Bitcoin Mining Business

Business Plan Industrial Mining

Made by MadHouse & Co.

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Principles of Bitcoin
All changes and upgrades to the protocol should strive to maintain and reinforce these Principles of
Bitcoin
21 million coins.

No censorship: Nobody should be able to prevent valid txs from being confirmed.

Open-Source: Bitcoin source code should always be open for anyone to read, modify, copy, share.

Permissionless: No arbitrary gatekeepers should ever prevent anybody from being part of the
network (user, node, miner, etc).
Pseudonymous: No ID should be required to own, use Bitcoin.
Fungible: All coins are equal and should be equally spendable.
Irreversible Transactions: Confirmed blocks should be set in stone. Blockchain History should be
immutable.

Low trust
Bitcoin is P2P electronic cash that is valuable over legacy systems because of the monetary autonomy it
brings to its users. Bitcoin seeks to address the root problem with conventional currency: all the trust
that's required to make it work -- Not that justified trust is a bad thing, but trust makes systems brittle,
opaque, and costly to operate. Trust failures result in systemic collapses, trust curation creates
inequality and monopoly lock-in, and naturally arising trust choke-points can be abused to deny access
to due process.
Having a low requirement for trust is a major fundamental property that makes all these other principles
happen. These principles can be understood as coming from and working towards a low-trust aim.

Other electronic payment systems prevent double-spending by having a master authoritative source to
check for them. If there is theft, fraud or error this centralized authority is morally and legally obliged to
undo the transaction, which means centralized electronic cash transactions cannot be irreversible. With
the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers,
hassling them for more information than they would otherwise need such as real life ID, credit check
and so on. Bitcoin's decentralized mining provides the possibility for Irreversible Transactions. This
finality means no real life ID is required to use bitcoin, it is Pseudonymous. Nor can anybody arbitrarily
stop anyone else using or transferring bitcoin, so it is Permissionless and Censorship-resistant.

Most of the bitcoin economy validates the rules of bitcoin for themselves instead of trusting others. This
means that invalid bitcoin transactions won't be generally accepted which enforces the 21 million
coins limit as well as other rules.

Origins of low-trust

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Bitcoin achieves its low requirement for trust through a few ideas and institutions.

Open source.
The bitcoin source code is published and available to all. Any programmer can read it. For example, the
bitcoin software cannot have a secret command to send all the money to one person because that
command would be seen by any reviewer who would raise the alarm to stop anyone running the code.

Peer-to-peer network.
Such networks have been used before and are shown to be very resilient. See Bittorrent (where bitcoin
probably gets its name from), Gnutella, Freenet, Kazaa, i2p and the internet itself. This means bitcoin
does not require trust in any centralized server for relaying information.

Cryptography.
Cryptographic proof is used to enforce the idea of possession in bitcoin, only someone with knowledge
of the private key can spend a coin. Other cryptography is used in other ways, for example Proof of
work.

Decentralization.
Divides power widely across many people, so no single entity can reverse transactions or otherwise
change the rules to suit themselves.

Verification of rules. Related to the above point. Any bitcoin user can run Full nodewallet software
which verifies all the rules of bitcoin and so that user doesn't need to trust anybody else. For example if
somebody creates a bitcoin transactionawarding a million bitcoins to themselves, full node wallet
software will reject it as invalid in the same way a careful goldsmith rejects fool's gold.

SWOT analysis of Bitcoin in 2018

Here we will discuss the SWOT analysis of Bitcoin one of the biggest cryptocurrency in 2018. Bitcoin is a
digital currency of new era. This is an online payment network. Very safe and trusty. This kind of
currency called cryptocurrency.

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STRENGTH IN SWOT ANALYSIS OF BITCOIN IN 2018

PEER-TO-PEER
Bitcoin is using the peer-to-peer network that is called Blockchain.In this network, only the sender and
the receiver knows the transaction when its taking place. There is no third party involvement in this
transaction. And there is no administrative authority regarding Bitcoin system. That means this is tax-
free. The government cannot apply tax here. For this reason, Bitcoin is a safe currency from any kind of
global currency. The bitcoin transaction is less costly than any conventional one. if you want to know the
“bitcoin forecast 2020” read the cnbc news where James Altucher states that bitcoin will reach $1
million by the end of 2020.

ANONYMITY
Bitcoin consists of a unique pin number that indicates the owner address. When a transaction is done,
the pin number is altered. That’s why when a Bitcoin is sent, it cannot be reversed if the new owner is
eager to modification the ownership. This certifies the security of the transaction.

FAST
Normally The bitcoin transaction is very fast and no objection to it. Anyone can deal their business easily
and no interruption here.

SAFE
Normal currency can be stolen by physically or virtually. But Bitcoin cannot be stolen from anyone’s
wallet. As the only owner can change the pin, it is impossible for others to steal it unless they have
physical access to owner’s personal computer.

WEAKNESS IN SWOT ANALYSIS OF BITCOIN IN 2018

VOLATILITY
There are many arguments about the volatility of Bitcoin. Maximum people tend to make judgments by
the publicity in the media. The current situation the result of media hype. Bitcoin has gone through huge
instability in the past years from 2010-2015. Its price is going up like a rocket but this is for a very short
period time. It is not a time to conclude about Bitcoin’s stability & consistency. It’s not like a company
like Hewlett Packard who has a stability.But if the currency can be accepted all over the country then it
will be a one of the great currency to do transactions.

TRANSACTIONS COST
People are now paying $28 on average to make a deal using the digital currency, as BitInfoCharts.
Bitcoin miners are enjoying the transactions fees. In December 2017 the total transaction fees paid to
bitcoin miners hit above $11 million.

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TRANSACTION TIMES
An argument has been concocting among the bitcoin exchanger about the transaction times and fees. It
takes 78 minutes on average to confirm a bitcoin transaction, as stated by Blockchain.com. The highest
average time 1,188 minutes per transactions.

