Tips :
BTC : 15fXq5FzKaUArzQ8zBWfJADMn1qTQ5w5Y6
DOGE : DK4uNKX99VTgEv8BZdeepsYJHKhev3oR1j
Hello everyone!
Today, I received an email from a friend saying that he knows that I’m into crypto currencies recently and he wanted to know if I could give him some pointers… in true KaKaRoTo fashion, I wrote him a long email to explain everything there is to know about cryptocurrencies. I think there’s a lot of interesting stuff in there that others might find useful so I’ve decided to make it into a blog post.
Note that I didn’t edit the email, so read it as an “email to a friend”.
Concerning crypto currencies, it’s a whole world and really quite interesting. I’ll try and give you as much info as i can. Note though that everything I say below may not be 100% accurate, as I might say something wrong, either because I misunderstood it myself or maybe to keep things simplified.
I don’t know how much you know about it, so at the risk of saying things you know, I’ll just assume you know nothing about cryptocurrencies.
So cryptocurrencies started with bitcoin in 2010 i think, satoshi nakamoto (an anonymous name of person or a group) released a white paper explaining the concept and created the currency, wallet, website, etc.. Of course you can check bitcoin website for more info, but the concept is basically that btc have a value, which is defined by how much people want to pay for it, but as is, it’s just a number. The system works by constantly generating coins until a maximum is reached, the concept follows gold mining where as long as you mine, you get more of it but there is a limit on the resource in the world and the value of gold depends on how much people want to pay for it, but other than that, it has no real value (it’s just a metal, right?).
I’ll explain about btc (bitcoin) then expand on the other cryptocurrencies (that we call altcoins).
Btc has a blockchain which is a public ledger which is made up of “blocks”, each containing transactions, in order to create an account you just generate a private and public key, the public key is your “account number” and the private key is your wallet. To send BTC from one person to another, you create a transaction containing your origin and destination accounts and the amount then sign it with your key then post it on the network which will add it to the current block, other nodes in the network will then check that the transaction was signed with the origin account’s private key, and they will sign your transaction in turn in order to confirm that it’s been verified.
At the same time, you have “miners” which are trying to generate the next block, more on that in a second. When a new block is generated, it gets added to the blockchain (ledger) and all new transactions get written into this new block. The previous one gets finalized. To ensure security of the network, new blocks are constantly being generated, for bitcoin it’s set to generate a new block every 10 minutes approximately. So, the block get generated by miners, to do that, they need to prove that they worked for it. The proof of work is based on a hashing algorithm, basically the take the current block header’s hash, they add random data to it then they make a hash of the data. I suppose you know what a hash is, so i won’t explain that. Basically the hash result must be below a specific threshold, if it is, you found the new block, if it’s not, you need to search again. So imagine a sha1 hash where the first 10 bytes are 0x00000000000000000000 you must be extremely lucky to find such data that gives this kind of hash. Well that’s what the PoW (proof of work) is based on. You keep hashing millions of random data (which include the hash of the current block) until you find such a lucky hash that is below the threshold, thus proving that you did work hard to find the new block. You can see the blockchain here for the current block (at the moment) for example : https://blockchain.info/block-index/381396/0000000000000000d0f673f0241c7aca3f2453b165a2f70014362733e0daad81
you see in the top-right where it says hash/previous block/next block, you see all the 0000 it starts with. That’s the block’s hash which is below a specific threshold. The reward for finding such a hash/block is that when you create the new block, you will add a new transaction to it, the first transaction of a block is always a transfer of 25 btc from “nowhere” into your address. That’s your block reward. You can see it in the blockchain link I just gave you, it has all the transactions, and the first one has “no inputs” and has 25.07 BTC (if it shows $ value, click on the green button below the value to show it in BTC). So there you go, that’s how you mine coins and generate new ones. Now the thing is, what is that threshold, and what happens if you can’t find the hash. Well, the threshold is called “difficulty” in the crypto world and it’s automatically adjusted after every block (or every 10 block or whatever