January 2018 marked the nine-year anniversary of the first-ever mined Bitcoin. Digital currency mining has come a long way in those nine years, exploding into something unimaginable by most when it was in its infancy.
Back in 2009, Bitcoin mining was largely just a hobby. Not many people had caught wind of digital currency at that point. The few who had were predominantly cryptography enthusiasts. Most were still in college, and the computing power on the machines they owned was minimal.
In the early days, most Bitcoin miners were simply enthusiastic experimenters, happy to devote a little energy to potential game-changing technology. People were using their computers for mining when they didn’t need them for anything else. Some gathered up older machines that had been collecting dust and put them to use mining Bitcoin. Even Marco Streng, co-founder of HIVE and CEO of Genesis Mining, mined Bitcoin from his dorm room.
The beginning of the boom
Back in 2009, Bitcoin was worth next to nothing. Few people had heard of digital currency and it certainly wasn’t widely accepted as a form of payment. The reward for mining the first Bitcoin block was 50 BTC, four times the 12.5 BTC reward of today.
But as people realized that mining could net a bit of side cash, more and more leapt aboard the Bitcoin bandwagon. Prospectors assembled computers for Bitcoin mining in basements, offices, garages, and spare bedrooms.
It did not take miners long to switch from using CPU power to GPU power. GPUs had previously been used to play increasingly powerful and realistic video games, and this power enticed Bitcoin miners. People began to assemble GPU machines specifically for mining.
After the public release of Bitcoin software, which made it possible to mine using GPUs in 2010, people stuffed GPU after GPU into computer towers in an attempt to speed up their mining processes. Speeding up the process made it more likely that they would “win” at mining a block by guessing a workable cryptographic hash. Power usage began to skyrocket as people threw together the first small-scale mining operations. Along with power consumption, stocks for companies like AMD and Nvidia also began to rise with increasing demand for better hardware to capitalize on a growing digital currency mining trend.
The modern mining surge
As more people adopted Bitcoin as a viable technology, more people began to mine. As more Bitcoin was exchanged and more blocks were mined, mining also became harder, and payouts of Bitcoin per block mined grew smaller. Bitcoins awarded to miners halve every 210,000 blocks—from 50 BTC to 25. At the time of this writing, it has currently shrunk to 12.5.
As the concept of digital currency gained momentum, people realized that mining Bitcoin could be a truly lucrative endeavor. Savvy businesspeople sought to grow the industry’s potential, which accelerated the mining arms race, and industrial-scale mining was born.
Companies bought warehouses and other large buildings to house data centers built specifically for digital currency mining. Of course, more mining machines in a
single building meant more power, both to run the machines as well as to cool them. Entrepreneurs began to search for better locations to reduce overhead while also growing their operations.
Today, digital currency mining is more competitive than ever. The puzzles take more computing power than most can muster in their garage, and the arms race is at an all-time high. No longer for hobbyists, Bitcoin mining has evolved into being a highly capital intensive endeavor, and not for the faint of heart.