[Closed] Bitcoin Mining - And other Cryptocurrencies

Eh?

I found £1 in the street earlier. I'm not sure if it is relevant but I might buy a scone with it at work tomorrow. I don't know if Brenda in the canteen accepts Dash coin or Ethereum but I'll ask her.

What does it mean to mine cryptocurrentcy? What is actually produced that has a value? If you are mining for copper, you do actual work and hopefully end up with a commodity that has a value because it is needed. How does this translate to cryptocurrentcy? Don't get it, sounds like pie in the sky balderdash, and it only has a value cos all involved say's it does. Can anyone explain?

Imagine I paid you one Dash coin. That transaction is recorded in a ledger, which in turn is kept on computers all over the word, rather than a central server. Each transaction can be verified by doing some computer processing on it - if the result of that processing doesn't match the result stored in the copy of the ledger on one of the computers, it can be said that that copy of the ledger is incorrect (has been hacked, or became corrupt) and it is then discarded. This is the blockchain and it's how it's kept secure.

Now, that processing needs to come from somewhere, and this is where mining comes in. People process the computations required to keep the blockchain secure on their machines and in turn are rewarded with a new coin, once enough transactions have been processed to uncover the next one.

At the start of a crypto-currency's life, coins come up quite quickly, but each time it takes longer and longer to be rewarded with the next one in the sequence (there are a finite number)

Don't get it, sounds like pie in the sky balderdash, and it only has a value cos all involved say's it does. Can anyone explain?

Thanks for taking the time OP to add your story.

I'm interested. Ignore the dildos.

This is as relevant discussion as anything, certainly if the future of currency floats your boat.

Politely, there is a crypto thread knocking around.

I was wondering about the potential of using/upgrading my existing works stations to be dual purpose in the regard.

A chum at work is into all this crypto currency stuff. He just buys and sells, no mining. I feel as though I understand what it's all about, but feel very wary of it.

He seems to be able to make a chunk of money in the morning, and then lose it by the end of the afternoon because he wasn't watching the multiple streams of buying and selling activity. It's like a very very volatile stock market.

My worry about it all is the fact that people are making (up?) money with no discernible thing to back it up. What's going to happen when Governments and Central Banks get the feeling that there's a lot of buying and selling going on outside of the economies they control?

What's going to happen when Governments and Central Banks get the feeling that there's a lot of buying and selling going on outside of the economies they control?

That is the question! There's an interesting [url= https://www.netflix.com/watch/80154500 ]doco on Netflix[/url] about it

What's going to happen when Governments and Central Banks get the feeling that there's a lot of buying and selling going on outside of the economies they control?

I guess their only option will be to have their own block chain.

My worry about it all is the fact that people are making (up?) money with no discernible thing to back it up

It's pinned to the dollar.

It's clearly going to develop from here though.

Perhaps this truly is a modern gold rush.

Which reminded me of this documentary series which was quite nice if anyone hasn't seen it.

http://www.bbc.co.uk/programmes/b0824c7w

Not very green though, is it? How many watts is that burning through?

https://digiconomist.net/bitcoin-energy-consumption

Thanks for your post Handyman153.

I have been interested by crypto currency for a fair few years but never brave enough to start sinking money into it. I think it's fascinating how the currency has developed in the last few years. I look forward to reading how your venture progresses.

This is considered a small set up...

This is also the reason graphics cards for gamers have gone through the roof in terms of cost and have very poor availability all over the world.

Unless you're doing it on a serious scale, don't even think its worth it anymore.

Ok. So there is a finite amount of the currency on the internet, somewhere. But where does that come from. Can I just invent my own and put 10 trillion there? What is it backed by? I get that central banks do this, but they are backing it, and a stable country most likely gonna be around for a long time.

Get it on diamonds and gold, but l can hold that in my hand. This is a much more trust thing that it really is there, somewhere.

Also, seems daft that there are several versions invented by speculators. A one world currency for trade would be good, but this is very volatile and, as it stands, like a pyramid scheme, where everyone buying is relying on the next wave of people buying it from them for more.

Buy and HODL

I find this stuff really interesting but my understanding isn't quite fully there. I'm pretty sure it'd be very difficult to pull off but is it possible that one body could manage to control 51% of the ledgers and just walk off with everyone's money?

Nice setup OP.

@chvck
Whales do exist in the crypto market. It's pretty unregulated so you sometimes see some strange trades going through that you'd not in a regulated environment (e.g: wash trading).

To people who think it's a pie in the sky thing. Yup, right now it's mostly an instrument for speculation. If you're going to trade it then that's a full time job.