the currency creator decided when he made it), and it’s based on the average time needed to generate the block. So let’s say you have 10 miners, each with 1GH/s comutation power, so the network has 10GH/s and for a difficulty of “5” (let’s assume it means first 5 bits are 0), it takes an average of 10 minutes to find the hash. Now 100 new miners join the network with 10GH/s each, that’s 1000GH/s more to the network and the total network hashrate is now 1010 GH/s.. it will be a LOT easier to find that hash, so now it only takes 30 seconds to find it. But BTC spec says one block every 10 minutes, so the difficulty will increase to let’s say 13 to account for all the new hashing power, and now the hashes are found every 10 minutes.. some miners leave the network, difficulty goes down, etc… Of course, it’s not exact, it’s based on luck, but it’s “how probable that the next hash will be found in 10 minutes considering the current hashing power of the network”, sometimes with the same hashrate and same difficulty, it takes seconds to find the next block, sometimes it can take hours.. and yes, if it takes hours, then it takes hours, there’s nothing you can do about it, you just wait until it finds the block, then you lower the difficulty for the next one. No one actually sets the difficulty, it’s decided upon by the entire network. Everyone runs the same code, so everyone follows the same rules and agrees with each other. If for example someone doesn’t, then his hash/transaction/whatever will not be confirmed by other miners and it’s rejected. If two people find the next block at the same time, then one will get orphaned and the other will get confirmed, not sure how that works, but there’s some race condition/concurrency protection in the way confirmations are done. The same applies for transactions and accounts, if you send money to someone but you didn’t have the correct private key, then it won’t get confirmed by anyone else and the transaction is useless. That’s why whenever you do a payment or transfer, any respectable site will tell you they wait for X confirmation before unlocking the funds for example, it’s usually 6 confirmations, which can take a few minutes, it depends on the network and the hashrate and number of miners, etc…
So.. When you have an account, your private key is your wallet, and if you lose it, then you will have no way of signing any transaction for that account, meaning that the money is lost forever. that’s why it’s always very important to make a backup of your wallet.dat file somewhere safe, or to write it on a piece of paper, or something like that.. a lot of people have lost millions of dollars because their HDD failed and they didn’t have a backup of their wallet.dat. One even just threw it out because he thought it was useless, back when 1BTC was valued at 0.0001$.. and then when 1 BTC became 1300$, he regretted it..
Since BTC has a public ledger (the blockchain) and transactions are confirmed by the peers, and no one owns the network, then obviously, you can see the balance of any account you want (see previous blockchain and click on any address to see its full history and balance), that’s why some people will create a few new accounts (just generate a private key locally) for every transaction and split their funds through multiple accounts, this way someone seeing a transaction won’t know which of the destination is the one being paid and which one is the new account of the account holder. It is sometimes suggested to use one new account every time you make a transaction.. but I don’t really do that myself.
Now one last item, we talked about mining, but mostly about what we call “solo mining”, which is having your CPU or GPU calculating hashrates until it finds the right one and then you ‘win’ the 25BTC reward. But if you did that for real, you would never win it considering how many people are on the network, so what people do is use “mining pools”, which is basically a service that will send you much smaller computations to do and you give the result to them, and everyone joins the pool. When the pool is the one that finds the block, it will then share the reward proportionally with every miner depending on how many “shares” they sent.. so for example, here’s one of my shares for BTC in one of the pools I’m in :
Block Value Status Duration Hash Rate Your Shares Payout
292742 BTC 25.1399 43/120 13 minutes 10.02 Ph/s 5456/5000002904 BTC 0.00002743
So, you see the block id which yielded 25.1399 BTC, it has 43 confirmations (out of 120 required before the block is considered accepted/not-orphaned), it took 13 minutes to find it, the pool’s hash rate is 10.02 Ph/s (my rate is 11.02 GH/s), I sent 5456 shares out of a total of 5000002904 from the entire pool, and the payout is my portion of the 25.1399 BTC that was paid to me (yes, quite small for 11GH/s of hashing power, but consider the 10Ph/s of the pool… FYI, the network has 50PH/s).
