So, cyrpto-currencies…yea where do I begin? My dabbling has been only for a few months and has been mundane for the most part. But I guess documenting my journey so far may prove useful for others wanting to hop into this dark art. So from the top…
Well first, I needed a hobby really and I came across these crypto-currency ideas when I read some article about Bitcoin. This was around the time when Bitcoin was rising up in value to over $1000 per coin. “Well how the heck can I get some Bitcoins then?”, I thought. It is near impossible to mine Bitcoins these days unfortunately, that boat has lonnnngggg sailed away. So, they only other ways you can get Bitcoins in a realistic manner is to “mine” alt-coins and then trade those alt-coins for Bitcoins on exchanges built for those very purposes. I will explain these terms this in a minute, but let me explain a little of what we are actually talking about first to set the groundwork of our discussion.
Bitcoin. It was conceived back in 2009 by a guy who wanted to give the financial power back to the people! It was to be a currency that anyone, anywhere in the world, could send money (Bitcoin) to anyone they so desired. No governments, no banks, and no darn regulations to worry about! While it was a mere novelty at that time, it has grown into a powerhouse of value as of late. Well really the value of Bitcoin (BTC) is mostly whatever the holders of BTC “think” it is worth, in relation to the all-mighty US dollar. This value is mostly hashed out on BTC exchanges set up for this very purpose and the value of BTC as varied wildly in the past. Basically, BTC is the wild-west of speculation in its purest form. And since BTC’s markets are not regulated at all, everything that is illegal to do in “regulated” markets, you can see happen in BTC markets. I am no financial wiz, but just be aware that the BTC market can be manipulated very easy, so if you go down this rabbit hole, be prepared to lose or possibly gain money on a minute-per-minute basis. So with that said, many countries have banned/restricted the use of BTC in their countries, or are starting to regulate this new commodity. Obviously, the good ole’ US of A is leading the charge on regulation. They say it is to protect the innocent civilians from losing all their money to this wildly speculative BTC, but it is really just to get their piece of the pie. Regulation requires record keeping and record keeping makes it easy to tax! I see this happening this near future, especially if BTC keeps up its’ high value. Anyways, that is BTC in a nutshell and now on to the meat and potatoes of this writing.
For the next part of this writing, please remember Google knows all. I am purposely going to gloss over some things, just for the sake of keeping the writing reasonable in length =).
So how do you “get” BTC? Well, if you are lucky, someone will send you some. But chances are no one is going to send you squat, since they are worth some much right now. If you want to be part of this BTC thing, you have to download a “wallet” for the BTC website, install it, and you now have a unique address that you can receive BTC with. The wallet also lets you send BTC to other people and keep track of your transactions. That’s it, it is pretty simple to get started, but now how to get some BTC. Well, back in the day, you were able to “mine” BTC, and for your trouble you received some BTC. You used your computer initially to process information for the BTC network, like record all its transactions, and did this “work” via having your computer do a complex calculation. If your computer was the first one on the whole BTC network of computers to find the solution to that work first, you were rewarded BTC! I am sure I am butchering the process description here, but like I said, Google knows all! Anyways, it was easier to do this in the past, but now it is impossible to do this with your own computer. It has become so competitive/difficult to do this, you need specialized hardware and facilities that cost a ridiculous amount of money to start and be profitable. Well solo (using your computer) BTC mining is dead, you are going to have to do something else to get BTC. One other way is to straight buy BTC from a couple sites made for this purpose. I use Coinbase.com personally, since you can link your US bank account for direct withdraw/deposit. I have had no issues using them, but I am no high roller, since I mostly work with $100 or so worth of BTC at a time. The only other way is to mine alt-coins and exchange those for BTC on exchanges.
What are alt-coins? Well alt-coins are basically the same thing as BTC, they just use a different kind of complex calculation algorithm to determine the “work” done for their networks. The biggest player in this field is Litecoin (LTC), which is usually referred to as the “silver” to BTC’s “gold”. The main thing to understand is 99% of these alt-coins use the BTC programming code at their core, since it was open-source from the start, so ALL these alt-coins “do” the same thing. The major driving force to even make alt-coins, was the attempt to return the “power” back to the common man and his computer. This is because BTC’s network workings are based on a complex calculation that was later found out to be easily solved by high specialized computer equipment (aka ASICs). This shifted the mining rewards from common computers, to super expensive equipment, with whole buildings being turned into mining farms. So this made it impossible for anyone without those means to make BTC via mining today. So enters LTC and it ASIC “proof” calculation algorithm, to the rescue. Basically, it designed to make designing ASICs to mine them very difficult. This in effect will keep the big mining players at bay, while the small time miners can still “play”, and make some coins. But when there is a will, there is way, and I am sure this “limitation” will be figured out soon and LTC will be following BTC network grow path this year.