VIRTUAL MONEY
This is a virtual payment or transactions network. Nobody can touch bitcoin. It’s an intangible value.

OPPORTUNITIES IN SWOT ANALYSIS OF BITCOIN IN 2018

LARGE MARKET
Cryptocurrency is a big market. Anyone can use it. There is no adult or child difference. Bitcoin is for all.

INTERNATIONALIZATION
Bitcoin has become internalize. Recently KFC Canada has introduced Bitcoin as one of their payment
systems. If you ask who accept bitcoin as payment, then here is a list of the company.

We have enlisted here some global brand companies :

Amazon – An online product service Marketplace.

Apple’s App Store – Buy Apple’s service through AppStore with bitcoins.

Badoo – An online dating network.

BigFishGames – PC, Mac and Smartphones (iPhone, Android, Windows) for Games.

Bing by Microsoft – 2nd search engine after Google.

Bloomberg – Online newspaper.

Braintree – A Research firm.

CVS – A pharmacy mall.

Dell – US-based Global computer technology company.

Fiverr – You can get anything done for $5 through Bitcoin.

Home Depot – For Office supplies.

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Microsoft – US based Software company.

Namecheap – Domain Hosting company.

Naughty America – An Adult entertainment provider.

PayPal / Ebay – Credit card / payment processor / Auction.

Reddit – You can buy premium features there with bitcoins.

com – An online store that helps anyone to trade their products.

Stripe – Another payments company.

Subway – Restaurant.

com – An IT blog company.

Tesla – A car company.

Wikipedia – An absolutely Free Encyclopedia with 4 570 000+ article.

WordPress – An CMS system for Blogger.

Zappos – An online retailer.

Japan and South Korea are investing more in the cryptocurrency industry from Asia.

Countries That Say “Yes” to Bitcoin

The United States

Canada

Australia

The European Union

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THREATS IN SWOT ANALYSIS OF BITCOIN IN 2018

Governments Rules and Regulation

Bitcoin transactions are illegal in many countries. Very few countries approved bitcoin. But There is a lot
of users all over the world especially the people who love to deal through online.

Countries That Say “No” to Bitcoin

Iceland

Vietnam

Bolivia

Kyrgyzstan

Ecuador

Russia

China

Bangladesh

In recent the central bank of Bangladesh named Bangladesh Bank has banned Bitcoin or any other
cryptocurrency transaction.

Why Decentralization Matters

Bitcoin’s biggest differentiating factor comes from it’s decentralized nature. Without the need for
decentralization, it’s incredibly easy to replicate the functionality of Bitcoin at a much less cost. So it’s
important to understand why that decentralization is such an important feature and what we lose
without it.

What is Decentralization?

Decentralization is the process of redistributing or dispersing functions, powers, people or things away
from a central location or authority.
Bitcoin is a decentralized Peer-to-Peer network that does not rely on a central authority. Any peer of the
network is not dependent on any single node for the correct blockchain. Bitcoin works as long as each
peer is connected to a single peer telling the truth, even if every other is lying. This is the key feature
that distinguishes Bitcoin from other networks, that rely on trusted entities for determining truth.

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Why Does it Matter?

To understand why decentralization matters, it’s important to know the flaws that a centralized system
has. Decentralization is not cheap, as it requires an expensive (but valuable) proof-of-work mechanism
for determining consensus. While transaction fees currently are cheap, the security provided for such
transactions is not cheap, as a great deal of it is paid through inflation. This will change, with time, and
the true costs will be exposed, or security levels will not match what currently exists. Bitcoin and other
decentralized services will lose in competition to centralized services if there were not significant
advantages to a decentralized system that offset this cost.

Censorship Resistance

Censorship resistance is one of the most important distinguishing factors of Bitcoin. Centralized systems
are notoriously easy to censor. Censoring transactions allows for third parties to prevent the flow of
transactions to or from certain sources.

Satoshi realized this when he said the following:

“Governments are good at cutting off the heads of a centrally controlled network like Napster, but pure
P2P networks like Gnutella and Tor seem to be holding their own.”

While governments are one potential threat of censorship, any system that relies on centralization also
is potentially threatened by any controller of the network. Even in the case of a benevolent central
authority, this authority could be compelled to act against his wishes through threat of use of force by
governments or criminals.
Miners currently have some ability to censor transactions. Notably, Eligius Mining Pool participates in
censoring transactions he defines as spam, such as transactions to Dice sites or parasitic protocols that
lie on top of the blockchain. However, as long as mining is decentralized, there is sufficient chances for a
transaction to be included into a later block. Just as nodes only require a single source of truth, users
only need a single miner willing to mine their transaction to avoid censorship. The greater the amount of
centralization in a system, the fewer people who could agree (or be forced to agree) with uniform
censorship rules. This poses one of the more serious risks with mining centralization.

Seizure Resistance

Centralized systems are extremely easy to seize large amounts of funds from users without their
permission. While Bitcoin users would still be individually susceptible to rubber hose attacks, there is no
centralized place to attack to seize a massive amount of funds. Even this threat can be mitigated
through time-locked transactions or multi-signature transactions that would prevent you from even
being able to access your own funds easily. No entity can compel a third party to release your funds to
them without your permission, unlike every centralized financial system.

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Access Control Resistance

Centralized services are easy to have access blocked by an ISP, government, or other authority. Even
with work-arounds such as VPN and Tor, the centralized services can always be shut down at a single
choke point.

Bitcoin is incredibly resilient to this type of attack. While ISPs can shut down certain types of traffic, that
traffic can be disguised. Even if the internet was completely shut down, Bitcoin could survive through
satellites or shortwave radio. Since there is no single point to shut down, every single node would need
to be eliminated to kill Bitcoin.

