Mining Dogecoin

What is Dogecoin mining? Learn all you need to get started.

What is Dogecoin? Want to learn how to mine dogecoins? First, mining dogecoins is done via scrypt instead of SHA256. 

To get started mining dogecoins you could get a 70KHs Dogecoin miner for about $100 or a 30MHs Dogecoin miner for about $285.

Want to learn how to mine dogecoins on Mac? 

To get started mining dogecoins you could get a 70KHs litecoin miner for about $100.

Want to learn how to mine dogecoins on Windows? 

Transcript - What is Dogecoin mining?

Hello, and welcome to my Dogecoin mining tutorial. Today I'm going to teach you how to mine Dogecoins quickly and easily with your Windows PC with an AMD video card. So first thing's first. You're going to need a wallet. And the Dogecoin wallet is just a piece of software that keeps your Dogecoins on your computer, unless you send and receive them.

So you want to go to Dodgecoin.com. I have a link in my video description. And just click on Windows and it will download the latest version. I already have it downloaded and on my desktop just for this video. So once you've done that you want to extract into a folder. Just drag that into a folder. And inside you'll see Dogecoinqt.exc. And open that. And it might take a minute or so.

Okay. So now that your wallet's open it will say out of sync next to wallet. And that just means that it has not synchronized with the Dogecoin network yet. Mine has already been synchronized and I'm just going to blackout some of these parts just for privacy reasons, but on the bottom right here you'll see a progress bar and just regular progress bar. And after an hour or so the progress bar should complete. And that should mean that it is in sync with the Dogecoin network. Once that is synchronized, your client will be able to receive and send Dogecoins. Okay. So you can open this and leave it to sync while you're mining. So you can just minimize that for now.

So to start mining we're going to use a software CG Miner. And again I have the link in the download -- in the video description. So once you go to that link, you want to go to CG Miner 3.7.2 Windows ZIP. Click on that and it will download. Again, I already have it downloaded just for this video. One more time you want to extract that into a folder. Then once you open up this folder you will see a bunch of files and these files aren't useful to you. The only thing you need here is you're going to need to create a dot bat file which will allow you to start mining.

But before we do that, you will need to join a pool. And a pool is basically just a group of miners that mine together in order to find coins faster. So a good website to find some good pools is Dogepool.com. And I'll have a link in my video description. And really you can pick any of these pools. It doesn't matter. There's really no big difference between them. So just for this video I'm going to go with TeamDoge, but you know, it's up to you which one you chose.

So then you want to create an account and you're going to need a user name, password, you're email and a pin. And a pin is a four digit number and you want to make sure that that you remember this or write it down somewhere because you're going to need this to get your Dogecoins from the pool into your wallet. So this is a very important number. Once you registered, it's going to ask you to log in. So I already created an account.

Okay. Once you logged in, you're going to see a bunch of information on your dashboard. This should be zero. I'm not sure why it's showing me a number. That's strange. Okay. So once you're on your dashboard, you're going to want to do two things. First, you want to go to your workers tab. And here you want to create a worker. As you can see I already made a test worker, but really it can be any name you want. Here is a test in test. So, we'll just add test two, test two. So I just add another worker. Really you just want a worker for every separate computer or video cards that you're using on a pool. You don't have to, but it lets you see which computers or video cards are performing the best and if there's something wrong with one them you'll know which exactly video card or computer that it is that is malfunctioning.

So once you've done that. Now, we're going to want to go back to our CG Miner folder. So here you're going to want to right click. Go to new, new text document. And let's call this start -- I guess I already have that. Weekend mining. It doesn't matter what you call it. Then let's open it with your text editor. And you're going to want to copy this into this file. Okay. Also you're going to need to replace a couple things here.

In the username, Doge worker name. You're going to want to replace it with a username of your pool and the worker name in your pool like we just made. So for me it would be how to mine doge dot test2 and for the password you're going to need to put in the password that you just made for the worker. So again here it's going to be test two.

