:
The number of days to breakeven of a new Antminer S19 Pro ($2,407 per machine, 29.5J per TH/s) :
A Bitcoin mining Pool Is Deliberately Censoring Transactions.
The Blockseer Mining Pool will only process specific Bitcoin transactions. But critics fear this is a dangerous path to go down.
BlockSeer's mining pool can censor Bitcoin transactions. Image: Shutterstock.
BlockSeer's mining pool--while still in private beta form--will censor certain Bitcoin transactions. The move has caused controversy, sparking criticism that this could undermine what Bitcoin should be. DMG Blockchain Solutions, to which BlockSeer is a subsidiary, suggests this could aid mainstream Bitcoin adoption.
BlockSeer, a blockchain analytics firm, has launched a private beta version of the BlockSeer Mining Pool, a mining pool that censors certain transactions. And it's not without controversy.
While BlockSeer's mining pool is still in its private beta, if this sparks a trend, it could make it very difficult for the regular user to use Bitcoin. Since transactions can't be made without a miner choosing to put them in a block, Bitcoin miners and pools wield a lot of power. Critics argue this, if this became the norm, it could cause a problem for Bitcoin.
"Who decides what is 'nefarious?' How do you challenge that?" Jason Deane, Bitcoin analyst at Quantum Economics, told Decrypt .
"It's a very dangerous path that could remove the advantages of a censorship-resistant payment system," Deane added.
The problem for critics of this mining pool is that it could potentially be the first step towards undermining what Bitcoin was first designed to be--a payments system immune to government control and founded on the basis of individual freedom.
Riccardo Spagni, a lead developer of Monero--which is one of crypto's most well known privacy oriented wallets--tweeted, " New mining pool is advertising that it censors transactions as a key selling point. Regulators will undoubtedly see this as a great thing and will "encourage" other mining pools to implement something similar."
"It's only a matter of time till most Bitcoin mining pools are forced to do this transaction filtering," he said.
Yet, according to DMG Blockchain Solutions, of which BlockSeer is a subsidiary, the mining pool promises to be a step forward, not only for Bitcoin's reputation, but also for cryptocurrency's hopes of mainstream adoption.
"Blockseer's pool brings a new compliance-focused standard to the industry, not only in the data the pool provides to its users, but also in the Bitcoin blocks it mines on the network," said Sheldon Bennett, COO of DMG Blockchain Solutions.
"The pool is focused on being devoid of transactions from known nefarious wallets which use this medium in ways that continue to sully the reputation of crypto currencies, specifically Bitcoin, in the mainstream as well as to impede widespread adoption," Bennett added.
Learning How to Use Bitcoin: A Beginner's Guide to Using the Bitcoin Testnet.

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Mining Club|0:26

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Melbourne Mining Club Andrew Cole, MD \u0026 CEO, OZ Minerals|33:21