Change Resistance

Bitcoin is also incredibly resistant to change. Bitcoin is not subject to the whims of a few individuals, and
any major change requires consensus from the vast majority of participants. While some see this as a
disadvantage, predictability and stability is a huge benefit. This can only be done through Bitcoin’s
decentralized consensus mechanism. A single rogue developer cannot make a change and affect
everyone. A government cannot mandate that the inflation rate should change. Bitcoin resists change
unless absolutely necessary.

Is Centralized Bitcoin Valuable?

In the end, the value proposition Bitcoin offers comes through decentralization. A centralized Bitcoin
would be a massively expensive version of existing networks and financial systems of today. It would
lose the battle, simply because the costs are great without any benefits of decentralization. Sacrificing
the decentralization, or at least being aware of the consequenecs of decentralization loss is key for
understanding how Bitcoin can and should evolve with time.

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Trading bitcoins
Bitcoins can be bought and sold on a number of exchanges. Take a look at the Comparison of
exchanges for more information.

Exchanges

Comparison of exchanges

BitBay • Bitfinex • BitMEX • Bitstamp • Bittrex • Bitso • C-

CEX • Coinfloor • Cryptopia • Gatecoin • GDAX • HitBTC • itBit • Kraken • Luno • Novaexchange • Poloni
ex • TheRockTrading

Defunct

Bitcoin Market • BTC-e • Mt. Gox • Intersango • TradeHill

BitBay

A market exchange site serving those trading between Bitcoins / Litecoins and PLN, EUR and USD.

Contents

[hide]

1 Adding Funds

1.1 BTC / ETH / LTC

1.2 PLN

1.3 EUR

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1.4 USD

2 Withdrawing Funds

2.1 BTC / ETH/ LTC

2.2 PLN

2.3 EUR

2.4 USD

3 History

4 See Also

5 External Links

6 References

Adding Funds

BTC / ETH / LTC

Bitcoins/ Ether/ Litecoin funds are credited to the exchange account after three confirmations. Deposit
fee - 0 BTC / 0 ETH /0 LTC

PLN

PLN wire deposit fee - 2 PLN. Poczta Polska deposit - 0 PLN Express Poczta Polska deposit Express bank
transfer

EUR

EUR wire deposists fee – 0 EUR. Credit and debit cards - Mastercard and Visa

USD

USD wire deposists fee – 0 USD. Credit and debit cards - Mastercard and Visa

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Withdrawing Funds

BTC / ETH/ LTC

Bitcoins/ Ether / Litecoins withdrawal fee - 0.0002 BTC / 0.00084000 ETH / 0.005 LTC/.

PLN

Wire withdrawal fee - 1 PLN. Withdrawal can be made by Bluecash - 10 PLN up to 5 000 PLN. Money
order via InPost Finanse - 4.50 PLN + 1% of withdrawal value Withdrawal from ATM - 10 PLN or 20 PLN

EUR

SEPA withdrawal fee -1.00 EUR.

USD

Withdrawal can be made by wire transfer - 0.35% (min. 5.2 USD, max 45 USD)

History

The service launched publicly on March 29, 2014 [1]. BitBay is operated by BitBay Sp. z o. o., located in
Poland. On December 12, 2014 BitBay announced the launch of a 2.0 version.

In January 2016 BitBay wa san authorized Collection Center of the 24th Grand Finale of the Great
Orchestra of Christmas Charity. The Great Orchestra of Christmas Charity http://en.wosp.org.pl/ is one
of the biggest charity event in Poland. Every year, it is supported by 120 000 volunteers who register and
run around 1500 Finale Centers all over Poland and abroad. During the collection BitBay has raised
1.86345367 BTC[2]

April 2016, BitBay has announced the inclusion of Ether as a tradable asset. BitBay supports Ether
trading including following currency pairs: ETH/BTC, ETH/USD, ETH/EUR and ETH/PLN[3].

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Bitstamp
A "Big Four" bitcoin exchange[1] in the world, which operates a BTC/USD market with support for
various currencies for deposit and withdrawal.

Contents

1 Trading
2 Adding funds
2.1 BTC
2.2 EUR
2.3 GBP
2.4 USD
2.5 CHF
3 Withdrawing funds
3.1 EUR
3.2 GBP
3.3 USD
3.4 CHF
4 Fees
5 Localization
6 Account Security
7 Language Support
8 API
9 History
10 See Also
11 External Links
12 References

Trading

Buying/selling

A buy/sell order is executed partially or in full when the price bid can be matched against a sell/buy
order that is at or below the bid amount.

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Adding funds

BTC

There are no fees incurred when transferring bitcoins for deposit. Funds are available once confirmed (3
confirms), a process that can take roughly 30 minutes.

EUR

Exchange accepts EUR deposits via SEPA transfers, then converts them to USD and credits them to
online account. No deposit fees!

GBP

Exchange accepts wire transfers in GBP, then converts them to USD and credits them to online account.
Charging 0.1% deposit fee (minimum fee: $15).

USD

Exchange accepts international wire transfers in USD, charging 0.1% deposit fee (minimum fee: $15).

CHF

Exchange accepts wire transfers in CHF, then converts them to USD and credits them to online account.
Charging 0.1% deposit fee (minimum fee: $15).

Withdrawing funds

EUR

SEPA withdrawals are charged with fixed 0.90€ fee once your funds are converted to EUR. Minimum
amount for SEPA withdrawal is $10,00.

GBP

GBP wire deposits and withdrawals in GBP are supported.

USD

International wire withdrawals in USD will be charged with 0.09% fee, minimum fee is $15,00. Minimum
amount for international withdrawal is $50,00.

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CHF

International wire withdrawals in CHF will be charged with 0.09% fee, minimum fee is $15,00. Minimum
amount for international withdrawal is $50,00.