Well, hopefully this is enough for you all to understand the basics and where to start your research in crypto-currencies. For those looking for exact how-to instructions for mining and links to useful mining information just reply here and I will answer those questions the in best way I can.
Now on to what I am specifically doing/did with crypto-currencies and my journey so far…
I have 4 mining rigs, with a total Scrypt hash power of about 2.8 Mhash/sec. These mining rigs are a hodgepodge of Radeon video cards that I managed to find used and cheap. So needless to say the mining rigs are not pretty, but it gets the job done. Now, I didn’t have all that hash power when I started this endeavor, so I was pretty limited in what I could mine. But I started learning about all this back around October 2013, and have come a long way in my understanding of crypto-currencies. This is key to understanding the route I took, and to see how the crypto scene has changed so much since then, so the way I started may not be the best way these days. But here is where I started…
I started with a Feathercoin (FTC) pool from day one. I did this because I had no clue about anything really, but it had a “low” difficulty (not really), and I thought I could mine a lot of it through the pool I used. Well I pooled mined it for a month straight and made a couple of hundred dollars in BTC at the time (BTC was $1k+ then), but I realized single coin pool mining wasn’t the best for me. This is because I also educated myself of all things about crypto-currencies during that time, and I become aware of different mining pool structures, pool fees, and even about shady pools that steal your coins. Additionally, since I was in Japan, I had to deal with internet connection issues due to the long distances from the mining pool servers, high rate of orphaned/rejected blocks, all which cut into my profits. Plus I am lazy, and I don’t want to have to constantly monitor my mining rigs to make sure they are connected to a flaky mining pool.
Coincidentally, a bazillion crypto coins started coming out around that time as well, and it became hassle to be jumping around looking for the most profitable coin to mine. Luckily, I stumbled across multi-pools that mine the most profitable coins automatically for you, and some even convert those coins into BTC as well. This made mining less of a hassle for me, since I could just point my mining rigs to these multi-pools and forget about them, all the while my BTC would roll in periodically. Obviously, these multi-pools charge fees for their service, but I am willing to give up a couple of percentage points for the convenience.
Unfortunately, with the rapid generation of crypto coins these last couple months, it became more profitable with getting “in” on those coins before everyone else via mining. This would enable you to get as many of those coins before the difficulty shot up to the moon. It basically became an arms race and my 2.8 Mhash in puny to what others can bring to bear on those coins’ networks. So I basically started to realize, to make decent profits off these coins, it wasn’t going to be with my 2.8 Mhash, but crypto day-trading.
Crypto day-trading I think is the natural evolutionary stop by getting involved in crypto-currencies, and I think most start mining at first, but the smart people go straight to this. Technically, all you need to do to start is buy some BTC with fiat at some exchange, and use that to play off the wild market fluctuations that are inherent to crypto-currencies as a whole. I mean, you can easy do BTC arbitrage between all the major exchanges, since they can vary in value of up to $50 or more from each other. Or monitor the crypto-currencies’ forums like a hawk and look for the next “big” coin. Then before those coins hit the major exchanges, buy them up really cheap from the early miners (got “in” on the coin) selling them on these crypto-currencies trading websites, and then wait. Once they hit the major exchanges chances will be that they will rise in value quickly, and then you sell (aka. dump) your stash, and hopefully make a nice profit for basically doing nothing. Rise and repeat.
So as it stands now, I still have my mining rigs doing their thing for constant income, but I also have been trying to mine the next “big” coin, but I seriously suck at doing that. I reliaze I don’t have the luck to mine the “right” coin, and haven’t so far either; I always get on a coin too late. So as far as mining that coin later, my 2.8 Mhash doesn’t mean squat when the difficulty is already through the roof. Very frustrating to say the least, but that is the reality of the crypto-currency scene now. Also, since I suck at picking the coins to mine, I doubt I will have any luck day-trading, so that is why I stick to the safety of mining with multi-pools. I get income that varies with the value with BTC on a daily basis, and I am good with that. Plus, my wife isn’t going to let me blow serious dough on buying some BTC to day trade, because with my crappy luck, I will lose it all! haha
At the time of this writing, Mt. Gox has imploded, and BTC’s value is in decline. But it will recover I think, since there is too much fiat (aka real money) involved in it to fail completely. However, I think for greater adoption among the masses, there is going to have to be more regulation of BTC in future. It is sad fact, but it has to happen, since the Mt. Gox collapse is catching the ire/ridicule of big banks and governments now, due the sheer amount of money that was lost. But all I know is that I just have my mining rigs humming along every day, and if BTC and all the other alt-coins go bust, I will just sell my hardware for cheap and call it a wrap! Comments greatly appreciated!
