Bitcoin noob needs a hand.

[johnnydotexe]

Hey everyone.  Just came across some talk about bitcoins so I figured I'd look in to it and find out wtf it is.  So far I've been to several websites and the maine wiki page for it but I still have some unanswered questions.

So far I have gathered that it is an online/digital currency that is transferred on a network made up of PCs all over the world, sort of like distributed computing(folding@home, seti@home, etc) which results in fee-less transactions and whatever else...haven't read that far in to it yet, so feel free to add more info or correct me where I'm wrong.

My questions are...

1. If you can mine for bitcoins this means you're pretty much creating bitcoins for free(electric bill and component purchases aside). If this is the case then why do bitcoins have any value to them? This seems like it would be the same as printing your own $ and being able to use it legally.

2. What exactly is bitcoin mining? So far I've gathered that you use your CPU or GPU to solve "puzzles" sort of like if you were folding@home but the part that confuses me is...what puzzles are you solving? Does the solution to this puzzle benefit anyone like f@h'ing virtual proteins benefit the medical world?

3. Apparently there is a bitcoin-USD exchange rate and it is currently around $5 to 1 btc. Again...how the hell do bitcoins hold value if they're created for free with little effort?  I'll go ahead and assume this is probably in the top 5 questions noobs ask.

4.  Where do I start to get GPU mining set up properly?  I used the article linked below but I don't know if that's the current best method.  My specs are below as well.

GPU mining instructions I used(on the step that requires waiting for the network sync/blocks to download) - http://www.newslobster.com/random/how-to-get-started-using-your-gpu-to-mine-for-bitcoins-on-windows

My rig specs...

CPU - AMD Phenom II X4 965 Black Edition(c3) @ 4.0GHz
MB - Asus Crosshair IV Formula
GPU - Sapphire Radeon HD5830 1GB GDDR5 @ Core 875MHz / Memory 1100 MHz
PSU - Corsair TX-850w
HDD1 - Seagate Barracuda 1TB SATA 6.0GB/s
HDD2 - Western Digital Black 640GB SATA 6.0GB/s
OS1 - Windows 7 Ultimate x64
OS2 - Linux Mint 11(external HDD)

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[MoonShadow]

My questions are...

1. If you can mine for bitcoins this means you're pretty much creating bitcoins for free(electric bill and component purchases aside). If this is the case then why do bitcoins have any value to them? This seems like it would be the same as printing your own $ and being able to use it legally.

Startup costs and electricity cannot be shifted aside.  This question is invalid.

2. What exactly is bitcoin mining? So far I've gathered that you use your CPU or GPU to solve "puzzles" sort of like if you were folding@home but the part that confuses me is...what puzzles are you solving? Does the solution to this puzzle benefit anyone like f@h'ing virtual proteins benefit the medical world?

Basicly the miners are repeatedly 'hashing' a block of transactions, looking for a hash number that is less than a particular number that represents the present difficulty necessary to produce a block every 10 minutes or so.  At that same time, this process is functionally "brute forceing" the blockchain in advance of an attack, securing the blockchain against any such attack on an ongoing basis.  There is much more to it than this.

3. Apparently there is a bitcoin-USD exchange rate and it is currently around $5 to 1 btc. Again...how the hell do bitcoins hold value if they're created for free with little effort?  I'll go ahead and assume this is probably in the top 5 questions noobs ask.

You assume incorrectly, because they are neither free nor require little effort.

4.  Where do I start to get GPU mining set up properly?  I used the article linked below but I don't know if that's the current best method.  My specs are below as well.

GPU mining instructions I used(on the step that requires waiting for the network sync/blocks to download) - http://www.newslobster.com/random/how-to-get-started-using-your-gpu-to-mine-for-bitcoins-on-windows

My rig specs...

CPU - AMD Phenom II X4 965 Black Edition(c3) @ 4.0GHz
MB - Asus Crosshair IV Formula
GPU - Sapphire Radeon HD5830 1GB GDDR5 @ Core 875MHz / Memory 1100 MHz
PSU - Corsair TX-850w
HDD1 - Seagate Barracuda 1TB SATA 6.0GB/s
HDD2 - Western Digital Black 640GB SATA 6.0GB/s
OS1 - Windows 7 Ultimate x64
OS2 - Linux Mint 11(external HDD)

I suggest you study the system till you 'grok' it before you attempt to setup a mining rig.  You will likely be disappointed otherwise.

[nmat]

1 - Something is worth what people are willing to pay for it. As long as there are people willing to buy bitcoins, it has value. The same happens with gold for example.