Fees

Bitstamp charges a trading fee from each party of successful trades made through the market. The
amount of the fee will vary based on a 30 day trading history. The rate for new accounts and those with
the lowest volume is 0.5%. Refer to the fee scheduleto determine discount levels. The fee that was
charged appears in the account history next to each trade.

Localization

Bitstamp is localizing its website with an online collaborative online translating tool. Feel free to join and
help with translation to your native language.

Link: https://crowdin.net/project/bitstamp

Account Security

Access to an account may be protected with the optional Google Authenticator utility.

Language Support

API

API is available https://www.bitstamp.net/api/

History

The exchange was announced on August 22, 2011[2]. Bitstamp.net is owned and operated by Bitstamp
Ltd and based in United Kingdom.

On May 12, 2012 the exchange began offering volume discounts for trading fees[3].

Bitstamp is one of the four exchanges that determine CoinDesk Bitcoin Price IndexBPI.

15
Bitfinex
A "Big Four" bitcoin exchange[1] in the world, Bitfinex trading platform is currently in a beta phase
(testing phase). The platform is owned and operated by iFinex Inc. (Bvi), and during this final phase the
platform is being prepared to operate under a fully licensed model.

Contents

1 Main Functions

1.1 Bitcoins exchange

1.2 Margin trading

1.3 Lending

2 Fees schedule

2.1 Order Execution

2.2 Deposits Fee

2.3 Withdrawals Fee

2.4 SWAPS

3 Company

4 External Links

5 References

Main Functions

Bitcoins exchange

The exchange part works like any regular bitcoins exchanges: you put your offer to buy or sell bitcoins.
When an order is matched against another, it is executed.

The exchange wallet type is used for this feature.

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Margin trading

Their margin trading feature is unique in the Bitcoin world. Basically, it allows you to borrow funds from
lenders (see next feature) to trade bitcoins. If you make a profit, you get the profit and pay the
depositor interests. If you make a loss, you reimburse the depositors the whole borrowed amount +
interests. [2]

Lending

Their lending feature goes hand to hand with the margin trading feature described above.

If you don't feel like a trader and/or prefer safer investments, this feature is for you. Bitfinex allows you,
using your deposit wallets, to lend bitcoins and/or dollars to traders. You can put offers with your
chosen terms (which rates, for how long, and how much).

Fees schedule

Order Execution

VolumeMaker feesTaker fees>= 0 BTC0.1%0.2%>= 500 BTC0.08%0.2%>= 2000 BTC0.06%0.2%>= 5000

BTC0.04%0.2%>= 15000 BTC0.02%0.2%>= 25000 BTC00.2%

Deposits Fee

Bitcoin: 0
International wire: 0.1% (minimum $20.00)
EgoPay: 0.2% (not include charge by Egopay)

Withdrawals Fee

Bitcoin: 0
International wire: 0.1% (minimum $20.00)
EgoPay: 0 (not include charge by Egopay)

SWAPS

Charged on your existing swaps, paid by the liquidity provider: 15.0% (of the swaps generated by active
contracts)

Company

Bitfinex Limited has its office in Hong-Kong, with one of our associate living there.

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BitMEX
BitMEX - Bitcoin Mercantile Exchange is a cryptocurrency derivatives trading platform.

BitMEX is wholly owned by HDR Global Trading Limited, a Republic of Seychelles incorporated entity.

Cryptopia
The Cryptopia marketplace lets you sell anything, to anyone, anywhere in the world in exchange for
cryptocurrency.

Buy/Sell items free of charge or setup an Auction or classified listing and start using your crypto today.

Cryptocurrency Market Capitalizations & %

Market Cap: $443.35B / BTC Dom: 36%

Cryptocurrency Market Capitalizations

Indexing 4617 cryptocoins with a total 24h volume of $4.51B and $443.35B marketcap!