Without mining pools, you wouldn’t be able to get anything.. I mean, sure I could try to find the block, and maybe I could and if I do, I’d win 25 BTC which is a LOT of money, but considering how huge the network is, it might take me years to find the block, or maybe I’ll never do.. so you join a pool and you share your luck with others. There are a few reward types a pool can use, either payout proportional to how much you contributed to that block, or proportional to the number of shares you sent in the past X minutes when a block is found (so if you’ve been on the pool for hours then you leave just before it finds a block, you still get something). anyways, not important.. the important thing to know is that if the pool isn’t the one that finds the block (there are a LOT of pools) then you don’t get anything. You can see the various reward types here : https://litecoin.info/Mining_pool_comparison#Reward_types
Oh and another thing, at specific blocks, the reward gets halved.. BTC started with 50 BTC reward, then at 100000th block, it became 25 BTC, it keeps getting halved until some point because, just like gold, the rarer it becomes, the harder it becomes to mine it. and the graph of number of coins in circulation should plateau towards the max, now jump right into it.
Anyways, now that the technical is out of the way, let’s talk about the theory of mining.
Mining bitcoin is impossible, not at home anyways.. usually a latest gen GPU will give you a few hunderd MH/s hashing SHA256, but GPU mining is so 2011, now everyone is using ASICs (Application-specific integrated circuit) which do a few TH/s easily. So any coin that is SHA256 is basically impossible to mine at home.. you would probably get about 0.01$ USD after a year of mining.. which would be less than your electricity costs. That’s where Litecoin (LTC) came into action! LTC uses Scrypt algorithm instead of SHA256 so the ASICs don’t support it, so it’s pretty much GPU exclusive, yeay! There are TONS of altcoins though, each with their own rules (how much reward per block, how much time per block) and their own specs (current difficulty, current exchange rate) which will be more or less profitable for you. The reference for me is coinwarz (http://www.coinwarz.com/) which I check every day because one very profitable coin today might be crap tomorrow. You can put your hashrate there (and electricity cost and power consumption of your GPUs) and it will tell you how much you will gain per day if you mined the coin. The problem is that Scrypt ASICs have just been released last week, so we’ll have people using ASIC for scrypt based coins soon… but they’re not that good, I mean, a 200$ ASIC gives you about 350KH/s which is slightly higher than a 200$ GPU which would give 300KH/s, but the nice thing is that it uses 2W of power, instead of 200W or whatever your GPU consumes.
There is also a new algo (kind of) called Adaptive-N Scrypt, which is just scrypt but with one of the constants made a variable (I think) which will make it hard to do an ASIC for it because memory requirements will increase everytime to prevent ASICs from catching up technology-wise. There’s also Keccak algo, but that’s only used by one coin, it’s called maxcoin and was released by Max Keiser, a financial journalist for RT (the tv channel). It was great, I made over 200$ with it pretty fast then value dropped so low that it was worth less than 20$.. thankfully, it went back up a little and I sold them and made 40$ back and lost 2 weeks of mining… if only I knew it would crash, I would have sold it when my balance was worth 200$.. but that’s part of playing the game! 🙂
This is another lesson, if you want to make it profitable, you mine something and you sell it right away into BTC (which is more stable).. I mined maxcoin because it was by far the most profitable, giving me about 20$ per day, but back then the value of one MAX was 0.01 BTC.. then it kept going down until it reached 0.0001 BTC. I managed to hold off selling until it started going back up then I sold it at 0.0004 just before it started dropping again, but if I had sold my mining revenue every day, I would have made a lot more money from it.
