How I Mined for Bitcoins: Buzzfeed's COO Simplifies Cryptocurrency Creation

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Bitcoins Rise
AP/Rick Bowmer
By , President & COO, BuzzFeed

Over the holidays, I spent many hours reading up on bitcoin, and I was struck by just how large the ecosystem and variety of players was. Putting aside the debate around bitcoin's value, I think there is no debate that this is an intriguing and very very interesting space.

As an investor, I'm bullish but cautious, as a hobbyist I can't stop reading about it.

(By way of disclosure, I own a very small number of bitcoins. Also I'll tell you about a bunch of services I've played with but I can't vouch for them beyond a cursory examination. There are certainly fraud and theft concerns in the bitcoin universe, so caveat emptor.)

A few aspects of the ecosystem that I'm currently studying for the pleasure of it are: hobby mining rigs, mining pools, software, and professional mining hardware and shares.

Hobby Rigs

You need tremendous computing power "to mine" bitcoins in an efficient manner. This is because it takes a lot of time and electricity for a computer to perform the calculations to crack the math problems that result in new bitcoins. However as a hobbyist, you can turn just about any computer into a "mining rig."

My friend Kane Hsieh came over this week and built this rig with me. (And my "with me," I mean he was kind enough to install everything while I asked questions.)

Here's what it looked like:
CNBC, Jon Steinberg, Instagram
CNBC, Jon Steinberg, Instagram

We used a $25 dollar RaspBerry Pi computer running Linux and those USB keys with the bitcoin logo are Icarus processors. They are specialized processors for mining bitcoins. Amazon lists a version of these too.

For what it's worth, Kane says that setting up a small mining rig is a great way to get some hands-on learning about bitcoin but warns that small rigs are almost never profitable.

Mining pools

Because we have such a small computer, we joined a "mining consortium." This allows us to combine our small bits of work mining coins with a network of many others.

Here is our mining rig just starting to work after connecting to the consortium; we chose Eclipse:
CNBC, Jon Steinberg, Instagram
CNBC, Jon Steinberg, Instagram


Software

There are countless programs that can be used to mine coins. We chose cgminer, which is very popular, but with names like Bitminter, Easyminer, and BTCMiner there are lots of choices.

There are also plenty of places to buy, sell, trade and hold your bitcoins. Mt.Gox is the one of the largest exchanges and Coinbase is one of the easiest and most mainstream, recently closing financing rounds from Union Square Ventures and Andreesen Horowitz.

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stoppots

It has become an everyday thing to come across mainstream articles such as these and observe people such as yourself speaking about bitcoin in such a manner. As if all of you had actually spent more than 10 minutes doing your research on an idea that has been outperforming gold for well over a year now.

Had you taken the time and believe me it takes a good portion of time and effort to wrap your head around this revolutionary concept. You would begin to see just how far ahead of its time bitcoin actually is.

Paypal and western union are the two most obvious services that are going to be forced to evolve. If the idea of bitcoin goes as far as the creator of the protocol intended, then banks and their governments will be evolving because of it as well.

The bitcoin protocol is open source and has been released into the wild of our virtual world and is now a tool anyone can use and not any government or agency of our real world can do to eliminate.

Believe me when I say this. People who understand it and have taken the time to grasp the concept are already laughing at the naysayers and those touting fraud and pyramid scheme.

Over history there are developments in technology that make change in everyday life inevitable. The concept of bitcoin and its place in our two worlds has such a potential.

January 15 2014 at 6:07 PM Report abuse rate up rate down Reply
Sam Shaw

I totally agree with this article. It's true that these days if you want to mine BitCoin, you WILL need one of those monster mining machines to do the job. It's become so hard to mine BitCoin with easily available hardware. With the kind of (easily affordable) hardware I have, my days of BitCoin mining are gone, I've had my share already.

I'm mining LiteCoin and AltCoin now. I built a few rigs about a year ago to mine BitCoin, made some profits, and now I'm using those same rigs to mine LiteCoin and AltCoin. They're still doing great! And the more people joining the race, the more those coins will climb in price just like BitCoin did.

I can build more of these rigs. Anyone wanting to buy ready-made, turnkey mining rigs can email me: dreamworld.technologies@gmail.com

January 08 2014 at 9:34 AM Report abuse rate up rate down Reply
landskp4u

The headline seemed to indicate he was going to explain bitcoins. After reading the article, I am now more confused as to what it is or how "mining" actually generates more of them, other than a computer does it.

January 08 2014 at 9:02 AM Report abuse rate up rate down Reply
'57mad

I just wonder what their security protocols are for this fictitious money floating around on their network of electronic reserves/banks? who is tracking these bits and stopping them from being hacked/stolen.

January 08 2014 at 6:26 AM Report abuse rate up rate down Reply
'57mad

in other words if your not a computer whiz or a math major, you don't really know were your bits and pieces are going or if you are mining anything for yourself.

January 08 2014 at 6:22 AM Report abuse rate up rate down Reply
'57mad

in other words he doesn't even know if he mining the bitcoins for himself or for someone else in the consortium. after forking out the dough for the rig he and his fiend built to do so.sounds like a scam to me.especially a pyramid scam.

January 08 2014 at 6:19 AM Report abuse rate up rate down Reply
Ripper

So let me get this straight. There are people out there that created this non sense electronic internet currency. People even mine it over the internet now also, like it is some precious metal. I am going to laugh my %^& off the day the real currency stock markets crash and your pretend bitcoins along with it. Please go back to your fantasy worlds. Same goes for people buying up gold like mad now. Because others in documentaries told you to do it. The fact is that if the economy crashes. All you are going to have is a bunch of worthless bling. Because if these countries go to the bottom. The only thing worth having is real items like food, shelter, etc. It will be barter and trade and your gold will be worthless, Why may you ask? Because you can't plant gold to grow food. You can't eat gold for nourishment. And you can't burn gold to keep you warm at night. You Peons!!!

January 08 2014 at 3:51 AM Report abuse -1 rate up rate down Reply
jamiemvanlooy

.............and when you're done with that you can ride a paper mache' barrel over dipshitz falls.

January 08 2014 at 2:15 AM Report abuse rate up rate down Reply
gordianpiusiii

Junk bonds, hedge funds, and now bitcoins. .Even stocks, bonds and commodities have become something sinister...even criminal. Making something where nothing really exists, profitting from it at others expense, then dumping it onto someone else. It's a rigged game, and not in our favor.

January 08 2014 at 1:58 AM Report abuse +1 rate up rate down Reply
yivvy148

What's to stop countries with super computers and brilliant software people from doing a little mining and generating mined bitcoins that could be worth untold multi millions or more in value? In the end who actually guarentees the integrity of this system? I would think that one must cash in these "coins" or purchase items of intrinsic value asap because the possibility of the bitcoin universe imploding is quite high. Every secured system known is subject to and has been compromised in some way and this will be no different. This is essentially "fools gold."

January 07 2014 at 1:48 AM Report abuse +1 rate up rate down Reply