For the second part, you're going to want to go back to your pool. Click on getting started and copy this part right here. It will be under the command liner instructions. And this a URL that your miner will navigate to to start mining. And again you want to just replace this part right here. And paste that in. Okay. So then you want to save this file and close it. Now, so here right now it is a text file, but we want this to be a dot bat file, B-A-T. So simply just rename it. Here dot bat. Click yes and now you have your bat file.

Now to start mining, simply double click on this bat file. And there we go. It's beginning to mine. Currently I'm using a Radeon 7850 video card and it should get around 330 kilo hashes per second. So this is going to slowly make it up there and then okay. Yeah, there we go. Now it's at 300 kilo hashes. If you're not sure how much your video card should be making, how many hashes it should be generating, simply google litecoin mining hardware. There we go. In the Litecoin wiki just simply google mining hardware comparison for Litecoin and here is a list of different GPUs and how many kilo hashes they should be getting.

So if I search this page for 7850, you can see that people get between 340 and 300 or 411. Wow. So they get around 350 kilo hashes per second. And I'm getting about 310. So, that's good. I mean, you can optimize it further and you can simply use the settings that they have right here. As you can see right now, I'm running on a lower intensity. So this way I can use the computer while I'm mining. Okay.

And then the final part is once you start mining, just go back to your pool. Click on edit account and you're going to want to open up your wallet and click in to the much received tab. You 'r going to want to create a new address. Call that the name of your pool or whatever. And just right click on it, copy the address, go back into your pool and input that address into your payment address. And then you can set automatic payment threshold. 1,000 Doge is the smallest limit. Here we go. And then you just want to put in your pin. And there we go. Now it's up to the account details. And if we go back into our dashboard, we can see that eventually it will update with the new hash rate.

Now, quick note before we leave is that the hash rate that you see in CG Miner is always going to be much more precise than the hash rate that you see in the pool, because a pool calculates it using the shares over time and because this value can fluctuate so does the hash rate. When in reality your hash rate remains the same. So as long as you're sure that your worker is working correctly. And then you don't have to worry about the hash rate that it shows inside your pool. As long as it's, you know, within 20% accuracy. All right. So it's going to be a bit slow to update, but eventually it will update to the fairly precise kilo hash per second. And you'll get paid out in next time you hit your minimum pay out. Okay. Well, I hope you enjoy this video on how to mine Dogecoin. If you liked it feel free to donate Doge coin to my address in the video description. And as always don't forget to share this video, because the more people use Dogecoin the higher the value will go.

All right, thanks and happy mining.

Transcript - Dogecoin Mining on Mac

All right. So I'm going to walk you through how to start mining Dogecoin. The first thing you need to do is join a pool and right now I'm using poolerino. It's the most popular one. There's tons you can find online that doesn't really matter. The first thing you need to do is click a sign up button. That will take you to this page where you can register account. There's a number of fields you have to fill out.

I'm not going to do it for you because I already have an account. So I'm just going to go in menu, login. All right. So this is what the inside of the mining pool website looks like. The only thing you really need to do to here to get started is create a new worker. You can do that clicking the My Workers thing. You'll see I've got a couple of workers here. You can add a new worker with this tab on the side. I'm going to make another one. Just call it something worker 2. And when you add that worker, you'll see that it successfully gets added and you now have a new worker. So it's pretty much all we need to worry about here. And there are few things you need to remember when you get to later steps.

The first is your username, which in my case is Ardo. Also, your worker name, which is worker 2 and your worker password, which in this case is also worker 2. We're going to use these later. The only other thing you need to know is the host name, which you can find out at this home tab. If you scroll all the way to the bottom in that homepage you'll see it's in this comment. But you want this, you should probably go ahead and copy that and we'll use that later. All right. So the next thing you need to do is download the actual software to do the mining that available at SourceForge, and it's called CPU miner. Go ahead and download that. The link's in the description. It will start your download and while this is going, let's go over to finder, check out our Downloads folder. You'll see that it's a zip file, so you're going to need to expand that. So go ahead and double-click that, it will expand, you'll see this minerd executable, which is basically the program that we're going to run to mine.