2 - Mining is not 'useful' like folding@home or BOINC, but it is essential to the network. Bitcoin transactions are secure because someone would need to invest millions in hardware to try to disrupt the network (even if you do so, you will not cause that much damage...). Regarding the 'what is it' part, it is basically trying to find an acceptable hash of a given number. Think of it like a lottery.

3 - Their creation is far from being free. You need to invest in hardware, pay electricity, etc.

4 - Go to a pool (example: http://deepbit.net) and make an account. Install OpenCL (I'm not sure if this is already installed with the AMD drivers), download GUIMiner and run it with your pool's username/password.

[johnnydotexe]

Startup costs and electricity cannot be shifted aside.  This question is invalid.

In my case startup cost can be put aside.  I build a new gaming rig once every 1 to 2 years so I don't need to spend any money there.

I'm aware that electricity consumption does cost something, but my question is far from invalid.  How do bitcoins retain their value if they can be created by anyone?

Basicly the miners are repeatedly 'hashing' a block of transactions, looking for a hash number that is less than a particular number that represents the present difficulty necessary to produce a block every 10 minutes or so.  At that same time, this process is functionally "brute forceing" the blockchain in advance of an attack, securing the blockchain against any such attack on an ongoing basis.  There is much more to it than this.

Ah, so there is a point to these "puzzles" being solved that benefits the whole bitcoin operation.  I figured there had to be a point but this isn't exactly easy-to-understand information to be butting on the bitcoin.org home page, haha.

You assume incorrectly, because they are neither free nor require little effort.

If mining is similar to f@h or s@h where you just click "start mining" and walk away I'd consider that little to no effort.

Mining would cost me whatever my PC consumes in electricity (over normal usage) while mining.  I still don't see how it retains that type of value in the exchange rate.

I suggest you study the system till you 'grok' it before you attempt to setup a mining rig.  You will likely be disappointed otherwise.

I'm not sure what you're getting at here.  Are you saying I should take more time to learn about bitcoins before mining them?  If so, I could use some noob-friendly links.  The bitcoin wikipedia page only confused me more.

[johnnydotexe]

1 - Something is worth what people are willing to pay for it. As long as there are people willing to buy bitcoins, it has value. The same happens with gold for example.

I suppose you're right with the "worth as much as someone is willing to pay for it."  That thought just never occurred to me because before a few hours ago I had never heard of bitcoin.

2 - Mining is not 'useful' like folding@home or BOINC, but it is essential to the network. Bitcoin transactions are secure because someone would need to invest millions in hardware to try to disrupt the network (even if you do so, you will not cause that much damage...). Regarding the 'what is it' part, it is basically trying to find an acceptable hash of a given number. Think of it like a lottery.

Explained by the poster above you, but all info is appreciated at this point.

3 - Their creation is far from being free. You need to invest in hardware, pay electricity, etc.

Understandable.

4 - Go to a pool (example: http://deepbit.net) and make an account. Install OpenCL (I'm not sure if this is already installed with the AMD drivers), download GUIMiner and run it with your pool's username/password.

I noticed that pools seem to be a better option than solo from what I've read so I'll look in to that.  I just don't want to end up in a pool running a not-so-friendly system of dividing earnings.

[nmat]

I noticed that pools seem to be a better option than solo from what I've read so I'll look in to that.  I just don't want to end up in a pool running a not-so-friendly system of dividing earnings.

I didn't see his post when I wrote mine. Regarding the pool, you can try deepbit just to see if everything is working correctly. Then take some time to learn about the different payment methods, try a few pools and choose the one you like best.

You should earn around 1.5 bitcoins per week with that card (electricity costs aside)

PS: Our whole economic system is based on supply and demand, so the "it is worth as much as people are willing to pay for it" thing applies to basically everything in life.

[johnnydotexe]

I didn't see his post when I wrote mine. Regarding the pool, you can try deepbit just to see if everything is working correctly. Then take some time to learn about the different payment methods, try a few pools and choose the one you like best.

I definitely need to look in to the various pool payment methods.  The pool dropdown list on GPUminer includes only certain pools or all pools available?  If the former, where can I obtain a list of all the pools?  Reason I ask is because if there are a lot more pools then maybe one of the forums I frequent has one going which would be a good option to go with.

Also, is there anywhere I could go to see the pros and cons to solo mining and pool mining?

You should earn around 1.5 bitcoins per week with that card (electricity costs aside)

How did you come up with that number, is this for solo or pool, and is that based on 24/7 mining?

