Got my first payout today, a whole 0.013 bitcoins! While this may not be a whole lot, it's still exciting for me, though it'll still be a few months at this rate to pay back the initial investment of my little jalapeno. At the time that I ordered it, Butterfly Labs was claiming that the turnaround would only be about two months, little did I know that they had a six-to-eight month backlog of orders. People that had preordered early ended up starting at about ten times the income that I'm seeing now, though the massive influx of mining hardware quickly increased the difficulty, cutting everyone's profits. It's also worth noting that the jalapeno uses electricity, and anyone serious about calculating profitability should take this into account. However, that said, it's getting pretty cold here, so I'm not really considering the heat that the unit is giving off to be wasted.
Anyways, back to my current situation, I signed up to Slush's pool, which I picked mainly because it's the oldest and possibly best known bitcoin pool on the internet. For those who aren't in the know, mining pools are groups you can join where everyone in the pool works together in order to mine the same blocks more quickly and efficiently, and everyone is given shares based on how many hashes they personally mined. In the olden days (only a few years ago, really), it was entirely possible to mine on your own, but now, because of the level of difficulty, If you were to mine on your own, you would probably never successfully mine your own block in the lifetime of your hardware, because even the most powerful piece of hardware is only a drop in the ocean compared to the global hash rate, hence the existance of the bitcoin pool.
Expanding on the solo miner, the reason that you would never earn any bitcoins without joining a bitcoin mining pool is because block mining is luck of the draw, only one person can successfully mine each block, and that person unlocks 25 bitcoins (this number increases after a set amount of difficulty increases in order to make mining attractive fr a longer period of time). Unfortunately, this means that anyone else who did not successfully mine the block obtains absolutely nothing. In the case of the bitcoin pool, regardless of who successfully unlocked the block, the 25 bitcoins are distributed based on contribution to everybody inside the pool, resulting in a much more stable income, and in many cases (unless you're sporting a few hundred thousand dollars of mining equipment in the mining cellar of your mansion in the south of France) this is the only way to earn anything at all, as the statistics have shown that, with the exponential growth of the global mining hashrate, an average miner will likely never unlock a single block.
It's worth noting that one should probably stick to one of the bigger, more well-known mining pools, for a few reasons. First off, smaller bitcoin mining pools can suffer the same fate as the solo miner; if their combined hardware power is not sufficient, they probably won't find many coins at all. Also, because of the organizational structure of the bitcoin pool, all of the freshly mined coins are first deposited into a central account, and there's really nothing stopping the owner of the pool from suddenly running off with a massive amount of coins, other than their conscience, that is. That's why I chose slush's pool, because it's the oldest and has paid out many, many times before.
Apart from the fact that running off with everyone else's hard work wouldn't be legal, it's also not in the best interest of the pool owner, as the pool owner actually doesn't need to contribute anything in order to earn money -- the pool itself takes a very small cut (two percent or so) for itself, which, if you're running a massive pool, is a very substantial amount of money.
Anyways, back to my current situation, I signed up to Slush's pool, which I picked mainly because it's the oldest and possibly best known bitcoin pool on the internet. For those who aren't in the know, mining pools are groups you can join where everyone in the pool works together in order to mine the same blocks more quickly and efficiently, and everyone is given shares based on how many hashes they personally mined. In the olden days (only a few years ago, really), it was entirely possible to mine on your own, but now, because of the level of difficulty, If you were to mine on your own, you would probably never successfully mine your own block in the lifetime of your hardware, because even the most powerful piece of hardware is only a drop in the ocean compared to the global hash rate, hence the existance of the bitcoin pool.
Expanding on the solo miner, the reason that you would never earn any bitcoins without joining a bitcoin mining pool is because block mining is luck of the draw, only one person can successfully mine each block, and that person unlocks 25 bitcoins (this number increases after a set amount of difficulty increases in order to make mining attractive fr a longer period of time). Unfortunately, this means that anyone else who did not successfully mine the block obtains absolutely nothing. In the case of the bitcoin pool, regardless of who successfully unlocked the block, the 25 bitcoins are distributed based on contribution to everybody inside the pool, resulting in a much more stable income, and in many cases (unless you're sporting a few hundred thousand dollars of mining equipment in the mining cellar of your mansion in the south of France) this is the only way to earn anything at all, as the statistics have shown that, with the exponential growth of the global mining hashrate, an average miner will likely never unlock a single block.
It's worth noting that one should probably stick to one of the bigger, more well-known mining pools, for a few reasons. First off, smaller bitcoin mining pools can suffer the same fate as the solo miner; if their combined hardware power is not sufficient, they probably won't find many coins at all. Also, because of the organizational structure of the bitcoin pool, all of the freshly mined coins are first deposited into a central account, and there's really nothing stopping the owner of the pool from suddenly running off with a massive amount of coins, other than their conscience, that is. That's why I chose slush's pool, because it's the oldest and has paid out many, many times before.
Apart from the fact that running off with everyone else's hard work wouldn't be legal, it's also not in the best interest of the pool owner, as the pool owner actually doesn't need to contribute anything in order to earn money -- the pool itself takes a very small cut (two percent or so) for itself, which, if you're running a massive pool, is a very substantial amount of money.
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