Now to run this, we need to use an application called Terminal. You can find that in your applications folder under Utilities. It should be all the way at the bottom here, yep, double click it. You'll open up a Terminal, it looks like this. If you're not comfortable with it that's fine, I'm going tell you exactly what's you need to type to get this running, then you start with cd downloads, which is going to take you into the Downloads folder, basically, which is where that minerd file is.

You then need to change the permissions on minerd. So you type chmod 755 minerd, which is going to allow you to run the file. And then you're ready to run it, you need to dot, slash, minerd. The first thing you need is dash O and then you paste that host name that you copied earlier. And then the only other thing you need is user pass, dash, dash, userpass and you need to set that equal to their user name, which in my case was Ardo, dot, your worker name, which was worker 2 for me and then a colon and your worker password, which was also worker 2.

And then you hit enter and your program is running, you're now mining with your CPU. Right. So I just fast forward about twenty minutes. It's been running for twenty minutes now. You'll see it's still going that the hash rate is a little bit higher. More importantly, you see these accepted messages which means that you are generating valid Dogecoins. If you zoom out and you go back to that pool website and refresh it, you can confirm that it's working there, as well. This might take a little bit. But when you go back, you'll see hash rate on your dashboard as well as a number of valid coins that you've produced. There you have it.

Transcript - Dogecoin Mining on Windows

Hey everybody. So there's a new cryptocurrency on the block. It's called Dogecoin. And Dogecoin is basically a script based coin. So it's a bit like Litecoin, I guess, you could say. And the maximum amount of coins that can be mined is around 100 billion. So, basically I don't see any huge advantage to Dogecoin in terms of, you know, its technology compared to other script based coins. But the branding is pretty cool, because I think it's the first the coins that's branded off of a popular internet meme, the Doge meme. So I think that will give it a lot of advantage, you know, in terms of how popular it will get. As you can see here it's released like on December 8th, which was like a week ago or something from when I made this video. And it already has 162 pages on its thread on bitcointalk.org so that alone shows a lot about its popularity at this point.

And yeah basically, if you want to get started mining Dogecoins, first thing you got to do is download the wallet. And the wallet you can get from here. I'll have the download link in the description for this version and I'll also have a link to this thread here so you can check out for any updates on the Dogecoin software or other related issues. So once you've downloaded the zip file, you want to either make a new folder, you know, move it in there and then extract to a folder so that you get like a new folder for Dogecoin. And then you copy the folder and you -- yeah you copy the folder down to like program files or something wherever you want to store it and then you rename over there to like Dogecoin because may be you don't want this extra stuff here. And then you go inside the folder. You make a shortcut to your desktop of the Dogecoin-QT.exe. You make a shortcut to your desktop and then you start the wallet software.

Once you started the wallet software you go to a much receive. Here is the place where you can make new addresses and you click on new address. And this is a mining pool pay out address that we're going to make here. So you type in your label like Dogecoin mining pool payout, for example. Then you click okay. I'm not going to do that because I already have an address here. And yeah, you copy the address. You're going to right click, copy address. Then what you want to do is sign up for a pool. And there's number of a Dogecoin pools already, but I just chose this one because it was first on the list.

So, this is Doge.scriptpools.com. I'm sure there is other good pools out there and you're going to have to look for them yourself, but this is just to illustrate an example so. And I think this pool is pretty good as well so. Should be okay. Then you go here to sign up. Click on sign up. And you enter your details. Enter your details, username, password, and it does require an email but it does not require verifications. You don't have to click on anything in your inbox and then you enter your pin code and you should remember your pin code. Actually, you're going to need that in a bit. And then you go and log in to the mining pool. And you go to edit account. Logged me out. I'm going to have to log in again.

Yeah, so you go in here, into your account and click on edit account. And here you enter the payment address so. And then you give a certain percentage donation. I would recommend that it's only a little bit so like a half percent at least. And then you have your automatic payment threshold. So 10,000 is the minimum on this mining pool. And then here at the bottom you enter your four digit pin number and click update accounts. And the payment address should appear here. And yeah, so then after that you got to make a worker. Go to my workers and you type in like a number here like number one. Like, I have number one and X or XO or whatever. And then you want to make a note of this. This is like the worker ID. And this is the password. So you want to make a note of this. They're not, you know, super-secret or anything. They're just, you know, so you can log stuff and yeah you can. It's basically for mining with standalone mining apps.

