Can my mobile phone mine bitcoins? The answer is yes and no.
Let me explain.
It might not surprise you that, like the rest of the world, I’ve caught a dose of Bitcoin fever. Bitcoins are a fabulously valuable digital currency which until a year or two ago almost everyone ignored – it was the province of geeks playing a game of imagining that a chunk of digital data which only they understood had some kind of real world value.
You could boast to fellow geeks about your hoard of Bitcoins, and your legendary Bitcoin mining rig, but you couldn’t use them to buy a pizza.
This all changed, when Chinese entrepreneurs discovered they could use Bitcoins to circumvent China’s strict currency controls.
With hindsight of course, it is all so obvious, at least to techies like me – we should have all been mining for our own hoard of Bitcoins, back when it was easy, waiting for that brighter future, when Bitcoins suddenly became valuable.
Because now it is too late – or is it?
The answer to that question really depends on whether Bitcoins become more valuable in the future – a question which could best be answered at some time in the future by exercising hindsight ;-).
So assuming you want to jump on the train, now that everyone wants a seat, what is the best way to mine Bitcoins?
In theory any computer can mine Bitcoins. But the difficulty of practical Bitcoin mining long ago surpassed normal hardware, and normal software programming techniques.
Why is it all so hard? The reason is that Bitcoin mining involves “proof of work”.
What is “proof of work”? Proof of work is proof that you have put in a large amount of effort, to guess a number which, when used in a calculation, produces a result within a preset range. The calculation is a “hash” function – it takes a block of data (Bitcoin transactions to date), combines this block with your guessed number, and produces an output number. If the output number falls within a preset range of possible values, congratulations, you are now the proud owner of some new Bitcoins.
The catch is performing the calculation in a practical sense takes a lot of computing power – the calculation is easy, but unless you are incredibly lucky, you will need to process billions, possibly trillions of guesses to find an output number within the preset range of permitted values. Worse, the difficulty of mining Bitcoins is adjusted with time, so that the combined computing power of everyone attempting to mine Bitcoins produces a new batch of Bitcoins every 10 minutes.
Think about it – gigantic university computers, large industrial rigs, boffins tinkering in labs, the combined effort of all those machines can produce a new batch of coins every 10 minutes. Considering what percentage of this colossal global effort is represented by your mining rig puts everything into perspective.
And winner takes all – only the computing rig which wins the contest to solve the math problem gets the new coins (OK there are ways to share the risk and reward, but lets not get too complicated…).
It wasn’t always so difficult. Back in the old days, when hardly anyone cared about bitcoins, you could mine bitcoins with an ordinary computer – allowing the production of bitcoins every 10 minutes, when hardly anyone cared enough to bother mining, meant the target for minting new bitcoins was really easy – so anyone geeky enough to set up the software could hit the target with minimal computing power. This is why you nowdays hear stories of people frantically searching for their old hard disk, with its multi million dollar stash of bitcoins.
So in principle I could develop an iPhone app or Android app which could produce some Bitcoins. The mobile phone Bitcoin mining app would be very slow compared to specialised Bitcoin mining systems, but you could get lucky. In theory you run mining software say while the phone is plugged into the charger, and occasionally strike some Bitcoins.
Having said that, the odds of getting it right with a mobile phone are impractically small – you could run the mobile phone continuously, for years, without ever seeing a Bitcoin. A bit like buying lottery tickets.
What do you do if you want to join the Bitcoin rush?
The limiting factors of Bitcoin mining are equipment cost and electricity cost. Forget microprocessors or anything you are likely to find inside the case of an off the shelf computer – practical Bitcoin mining now requires specialised hardware accelerated Bitcoin mining cards.
But at the same time you need a normal computer to manage the communication between the specialised mining cards and the the Internet. The catch is, ordinary computers chew up a lot of power – and the computer has to be switched on, all the time you are mining for Bitcoins.
That is when this little beauty caught my eye – a low powered general purpose computer, with detailed instructions designed for non techies to follow, which works with a bunch of off the shelf hardware accelerated mining cards.
Is it worth doing? My fingers are twitching. The analysis I have read says at current prices it isn’t worth doing, even with the super cheap rig I described – you won’t make your money back. But who would have believed a year ago that Bitcoins would hit a value of $700+ each? The cautious investor in me says that what goes up must come down – but if Bitcoins increase again, and reach a value of say $7000 each, or $70,000 each, I shall be kicking myself if I didn’t build or buy a mining rig.
Maybe I shall start small – perhaps I shall develop that Bitcoin mining mobile phone app after all.