Sorry about all the questions but when I get in to something new I try to learn everything about it and then a few days later I'm the one answering questions for people.  Always been a fast learner I guess, haha.

[johnnydotexe]

One other thing...this "synchronizing with network" that my bitcoin wallet is doing has taken about an hour so far and it's at 65%.  What is it doing and how often will it need to do this?  I believe I read somewhere that it's downloading these "blocks."

[nmat]

I didn't see his post when I wrote mine. Regarding the pool, you can try deepbit just to see if everything is working correctly. Then take some time to learn about the different payment methods, try a few pools and choose the one you like best.

I definitely need to look in to the various pool payment methods.  The pool dropdown list on GPUminer includes only certain pools or all pools available?  If the former, where can I obtain a list of all the pools?  Reason I ask is because if there are a lot more pools then maybe one of the forums I frequent has one going which would be a good option to go with.

Also, is there anywhere I could go to see the pros and cons to solo mining and pool mining?

You should earn around 1.5 bitcoins per week with that card (electricity costs aside)

How did you come up with that number, is this for solo or pool, and is that based on 24/7 mining?

Sorry about all the questions but when I get in to something new I try to learn everything about it and then a few days later I'm the one answering questions for people.  Always been a fast learner I guess, haha.

Anyone can set up a mining pool so there are lots of them. You don't want to mine at a pool that isn't listed here because it is probably abandoned. A bigger pool has regular payouts, but sometimes it will also charge larger fees. Small pools help to keep the network decentralized and are usually free. Regarding solo mining, you don't want that.

Go here https://en.bitcoin.it/wiki/Mining_hardware_comparison and check the Mhash/s of your GPU. Then put the number here: http://bitcoinma.appspot.com/
That number is for pool mining. If you solo mine, you will probably find a block (50 bitcoins) in 6 months, but so many things will change until then...

EDIT: The synchronizing with the network takes a lot of time at first. You can close it and resume some other day (you don't even need to install the bitcoin client in order to mine at a pool). After the first sync it will be faster.

[FreeMoney]

One other thing...this "synchronizing with network" that my bitcoin wallet is doing has taken about an hour so far and it's at 65%.  What is it doing and how often will it need to do this?  I believe I read somewhere that it's downloading these "blocks."

A new block (data containing mostly transactions) is found on average every 10 minutes. You are catching up a few years worth right now. If you disconnect for a few days you'll have a little bit of catching up to do.

Right now this is a reasonable thing to do, eventually most people will use a client that doesn't need a full record.

[nbtcminer]

If you want a quick start use the following:

1.) Get GUI miner (good for new people)
2.) Sign up for a Pool (i.e Slush's Pool, BTC Guild or Deepbit)
3.) Read their help sections on geting connected to their mining pools.

Google is your friend in this case and much of the information you need is publicly available on this forum.

*Note: depending on your cooling situation, you should be getting anywhere from 260-300 MH/S from your card. This will depend on how you clock your card and the flags used with GUIminer.

[johnnydotexe]

If you want a quick start use the following:

1.) Get GUI miner (good for new people)
2.) Sign up for a Pool (i.e Slush's Pool, BTC Guild or Deepbit)
3.) Read their help sections on geting connected to their mining pools.

Google is your friend in this case and much of the information you need is publicly available on this forum.

*Note: depending on your cooling situation, you should be getting anywhere from 260-300 MH/S from your card. This will depend on how you clock your card and the flags used with GUIminer.

I went with the main/official BTC client and GUI miner and set them up according to that link I mentioned earlier which is also cited in numerous noob guides on this forum, so it appears I'm off to a proper start.  I also made an account and created a worker at BTC Guild.  Just waiting for the BTC client to finish syncing so I can get my address and start mining.

I've also been reading through all those noob guides while doing some searching for optimal settings on my Sapphire 5830.  I'm seeing that people overclock the core and underclock the memory...am I reading that right?  I can't really do that because I would have to revert back to my normal clocks(both core and memory overclocked) every time I'm not mining so I can play my PC games...I do a LOT of gaming, so this would be a huge inconvenience.  Will a normal or higher memory clock hurt my numbers much?

My cooling is decent enough.  Coolermaster Storm Scout case with the front/top/rear fan mesh cut out, seven Coolermaster R4 120mm fans(2 x intake front, 2 x intake side, 1 x exhaust top, 2 x exhaust that push/pull across my radiator), Corsair H50 Hydro-Series CPU cooler, ICDiamond 24k beta-version thermal compound on the CPU and GPU, GPU fanspeed manually set in CCC or whatever AMD calls it these days.