[Updated 30 June 2014]
Per request, here is an update!
I can’t believe how fast time flies in Bitcoin time! It has been over three months since the Gox disaster and the Bitcoin landscape has changed a lot. My experiment has changed a lot as well, but not my overarching goal of making BTC. I think I have changed course quite a bit in how I was making BTC these past few months, but I will just start at where I am at now, to spare everyone the boring details of the last three months. Alright then, right to it!
I ended up stumbling across MiddleCoin around December 8, 2013 and used it until May 24, 2014. I made 2.34260832 BTC during that time, and where it all went, I have no idea! Either way, that is what 2.8 M/hash of Scrypt mining power made me, but I started running into issues. One, I didn’t realized I was pulling about 18A between all my miners on a 15A socket, but luckily on a 20A circuit. I just should have known something was up when the breaker would trip randomly over time. I also fried two good 15A surge protectors only after running 18A though them for months (go belkin!), when the plug connectors melted; but luckily no fire! I don’t know why I took me so long to actually think critically about the power draw I was putting through all my wiring, hell I was even using a 16 gauge extension cable to boot, and I am sure that would have melted eventually too! I now have a sturdy 14 gauge extension cord, which is rated for the power I am pulling through it at least, so the fire hazard risk is even lower than before (Yea!). Well I ended up buying a plug-in watt meter out in one of the shops around where I live, and now I can see how much power I am actually pulling when my rigs fire up, however this should have been one of the first things I bought. Now moving on to the second issue or more like issues, I had…
Heat! Running my rigs on full power while crunching Scrypt alt-coins makes for a hot room! I actually have my rigs in an exterior room, outside my home, so during the “winter” time they stayed relatively cool. But when the season started to change in May, that room’s ambient temperature was getting over 40 Celsius, which is no bueno for computer hardware! The other small issue I had was with Middlecoin itself, where my payouts were becoming infrequent and smaller for some reason, and it was becoming less reliable to connect to. I am sure there are plenty of reasons for that, but none of them were anything I could control, so I started looking for steady income elsewhere. Coupled with the season change, I need to find a way to cool that room, reduce the power consumption of my rigs, and find a new home for my hash power.
The first thing I did was sell one of my rigs. I did this because it was a redundant rig, one of the first motherboards I bought when I had no clue about anything. I could only hook-up two video cards to it at any one time and it as nothing special. So I sold that motherboard and my radeon 7770 video card, which was the slowest one of the bunch, so no real loss to me. This left me with a total of three rigs, but that still left me running about 16A for everything, which was still a bit too high. During this time frame of moving hardware around, I stumbled across NiceHash, which basically sells your hash power for you, giving you more or less constant income, plus it was just point and click to set up; right up my alley!
So, as I mentioned before, the alt-coin/bitcoin landscape changed a lot these past few months, which include what type on crypo-algorithm these alt-coins use for mining them. While there are a few out there now, I am just going to focus on x11, since that is what I am selling right now on NiceHash. To be honest, I don’t really care what makes x11 tick, I just like the fact that is cut my power usage down by 30%, which in turn cut down the heat. It is also a popular crypo-algorithm these days, so it is profitable to sell hash power based on it. This attribute of x11 gave me the options I was looking for in keeping my gear cool, without having to move all my rigs inside my home (not going to happen), and coupled with NiceHash, a new income stream of BTC. I do want note that I now have about 10 M/hash of x11 power, which equates to about 2.5 M/hash of Scrypt power; it is all relative since am using the same video cards.
I do also want mention I picked up a ASIC Miner Erupter Cube for cheap in the local area recently, and that provides up to 38 G/hashes of SHA256 mining power, which I am also selling on NiceHash. I actually had issues getting it to work with Nicehash for awhile, but I got that squared away with some help from others, and I have that story posted at the following forum, with posts the under “djbert” name.