So the next thing you want to do once you made your worker is download the mining software. And there is basically two ways you can mine for Dogecoins. Number one is or the first one is CPU mining. So you mine with your microprocessor, but that's usually not that effective alone if done alone so. But you can, you know, try it out as well so. You can get the CUP miner from this thread here. I'll have it linked in the description. And here is the 32/64 bit miners. And the second way is through graphics card mining or GPU mining with your graphics card. And for Radeon graphic cards and other AMD graphics cards you're going to want to use CG Miner. And the newer versions of CG miners don't support script which is the algorithm that the Dogecoin is based on. But this older ones or slightly older ones support it. It’s 3.6.6 for example. That's a decent version. You go to this link that I'll have linked and you click on View Raw and you'll get to download the zip file.

And if you're running NVidia GeForce or other NVidia graphics card and you're going to want use CudaMiner and you can get it from this thread at bitcointalk.org, which will also be linked in the description. And here is the zip file. It has both 32 and 64 bit versions in it. So you can just download that and extract it and pick the version that suits you the best. Then once you've done that you're going to want to make this batch files. Basically these batch files, they configure the mining software where it's going to mine and you know the username details and stuff like that. So you, yeah, you need to make those and to make those you just open up your Notepad. Then you copy this stuff in there. And you enter your details like your username and then the worker Id which was number 1 and then the worker password which I had as X.

So all this are pretty much the same because they're all based off of I think the CPU miner. So they're like structure or the format is pretty much the same.  Except for CG Miner which is not a script miner by default. So you need to enable like script mining by putting this additional thing here. But otherwise it's exactly the same as other two. And I'll have this linked as well in the descriptions so you can like copy then directly as well.

And, yeah, basically these have to be in the same folder as the mining software. So it has to be in the same folder as the executable like CudaMiner.exe or minerde.exe which is the CPU Miner or CG miner. And when you want to run your miner, you run it off the batch file. You don't run it off the executable, because then it doesn't get configured. So when you make shortcuts, you want to make shortcuts to the BAT file instead of the executable. And that's how you run it.

Yeah. That's all I have for this video. If you have any questions just ask them in the comment section. I'll try my best to answer them and yeah, that's all. So happy mining and I'll see you all later. Bye!

Litecoin and bitcoin

In 2009, Satoshi Nakamoto launched bitcoin as the world's first cryptocurrency. The code is open source, which means it can be modified by anyone and freely used for other projects. Many cryptocurrencies have launched with modified versions of this code, with varying levels of success.

Litecoin was announced in 2011 with the goal of being the 'silver' to bitcoin's 'gold'. At the time of writing, Litecoin  has the highest market cap of any mined cryptocurrency, after bitcoin.

Here's our guide to show you the crucial difference betweenbitcoin and litecoin.

At-a-glance differences

	bitcoin	litecoin
Coin limit	21 Million	84 Million
Algorithm	SHA-256	Scrypt
Mean block time	10 minutes	2.5 minutes
Difficulty retarget	2016 block	2016 blocks
Block reward details	Halved every 210,000 blocks.	Halved every 840,000 blocks
Initial reward	50 BTC	50 LTC
Current block reward	25 BTC	50 LTC
Block explorer	blockchain.info	block-explorer.com
Created by	Satoshi Nakamoto	Charles Lee
Creation date	January 3rd, 2009	October 7th, 2011
Market cap	$10,467,596,650.78	$540,274,528.26
	Bitcoin Statistics	Litecoin Statistics

Mining differences

Just like bitcoin, litecoin is a crytocurrency that is generated by mining. Litecoin was created in October 2011 by former Google engineer Charles Lee. The motivation behind its creation was to improve upon bitcoin. The key difference for end-users being the 2.5 minute time to generate a block, as opposed to bitcoin's 10 minutes. Charles Lee nowworks for Coinbase, one of the most popular online bitcoin wallets.