On the other hand, some things, you want to keep, for example, there’s Auroracoin (http://auroracoin.org) which is a coin that was created for the icelandic people who have huge financial issues and where 50% of all the coins are pre-mined and will be distributed to all the citizens of iceland, so I mined it and I thought that it would be awesome to have coins from this currency which might be widespread in an entire country.. but a couple of days ago they did the airdrop (where they allow icelandic citizens to claim their coins) and the value dropped..
Actually the value fluctuates depending on supply/demand.. if a lot of people are selling, then the price drops because you compete on the price in order to sell yours first.. if people want to buy, then price goes up. I suppose what happened with auroracoin is that people got their coins and just sold them in exchange for BTC since there was no infrastructure supporting AUR. But maybe in the future, it will start being accepted by merchants in iceland and people will start buying it and price goes back up. at least that’s the plan. Note also that it was basically a “free money for everyone” which goes against the whole idea of proof of work to get reward.. what do you do when you get free money? Note that there’s also now a SpainCoin and a GreeceCoin following the same 50% pre-mined for citizens principle, and I’m mining those as well (got 4 AUR, 20 GRCE and 68 SPA (sold 15 of SPA already when it was very high price)..)
There are also others than you want to hold onto because you know the price will go up, like for example, the very much liked and meme-based DOGECOIN! wouhouuu! ok, I do like dogecoin because it’s so popular. The dogecoin currency was created only as a joke by two guys, they never thought anyone would care, they made a logo using the shiba inu dog and used that meme as a base for the coin “wow, much coin, very transaction, etc..” and then they were wtf-ing when people actually started using it.. turns out it became extremely popular and value is sky rocketting. Only problem is that since it was a joke, all the coins will be mined in 10 months or so. but difference is that there is no limit on the amount of DOGE as opposed to other currencies, it will just become really small reward after the limit. The reward was random between 10 000 and 1 000 000 DOGE per block with a block time of 1 minute. Right now, I think they changed it to become a fixed amount because people were abusing the system by only mining doge when the next reward was the highest (since it’s a consensus, remember, it means the ‘random reward’ is not random at all, it’s based on an equation using the previous block’s hash as seed), which caused increased difficult on specific blocks and honest miners were only getting the small rewards. Anyways, it’s been halved once already so right now, it’s 250 000 DOGE per minute, and the price is 0.00000102 BTC. oh and yes, most exchanges are BTC to altcoin or altcoin to BTC, sometimes to/from LTC as well, then it’s USD/CAD/WHATEVER$ to/from BTC or LTC. so yeah, you do the math from your altcoin to BTC then according to today’s value of BTC, you know your altcoin’s worth in $.
So anyways, what’s special about DOGE is that it’s very popular, reddit mostly is making it the altcoin of choice, you always hear about it everywhere, like during the US regulations talks, they would talk about BTC and LTC (as the main coins) and they mentioned “or a coin based on a dog meme”. Doge is used a lot for tipping, charity, and all that, so you see a lot of causes evolving around doge, for example they raised 25000$ to get the jamaican bobsled team to go to the olympics, there’s doge4water (http://doge4water.org/) and just recently (last week actually, and funding finished yesterday) there was doge4nascar where they raised 50 000$ to sponsor Josh Wise car in NASCAR racing. http://www.doge4nascar.com/ and since they raised it, it’s been on every news outlet ( Fox news, the guardian, etc.. https://www.google.ca/search?q=dogecoin+josh+wise&safe=off&tbm=nws ) which is giving it a lot of exposure and popularity.. and just imagine that car with dogecoin logo on national television during nascar.. this will cause people to get interested in dogecoin, and to BUY dogecoin, which will cause the price to go UP! Also, in 30 days, the reward will be halved to 125 000 DOGE, which means the value kind of has to double in order to keep miners interested in mining dogecoin for profitability.. think about it, reward gets halved, means miners get half as much.. so they will stop mining it, if value doesn’t double, then they won’t be get enough and other coins will be more profitable.. of course, other possibility is that miners leave and the network hashrate (and so the difficulty) drops so those who remain get twice as much as before == same profitability… anyways even though dogecoin value has been dropping a lot lately, it is bound to go back up. It had already gained 10 times its value by the time I started mining it, unfortunately, I only had very little mined at that time (now I have around 145 000 DOGE in my wallet). On the other hand.. as someone recently told me “we don’t really see many parodies of gangnam style anymore” so maybe this hype around dogecoin is a bubble about to burst.. you never know!