Well I think that up brings everyone up to speed on where I am at currently with my mining venture. I haven’t bought any new video cards or anything, and I don’t plan to either. I think GPU mining is just not going to make as much money as it did before. Now that the Scrypt ASICs are here, there is no way you will get your money back investing in a bunch of GPUs miners these days, it is just the sad truth. Well, I will leave everyone with some final thoughts of mine on what is going on in this scene we called crypto-currency…
1. ASICs miners: I have seen many ASICs miners for SHA256 and now for Scrypt, I will admit I may have drooled over some for a bit, but don’t fall for this trap! You will never get your money back, let alone make money! Trust me on this, you WILL NOT MAKE MONEY! I believe the ASICs mining scene is not in the “consumers” favor, it is only in the companie’s that are making them favor. Do you really think that the companies making all these ASIC miners, are just making them, and then hoping to sell them to you to make their profits off those sales? Nope! They are setting up their own farms first, and then selling the left over ASICs to the consumers that are thinking they got “in”, but they really didn’t. By the time they plugged it in, the difficulty of whatever coin in question is through the roof, even for that shiny ASIC miner they just bought. You can see this situation play out now, as some ASIC manufactures are just selling hashing power instead of the hardware. As this lets them keep their hardware centralize and making money constantly by mining, and off course get whatever then can charge from the people who think they are getting a deal. Please understand I am not going as far as saying that the ASIC manufactures out there are scamming people. It is just people don’t realize that the numbers will never add up in their favor, and because things change so fast in this scene, the average joe will most likely lose money in this ASIC game.
2. BTC investments: Like I mentioned in the original post, if you can day trade BTC to your profit, then do it! You don’t need hardware or anything, just some BTC, and some time to make your BTC grow. But I am lazy and I don’t have the time to watch the BTC exchanges like a hawk, so I am always looking for different ways to make BTC. Well I have found a site called BTCDelta and it is super easy to use. You basically can save BTC there in a “savings” account or trade BTC on a margin. The return rate on your BTC “savings” account is 5% currently, which beats any standard fiat savings account these days in the States. Like I said, I like easy, so as I mine BTC, I then dump it there, and let it sit and accrue 5%. I don’t do the margin trading, as I am sure I will lose everything, but that option is out there for other brave souls. A link to the website is below…
Well I am done and I am tired. I am sure there are plenty of grammar and spelling errors, but I will fix them later. If anyone wants more elaboration on anything, just ask, as I know I generalized a lot in this post.
[Updated 1 September 2014]
Well here is another update! I have been slowly selling my GPU mining equipment these past couple months, since I want to get a reasonable return on my hardware while I can. I have been providing x11 hashing power on Nicehash since my last update and the returns have been ok for the amount of hashing power I was giving. At the time I was providing up to 10 MH/sec with all my cards going, but I have since dropped down to 4 MH/sec. That is because I have sold one of my 270X’s and I am just running 3 of my older Radeons in a mining rig while I try to sell them. I then basically took one of my rigs, stuck my other two 270x’s in it in crossfire mode, and I now have a great gaming computer! This gaming rig actually runs these newer games better darn good, and I think I am going to keep it this way, so I can get some other kind of use out of the hardware. All the mining hardware I originally bought was “paid” back around February of this year, so why not? So is this the end of my mining experiment? Not quite…
Soooo, I ran across a used KnCMiner Jupiter for sale in the local area about a month ago, and the price was pretty good. I sweet talked the wife in releasing the funds and I ended up picking it up for a good price/condition. It is the 4 core version, normally running at 650 GH/sec, but I now have it reliably OC up to ~900 GH/sec. I want to hit the 1 TH/sec sweet spot, but I am running into heating and hardware error issues right now. I think I can hit that number though once the weather gets cooler or if I go the immersive cooling route.
So now that I have the Jupiter, I definitely plan to dump all my GPU mining stuff, except for my new gaming rig, and just focus on providing SHA256 hashing power. For me, this is just the next evolutionary step, and I kind of what to leave the tangle mess GPU mining rigs end up being, for the sleek/sexy and single purpose ASIC hardware. So, this is what I have going on now…
1. KnCMiner Jupiter – OC up to ~900 GH/sec
2. ASICMiner Erupter Cube – OC up to ~38 GH/sec
3. ANTminer U2 USB – OC up to ~2 GH/sec
So we are looking at about 940 GH/sec between all my SHA256 hardware. That is netting me about $11 a day from WestHash. Of course over time this is going to drop, but that is just the nature of Bitcoin as the difficulty just keeps rising and rising.
Oh yea, to those that are thinking, “What is Westhash”, it is just like NiceHash (same guys), but with the server based on the west coast of the USA. I use that server now, and my hashing connection is WAY better now, actually it is rock solid, compared to using Nicehash’s server that is based in Europe.
Well that brings us update on everything so far. My next step may be immersive cooling, just to see how far I can over-clock my Jupiter, but I am not sure yet if the costs involved going that route will really net me anything substantial on returns at this point. I will also detail how I got my Jupiter to 900 GH/sec at a later time, since I am too lazy to do it right now =)