ASIC Mining

For miners and enthusiasts though, litecoin holds a much more important difference to bitcoin, and that is its different proof of work algorithm. Bitcoin uses the SHA-256 hashing algorithm, which involves calculations that can be greatly accelerated in parallel processing. It is this characteristic that has given rise to the intense race in ASIC technology, and has caused an exponential increase in bitcoin's difficulty level.

Litecoin, however, uses the scrypt algorithm – originally named as s-crypt, but pronounced as 'script'. This algorithm incorporates the SHA-256 algorithm, but its calculations are much more serialised than those of SHA-256 in bitcoin. Scrypt favours large amounts of high-speed RAM, rather than raw processing power alone. As a result, scrypt is known as a 'memory hard problem'.

The consequences of using scrypt mean that there has not been as much of an 'arms race' in litecoin (and other scrypt currencies), because there is (so far) no ASIC technology available for this algorithm. However, this is soon to change, thanks to companies like Alpha Technologies, which is now taking preorders.

GPU mining

To highlight the difference in hashing power, at the time of writing, the total hashing rate of the bitcoin network is over 20,000 Terra Hashes per second, while litecoin is just 95,642 Mega Hashes per second.

For the time being, 'state of the art' litecoin mining rigs come in the form of custom PCs fitted with multiple graphics cards (ie: GPUs). These devices can handle the calculations needed for scrypt and have access to blisteringly fast memory built into their own circuit boards.

There was a time when people could use GPU mining for bitcoin, but ASICs have made this method not worth the effort.

Transaction differences

The main difference is that litecoin can confirm transactions must faster than bitcoin. The implications of that are as follows:

• Litecoin can handle a higher volume of transactions thanks to its faster block generation. If bitcoin were to try to match this, it would require significant updates to the code that everyone on the bitcoin network is currently running.
• The disadvantage of this higher volume of blocks is that the litecoin blockchain will be proportionately larger than bitcoin's, with more orphaned blocks.
• The faster block time of litecoin reduces the risk of double spending attacks – this is theoretical in the case of both networks having the same hashing power.
• A merchant who waited for a minimum of two confirmations would only need to wait five minutes, whereas they would have to wait 10 minutes for just one confirmation with bitcoin.

Transaction speed (or faster block time) and confirmation speed are often touted as moot points by many involved in bitcoin, as most merchants would allow zero-confirmation transactions for most purchases. It is necessary to bear in mind that a transaction is instant, it is just confirmed by the network as it propagates.

Bitcoin Litecoin image via Flickr. Mining Rig image via Wikipedia. Mining USB devices Image via Shutterstock.

How to Mine Litecoin and other Altcoins

While it is now considered too late for hobbyists without expensive ASIC processors to start mining bitcoins, many of the alternative digital currencies are still well suited for mining on your home PC.

In this guide, we’ll take you through all you need to know to start digging up a few litecoins, feathercoins or dogecoins without any costly extra equipment.

For the most part, cryptocurrencies employ either SHA-256 or scrypt as their proof-of-work hashing algorithm, but many of the newer currencies have opted for scrypt.

Row of Gridseed litecoin miners set up. Copyright: Arina P Habich

Scrypt tends to be the more memory intensive of the two – however, home PCs with reasonably powerful graphics cards can still mine those cryptocurrencies quite effectively, as there are no dedicated ASICs to compete with – yet.

Perhaps surprisingly, it’s still possible to use just your computer’s CPU to mine some of the digital currencies. This holds true, even if you have only a laptop with integrated graphics; though this may not prove terribly effective and is not a set-up we would recommend.

Wallets at the ready

Before you start mining, you will need a wallet to keep your hard-earned coins in (see our guide to storing bitcoin). A good option is to head to the homepage of the currency you intend to mine and seek out the download link for the default wallet app. If you would like to do more research into litecoin specifically, we have a guide on how to get started.

