My Reluctant New Hobby of Bitcoin Mining

As I discussed in my previous post I recently started playing with GPU password cracking. After some modifications to my desktop system my machine was cracking passwords at a rate I was quite pleased with. After I put it through its paces on a few passwords I wondered how it would perform mining crypto-currency. I had zero experience in that area so I did some internet research to help me get started.

One of the first themes I started seeing was that if your main motivation for mining crypto-currency was profit than you should likely run away. The consensus was that if you were interested in crypto, alternative currencies or other similar topics then this maybe a nice hobby for you but if your main interest in crypto-currency was money then you would be better off spending your money buying them directly rather than mining them.

One of the next things I found out was that I was not going to be able to mine for Bitcoins using my new graphics card. When bitcoin mining was just starting people were using their computer’s CPUs for mining. The next step in the evolution was bitcoin mining using graphics cards. Just like with password cracking GPUs offer a huge speed advantaged compared to CPUs. Unfortunately for GPU miners there was one more evolution: the transition to application-specific integrated circuit, or ASICs. ASICs are specially made devices that can crack a specific algorithm at a much higher rate than a GPU and usually with much lower power consumption. The downside is that when the ASICs are no longer cost efficient to use for mining purposes they have none of the other uses that a video card has.

When I started doing research into this area I almost bought a Bitmain AntMiner S1 Asic which mines SHA256 (the algorithm used by Bitcoins) at a rate of 180 GHs which is FAR faster than even multiple GPUs can mine. When I crunched the numbers a month and a half ago the price was $240 and they would mine about $5 worth of bitcoin a day. I just checked at the price hasn’t come down but due to crypto currency’s getting harder to mine as they age (by design) the devices now mine about $3.20 worth of bitcoin each day. After you account for the cost of power it’s going to be a while before the cost is recouped.

While Bitcoin is by far the biggest of the crypto-currencies there are other currencies which are often referred to as “alt-coins”. Most of these coins use algorithms other than SHA256. Some of the most common are:

Scrypt (Used by popular alt-coins such as Litecoin and Dogecoin): Within the past two months Scrypt ASICs have been released which makes GPU mining for Scrypt based crypto-currencies inefficient.

N-Scrypt (Used by Vertcoin and a few other alt-coins): There are currently no ASICs for the N-Scrypt algorithm and the developers say that if any N-Scrypt ASICs are ever developed they will fork the algorithm to render them useless.

X-11, X-13 & X-15 (Used by a larger number of alt-coins including Darkcoin and Cryptocoin): X-11 and X-13 are very GPU friendly (low temperature and high efficiency) algorithms used by a larger number of recent alt-coins. As I type this a new algorithm (X-15) is just emerging.

Since I already had a good graphics card and wanted Bitcoins the logical choice seemed to be using my GPU to mine other crypto currencies and trade those for Bitcoins. With a full time job and other obligations I don’t have a lot of time to track trends, trade currencies etc. so my best option was to join a multi-pool where a large number of individuals work together to mine crypto-currencies which are automatically exchanged for bitcoins. I found exactly what I was looking for at trademybit.com. The owner of the pool charges .05% to mine there but the pool automatically switches between whatever currency offers the best effort/value ratio for your algorithm of choice. For an extra 2% the pool will also automatically exchange all of the alt-coins you mine into bitcoins. I personally find the fees well worth the cost. The amount I earn every day can vary greatly and it’s definitely been slow lately but in the past month and a half I’ve earned around $40 worth of bitcoins. I’m not sure how much additional power I’m using by having the computer on when I otherwise wouldn’t but since I already had the equipment and I find the whole field interesting I’m more than happy with my results so far.

 

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