Welcome to CryptoDuck and the wonderful world of cryptocurrency mining. As a noob to this hobby I've made many mistakes over last 3 days and I'm sure will make many more in the weeks to come. Hopefully together we can overcome hurdles and achieve a level of profitability.
My initial expectation was to hopefully do some part time mining which would eventually pay off my investment in some video cards I needed to upgrade some PCs at home. One for gaming and one for a media center.
I had an old Lenovo M57 intel core2duo PC with a Zotac G8400S Nvidia graphics card. I used this PC with Windows Media Center and a TV tuner to capture live broadcast TV. I'm not a fan of paying for cable but I like DVR functionality.
My not so trusty Denon AVR broke after a venerable 7 months of service. I bought a Harman Kardon that was on sale at Frys for $199. What a deal right? Actually I like much of the functionality of the new AVR even if the remote is not exactly user friendly. One major draw back to the HK is that when on HDMI input the only audio source is HDMI. Something in my Lenovo and the Nvidia card never agreed and I couldn't get HDMI audio so I used optical audio via a USB DAC. Now I had a problem. I could see or hear TV but not both at the same time. My solution was a new video card.
I returned to Frys and purchased another Nvidia card this time a GT 610. It was cheap only $30 but it did the job. If you haven't noticed by now I can be cheap when it comes to electronics so I started wondering how can I get my money back. I remember first hearing about Bitcoin last year. It was worth about $14 USD per BTC. The whole thing made no sense to me and I didn't know anything about mining or where the BTC came from. Some friends of mine bought some BTC to use on online purchases. I stayed away from the whole thing as it seemed the only way to get BTC was to send Western Union cash grams and that left a sour taste in my mouth.
Low an behold last week I read an article that said BTC was trading at $1000 USD per BTC. WHAT!! Did I feel like I missed the boat. I decided to look into this whole Bitcoin thing and learned more about mining. I did a quick google search and found a tutorial for pool mining. Bitminter had a GUI so I chose it as my pool. I also like the fact that it was a Java GUI so I could run it on my Ubuntu machines from the web browser also.
With out knowing anything about hash rates or using GPUs or CPUs I launched Bitminter after creating an account. This little needle on the gauge moved and I assumed I'm printing money. Yeah!!! It's addictive. I kept looking back to see what was happening on the PCs and checking the Bitminter site to see how my workers were producing.
Then I realized I had the bug. It was to late to avoid it. This was turning into a hobby. I did some research to find out if I could improve my hash rate. You know what? I was doing everything wrong. For one no one and I mean no one mines Bitcoin using their CPU. To tell the truth no one mines Bitcoin with GPU anymore and expects to make a profit of any kind. You see a new thing has happened very recently. ASIC hashers have been released. ASIC is a type of computer chip which is designed for a very specific purpose. That's what the AS part of ASIC stands for (Application Specific). These ASIC devices which have recently been released are designed to hash Bitcoins. They do it so fast the system has raised the difficulty level of mining BTC and anyone not using one is probably spending more on electricity than their return.
Another thing to note is for the most part these ASIC devices are not cheap. A significant investment is required to be profitable at mining BTC. I felt like I missed the boat again. Then I noticed while logged into Bitminter that there was section under BTC payout called NMC payout and I had accumulated a small amount of this NMC thingy. What could it be? Was it worth anything? I hadn't set Bitminter up to mine anything other than BTC.
It turns out that the algorithm used to mine BTC can be used to mine NMC also. NMC is Namecoin and Bitminter does this automatically. While it can be used as a cyptocurrency it is actually more than that. It is designed as a decentralized DNS service. DNS is the service by which your computer translates internet destinations that you can remember like www.google.com to an IP address the computers and routers on the internet understand.
Well now this makes more sense to me than BTC. NMC has a reason. If you want to register a network name or domain in the NMC network you need to buy it with NMC. This is something that has at least a much more real value. I kept my rigs mining BTC/NMC while I did research into this alternate cryptocurrency. Good news and bad news lay ahead.
The bad news was simply that the same hardware to mine BTC was required for NMC. NMC mines a little faster but ASIC hardware is a must. I felt crushed I still missed the boat. I figured I could keep mining until I reached a cashout level and transfer my coins to Coinbase. I chose Coinbase because you can link it to your bank account.
Coinbase wasn't working linking to my account. It may have had something to do with the Thanksgiving weekend but I started exploring alternate ways to exchange coin. I didn't have enough to exchange but hey I didn't have anything better to do. I found a couple of exchanges and saw a world of cryptocurrency I couldn't believe. There coins upon coins out there.
Most of them are the equivalent of junk bonds or penny stocks. You will probably loose if you bet on them. On the other hand there was something attractive about some of these alternate currencies. Some of them were ASIC resistant, or at least were designed to use a different algorithm than the SHA256 BTC used. That meant I could mine with my GPU and may actually be profitable.
To be clear there is a very small portion of miners that use CPU for mining. Most of them are in Primecoin because you lose money mining with CPU on other coins. I'll cover more on Primecoin later. I currently have an experimental 3 rig Primecoin setup to test profitability.
Since GPUs could still be profitable in the altcoin market I did a little research and settled on mining two coins. Litecoin and Feathercoin. Litecoin is a well respected altcoin. It is likely destined to be silver to BTC's gold. It was an easy choice. There are many miners leaving BTC for Litecoin because they don't have the ability to upgrade to ASIC or are repurposing their FPGA miners. FPGA is the chip used in good GPUs.
Feathercoin has a good enough following that I think it has a shot at becoming copper but it is still up in the air what coin will take that spot. I like the gamble though because the difficulty level on Feathercoin is still low enough you can mine out a fair share of coins with crappy equipment. If it goes up great. If not no big loss.
Crappy equipment brings me to my next failure. Nvidia cards are horrible miners. While Nvidia rules the world of gameplay with floating point calculations AMD/ATI cards rule the world of mining. The ATI cards have better integer calculation ability and comparably priced cards from Nvidia and ATI will show ATI to be significantly better at mining.
Off I went to Frys again. I hadn't bought my gaming card yet and decided I could swallow some crow and buy an ATI card in a price range that would give me decent enough gaming and ok mining. Lets be clear hear that I was not about to drop crazy cash on a video card when I haven't even received a single cent from my mining yet.
Frys was having a sale and rebate offer. I found an MSI HD7790 OC which was $109 with a $20 rebate. Not bad I just picked up a card for under a hundred dollars and it's hash rate should be over 200 KH/s. My new Nvidia card was only putting out about 18KH/s and was a third the price. This would be good enough for a one month test.
As of this writing I have been mining for 4 days. I have tried FTC and LTC. At current exchange rates and if my the card keeps producing at it's current rate I should pay the card off and make a small profit at the end of the month. Of course difficulty can change and reduce how much I produce or prices on the coins can drop. Let's not kid ourselves it is a volatile market and we may be looking at a bubble.
Will I keep mining FTC and LTC? I'm not sure. I did call this a hobby. I don't envision paying my mortgage with a room full of mining rigs. I'll likely throw my hand at other alt coins and collect a few here and a few there and sit on them and see if they ever amount to anything.
Thanks for reading through my first rant and I'll be posting tutorials on setting up different mining operations soon.
--CryptoDuck
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