If you find yourself in need of help and advice, most altcoins have community forums, as well as their own subreddit. The majority of wallets are based on the original Bitcoin-Qt client. Be warned, though, that before these wallets are truly usable, you may face a lengthy wait while the coin's entire block chain downloads.

Wow. Much Wallet (This is DogeCoin's Wallet)

The need for speed

Unless you possess specific mining hardware, there are two ways to mine cryptocurrencies: with your central processing unit (CPU) or with your graphics processing unit (GPU) – the latter being sited, of course, on your graphics card.

Of the two, a GPU offers far better performance for the cryptographic calculations required. However, if you are making your first foray into mining and don't possess a souped-up gaming computer – a laptop with Intel integrated graphics, perhaps – it will still be possible to mine those altcoins, but at a far slower rate.

The catch with GPU mining is that it requires a dedicated graphics processor, such as you may have fitted inside your desktop PC – the Intel integrated graphics cards found in most laptops are just not suitable for the task. To keep speeds up to a respectable level, most altcoin miners build dedicated machines using motherboards that can house multiple graphics cards, usually via riser cables.

Be aware, too, that mining digital coins is very system intensive and can reduce the lifespan of your electronic components. It's a good idea to make sure you have adequate cooling in place, keep an eye on those temperatures and keep hold of any warranties – just in case.

Solo, or with the crowd?

Mining can either be a solitary venture or you can join a mining 'pool', where a number of people combine their processing resources and all take a share of the rewards.

It can be helpful to think of mining pools as joining a lottery syndicate – the pros and cons are exactly the same. Going solo means you get to keep the full rewards of your efforts, but accepting reduced odds of being successful. Conversely, joining a pool means that the members, as a whole, will have a much larger chance of solving a block, but the reward will be split between all pool members, based on the number of 'shares' earned.

If you are thinking of going it alone, it's worth noting that configuring your software for solo mining can be more complicated than with a pool, and beginners would probably be better off taking the latter route. This option also creates a steadier stream of income, even if each payment is modest compared to the full block reward.

Deciding which altcoin to mine will be something else to bear in mind, however, some pools, such as Multipool, manage this for you and switch coins based on profitability.

Installing your CPU miner

A handy piece of software called cpuminer is the easiest way to start mining, but does require the ability to use the command line on your computer. The program can bedownloaded from SourceForge and is available for Windows (32 and 64 bit), OS X and Linux. For the purposes of this guide, though, we are making the assumption that you are using the Windows OS.

First, download the appropriate file for your operating system. The zip file can be extracted to anywhere on your hard drive, as long as you remember where it went. A good idea would be to create a 'cpuminer' folder on your desktop.

Writing your script

So, how to set up cpuminer with the parameters needed for your mining pool? Well, it's usually simplest to write a one-line script (known as a 'batch file' in Windows) to launch the miner with the correct instructions.

To do this you will need the following:

• The full path of the directory in which the mining program ("minerd.exe") is stored (eg: "C:\cpu-miner-pooler").
• The 'stratum' URL of your mining pool server (eg: "stratum+tcp://pool.d2.cc").
• The port number of your mining server (eg: "3333”).
• Your mining pool username (eg: "username").
• Your worker name or number (eg: "1”).
• Your worker password (eg: "x").

Now, open Notepad or your preferred text editor. Do not, however, use a word processor such as MS Word. Next, enter the script using the following formula (note that this method assumes you are mining a currency that uses the scrypt algorithm):

start "path" minerd.exe - -url URL:PORT –a scrypt - - userpass USERNAME.WORKER:PASSWORD

So, using the example details above, you would have produced the following text:

start "C:\cpu-miner-pooler" minerd.exe --url stratum+tcp://pool.d2.cc:3333 -a scrypt --userpass username.1:x

Save this file with a ".bat" extension; for example: "my-mining-profile.bat".

Once the batch file is saved, double click it to activate the miner program. Your mining pool will most likely have a web-based interface and, within a few minutes, the website should show that your mining worker is active.

Now that you know how to mine with the CPU, let's have a look at using your GPU.