Price Marketcap

BTC+1.36%

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$9,368$159.28B

24h Change+1.36%

24h Volume$1,372,219,924

Marketcap$159.28B

ETH+2.07%

$689$68.26B

Marketshare15%

Price in BTC0.07353440 BTC

24h Change+2.07%

24h Volume$1,340,231,167

Marketcap$68.26B

XRP+2.22%

$0.8639$33.87B

Marketshare7.64%

Price in BTC0.00009236 BTC

24h Change+2.22%

24h Volume$266,280,618

Marketcap$33.87B

BCH+1.5%

$1,403$24.13B

Marketshare5.44%

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Price in BTC0.15065934 BTC

24h Change+1.5%

24h Volume$260,568,924

Marketcap$24.13B

EOS+18.58%

$19$15.75B

Marketshare3.55%

Price in BTC0.00204514 BTC

24h Change+18.58%

24h Volume$145,346,785

Marketcap$15.75B

ADA+11.81%

$0.3342$8.66B

Marketshare1.95%

Price in BTC0.00003567 BTC

24h Change+11.81%

24h Volume$8,851,403

Marketcap$8.66B

LTC+1.38%

$153$8.54B

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Marketshare1.93%

Price in BTC0.01620139 BTC

24h Change+1.38%

24h Volume$276,657,681

Marketcap$8.54B

XLM+1.19%

$0.4195$7.83B

Marketshare1.77%

Price in BTC0.00004503 BTC

24h Change+1.19%

24h Volume$36,776,567

Marketcap$7.83B

BCD-8.91%

$50$7.65B

Marketshare1.72%

Price in BTC0.00532339 BTC

24h Change-8.91%

24h Volume$9,708

Marketcap$7.65B

MIOTA+2.41%

$2.07$5.76B

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Marketshare1.30%

Price in BTC0.00022116 BTC

24h Change+2.41%

24h Volume$111,827,210

Marketcap$5.76B

TRX+11.66%

$0.0821$5.40B

Marketshare1.22%

Price in BTC0.00000876 BTC

24h Change+11.66%

24h Volume$23,425,039

Marketcap$5.40B

ALP±0%

$0.5414$5.10B

Marketshare1.15%

Price in BTC0.00010000 BTC

24h Change±0%

24h Volume$173,156

Marketcap$5.10B

NEO-0.36%

22
$76$4.94B

Marketshare1.12%

Price in BTC0.00811974 BTC

24h Change-0.36%

24h Volume$16,228,476

Marketcap$4.94B

XMR-0.73%

$257$4.11B

Marketshare0.93%

Price in BTC0.02744301 BTC

24h Change-0.73%

24h Volume$83,278,346

Marketcap$4.11B

DASH+2.51%

$498$4.04B

Marketshare0.91%

Price in BTC0.05368545 BTC

24h Change+2.51%

24h Volume$56,849,433

Marketcap$4.04B

XEM+1.88%

23
$0.4077$3.63B

Marketshare0.82%

Price in BTC0.00004305 BTC

24h Change+1.88%

24h Volume$3,213,661

Marketcap$3.63B

ETC+5.12%

$22$2.20B

Marketshare0.50%

Price in BTC0.00232091 BTC

24h Change+5.12%

24h Volume$153,261,497

Marketcap$2.20B

VEN+1.14%

$4.04$2.12B

Marketshare0.48%

Price in BTC0.00043100 BTC

24h Change+1.14%

24h Volume$364,974

Marketcap$2.12B

24
QTUM+7.25%

$22$1.88B

Marketshare0.42%

Price in BTC0.00226240 BTC

24h Change+7.25%

24h Volume$41,342,354

Marketcap$1.88B

OMG-1.14%

$18$1.83B

Marketshare0.41%

Price in BTC0.00191773 BTC

24h Change-1.14%

24h Volume$3,046,155

Marketcap$1.83B

USDT+0.53%

$0.9953$1.82B

Marketshare0.41%

Price in BTC0.00008753 BTC

24h Change+0.53%

24h Volume$9,287,793

Marketcap$1.82B

25
ICX+1.01%

$4.54$1.76B

Marketshare0.40%

Price in BTC0.00048442 BTC

24h Change+1.01%

24h Volume$64,452

Marketcap$1.76B

BNB+5.84%

$15$1.74B

Marketshare0.39%

Price in BTC0.00162991 BTC

24h Change+5.84%

24h Volume$10,630,207

Marketcap$1.74B

LSK+1.76%

$12$1.25B

Marketshare0.28%

Price in BTC0.00127028 BTC

24h Change+1.76%

24h Volume$3,416,098

Marketcap$1.25B

26
ZEC-1.14%

$293$1.12B

Marketshare0.25%

Price in BTC0.03134821 BTC

24h Change-1.14%

24h Volume$27,078,127

Marketcap$1.12B

XVG+0.28%

$0.0717$1.07B

Marketshare0.24%

Price in BTC0.00000766 BTC

24h Change+0.28%

24h Volume$9,894,428

Marketcap$1.07B

BCN+4.21%

$0.0057$1.06B

Marketshare0.24%

27
Mining

Contents

1 Introduction

2 Difficulty

2.1 The Computationally-Difficult Problem

2.2 The Difficulty Metric

2.3 Reward

3 The mining ecosystem

3.1 Hardware

3.1.1 CPU Mining

3.1.2 GPU Mining

3.1.3 FPGA Mining

3.1.4 ASIC Mining

3.1.5 Mining services (Cloud mining)

3.2 Pools

3.3 History

4 See Also

28
Introduction

Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions (and a
"mining rig" is a colloquial metaphor for a single computer system that performs the necessary
computations for "mining". This ledger of past transactions is called the block chainas it is a chain
of blocks. The blockchain serves to confirm transactions to the rest of the network as having taken
place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to
re-spend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks
found each day by miners remains steady. Individual blocks must contain a proof of work to be
considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block.
Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to set the history of transactions in a way that is computationally
impractical to modify by any one entity. By downloading and verifying the blockchain, bitcoin nodes are
able to reach consensus about the ordering of events in bitcoin.

Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid
any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of
disseminating new coins in a decentralized manner as well as motivating people to provide security for
the system.

Bitcoin mining is so called because it resembles the mining of other commodities: it requires exertion
and it slowly makes new units available to anybody who wishes to take part. An important difference is
that the supply does not depend on the amount of mining. In general changing total miner hashpower
does not change how many bitcoins are created over the long term.

Difficulty

The Computationally-Difficult Problem

Mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to
the target in order for the block to be accepted by the network. This problem can be simplified for
explanation purposes: The hash of a block must start with a certain number of zeros. The probability of
calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In
order to generate a new hash each round, a nonce is incremented. See Proof of work for more
information.

The Difficulty Metric

The difficulty is the measure of how difficult it is to find a new block compared to the easiest it can ever
be. The rate is recalculated every 2,016 blocks to a value such that the previous 2,016 blocks would have

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been generated in exactly one fortnight (two weeks) had everyone been mining at this difficulty. This is
expected yield, on average, one block every ten minutes.

As more miners join, the rate of block creation increases. As the rate of block generation increases, the
difficulty rises to compensate, which has a balancing of effect due to reducing the rate of block-creation.
Any blocks released by malicious miners that do not meet the required difficulty target will simply be
rejected by the other participants in the network.

Reward

When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is
agreed-upon by everyone in the network. Currently this bounty is 12.5 bitcoins; this value will halve
every 210,000 blocks. See Controlled Currency Supply.

Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive
for the miner to include the transaction in their block. In the future, as the number of new bitcoins
miners are allowed to create in each block dwindles, the fees will make up a much more important
percentage of mining income.

The mining ecosystem

Hardware

FPGA Module

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Users have used various types of hardware over time to mine blocks. Hardware specifications and
performance statistics are detailed on the Mining Hardware Comparison page.

