History of Bitcoin Mining {Part 2}: ​​The Awakening of the Masses in the Graphics Card Era

1.4 CPU Era

In that era, Bitcoin was just a new and grand concept.

There are too many fresh and grand concepts in this world, and most of these concepts quickly disappear in the wind, as if they had never appeared.

Only one in ten thousand can survive and grow strong.

In fact, Bitcoin survived and spread quietly.

However, the participants just thought the concept was interesting and the company didn't have to pay for its electricity bills. They started looking for some idle machines and running the Bitcoin client.

It can be said that Bitcoin at this time is just a game for most people. Its value is not even as high as the gold coins in the online game "World of Warcraft", and not many people care about how much they can mine.

Everyone is using the Bitcoin client and CPU to mine silently.

A force is taking root and growing quietly beneath the calm surface of the water.

The Awakening of the Masses: The Graphics Card Era

2.1 First Exchange

On May 21, 2010, a person nicknamed laszlo posted on the forum, wanting to sell 10,000 bitcoins for $50.

But no one bought it.

However, some people expressed their willingness to exchange the 10,000 bitcoins for a $25 pizza coupon.

Laszlo agreed.

At today's market price (May 2013), 10,000 bitcoins can be exchanged for approximately RMB 8 million.

I think this is probably the most expensive pizza in history.

Looking back, history always makes people feel deeply moved.

2.2 Gradually Popular

A year later, on May 29, 2011, Rickard Falkvinge, the founder of the world's largest BT download website "The Pirate Bay", wrote a famous article "Why I Invested All My Savings in Bitcoin?" In this article, he clearly stated his enthusiasm for Bitcoin. He wrote in the original text:

“Here are three main reasons why I’m betting that Bitcoin will appreciate:

Past: In the past fourteen months, the Bitcoin-to-US dollar exchange rate has increased a thousand-fold. Yes.

Read it again: a thousand times, fourteen months.

There is no sign yet that it will stop or become saturated, quite the contrary.

Use: The use of Bitcoin does not require any official approval, so there is no need to pay transaction fees to a third party, and there are no cumbersome procedures.

Expectation: Based on the math, I predict that it will be worth at least a thousand times more in the next few years, and that’s just conservative.”

In fact, the subsequent price trend of Bitcoin has basically confirmed his point of view.

The above is a Bitcoin price chart from blockchain.info

2.3 Class formation

Once there is appropriate profit, capital will become very bold.

As long as there is a 10% profit, it will be used everywhere; with 20%, it will become lively;

If it is 50%, it will lead to active risk-taking; if it is 100%, it will make people disregard all laws;

If it is 300%, people will not be afraid of committing crimes, or even the risk of being hanged.

-- Capital, Volume 1

The market performance of Bitcoin gradually attracted more early players to join. The crazy appreciation made everyone less calm than before, and some people began to study how to mine more Bitcoin.

When Bitcoin was first designed, it was determined that the total output of Bitcoin per day was limited. The more powerful your computing power is, the greater the probability of obtaining Bitcoin. This is a fully competitive free market.

People have tried all kinds of methods to improve their computing power in order to mine more Bitcoins: evil hackers have controlled a large number of computers to form a zombie network through viruses and Trojans buried deep underground to mine and make huge profits; righteous hackers have found that the SHA-256 hash value calculation that Bitcoin mining relies on is hundreds or even thousands of times faster than the CPU with GPU (graphics card).

As a result, hackers wrote programs to mine Bitcoin using graphics cards, which triggered the first industrial upgrade in the Bitcoin mining industry. A large number of players began to purchase a large number of graphics cards to form computing machines and even computing clusters specifically for mining. These machines are called "mining machines", and the owners of "mining machines" call themselves "miners".

For this reason, someone even wrote an article titled "13-year-old son starts making money online", telling the story of how his son made thousands of dollars by mining with graphics cards.

At this time, Chinese players also participated in the game on a large scale, and various reports in the media increased day by day. However, many of them were not enthusiastic about the concept of Bitcoin itself, but only regarded it as a way to make money. Many people would sell the Bitcoins they mined at the market price at that time to supplement their family expenses.

Afterwards, because of the crazy appreciation of Bitcoin again and again, many people expressed great regret for their short-term behavior of enjoying instant gratification at that time. Some people lamented: "I had enough money to buy a house in Beijing, but I only used it to buy a car"; some people even made a fierce vow: "If there is no Bitcoin for three years, I will cut off my hands if there is Bitcoin."

CPU mining, however, has been declining due to its low computing efficiency and is gradually withdrawing from the historical stage. The official bitcoin client has also announced the cancellation of its built-in bitcoin CPU mining function since version 0.3.22.

2.4 Mint

There are "mining machines", "miners", and naturally there are "mining farms" (also known as "mining pools" and "coin pools").

The main job of the mining machine is to package transaction records into data blocks. Each successfully packaged data block allows a certain number of new bitcoins to be issued.

However, as more and more participants join, the difficulty of packing data blocks is also increasing rapidly. The probability of a single mining machine successfully packing a data block is getting lower and lower, and it may even take years or even decades.

Then, someone raised his arms and shouted, "Proletarians of the world, unite!" Many people responded.

They integrated scattered mining machines to form huge cloud computing clusters, and then divided the mining revenue equally according to the contribution of computing power, just like the industrial revolution from small workshops to large factories.

The above figure is a schematic diagram of the mining pool market occupancy rate

At this point, the total computing power of the Bitcoin network has far exceeded the combined computing power of the world's top 500 supercomputers.

However, this is just the beginning.