Setting up your GPU miner

For those that intend to mine with GPUs, or USB mining devices, cgminer is the program to use and can be downloaded from the developer's website – unless, that is, you're a Mac user, in which case you will find some unofficial binaries here.

Versions of cgminer following version 3.72 do not support scrypt mining, and support for GPUs was removed in version 3.82. Therefore, the latest version isn't necessarily the one to download. Instead, seek out the version appropriate for your needs.

Again, in this example, we are making the assumption that you are using the Windows OS. However, if you are using Linux or OS X, the command line arguments (ie: the parameters) are the same. Furthermore, the instructions below once again assume you will be mining a scrypt currency.

Extract the software into a folder that can easily be found, eg: "c:\cgminer\".

Before going any further, make sure that your graphics drivers are up to date.

Next, press the Windows key together with the "R" key, type in "cmd", and press "enter". This will open the command terminal. Use the "cd" command to change the directory to the one housing the cgminer zip file.

Then, type in "cgminer.exe –n". This will list all recognised devices on your PC. If your graphics card is detected, you should be good to go. If not, you'll have research the steps required to properly set up your specific graphics card.

You will now need your mining pool details, just as with the CPU mining section above:

• The full path of the directory in which the mining program ("minerd.exe") is stored (eg: "C:\cpu-miner-pooler").
• The 'stratum' URL of your mining pool server (eg: "stratum+tcp://pool.d2.cc").
• The port number of your mining server (eg: "3333”).
• Your mining pool username (eg: "username").
• Your worker name or number (eg: "1”).
• Your worker password (eg: "x").

Now we'll make a batch file again, in order to start cgminer up with the correct parameters. In this case, the command structure is:

Start "path" cgminer -- scrypt -o URL:PORT -u USERNAME.WORKER -p PASSWORD

For example,

Start "C:\cgminer\" -- scrypt –o stratum+tcp://pool.d2.cc:3333 --userpass username.1:x

Watching your miner

Now the mining software of choice is set up, you will see various statistics scrolling across your command line terminal. If you are using cgminer, you will see more information than you would with cpuminer. In the case of the former, you will see information about the currency and the mining pool, as well as about your mining hardware. If you're running cpuminer, you will only see references to blocks that your PC has solved; although, it does, at least, show your hashing speed.

Maximising your power

Good news for miners who own PCs with dedicated graphics cards: it is possible to run both cpuminer and cgminer at the same time. To make this possible, add a "-- threads n" argument to the minerd command. Here, "n" stands for the number of CPU cores that you wish to employ for mining.

Remember to leave one or two cores free to control your GPUs, though. Setting minerd to use all CPU cores will mean that the CPU will be too busy to send data to the GPU for processing. For example, if you have a quad core CPU, try setting the "--threads" argument to "2" or "3".

Mining with both GPU and CPU concurrently reveals just how much better GPUs are at mining than the CPU. Compare the hash rates shown in the terminal windows for each of your mining programs and you should see at least a five-times difference in hashing speed.

How do Bitcoin Transactions Work?

Bitcoin transactions are sent from and to electronic bitcoin wallets, and are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the bitcoins were produced.

Holding onto bitcoins is great if you’re a speculator waiting for the price to go up, but the whole point of this currency is to spend it, right? So, when spending bitcoins, how do transactions work?

There are no bitcoins, only records of bitcoin transactions

Here’s the funny thing about bitcoins: they don’t exist anywhere, even on a hard drive. We talk about someone having bitcoins, but when you look at a particular bitcoin address, there are no digital bitcoins held in it, in the same way that you might hold pounds or dollars in a bank account. You cannot point to a physical object, or even a digital file, and say “this is a bitcoin”.

Instead, there are only records of transactions between different addresses, with balances that increase and decrease. Every transaction that ever took place is stored in a vast public ledger called the block chain. If you want to work out the balance of any bitcoin address, the information isn’t held at that address; you must reconstruct it by looking at the blockchain.

What does a transaction look like?

If Alice sends some bitcoins to Bob, that transaction will have three pieces of information:

• An input. This is a record of which bitcoin address was used to send the bitcoins to Alice in the first place (she received them from her friend, Eve).
• An amount. This is the amount of bitcoins that Alice is sending to Bob.
• An output. This is Bob's bitcoin address.