CPU Mining

Early Bitcoin client versions allowed users to use their CPUs to mine. The advent of GPU mining made
CPU mining financially unwise as the hashrate of the network grew to such a degree that the amount of
bitcoins produced by CPU mining became lower than the cost of power to operate a CPU. The option
was therefore removed from the core Bitcoin client's user interface.

GPU Mining

GPU Mining is drastically faster and more efficient than CPU mining. See the main article: Why a GPU
mines faster than a CPU. A variety of popular mining rigs have been documented.

FPGA Mining

FPGA mining is a very efficient and fast way to mine, comparable to GPU mining and drastically
outperforming CPU mining. FPGAs typically consume very small amounts of power with relatively high
hash ratings, making them more viable and efficient than GPU mining. See Mining Hardware
Comparison for FPGA hardware specifications and statistics.

ASIC Mining

An application-specific integrated circuit, or ASIC, is a microchip designed and manufactured for a very
specific purpose. ASICs designed for Bitcoin mining were first released in 2013. For the amount of power
they consume, they are vastly faster than all previous technologies and already have made GPU mining
financially.

Mining services (Cloud mining)

Mining contractors provide mining services with performance specified by contract, often referred to as
a "Mining Contract." They may, for example, rent out a specific level of mining capacity for a set price at
a specific duration.

Pools
As more and more miners competed for the limited supply of blocks, individuals found that they were
working for months without finding a block and receiving any reward for their mining efforts. This made
mining something of a gamble. To address the variance in their income miners started organizing
themselves into pools so that they could share rewards more evenly. See Pooled
mining and Comparison of mining pools.

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History

Bitcoin's public ledger (the "block chain") was started on January 3rd, 2009 at 18:15 UTC presumably
by Satoshi Nakamoto. The first block is known as the genesis block. The first transaction recorded in the
first block was a single transaction paying the reward of 50 new bitcoins to its creator.

List of Well – Known Brands in the Bitcoin Mining Business

In every industry, there are always brands that perform better or are better regarded by customers and
the general public than others. Some of these brands are those that have been in the industry for a long
time, while others are best known for the results they deliver.
These are some of the leading bitcoin mining companies (bitcoin mining pools) in the United States of
America and also in the globe;

AntPool — 17.82%

DiscusFish/P2Pool — 16.49%

BitFury — 16.4%

BTC China Pool — 13.74%

BW Pool — 7.68%

Eligius — 4.83%

KnCMiner — 4.27%

Slush — 4.08%

21 Inc. — 3.79%

io — 1.99%

Unknown — 1.9%

Unknown entity — 1.42%

BitClub Network — 1.33%

8baochi — 0.85%

BitMinter — 0.76%

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Kano CKPool — 0.66%
Unknown Entity — 0.66%
Solo CKPool — 0.47%

org — 0.47%%

Unknown Entity — 0.28%

Planning Your Bitcoin Mining Operation

Operating a Bitcoin mining facility can be profitable, but you need to treat it like a business. I operate a
small Bitcoin mining facility, and there is a lot more that goes into it than just plugging in the equipment
and letting it run.

It’s easy to set up a single Bitcoin mining device and run it. Scaling to something that can make a
significant amount of money is a different story, however. To make a profit, one needs reliable revenue
and low costs. This means low costs for all aspects of the operation:

 Equipment
 Electricity
 Cooling
 Infrastructure
 Business Management
 Operations and Maintenance

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 Bitmain Tech Antminer S9

Equipment

Bitcoin mining hardware is the first and most important part of the operation. If you can’t get good
equipment at a good price, you might as well stop right there. At this point in time, the best equipment
to buy is the Bitmain Antminer S9. You should be able to generate about 0.5 Bitcoin per month (as of
July 2016, post-halvening).

The power supplies need to be purchased separately. If you have 110 Volt AC, get this setup
from Centrix International. If you have 220 VAC, you can use either the Centrix setup, or get the power
supply from Bitmain.

Electricity
The Bitcoin mining hardware basically convert electricity to Bitcoin. The lower your electricity costs, the
better off you will be. For US Dollars, your electricity costs should be $0.10 per KiloWatt Hour or less to
maintain profitability.

Calculating actual electricity cost can be a bit tricky, and if you have a choice of electricity suppliers, it is
worth getting their rate sheet to determine the price at the usage. As a starting point, there will be
different rates.

Residential – usually low price.

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Commercial light – less than 200 amps or 30,000 KWHr per month

Commercial medium – less than 500,000 KWHr per month

Commercial heavy – everything else

Within these rates, there will usually be a few categories of costs. It is best to put together a
spreadsheet, add all the costs together, then calculate an effective per KWHr rate in order to compare
the two. The costs you will have to take into account are:

Monthly service fee

Usage fee – how many KWHr used

Demand fee – maximum Watts used at any one time

Demand peak – additional fee based on maximum Watts vs. average Watts

I’ve found that you can turn the fan speed down to 40% or so if you operate in an air-conditioned
environment, then it won’t be that loud, and you might be able to run it without anyone noticing…but if
you operate more than one of the units the electrical usage will be probably be noticed by the building
owner at some point. These devices use a lot of electricity!

Whenever you have the option, use 220 Volt AC instead of 110 VAC. The power supplies for the miners
run more efficiently at the higher voltage.

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Cooling
Bitcoin miners put out a lot of heat. The fans on each of the Antminer units push through about 200
Cubic Feet per Minute (CFM) of air. The nice thing is, there are no hard drives in these systems, so they
can run hotter than a typical server.
These systems are basically three cards, each running lots of ASIC’s, with heat sinks on the top and
bottom of the chips. Here is one that’s open for cleaning.
Antminer open for cleaningSo the good news is that these boxes don’t need to be in an air conditioned
environment, they just need a lot of airflow to get rid of the heat. In my first location, I put in place a
large exhaust fan that was rated at 10,000 CFM. That size fan would be able to remove the heat
generated by 50 Antminers because 50 x 200 CFM = 10,000 CFM. I had to match the intake vents to
10,000 CFM of airflow also, of course. That took up twice the space of the fan.