That being said.. it’s a game, like stock market.. you “buy” (in this case by using your GPU’s time and electricity) coins and hope it goes up.. if you don’t hope that, then sell them right away.. then move away to the next coin, etc..
one very interesting thing is at coin launches! What happens in a coin launch is that there’s pretty much no one around, so if you get in just at the right time, you can get a lot really quickly. like for example, my auroracoin, I mined it too late.. my friend told me about it and I ignored him.. difficulty was maybe 100 or 200 (don’t know what it represents exactly, but it’s not bits of 0s) and he made a few AUR in a day on his home PC GPU (a cheap gpu which gives 60KH/s) then people got “wow” over it and started mining it, the value of it jumped and difficulty became 6000 (which is HUGE for scrypt based coins) so I started mining it and only got like 2 AUR after 5 days of mining on my mining rig of 2.1 MH/s… and my friend got “rich” quickly.. he sold and bought himself a new GPU to mine some more… So the idea is to find coins that will have a lot of exposure and impact, that people will like and you mine them from the very beginning before everyone else joins. Sure, you’ll still be a drop in the ocean.. but a 2MH/s drop in 200MH/s is better than a 2MH/s drop in 60GH/s network hashrate 🙂 You can see the network hashrate on coinwarz by the way.
So one interesting coin coming up is H2O https://bitcointalk.org/index.php?topic=494229.0 it looked good a lot of people wanted to jump into it, the launch was meant for march 24th, but they had bugs and delayed it.. rumor is that it’s going to be this friday.. if you want to mine it and sell, then that might be my first choice. Second choice would be the spaincoin or greececoin because their difficulty is really low so you can make a lot of them really fast, and if they get adopted, their value can be worth a lot, but only in the future.. also it could crash and value becomes 0.. and of course, dogecoin! but it might be better to buy dogecoin, its price is very low right now, 102 (meaning 1 DOGE = 0.00000102 BTC) and I think it will go to 200 in less than a month.. and after nascar ( in two months) it could double again. You could also mine it, see how much you can make according to coinwarz. Be aware you need to find a good pool, if you use a small pool, there’s a chance it won’t find blocks and you won’t get anything.. a good pool finds blocks more easily, but the pool’s hashrate is obviously higher so you get a smaller share, but often.. a smaller pool will give you a bigger share, but less often, your choice which way to go.
Another way to look at it is that once ASICs start selling (There’s already one ASIC on the market, but the “Titan” asic is planned for Q2/Q3 of 2013 and is supposed to be massive), and asics take over the scrypt network, then you’ll see a LOT of people with their GPU mining rigs having to shift their focus, either by selling their rigs (so expect cheap GPUs soon, by the way AMD just dropped their prices yesterday on newegg.com (not .ca)) or by making them mine a “asic-proof” coin.. and that’s where Scrypt-N comes into play.. my prediction is that soon everyone will move to scrypt-n coins (spaincoin switched recently from scrypt to scrypt-n in an update) which means the difficulty for scrypt-n coins will go through the roof. and Vertcoin is the one who stated it all, and is probably the scrypt-n coin with the highest difficulty and highest exchange value. My prediction is that when all gpus go to it, its difficulty will go up a lot and by consequence, the rewards will get smaller (harder to mine), which means that for it to be profitable, its value has to increase, so it will probably have a big increase in exchange rate (it already seems to be increasing steadily along with its difficulty).. so the vertcoins that I mined now (relatively easily, 5 VTC so far) will be worth a lot more in a few months (or a year).