For the hand wringer complaining about "oh no! Electricity wasted!" Then remember fiat costs a ton of energy to create, distribute and maintain as well. All those printing presses, armed guards, transportation rigs, guess what? They cost money!

What is it backed by? I get that central banks do this, but they are backing it, and a stable country most likely gonna be around for a long time.

What do the banks back though? They use fractional reserve.

Also it's the government that's ultimately backs your money.

. I'm pretty sure it'd be very difficult to pull off but is it possible that one body could manage to control 51% of the ledgers and just walk off with everyone's money?

As I understand it, they don't own the currency , they just control the blockchain. That's not the same as owning the contents of the wallet.

The same reason your accountant can't steal your money from just your paperwork. But it's like having lots of accountants working on one ledger.

But where does that come from. Can I just invent my own and put 10 trillion there?

It comes from the miners solving mathematical equations, which takes lots of power and time.

You can mine, but you can't just put a trillion there.

[i]How many watts is that burning through?[/i]

there's an awful lot of containers full of bitcoin mining machines being placed in the sunnier parts of the US with arrays of solar panels around them now.

I'd get in early, get out quick - there will either be a loss of faith in the whole blockchain thing when it's found it can be manipulated or a realisation that actually nation states backing currencies is quite a good thing on the whole.

curiousyellow -

For the hand wringer complaining about "oh no! Electricity wasted!" Then remember fiat costs a ton of energy to create, distribute and maintain as well. All those printing presses, armed guards, transportation rigs, guess what? They cost money!

That'll be me? No, no complaining about electricity 'wasted', I'm just concerned about climate change, and the amount of energy needed here. You carry on though.

As I understand it, they don't own the currency , they just control the blockchain. That's not the same as owning the contents of the wallet.

Could they not create a load of fraudulent ledgers to fake everyone handing over their money? As I say, I've still not fully got the grasp of it! Might have to watch some documentaries.

Well if you're smart with your energy output you may not need to put the central heating on!

Could they not create a load of fraudulent ledgers to fake everyone handing over their money?

Hackers can be an issue just like in any system.

I may have missed it, but what was the cost of all that kit? That'd let you compare the ROI compared to say sticking it on a global tracker fund.

control 51% of the ledgers and just walk off with everyone's money?

No, assuming they could manipulate things the way they wanted you would still end up with a fork in that blockchain with 2 currencies resulting from it.

A hard fork is why I now have ~ £8.50 worth of BitCoin-Cash alongside my ~ £150 of Bitcoin. It just creates more money Yayyy 😀

Block-chain are here to stay, and my bet is they will eventually be used for loads of important things as a form of uncrackable database e.g. storing title-deeds, Bills of Laden, generic proof of ownership etc. Currency is just one usage and might not be the one that actually endures if it remains so volatile, slow to register actual transactions and continues to carry high transaction fees.

Subscribed! I have looked at miners and thought about giving it a go, but not sure I want to commit when I'm not too sure on the return.

@codybrennan
You've got a point. It is ridiculously energy intensive. But remember, the amount of Bitcoins is finite, so at some point mining will stop and transactions will be the only thing that need to happen. There are alternative currencies which are taking steps to minimise power consumption.
Also, like rone said, some people use the heat output for... heating.

Compared to fiat currency it should be simpler to administer and maintain.

Also, sorry for the name-calling.

At the moment, it feels like it's just a massive run on speculation. Bitcoin is being used as a store of value by a lot of people so it may not crash long term. Ethereum may have legs but smart contracts can be implemented in any currency. However, like BigEaredBiker says, the blockchain is here to stay. Even my friends who are bankers believe it's the way forward.

curiousyellow - Member
@codybrennan
You've got a point. It is ridiculously energy intensive. But remember, the amount of Bitcoins is finite, so at some point mining will stop and transactions will be the only thing that need to happen. There are alternative currencies which are taking steps to minimise power consumption.
Also, like rone said, some people use the heat output for... heating.

Compared to fiat currency it should be simpler to administer and maintain.

Thanks CY- I wasn't trolling, its a genuine concern. OTOH, I'm shopping for a new smart turbo trainer right now, and I could argue that as it uses unnecessary electricity, I'm something of a hypocrite....

Also, sorry for the name-calling.

Don't worry about it, no offence taken- I hadn't had any coffee at that point so wasn't as diplomatic as I normally am 🙂

At the moment, it feels like it's just a massive run on speculation. Bitcoin is being used as a store of value by a lot of people so it may not crash long term. Ethereum may have legs, but in the long term, like BigEaredBiker says, the blockchain is going to be here to stay. Even my friends who are bankers believe it's the way forward.

