This is the second in a two-part series exploring Butterfly Labs and its lineup of dedicated Bitcoin-mining hardware.In part one, we looked at the company and the experiences customers have had with it.In part two, we share our experiences running a Bitcoin miner for a couple weeks.There is a whirring, whining presence in my dining room.I notice it every time I walk through.Every day, it sucks down about one full kilowatt-hour of electricity.In a year, it will consume almost $100 worth of juice—and that's on top of the $274 it costs to buy the box in the first place.Oh, and it's hot, too.If I moved it into my office and could stand the noise, I could keep a cup of coffee comfortably warm on top of the thing.Why on earth would anyone want such a disagreeable little machine in their home?The short answer: every day, that machine magically generates something like $20 in bitcoins.Ars Senior Business Editor Cyrus Farivar tapped me on the shoulder a few weeks back with a proposition."I've got a Butterfly Labs Bitcoin mining box," he explained.

"There aren't that many in the wild right now.I'm working on a story about the company, but I'm about to go on vacation.Do you want to see if you can get the thing working while I'm out?"That's the electronic currency that's quickly rocketed from lame nerd project to ludicrously valuable hot topic, right?I didn't know a lot about the world of Bitcoin other than the fact that "mining" them involved people building custom PCs with tons of video cards to handle the math.I certainly didn't know how to "mine" bitcoins myself or what to do with the things once I had them.I just knew that people eventually try to trade them in for cash somehow (but how to do that was also a total mystery).And yet here was the opportunity to take a piece of hardware I'd never heard of and see if I could use it to magically create some money out of nowhere.I told Cyrus to send me the Butterfly Labs miner.As he trekked off to Peru for his vacation, I settled in with the little black box.Butterfly Labs is a company that has drawn a fair amount of controversy for what the Bitcoin community at large perceives as a string of broken promises.

The company sells ASIC-based Bitcoin miners—machines that are built around customized chips that do nothing except compute SHA-256 hashes very quickly.bitcoin fork walletIts smallest miner (the one I had to get working) is codenamed "Jalapeño" and computes a bit over five billion hashes per second (or 5GH/s).ethereum fakeThe problem is that Butterfly Labs started selling the machines long before it actually had a product to sell.bitcoin goxIt began taking paid-in-full preorders back in mid-2012, and thousands of customers opened their wallets for Bitcoin miners ranging from the small 5GH/s miner at $274 all the way up to the large 500Gh/s miner, which costs $22,484.litecoin asic possibleButterfly Labs promised certain performance targets to customers—it initially felt confident that its application-specific integrated circuit (ASIC) designs would deliver one billion hashes per second for every 1.1 watt of power consumed.bitcointalk altcoin speculation

This proved extremely optimistic.Hardware delivery slipped multiple times.armory bitcoin wallet offlineNow, a full year later, the first few real live Butterfly Labs boxes are finally being shipped, though no small number (as many as 30) were sent to journalists to review rather than to paying customers.But when the little black box showed up on my doorstep, I had no idea about the deep and extremely vocal Bitcoin community or the story behind Butterfly Labs.I didn't really even fully understand what the miner did.I simply knew that I wanted to get this thing working and make some money.The 5GH/s Jalapeño miner is a black rounded cube with a brushed metal finish.The only connectors on the exterior of the device are on the back: a mini-USB port for data and a power plug.Near the power plug are a series of small red LEDs that the device uses to tell you its status, though there was no documentation in the box to explain what the LEDs meant.

The front of the cube contains another red LED to indicate power.There are two sets of vents, one low on the front and the other high on the rear.The device's internal 80 mm fan draws cooler air up from the front through the fins of the large heat sink mounted on the ASIC chip.It expels the now-warm air out through the top vents.After I unboxed the thing and took some photos, I was sort of stuck.I had no idea what to do with the little rounded-off cube.Before I consulted the Internet for documentation, I tried briefly—and in vain—to see if I could make it work on my own."I am a geek, and I work at Ars Technica, which is a major technology website of some renown," I thought."I have built Web servers.I use, like, Linux and stuff.How hard can this really be?"Connecting it via USB to any of the computers I had handy didn't really cause anything to happen.The device showed up on the USB bus and identified itself, but it didn't do anything.I naively wondered if there was some kind of application I needed to download to "log on" to the device to get it mining.