[nmat]

Just waiting for the BTC client to finish syncing so I can get my address and start mining.

You don't need to wait for that. When you mine the coins are held at the bitcoin pool until you withdraw. Also, you can get an address before syncing, you just can't use the coins you send there until you finish the sync.

[johnnydotexe]

Just waiting for the BTC client to finish syncing so I can get my address and start mining.

You don't need to wait for that. When you mine the coins are held at the bitcoin pool until you withdraw. Also, you can get an address before syncing, you just can't use the coins you send there until you finish the sync.

So I can mine with BTC Guild and just let my earnings stack there until I'm ready and able to withdraw to my wallet?

How do I get my address before the syncing finishes?  I read somewhere that it is displayed somewhere on the main window of BTC Wallet but I don't see it.

I had to close BTC Wallet in order to move the GUI Miner folder to somewhere other than my desktop and now it is back to 1% on syncing, but I read a post above that said I can close BTC Wallet and continue at any time.  Did I do something wrong or misread what was said?

[nmat]

So I can mine with BTC Guild and just let my earnings stack there until I'm ready and able to withdraw to my wallet?

How do I get my address before the syncing finishes?  I read somewhere that it is displayed somewhere on the main window of BTC Wallet but I don't see it.

I had to close BTC Wallet in order to move the GUI Miner folder to somewhere other than my desktop and now it is back to 1% on syncing, but I read a post above that said I can close BTC Wallet and continue at any time.  Did I do something wrong or misread what was said?

Yes, you can mine and keep your earnings at the pool until you are ready to withdraw. The percentage resets every time you start the client, but the downloaded data is kept (i.e. you downloaded 1% of the remaining data since you started the client). Your address is in the "receive coins" tab.

[johnnydotexe]

So I can mine with BTC Guild and just let my earnings stack there until I'm ready and able to withdraw to my wallet?

How do I get my address before the syncing finishes?  I read somewhere that it is displayed somewhere on the main window of BTC Wallet but I don't see it.

I had to close BTC Wallet in order to move the GUI Miner folder to somewhere other than my desktop and now it is back to 1% on syncing, but I read a post above that said I can close BTC Wallet and continue at any time.  Did I do something wrong or misread what was said?

Yes, you can mine and keep your earnings at the pool until you are ready to withdraw. The percentage resets every time you start the client, but the downloaded data is kept (i.e. you downloaded 1% of the remaining data since you started the client). Your address is in the "receive coins" tab.

You sir are awesome.  Haha.

I now have my BTC Guild account all set up and GUI Miner configured to mine for my BTC Guild account.  Now I just have to figure out GPU settings that are a balance between mining and gaming...or see if MSI Afterburner allows me to quick-change between profiles.  The latter is going to suck because I'll need to remember to change profiles before mining and before gaming.

[nbtcminer]

If you plan on using your system while you mine, leave your settings at stock speeds (you'll hit close to 260mh/s I think). Make sure your aggression settings around 6 -7 and no higher (or your system will unsuable for even basic things like web browsing).

If you decide to get serious about mining, you should underclock your memory to 500-600 and then up your GPU core to 900-1000. That should net you a healthy +50mh/s gain in mining power. Having a higher memory clock won't hurt your mining but it will definitely generate more heat which will cause things go south real fast. Hope this helps,


Cheers,

If you want a quick start use the following:

1.) Get GUI miner (good for new people)
2.) Sign up for a Pool (i.e Slush's Pool, BTC Guild or Deepbit)
3.) Read their help sections on geting connected to their mining pools.

Google is your friend in this case and much of the information you need is publicly available on this forum.

*Note: depending on your cooling situation, you should be getting anywhere from 260-300 MH/S from your card. This will depend on how you clock your card and the flags used with GUIminer.

I went with the main/official BTC client and GUI miner and set them up according to that link I mentioned earlier which is also cited in numerous noob guides on this forum, so it appears I'm off to a proper start.  I also made an account and created a worker at BTC Guild.  Just waiting for the BTC client to finish syncing so I can get my address and start mining.

I've also been reading through all those noob guides while doing some searching for optimal settings on my Sapphire 5830.  I'm seeing that people overclock the core and underclock the memory...am I reading that right?  I can't really do that because I would have to revert back to my normal clocks(both core and memory overclocked) every time I'm not mining so I can play my PC games...I do a LOT of gaming, so this would be a huge inconvenience.  Will a normal or higher memory clock hurt my numbers much?