It is indeed. I'm seeing its impact in my industry already (comms), and its gonna be a game-changer, for everything from packet-based services to file storage and distribution....everything really.

EDIT- oh, and "Vurt" is a brilliant book 🙂

But remember, the amount of Bitcoins is finite, so at some point mining will stop and transactions will be the only thing that need to happen.

More important to remember is that the mining difficulty is exponential, so the people who invented the system hold the bulk of the currency and effectively paid nothing for it...

[url= https://powercompare.co.uk/bitcoin/ ]Bitcoin Mining Now Consuming More Electricity Than 159 Countries Including Ireland & Most Countries In Africa[/url]

I’ve just taken the plunge into crypto currencies although it’s more of a dipping the toe in than a plunge as such. I’ve loads of old computers sitting about which I had considered turning into mining machines but realistically the reason they’re sitting about is because they’re old and slow so don’t think this is a go-er. I’ve also considered renting bandwidth from a mining farm or whatever the phrase is, might just do it for the sake of trying it to be honest. Not sure why but I quite “like” ethereum, not as in I think it’ll do well but more it seems like a “friendly” sort of crypto currency!

I’m not sure they’ll take off as actual mainstream currencies until the volatility settles a bit though, obviously you can buy things with them but to me they seem much more like commodities than anything else.

[url= https://en.wikipedia.org/wiki/Mining_pool ]Join a pool?[/url]

[url= https://slushpool.com/home/ ]Slushpool[/url]

I have no words for what an environmentally ridiculous and appalling thing cryptocurrencies are...

I have no words for what an environmentally ridiculous and appalling thing cryptocurrencies are...

except that they are not - they offer real possibilities in problem areas like aid, where payments get half-inched along the way by corrupt bodies like governments.

how do crypto currencies compare to gold mining (which dumps arsenic and mercury into the local water courses) in terms of environmental damage?

except that they are not - they offer real possibilities in problem areas like aid, where payments get half-inched along the way by corrupt bodies like governments.

How does that justify such profligate use of energy to imagine them?

Blockchain is an interesting technology but the energy intensive mining for bitcoin etc is not a good use of it. Secure, distributed ledgers is.

Hopefully this bubble will burst soon.

BTW, one of the great things about Fiat money is how cheap it is - there's very little embedded energy compared to gold.

how do crypto currencies compare to gold mining (which dumps arsenic and mercury into the local water courses) in terms of environmental damage?

I'm not sure how you'd go about measuring it. there's the cost of the computer hardware, which can be a anything from a powerful standardish system to custom build mining rigs that can contain many many graphics cards.

The number of users and whether they mine 24/7or not then the 'biggie' the electricity consumption, which would depend on how eco friendly the countries power grid is..

There's a lot of variables!

Murray - Member

Hopefully this bubble will burst soon.

It won't.

One of my colleagues set up an AWS Cloud instance with an open port to the internet which quickly attracted a bitcoin miner installation. So rather than stealing data the hacker was stealing CPU cycles, very clever, especially if you do this at scale.

BTW, one of the great things about Fiat money is how cheap it is - there's very little embedded energy compared to gold.

Curious to know how you arrive at this conclusion. Maybe no embedded energy, but there's a lot of energy sunk into making it, moving it around and administering it!

With blockchain based currencies off the top of my head you don't need:
- banks
- distribution infrastructure involving humans and transportation
- redesign, recirculation of physical money
- mints
- people agonising about QE

Which looks like a considerable energy saving to me!

How does that justify such profligate use of energy to imagine them?

that's just proof of work, there are other consensus algorithms out there.

With blockchain based currencies off the top of my head you don't need:

You mean you have a working implementation which scales properly for billions of users?

Nope, didn't think so.

Blockchain is an interesting technology but the energy intensive mining for bitcoin etc is not a good use of it. Secure, distributed ledgers is.

there's the rub - secure. the cost of mining is part of the reason the bitcoin ledger is secure.

I have no clue about this but do have a couple of questions. I'll watch the documentaries listed above later.

Is the income from mining virtually guaranteed for a certain hardware setup until it tapers off?

Secondly, what happens to your blockchain machine(s) once the mining income has tapered off? Do you just switch them off or is there some money to be made by acting as a blockchain machine?

You mean you have a working implementation which scales properly for billions of users?

Nope, didn't think so.

yes, let's just critisize and dismiss an embryonic technology...