Here’s a nice fan from Grainger, and some Drainable Louvers:

You will need a way to direct the flow of air so it does not bypass or recirculate around your Bitcoin
miners. I built some air flow guides out of wooden 2×4’s with plastic sheeting stapled to it.

Infrastructure

This is all the stuff that you need to get the Bitcoin miners connected and working. It helps to have a
little bit of data networking knowledge here. Easiest way to get that is to pick up a Cisco CCNA
certification guide from the bookstore and use that as a reference.

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Firewall and router
You’re going to need an internet connection. It does
not need to be fast, but it should be reliable. The
Bitcoin miners can only earn money if they can
download the hashing puzzles from the Internet and
upload the solutions.

It would be useful to have a firewall that has remote

access VPN capability, so you would be able to
access the equipment remotely. I really like the Cisco Meraki MX64W firewall. It’s everything you need,
has top level security, and provides remote access VPN along with Wifi.

Network Switches
Each of the Bitcoin miners has a
network connection. It needs to plug
into something. You’ll need to buy a
network switch to make it work. The
switches don’t have to be fast. I prefer
to buy used Cisco 48 port switches. You can get one of those for less than $100 on eBay.

Power Distribution Unit

The Bitcoin miners use a lot of power
– You are going to need an
electrician to run electricity to your
miners. Tell him that you want a
bunch of 220 VAC, 30 Amp
connections, and you are going to be
using NEMA L6-30P connectors (in
North America).

Plan on each Antminer using 6 Amps of 220VAC power, which means if you get a 30 amp Power
Distribution Unit (PDU), you can power 4 Antminer’s from it. You can try to power 5 from them, but
you’ll pop circuit breakers. This Tripp-Lite PDUH30HV would a good one to get.

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Power Cords
You’ll need to get the power cables that go from the PDU to the
power supplies also. These can be tricky to figure out. You’ll need
the IEC C14 to C13 connectors. There’s lots of different vendors
for these.

Video Surveillance System

These are really inexpensive these days. Connect a cheap 4 camera video surveillance system up to your
network. It’s nice to be able to quickly see that everything is working well while you are away. And if
someone messes with your stuff, that’s nice to see also.

Shelves

Things You Don’t Need

There is stuff you could buy if you wanted to be extravagant. But I don’t think it’s worth it.

Smart PDU’s – I first started using these, because I thought it would be nice to be able to reboot the
Bitcoin miners remotely. It turns out they are more trouble than they are worth.

Computer Server Racks – These are a waste of money. The Antminers don’t fit on them.

Air Conditioning – Too expensive to run

Uninterruptable Power Supplies (UPS’s) – Not needed, and way too expensive. If power goes down, you
want your miners to shut down. When power comes back on, everything will boot and start running
again.

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Business Management
This is a business that makes money. There are things that need to be done for business management,
both in the initial setup, and in the ongoing operations. It should be registered as a company so that
business expenses are deducted from income, and any taxes will be paid only on the profits.

This means you should engage with at least an accountant, so that you can capture the depreciation of
the Bitcoin miners.

Business Setup

> Form business as an LLC, register with the State

> Get an Employer Identification Number from the IRS

> Set up a bank account and fund it

> Lease a space for operations

> Obtain a Certificate of Occupancy (pro tip – make changes to space after getting CO)

> Get account with power company and internet service provider

Bitcoin Mining Operations

> Get electrical pulled into space

> Set up natural circulation cooling

> Configure data network

> Configure power distribution to Bitcoin miners

> Operate miners and scale up

> Keep track of all purchases and expenses for tax purposes

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Business Operations
> Set up Bitcoin Miners to send Bitcoin to an account on an Exchange.

> Sell Bitcoin on the Exchange to fund operations, send money to bank account.

> Pay bills from bank account.

> Keep equipment running.

> Save enough Bitcoin or money to fund an equipment refresh every two years

> Pay taxes as you need to. Understand depreciation. Get an accountant.

Operations and Maintenance

The first few months of operations will be great. As you add more Bitcoin miners, you’ll see your daily,
weekly, and monthly income go up.

And then things will start to go wrong. Power, cooling, and other issues will crop up.

So you’ll have to start a regular schedule of maintenance and upgrades to the equipment. There’s many
different things that will have to be done, but the biggest one is cleaning.

Get yourself a dust mask and an air compressor, and clean your Bitcoin miners out every few months.

Summary

Remember, keep your costs low. The two biggest costs are the Bitcoin miners and electricity. If you can
control those, everything else will work out. If you are planning on setting this up as a legitimate
business, plan for minimizing taxes right from the start. If you do it right, you can be cash flow positive
yet have a tax loss to offset your other income…good luck!

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Revenue Th/s > $/€

Now we have to calculate the power of the Asic Antminer S9i 14Th/s with Psu.
On the Bitmain webpage www.antpool.com we can calculate wich reward in
Bitcoin the pool will give us . Pool Fee 1.5% .
If we have only 1 S9i 14Th/s we will have a revenue of :
Day - 0.00086214 BTC = 8.05 $/Day = 6.78 €/Day
Week - 0.00603498 BTC = 56.92 $/Week = 47.45 €/Week
Month - 0.0258642 BTC = 241.35 $/Month = 203.47 €/Month
Year - 0.3146811 BTC = 2939.11 $/Year = 2475.91 €/Year

Day - 0.00086214 BTC = 8,05 $ / Day

Week - 0.00603498 BTC = 56,92 $ / Week
Month - 0.0258642 BTC = 241,35 $ / Month
Year - 0.3146811 BTC = 2.939,11 $ / Year