You can go at this two ways, the hoarder mode with hopes that in 2 or 3 years, your coins will be worth millions, or a seller who will sell coins as soon as he mines them to make a profit right now.. or you can try to play the market, predict increases and decreases and all that.. You could switch from one altcoin to another, or concentrate on only one…
Now the last thing about this “theory” section is about exchanges.. obviously, altcoins can be exchanged for BTC and BTC for CAD or USD. and for that, you use exchanges, the most known one for BTC was MtGox which fucked up and closed and is under investigation and all that.. there are a few who had issues, but the one I use and most people seem to use is cryptsy.. there are other well known exchanges like Bter, bitstamp, mintpal, etc.. The way it works is that it will generate an address for an altcoin just for you, you transfer money to that address and it counts as a deposit into your account, then you can trade (sell/buy) and you can withdraw the money afterwards.. exchanges will have a balance for each of your altcoins so it kind of counts as a bank, but it’s not recommended to keep your money in anything other than your own wallet (and secure your wallet.dat). MtGox lost millions of $ and many exchanges got hacked and lost people’s money. Same rule goes for pools, when you create an account in a pool, first thing you do is set your address for transfers and enable auto-payout, you don’t want to have the pool hacked or shut down and all your mined coins still in the pool.
So, I suggest cryptsy for most of your stuff, I like it.. but while it supports a lot of currencies, it doesn’t do all of them, so you have to use others from time to time.. for example, to sell my SPA (spaincoin), I had to use Mintpal since cryptsy doesn’t do SPA. For GRCE, I only found bittrex and cryptorush that support it (for now), etc..
Remember when I said mining new coins is very profitable.. one issue though about new coins is that they will start with a high value on the market, let’s take GRCE (greececoin) for example, when it started it was valued at 0.008 (BTC per GRCE) and I was mining it, great.. now my first problem, the rewards I mined are unconfirmed in the network (to avoid an attack of the network if someone has 51% of the network hashrate, you need to wait 120 blocks after the current one before you can use coins generated in that block), so I still can’t use them.. need to wait for them to be confirmed.. by the time they were confirmed, value dropped to 0.003.. but now I can’t sell my coins because first, not many exchanges support it.. actually, only one at that time, secondly, no one wanted to buy it.. it’s still new, no one is interested, the only people who know about it are those who follow the “new altcoin announcement” threads on bitcointalk forums, and those are already miners who mined a lot of the coin and who also want to sell it, they don’t want to buy it… so if i try to sell it, it won’t work.. and when no one wants to buy and you want to sell, what do you do ? well, you sell your coins at a value lower than the market price, so as soon as a buyer comes in, he’ll buy your coins, not someone else’s.. and all the miners fight over that by lowering the market price.. by the time buyers are in, the price dropped 10 times.. and currently, it’s at 0.0001, so.. 80 times less than the initial market price. All you can hope for is that this new coin will be successful and people will like it enough that the price will eventually start going back up, and you are left with a lot of coins mined during the launch.
Ok, I think you got the theory, so now let’s talk about practice! There’s not a lot to say, you need a GPU (forget about cpu mining), it needs to be an AMD, because Nvidia SUCKS.. you can look at the hardware comparison to get a good idea : https://litecoin.info/Mining_hardware_comparison
You can use your own hardware like my friend did until you earn enough by mining to buy more GPUs, or you can buy a dedicated rig, which is what I did (and also use my desktop GPU for mining when not in use). For your info, if you buy a rig, it’s better than just buying coins because once it pays for itself, then it will keep generating free money.. but most importantly, at the end of the day, if all your coins are worthless, you still have hardware that has resale value. BUT whatever you invest in this, you have to be prepared to consider that money as “lost”.. in other words, don’t spend money you can’t afford to lose.
