Mining History

Bitcoin mining is how new Bitcoins are created/brought into existence. Mining works by trying to solve cryptographic puzzles using processing power. When a cryptographic puzzle is solved, the miner that found the solution is rewarded with newly minted Bitcoins. The initial reward was 50 Bitcoins per block mined, but the reward is cut in half as time goes on. As of 8/5/2013, the block reward is 25 Bitcoins.

On January 3rd, 2009 the first block, also known as the 'Genesis Block' was mined by the creator of Bitcoin, Satoshi Nakamoto. Satoshi mined many of the first blocks before other miners came into the picture. Initially, miners were using the CPUs (central processing unit) in their computers to submit 'hashes' / solve the cryptographic puzzles. On September 18th, 2010 a Bitcoin miner going by the pseudonym Puddinpop released the code that allowed miners to use their graphics cards (GPUs) to mine. The GPUs greatly outperformed the CPUs by orders of magnitude depending on the specific hardware. The transition to GPU mining was quickly made and CPU mining became obsolete as the network difficulty increased.

The next stage of faster Bitcoin mining was done using FPGAs (field-programmable gate array); programmable chips that could be optimized specifically for mining and that task alone. FPGAs were not widely adapted by the time ASICs came into the market. ASIC stands for application specific integrated circuit. They are computer chips that are designed and manufactured for the sole purpose of Bitcoin mining, they serve no other purpose. Unlike FPGAs, ASICs cannot be re-programmed to do other computational tasks.

ASICs now dominate the Bitcoin mining market. They are the fastest available option, they use the least amount of electricity, and put out the least amount of heat. It is theorized that there will be no 'new stage' of Bitcoin mining, only better ASICs. The only possible hardware that can be faster are quantum computers, which have yet to be invented at a practical scale.

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