My cooling is decent enough.  Coolermaster Storm Scout case with the front/top/rear fan mesh cut out, seven Coolermaster R4 120mm fans(2 x intake front, 2 x intake side, 1 x exhaust top, 2 x exhaust that push/pull across my radiator), Corsair H50 Hydro-Series CPU cooler, ICDiamond 24k beta-version thermal compound on the CPU and GPU, GPU fanspeed manually set in CCC or whatever AMD calls it these days.

[johnnydotexe]

With my GPU core set to 875MHz and Memory at a stock 1000MHz I'm seeing roughly 260MH/s.  This is using only "-v -w128" in the flags area and no other settings changed from default on GPU Miner except what I needed to change to mine for my BTC Guild account.

I think with some other flags and a high core/lower mem clock I can probably squeeze another 50-100MH/s but I'll wait until I know more about this stuff before taking it to the extreme on my hardware.

Also gotta dig through my storage unit to see if I can piece together a rig to run exclusively on mining and set 'er next to my headless f@h closet rig.  My electric bill sucks but it's not too awful.

[MoonShadow]

Startup costs and electricity cannot be shifted aside.  This question is invalid.

In my case startup cost can be put aside.  I build a new gaming rig once every 1 to 2 years so I don't need to spend any money there.

I'm aware that electricity consumption does cost something, but my question is far from invalid.  How do bitcoins retain their value if they can be created by anyone?

They can't be created by anyone.  It's not like running a printing press.  The system is self-regulating, the mining is the distribution method.  The idea that bitcoins are 'created' by the miners is misleading, although not altogether incorrect.  I can't really explain it starting with what you now know.  It took myself two weeks of fairly intense study on the matter to get it myself.  You need more study first, it's not something that can be explained in short bites.

As for the value question, as any respectable economist will tell you, value is always subjective.  Bitcoins have value because there are those of us who do understand the system, and believe that it can work enough that we are willing to risk our own funds to that end.  The common answer is that Bitcoins are worth whatever someone will pay you for them, which is both true and a terrible answer.

Basicly the miners are repeatedly 'hashing' a block of transactions, looking for a hash number that is less than a particular number that represents the present difficulty necessary to produce a block every 10 minutes or so.  At that same time, this process is functionally "brute forceing" the blockchain in advance of an attack, securing the blockchain against any such attack on an ongoing basis.  There is much more to it than this.

Ah, so there is a point to these "puzzles" being solved that benefits the whole bitcoin operation.  I figured there had to be a point but this isn't exactly easy-to-understand information to be butting on the bitcoin.org home page, haha.

The white paper is where anyone who wishes to really understand the system should start.  Both the bitcoin.org FAQ and the Weusecoins.com type sites are aimed at laymen, i.e. the same kind of people who use cash but think that it's still backed by gold.

You assume incorrectly, because they are neither free nor require little effort.

If mining is similar to f@h or s@h where you just click "start mining" and walk away I'd consider that little to no effort.

It's not quite like that.  Once set up, there is little human labor, this is true.  However, the cost of electricity versus the near-term market value of the bitcoins that you could generate with what you have are pretty close together.  So those that do it professionally almost always have some kind of advantage over the average Joe with a GPU.  Could be specialized hardware, a personally tweaked GPU miner process, or a need for spot heating for their garage in winter.  You also risk the GPU itself, as mining full time could drasticly shorten it's expected life.

Mining would cost me whatever my PC consumes in electricity (over normal usage) while mining.  I still don't see how it retains that type of value in the exchange rate.

That would require a course in Austrian Economic Theory.  The short answer is that the bitcoin's value has more to do with it's utility as a transfer of value over distance system than as a commodity, which is the service that the network provides to the users of the monetary unit, since no other monetary unit can do the same job for the same costs, or with the same level of anominity.

I suggest you study the system till you 'grok' it before you attempt to setup a mining rig.  You will likely be disappointed otherwise.

I'm not sure what you're getting at here.  Are you saying I should take more time to learn about bitcoins before mining them?  If so, I could use some noob-friendly links.  The bitcoin wikipedia page only confused me more.

I'm saying that you should take more time to learn more about it because you are likely to be disappointed in what you can get for what your machine can produce.  It's not a get rich quick scheme, it's likely the costs of electricity will equal or exceed the value of the bitcoins that you could produce.

[ZodiacDragon84]

Try the simple to use java interface of the bitminter pool. Its noob friendly, not so big that it can screw the network like deepbit, and its pretty steady payout.

www.bitminter.com to find out more