For reference, I “sacrificed” 1500$ and bought a rig consisting of :
Power supply + Motherboard + CPU + RAM
2 Asus AMD Radeon R9 290
The power supply is quite important because your rig will use a lot of power, and the motherboard, you’ll want one with as much PCI-E ports as possible.. mine has 4 PCI-E 16x and 2 PCI-E 1x so I could put 6 GPUs on it.. problem is that a GPU uses two slots because of their width, and I can’t fit 4 in there.. and that’s why you can buy PCI-E risers (look for it on ebay). Anyways, with 4 GPUs, you’ll most likely need a 1500W PSU.. what I did was buy 2 PSUs of 750W because then you can power 2 GPUs with one PSU and the other 2 with the second GPU and just force the second PSU to be always on (by shorting PS_ON with ground on the ATX connector). I bought two because PSU was on sale and even though I only need one, I thought might as well take the second one for half price :p
The GPU was on sale as well, normal price is I think 660$, I got mine for 540$.. now on the US newegg, price dropped to 430$ from what I saw yesterday.
I chose the R9 290 because a friend of mine said they are better than similar KH/s cards in terms of power consumption. I tweaked it until I got 860KH/s per card which is not bad.
I didn’t need an HDD because I used linux running off a usb stick. If you chose to install windows, you need an HDD though..
Here’s a nice guide which I followed : http://www.cryptobadger.com/build-your-own-litecoin-mining-rig/ that website also has other nice articles if you want to read through them.
So I used the SMOS distribution which you just write to a usb key (no install) and you boot it and it starts mining right away, you’ll just have to edit the config file to point it to your own pools : http://www.smos-linux.org/
And it gives you a web access similar to this : http://bamt.webboise.com/mgpumon/
Only issue I had with it is that it has an auto-donate feature where it will stop your miner for 15 minutes and it will mine into its own pools… which was a big problem for me because when I was mining maxcoin, I had to use a different miner application and I wasn’t using their service for mining, so it couldn’t “stop the server” so it ran two instances of the miner who froze the cards and I wasted 2 days without mining before I noticed… so if you want to disable the auto-donate, just do a ‘crontab -e’ as root and remove the scripts from crontab.
If you just want to use your desktop for mining, then you can use cgminer for AMD or cudaminer for Nvidia, but as you can see in the hardware comparison wiki, nvidia aren’t so good for mining. If you use cgminer, you must use version 3.7.2, because any version after that will *not* work for GPUs, as they dropped support for it. I use a fork of cgminer from “kalroth” (google kalroth cgminer) which has more option and bugfixes backported into 3.7.2. If you use scrypt-n, then you need vertminer (google it) which supports scrypt-n.
In theory it would take about 8 months to get back the price of a GPU from mining, but if the coin crashes, you lose the time you mined that coin, or if the coin gets a 10x increase in value, it could take only 1 month to get the money back.. you get the idea.
I’m not sure what other info I can give about the practical aspects of mining.. you get/have hardware, you get the miner, register in a pool, open the wallet, configure the pool in the miner (there are lots of instructions if you google for it) and start mining.. you put an auto-payout, and you hoard or sell depending on your preference.
For information, I’m using dogehouse.org as pool for dogecoin, and dedicatedpool.com for GRCE and SPA, and vertco.in for VTC.