I admitted defeat and consulted the Internet.Unfortunately, as I was to quickly learn, I was coming at the miner with a certain set of false assumptions.The BFL miner is a pretty simple device; it doesn't have an "interface" or a console or anything like that at all.It talks via serial-over-USB, and you do need an application running on your computer to actually do anything with it.In fact, you need several things: a mining application, a "wallet," and a "pool," though the pool is optional.Bitcoin is wildly confusing.And here’s the bad news: the fact you’re reading this now means you’re late to the game, and it’s going to be tough to turn a profit in Bitcoin mining.Nevertheless, if you want to try your hand at mining bitcoins, here we present the beginner's guide to generating bitcoins.Also see: How to make money from your hobby.Following a dodgy patch in 2016, Bitcoin's value has recovered and actually surpassed the value of gold.At the time of writing one Bitcoin is equivalent to £1021.66, whereas an ounce of gold is equal to £981.89.

This increase has been attributed to a surge in demand in China.But now Bitcoin is once again said to be under threat, as BitTorrent founder Bram Cohen plans to launch his own crypto-currency within the next few months.Bitcoin is overhyped, Cohen told Steal This Show, and his alternative will rely on the power of pre-existing digital storage rather than mining."I have this plan, a slightly crazy plan, for making something that doesn't have computers burning electricity as part of its mining," Cohen said."The short of it is what you do instead of computers burning electricity to mine you have storage space that's mining."If you're finding yourself baffled as to what we're talking about, please let us explain.Bitcoin is a digital currency that operates independently of a central bank.Encryption is used to regulate both the generation of Bitcoin units and the transfer of the currency.According to Reuters, the European Union will move to clamp down on this digital currency which has reportedly been used to anonymously fund terrorism - the Paris ISIS attackers reportedly had a Bitcoin wallet worth more than $3m.

EU interior and justice ministers will gather in Brussels later this week to discuss ways in which they can "strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards", according to draft conclusions of the meeting seen by Reuters.In essence, the more bitcoins mined or ‘found’, the harder it is to ‘find’ more coins.While once it may have been possible to use a high-powered PC at home to mine Bitcoin on its own, the sheer popularity of mining Bitcoin means it’s viable only to join a pool.This is where your computer works alongside others to mine bitcoins.It’s much like , where clusters of computers work together to try and find extra-terrestrial life.See also: The rise of Bitcoin and why you can't mine them on your own.Without getting bogged down with the technicalities, the groups of computers in a Bitcoin pool are crunching numbers to mine a block.For every block mined, you get 25 coins.

Update March 2017: Currently each coin is worth £1507, which is almost 10 times the value it was when we originally wrote this in 2015.Indeed, some analysts thought in 2015 that Bitcoin was doomed.Here's what the graph looked like around two years ago: Google's currency converter lets you check very quickly how much a Bitcoin is worth.As we mentioned in the introduction, these days it's difficult to turn a profit mining Bitcoin.But it has been known, especially for early adopters of the virtual currency.For example, the Guardian reports on how a Norwegian man’s $27 investment in Bitcoin turned into a $886,000 windfall four years later."Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption.He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory," reports the Guardian.At which point, they were worth a small fortune at $886,000.

Let's say you try and mine a block of bitcoins with just one home PC.This is a bad idea: the electricity costs will be higher than the money you make from any mined bitcoins and you may have to wait months - or longer - before you get any return.By joining a pool, you should get smaller payments more regularly.However, you could still end up out of pocket even if you join a pool such as Slush’s Bitcoin pool – one of the most popular ones.When a block is completed, you get a share based on the number of other ‘workers’ who helped mine the block.A fee – around 2 percent – will be deducted from this, and you could well earn only half the amount you’ve spent in electricity costs.Of course, if you’re able to run the mining software on a computer for which you don’t pay the electricity bill, you might be quids in (but we don’t recommend running it on your work PC!).If you want to mine Bitcoin on a Mac, on the other hand, bear in mind the advice of our colleagues at Macworld: How to mine Bitcoin on Mac.

So, if you’re still interested, here’s a simple step-by step guide to getting started with Bitcoin mining: Step 1.You’ll need a ‘wallet’ to start with.This is a bit like a PayPal account where your bitcoins can be stored.You can store this wallet online, or locally on your PC.You’ll need to download a large ‘blockchain file’ to use a wallet.With a coinbase account, you can buy, use and accept Bitcoin currency.Join a pool, such as Slush’s Bitcoin pool.There’s always a danger that the pool owner might keep all 25 bitcoins when a block is mined, since the whole 25 coins are paid to one person: the pool owner.You’ll need to choose a trustworthy pool owner.Slush’s pool was the first and has been operating since December 2010.By the site’s own words, it has a “a long history of stable and accurate payouts”.Install a Bitcoin ‘miner’ on your PC.There are two types: CPU and GPU.For beginners, Kiv's GUI miner is recommended.You can find out more about how to use Kiv's GUI miner here.