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Intro.
Beginners to Bitcoin may find the concepts and the scope of the network overwhelming. The idea of trading real currency for digital currency can sound scary, especially when the beginner is not familiar with how blockchain works or even how to send and receive coins. An ideal situation for learning how to use Bitcoin would not involve trading real money in the process. In this post, I'd like to cover the Bitcoin Testnet: a zero-risk testing network that allows the beginner to trading Bitcoins as if they were on the main network.
The Bitcoin network is divided, so to speak, into three networks:
The main network (where coins are traded as real currency), A test network called the Testnet (where coins with no associated value are traded for testing purposes), and A regression testing network (where coins are created instantly and are never traded to others outside the user's network).
Coins mined in one network stay in that network, thus coins cannot be transferred between networks. It is because of this separation that we are able to use the Testnet as an environment for learning.
Testnet Coins.
Both the main Bitcoin network and the Testnet network contain live blockchains and real users trading real, mined coins. Bitcoins on the main network have real value associated with them whereas the Testnet bitcoins do not.
The main difference (as far as the beginner are concerned) between the coins on both networks is whether or not everyone agrees they have value. Testnet coins are given away for free to anyone that wants them. Coins on the main network are traded for goods and services in the same way United States currency is.
Coins for the Testnet are given out for free from what are called "Faucet Websites." These websites are set up by miners or other users with a surplus of Testnet coins. They send coins to anyone who requests them and kindly asks for their return when the user is finished with them.
Trading coins on the Testnet is exactly the same process as trading them on the main network. The process goes like this: Blocks are mined, coins are generated by the mining, users are sent Bitcoins by other users, the transaction is recorded in the blockchain, blocks of transactions are mined, and the process repeats. Testnet coins are used to generate transactions in the Testnet blockchain and are used both by beginners and developers who are testing new Bitcoin-based programs.
The Bitcoin Testnet implementation does not require a separate installation. Bitcoin wallets that have the ability to connect to the Testnet can be started with a special flag that will direct the software to connect to the Testnet blockchain instead of the main network blockchain.
As with the main network, though, the software will need to download the current blockchain to properly synchronize. Luckily, however, the size of the Testnet blockchain is far less than the main blockchain. As of February 2018 the size of the main blockchain is about 156 Gigabytes whereas the size of the Testnet blockchain is only about 14 Gigabytes.
How to Set Up Bitcoin Core for Testnet.
A Bitcoin Core instance can be started with the '-testnet' flag to connect to the Testnet blockchain instead of the main blockchain.
From an Ubuntu machine: download Bitcoin Core and start with the following commands (check bitcoin.org for the latest version):
The bitcoin-qt binary is the GUI version of Bitcoin Core. The last command will open a new window and start syncing with the Testnet blockchain.
Electrum: What is it, Pros & Cons.
Unlike Bitcoin Core, Electrum does not need to download and sync to the entire blockchain. The upside to this is it only takes a few minutes to get up and running. The downside is you cannot explicitly trust the blockchain. Although not trusting the blockchain is acceptable in a zero-risk learning environment, the rest of this blog will refer to Bitcoin Core.
Start Electrum with the '-testnet' command to connect to the Testnet blockchain. Below are commands that will install and start Electrum on Ubuntu.
How Bitcoin Trading Works.
After the blockchain has been synchronized you can begin trading Bitcoins (BTC).
On the main Bitcoin network, coins can be obtained from either mining, receiving them from another user, or buying them from a BTC exchange.
On the Testnet network, coins can be requested from Faucet websites such as https://testnet.manu.backend.hamburg/faucet.
Faucets require an address to which they send coins. To obtain a receiving address, click on the 'Receive' button from the top of the Bitcoin Core screen followed by the 'Request Payment' button as seen below.
The Faucet will then send a certain amount of coin (usually around 1 BTC) to the address you provided. When you receive BTC from the Faucet you will see a notification popup and a positive balance on the main Bitcoin Core screen. You will also be able to see the transaction date, time, amount, and ID from the 'Transactions' screen.
BTC received will not be available to spend until the transaction has been confirmed in the Blockchain. Depending on the software and the level of trust it has of the blockchain, the funds will be available after one or many successfully mined blocks. From the 'Overview' menu you will see 'Available' and 'Pending' balances. BTC in a pending status is not available to spend.
Sending Bitcoins is the same process but in reverse. A user will provide you with a receiving address when they are expecting to be paid. In Bitcoin Core (or any other Bitcoin Wallet) you type or scan this address into the 'Pay To' field.
Receiving addresses are essentially the public key in a Public/Private key pair. The receiver allows you to encrypt the Bitcoins you are sending with their public key. After encryption, the only way to access the coins, and thus spend them, is to decrypt them with the private key.
Since a public key in a Public/Private key pair is, theoretically, open to cracking, and since the Bitcoin implementation is focused on anonymity, Public/Private key pairs are rotated regularly. It is common for a user to provide a new public key each time they expect payment. This behavior is not mandatory, however. Users that request donations and organizations that don't require anonymity can give out the same public key for multiple transactions.
Since a user is encouraged to give out many public keys for their transactions they are left with many private keys that access the coins. These private keys are stored in what is called the wallet.

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The Wallet.
The value inside your wallet (your wealth) is locked away inside a complex mathematical formula using your public key. The only key to this lock is essentially the answer to that formula: the private key. Anyone with access to the private key owns the right to spend the Bitcoins associated with it.
By default, the file that contains the private key is not encrypted. This leaves the private key open to attack and theft. Keeping your private key(s) encrypted is a security imperative. Before you receive or spend Bitcoin, encrypt your wallet in Bitcoin Core by clicking on 'Settings' and then 'Encrypt Wallet...'.
Similarly, if you lose your wallet, you lose your private key(s). The wallet, when used with Bitcoin Core, is stored in your home directory under a hidden folder called '.bitcoin' as a file name 'wallet.dat'. This file should remain protected with encryption and regularly backed up.
Viewing Transactions.
Once the transaction has been mined inside a block in the blockchain it will be available to view from a website that tracks the Blockchain. From the 'Transaction' screen in Bitcoin Core, you will find the transaction ID. This ID can be copied and pasted into a website such as https://testnet.blockexplorer.com/. See below for an example.
Notice that all information about the transaction is publically available except for the private keys. This information is available for every transaction that has ever occurred in the blockchain to anyone who wants it. Also notice, however, that we did not associate our accounts with names, email address, etc. No identifying information is ever needed to take part in a Bitcoin transaction. The only thing tying a user to their Bitcoins is the private key associated with the public key to which Bitcoins were sent.
Learning how to use Bitcoin using the Testnet is quick and simple. It is possible, in just a few steps, to learn how to install and encrypt a wallet, receive coins, spend coins, and track transactions all without spending real money.
All of the steps described above also apply to Bitcoin Core when it connects to the main blockchain.
How to Solo Mine on Bitcoin's Testnet.
I'm a Bitcoin engineer, so I often need to test new code but I don't want to risk losing valuable bitcoins in case there is a bug...
I'm a Bitcoin engineer, so I often need to test new code but I don't want to risk losing valuable bitcoins in case there is a bug. Thankfully, the Bitcoin testnet was created specifically for this purpose. As a side project I decided to buy a secondhand Bitcoin ASIC, an Antminer S5, and give a shot at solo mining on testnet so that I could generate some coins. Unlike on mainnet, which has so much mining competition that you'll probably never find a block, the difficulty on testnet is low enough that solo mining is worthwhile. The following instructions should work for any ASIC that uses cgminer, though from what I've read the configuration for bfgminer is nearly identical.