How is it sent?

To send bitcoins, you need two things: a bitcoin address and a private key. A bitcoin address is generated randomly, and is simply a sequence of letters and numbers. The private key is another sequence of letters and numbers, but unlike your bitcoin address, this is kept secret.

Think of your bitcoin address as a safe deposit box with a glass front. Everyone knows what is in it, but only the private key can unlock it to take things out or put things in.

When Alice wants to send bitcoins to Bob, she uses her private key to sign a message with the input (the source transaction(s) of the coins), amount, and output (Bob’s address).

She then sends them from her bitcoin wallet out to the wider bitcoin network. From there, bitcoin miners verify the transaction, putting it into a transaction block and eventually solving it.

Why must I sometimes wait for my transaction to clear?

Because your transaction must be verified by miners, you are sometimes forced to wait until they have finished mining. The bitcoin protocol is set so that each block takes roughly 10 minutes to mine.

Some merchants may make you wait until this block has been confirmed, meaning that you may have to make a cup of coffee and come back again in a short while before you can download the digital goods or take advantage of the paid service.

On the other hand, some merchants won’t make you wait until the transaction has been confirmed. They effectively take a chance on you, assuming that you won’t try and spend the same bitcoins somewhere else before the transaction confirms. This often happens for low value transactions, where the risk of fraud isn’t as great.

What if the input and output amounts don’t match?

Because bitcoins exist only as records of transactions, you can end up with many different transactions tied to a particular bitcoin address. Perhaps Jane sent Alice two bitcoins, Philip sent her three bitcoins and Eve sent her a single bitcoin, all as separate transactions at separate times.

These are not automatically combined in Alice’s wallet to make one file containing six bitcoins. They simply sit there as different transaction records.

When Alice wants to send bitcoins to Bob, her wallet will try to use transaction records with different amounts that add up to the number of bitcoins that she wants to send Bob.

The chances are that when Alice wants to send bitcoins to Bob, she won’t have exactly the right number of bitcoins from other transactions. Perhaps she only wants to send 1.5 BTC to Bob.

None of the transactions that she has in her bitcoin address are for that amount, and none of them add up to that amount when combined. Alice can’t just split a transaction into smaller amounts. You can only spend the whole output of a transaction, rather than breaking it up into smaller amounts.

Instead, she will have to send one of the incoming transactions, and then the rest of the bitcoins will be returned to her as change.

Alice sends the two bitcoins that she got from Jane to Bob. Jane is the input, and Bob is the output. But the amount is only 1.5 BTC, because that is all she wants to send. So, her wallet automatically creates two outputs for her transaction: 1.5 BTC to Bob, and 0.5 BTC to a new address, which it created for Alice to hold her change from Bob.

Are there any transaction fees?

Sometimes, but not all the time.

Transaction fees are calculated using various factors. Some wallets let you set transaction fees manually. Any portion of a transaction that isn’t picked up by the recipient or returned as change is considered a fee. This then goes to the miner lucky enough to solve the transaction block as an extra reward.

Right now, many miners process transactions for no fees. As the block reward for bitcoins decreases, this will be less likely.

One of the frustrating things about transaction fees in the past was that the calculation of those fees was complex and arcane. It has been the result of several updates to the protocol, and has developed organically.

Updates to the core software handling bitcoin transactions will see it change the way that it handles transaction fees, instead estimating the lowest fee that will be accepted.

Can I get a receipt?

Bitcoin wasn’t really meant for receipts. Although there are changes coming in version 0.9 that will alter the way payments work, making them far more user-friendly and mature.

Payment processors like BitPay also provide the advanced features that you wouldn’t normally get with a native bitcoin transaction, such as receipts and order confirmation web pages.

What if I only want to send part of a bitcoin?

Bitcoin transactions are divisible. A satoshi is one hundred millionth of a bitcoin, and it is possible to send a transaction as small as 5430 satoshis on the bitcoin network.