Technologies like Ethereum offer a lot more possibilities than bitoin, mining speeds are faster for one thing.

This is like criticising early versions of the web as a waste of time, but look what it has turned into now.

People suggest that this is blockchain 1.0, which will probably crash and burn due to crazy expectations and speculation, and then blockchain 2.0 will appear and a new paradigm will begin...

There's been a fair number of instances of games etc being delivered with built in bitcoin mining software, they don't need to cheat to gain access, you actively choose to install the software 🙁

So, its been an interesting bag of responses.

I fully expected some people to either not understand, or feel that it was a waste of resources and money.
I was skeptical, but Amazon, Google, and multiple IT suppliers now accept Bitcoin, so it is a fully 'working' currency.

To explain slightly more I am currently mining for Dash, Ethereum and Sia, but when I am paid out of the 'pool' I am paid in Bitcoin.
And to clear up even more, I will then sit on this Bitcoin for the foreseeable future. I am certain Bitcoin will fall towards the end of the year to around $4000 each, but then after that all reports are showing a slow and steady rise.
If you choose to believe websites such as [url= https://cointelegraph.com/news/keiser-envisions-100000-bitcoin-high ]THIS[/url], [url= https://www.quora.com/How-much-will-1-bitcoin-be-worth-in-2026-27 ]THIS[/url] and [url= https://www.cryptocoinsnews.com/investor-predicts-bitcoin-price-to-hit-27k-in-four-months/ ]THIS.[/url] Then investing a few thousand £ now, could well be worth it. My intentions are to re-coup my initial investment, and have the equipment owe me nothing, and then keep the miners earnings from that point as a future investment.

I'm not going to talk £ numbers on here, if anybody wants to know anything in more detail please email me and I can provide a tad more info.
But my ROI on all equiment at the moment looks to be around 60 days. That factors in all electricity costs from actually powering the equipment, and cooling all equipment.

Is the income from mining virtually guaranteed for a certain hardware setup until it tapers off?

Secondly, what happens to your blockchain machine(s) once the mining income has tapered off? Do you just switch them off or is there some money to be made by acting as a blockchain machine?

This is an interesting question, the first answer is yes. The exact amount per day is not guarantied, but the income is. To an extent anyway.
There are so many different currencies, that if one of my current choices suddenly starts to become unprofitable, I will start a different variation of the mining script on the same equipment.
I am not looking at this with rose tinted lenses, this could all crash tomorrow. But i am a tiny tiny player, so I am relying on larger multi million pound investors who have much more to loose, being right!

A slightly tangent has been the co-location of mining equipment. I have a couple of parties sending me over equipment to install and run here.
Obviously this based on profit after all electricity and device care is put into place, but I have the facilities to store and run the equipment. So for people who want to buy into the mining concept, but don't want to keep a loud/warm unit at home, I offer the environment for it to run in.

I still haven't had enough details to give a report on the miners income, hopefully after a full weekend running, I should know if it was a good investment!

Lastly, the regards to the environmental aspect.. Really?
Yes, it uses electricity. I am trying to be as conservative as possible, but like it or not, this is a real life currency and something that I believe will become the norm in a few years time.
The comment with regards to high street banks is very valid.

Can I just invent my own and put 10 trillion there

You can invent your own like quite a few have done:

https://coinmarketcap.com/all/views/all/

Handyman - how much did all the kit cost?

My thoughts are if BTC gets to 10,000 that will be a barrier broken and I can see some big investment jumping on board.

chiefgrooveguru - Member

I have no words for what an environmentally ridiculous and appalling thing cryptocurrencies are...

Hey...what's that money in your pocket made from?

Ok. So all a bit Wild West at moment. Over 1300 cryptocurrentcies listed on Mudsharks link. Guess a bunch will crash and burn and we left with something more stable, not just a massive speculation. Still don't get bits, will have to watch the documentaries on it.

Ewan - Member
Handyman - how much did all the kit cost?

I think in total I have spent around £7K
BUT that does 14 extra graphics cards, which got purchased on impulse and will be sold. Leaving my actually investment at around £5.5K

£14/day for £5,500 investment - pretty good work if you can get it and you're prepared for the risk. 3% interest is only £170 odd per year over 3 years.

Murray,
The £14 a day is currently only on the GPU system.
I’m still waiting to find out the return on the ASICS system. The GPU system probably cost around £1300 all together.
I did already have windows COA’s, SSD’s and Ram, so it’s not a ‘true’ cost.

