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

Bitcoins Rise
AP/Rick Bowmer

By Jon Steinberg, 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


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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Originally published