Now for the last chapter of my book (lol). Mining BTC itself! Yes I know, I said earlier it’s impossible, but I actually said “impossible on a GPU”. I recently found this awesome site called cex.io in which you can trade BTC for GHS. It’s cloud mining but you don’t actually rent the GHs you buy them! Meaning that you get the GHS and you use it and mine from it forever or until you sell your GHS to someone else.. this means that you can buy 100GHS (would be around 600$ at current GHS price), let it mine for a while, which will give you about 6$ per day of revenue for 100GHS, then when you’re tired of it, you sell back those 100GHS. The issue here is two fold, the first is that the BTC network hashrate increases all the time, and the difficulty increases by about 30% per month I think, which means that the 6$ per day you get today, in one month will be much lower unless you buy more GHS.. The second issue is that since the value you can get from 1 GHS is lower every time the network hashrate increases, it means that the value, and so, the price of a GHS also decreases all the time, this means that when you sell back your GHS, you won’t get back the original amount of BTC (your 600$) you originally put in to buy them.. but hopefully, if you used it for long enough, then you will have earned those 600$ through mining already. I think it would take about 100 days to mine back your investment, then whatever you sell becomes extra money if you decide to sell your GHS.
The cool thing about cex.io is that you’re not renting the hardware, you’re buying it (or part of it), so if you have more GHS than what an ASIC miner provides, you can redeem the hardware and have it sent to you.. of course you’d have to pay electricty and maintain it yourself then, so not a great idea, but it’s still good to have that option and know that you actually do own the GHS that you bought. By the way, every earning you get from mining BTC, a portion of it gets taken to pay for electricity and maintenance, etc.. which is (according to them) about 13%, they have a complicated equation explained on the website, you pay per GHS you own and the time it’s been running (snice runs longer = more electricity use), this means that a portion of your earning goes into this maintenance fee, and the longer it takes to mine a BTC block, the higher the fee. Don’t forget, this is a pool so it’s a matter of luck.. I’ve seen it sometimes take a few seconds to find a block, or you find 10 blocks with 5 to 10 minutes between each block found, then you can spend 2 hours without finding any block.. the maximum fee I saw was about 50% and that was for the 2 hour delay before finding a block.. I guess overall it would average to 13% maybe.
If you want to give cex.io a try, I’d appreciate it if you use my referral link to create your account, because the referal gets 3% bonus GHS when a referred user trades GHS. So if you buy 10GHS, I’d get 0.3 extra (which I would lose if you sell, you can read the FAQ). Here is my referral link : https://cex.io/r/0/kakaroto/0/ please think about it when/if you decide to buy GHS to mine BTC directly.
The advantage of BTC is that its value is pretty stable.. sure, it fluctuates a lot, but it’s usually been between 550$ and 650$ in recent months, which is not like some altcoins (like maxcoin) which can see their value divided by 100 in a couple of weeks.
What I’ve done is use my GPU to mine altcoins, then I sold some of them (keeping AUR, VTC, GRCE, SPA and of course DOGE), and used that revenue to buy 11 GHS for myself and I’m leaving it mining now.. unfortunately, GHS price dropped in the past couple of months, so if I sell my 11GHS, then I’d have lost some money, but hopefully in a week or two, I’d be making a profit.
Another interesting point about cex.io is that you can ‘preorder’ GHS, they will add hardware on 26 of april and on 26 of may, and you can buy GHS for 0.008 for the april deployment and for 0.004 for the may deployment (currently active GHS can be traded for 0.011) so you could spend the money on the may GHS and triple the investment in 2 months… but on the other hand, it is possible that the GHS price drops by the 26th of may, and then you’d have bought GHS at the same price it would be selling on the day it becomes online, but you paid for it 2 months in advance instead of using those 2 months for mining with currently available GHS.. again, in this case, it’s a gamble. You can see the evolution of GHS value on cex.io for the past month to decide if it’s worth the risk.
Ok, I think that’s about it, I think I covered all the basics and advanced topics :-p
Don’t forget that if you decide to join cex.io, use my referral link here : https://cex.io/r/0/kakaroto/0/
Also, if you found this post interesting, you are more than welcome to send me tips to my BTC or DOGE wallets :
BTC : 15fXq5FzKaUArzQ8zBWfJADMn1qTQ5w5Y6
DOGE : DK4uNKX99VTgEv8BZdeepsYJHKhev3oR1j
Thanks for reading!