So rather than stealing data the hacker was stealing CPU cycles, very clever, especially if you do this at scale.

There are various examples of people scanning github etc for accidently uploaded credentials for AWS/Azure/other cloudly stuff and then spinning up a shedload of instances to mine away before they get noticed and shutdown. The costs incurred in some cases are pretty scary.
Cryptocurrencies and its variants (such as ethereum smart contracts) are interesting but I think in many cases they wont survive contact with reality for long. As a software developer I am a tad cynical about the faith put into smart contracts etc.

Looks like 10,000 is going to come sooner rather than later.

Anyone who bought early yesterday or Friday is sat on a 10% plus profit.

If anyone wants to spec me a system for around 5k. I could drop a bit of cash your way.

It's needs to be able to edit films too , if that's feasible?

$10,000!

I have no words for what an environmentally ridiculous and appalling thing cryptocurrencies are...

The big players that I've seen on mining forums are hooked up to cheap plentiful renewable electricity for obvious reasons - eg the big Chinese ones built right next to hydro dams, solar farms etc. I guess some might be mining with public leccy made in other ways though.

The whole thing is kind of interesting but there's going to be a tipping point at some point especially with so many copycat currencies. Personally I think you'd be mad to invest anything that would expose you to risk if it all goes worthless.

So... don't invest what you're not willing to lose?

However the power is generated this does seem an awful lot of electricity to be using.

[i]At those levels of electricity consumption, each individual bitcoin transaction uses almost 300KWh of electricity – enough to boil around 36,000 kettles full of water. [/i]

[url= https://www.theguardian.com/technology/2017/nov/27/bitcoin-mining-consumes-electricity-ireland ]https://www.theguardian.com/technology/2017/nov/27/bitcoin-mining-consumes-electricity-ireland[/url]

Technologies like Ethereum offer a lot more possibilities than bitoin, mining speeds are faster for one thing.

Isn't that a consequence rather than the point?

Once the cost/benefit ratio stops working people won't bother mining any more and then where will we be?

Once the cost/benefit ratio stops working people won't bother mining any more and then where will we be?

Given that there are 1300 cryptocurrencies at the moment I wonder how people decide which ones to provide processing power for - presumably going for the most profitable is sensible.

Whilst I am no expert on Bitcoin, it is a fact that you cannot pick up a newspaper or open a web page or talk to someone without some sort of Bitcoin chat coming up. The level of interest in it is so high that barring a catastrophic event the price will only go up long term, and probably by a great great deal.

@andykirk - I'm old enough to remember Ferranti - lots of people saying buy it just before it went bust. That's the way bubbles work.

I also remember Clinton's new "always growing economy due to the internet" and Brown abolishing recessions.

Whether Bitcoin goes the same way is a different question but I wouldn't take the public noise as a sign that it will keep going up.

Blockchain is definitely an interesting technology and undoubtedly here to stay.

Bitcoin just looks like fevered speculation though, we are into greater fool theory / dutch tulip territory as far as trading goes. Its definitely a bubble. Mining them is not the same as trading them though

See also a certain quote about shoeshine boys giving stock tips in 1929....

My wife asked me about bitcoins last night after hearing about it on Radio 2.

Got me thinking about the greater fool thing as there's a lot of greedy little selfish baby boomers out there with a lump sum just arrived from their pensions, who are very easy to sell things to. Also, there's going to be a lot of PPI type organisations without much to do very shortly... Could this be the perfect greater fool about to fall in the bitcoin investors laps?

The arguments on all sides of this are not mutually exclusive. Bitcoin and other current crypto currency may be in the middle of a big bubble and will burst - but that does not mean that it will not lead to a big market consolidation and one or two currencies emerge. There do seem to be issued of scalability in current model to the levels needed to process the trillions of transactions handled by normal currency (iro processing grunt and power consumption) maybe 2.0 will advance that.

We've seen tech bubbles before, and market does consolidate to a few, very big, winners.

But ultimately bitcoin needs to create a fundamental want, meet a fundamental need or correct a fundamental flaw in the current sovereign currency world - and that is the case yet to be made I think

Interesting [url= https://spectrum.ieee.org/energy/policy/the-ridiculous-amount-of-energy-it-takes-to-run-bitcoin ]paper[/url] on blockchain from the IEEE. Two alteratives to Bitcoin's proof-of-work are mentioned - proof-of-time and proof-of-useful-work.

Anyone bought a crypto kittie yet?

So I just stumbled across this little nugget of joy:

the Bitcoin network is consuming power at an annual rate of 32TWh—about as much as Denmark.