Day - 0.00086214 BTC = 6,78 € / Day

Week - 0.00603498 BTC = 47,45 € / Week
Month - 0.0258642 BTC = 203,47 € / Month
Year - 0.3146811 BTC = 2.475,91 € / Year

Now if we check the refference site of www.coinmarketcap.com we see the

price of Bitcoin today 10.05.2018 is 9342.42 $ .
https://coinmarketcap.com/currencies/bitcoin/

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If we have 100 Asic S9i 14 Th/s.
100 AsicS9i × 1010 $ = 101.000 $ = 84.738,51 €
100 × 14 Th/s = 1.400 Th/s
We will have the following revenue :
https://www.antpool.com/support.htm?m=calculator
Day - 0.08621438 BTC = 784.71 $/Day = 659,63 €/Day
Week - 0.60350066 BTC = 5.492,99 $/Week = 4.617,38 €/Week
Month - 2.5864314 BTC = 23.541,39 $/Month = 19.735,97 €/Month
Year - 31.4682487 BTC = 285.814,87 $/Year = 240.120,99 €/Year

Day - 0.08621438 BTC = 784,71 $ / Day

Week - 0.60350066 BTC = 5.492,99 $ / Week
Month - 2.5864314 BTC = 23.541,39 $ / Month
Year - 31.4682487 BTC = 285.814,87 $ / Year

Day - 0.08621438 BTC = 659,63 € / Day

Week - 0.60350066 BTC = 4.617,38 € / Week
Month - 2.5864314 BTC = 19.735,97 € / Month
Year - 31.4682487 BTC = 240.120,99 € / Year

*All the revenues untill now calculated do not include Electricity costs .

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If we have 500 Asic S9i 14 Th/s.
500 Asic S9i × 1010 $ = 505.000 $ = 422.452,74 €
500 × 14 Th/s = 7000 Th/s
We will have the following revenue :
https://www.antpool.com/support.htm?m=calculator

Day - 0.43107189 BTC = 3.712,80 $/Day = 3.104,89 € / Day

Week - 3.01750323 BTC = 25.933,09 $/Week = 21.734,23 € / Week
Month - 12.9321567 BTC = 111.141,80 $/Month = 93.146,70 € / Month
Year - 157.34123985 BTC = 1.358.613,28 $/Year = 1.138.640,79 € / Year

Day - 0.43107189 BTC = 3.712,80 $ / Day

Week - 3.01750323 BTC = 25.933,09 $ / Week
Month - 12.9321567 BTC = 111.141,80 $ / Month
Year - 157.34123985 BTC = 1.358.613,28 $ / Year

Day - 0.43107189 BTC = 3.104,89 € / Day

Week - 3.01750323 BTC = 21.734,23 € / Week
Month - 12.9321567 BTC = 93.146,70 € / Month
Year - 157.34123985 BTC = 1.138.640,79 € / Year

*All the revenues untill now calculated do not include Electricity costs .

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Now if we have 1.000 AsicAntminer S9i 14Th/s we will do like this :
1 Asic S9i = 1010 $ = 847.39 €
1010 $ × 1000 = 1.010.000 $ = 846.924,90 €
14 Th/s × 1000 = 14.000 Th/s
Consulting again the site
https://www.antpool.com/support.htm?m=calculator :
We will have the following revenue :
Day - 0.86214379 BTC = 8.053,80 $/Day = 6.782,90 €/Day
Week - 6.03500653 BTC = 56.418,38 $/Week = 47.480,29 €/Week
Month - 25.8643137 BTC = 241.793,05 $/Month = 203.606,46€/Month
Year - 314.68248335 BTC = 2.943.288,20 $/Year = 2.477.211,99 €/Year

Day - 0.86214379 BTC = 8.053,80 $ / Day

Week - 6.03500653 BTC = 56.418,38 $ / Week
Month - 25.8643137 BTC = 241.793,05 $ / Month
Year - 314.68248335 BTC = 2.943.288,20 $ / Year

Day - 0.86214379 BTC = 6.782,90 € / Day

Week - 6.03500653 BTC = 47.480,29 € / Week
Month - 25.8643137 BTC = 203.606,46 € / Month
Year - 314.68248335 BTC = 2.477.211,99 € / Year

*All the revenues untill now calculated do not include Electricity costs .

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We have 2 cases :
1 - We are paying the electricity bill to a Electricity Company like Enel or
Hera in Italy .
2 – We have solar panels to supply the Asics .

Case 1
Energy consumption calculation
The energy E in kilowatt-hours (kWh) per day is equal to the power P in watts (W)
times number of usage hours per day t divided by 1000 watts per kilowatt:

E ( kWh/day ) = P(W) × t(h/day) / 1000(W/kW)

AsicS9i consumes 1340 w/h

E = (1340 W × 24 H) / 1000w = 32,16 Kw / 24 Hours
32,16 KwH × 31 = 996.96 KwH / Month
996,96 Kwh / M × 12 = 11.963,52 KwH / Year
If we supose a Kw/h price in Industry in Italy from 2016 the price is
0.088 € / Kw/h .
32,16 Kw × 0,088 € = 2,83 € / 24 Hours
996,96 KwH /Month × 0,088 € /KwH = 87,73248 € /Month
11.963,52 Kwh / Year × 0.088 € / KwH = 1.052,78976 € / Year

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46
What is 'Return on Investment (ROI)'

Return on Investment (ROI) is a performance measure, used to evaluate the efficiency of an investment
or compare the efficiency of a number of different investments. ROI measures the amount of return on
an investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an
investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

The return on investment formula:

ROI = (Gain from Investment - Cost of Investment) / Cost of Investment

R.O.I 100 ASICS - 160,9 % Year

R.O.I 500 Asics - 164,95 % Year
R.O.I 1.000 ASICS - 190 % Year

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