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All About Bitcoin Mining: Road To Riches Or Fool's Gold?

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June 9, 2013 9:49:35 PM

Finally a proper write up on Mining Bitcoin with the good the bad and the reality.
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June 9, 2013 9:54:43 PM

How does mining new coins make sense if there will ever only be 21 million? I am so confused by that point.
Another thing is, with an economic system like this, a billionaire can easily manipulate market prices and make extremely large amount of money and still be completely fine due to this being in a grey area of the law. You can't pump and dump stocks legally but it seems pretty easy for something like this considering you can dump the bit coins off as currency in any country.
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June 9, 2013 10:00:47 PM

esrever said:
How does mining new coins make sense if there will ever only be 21 million? I am so confused by that point.


To quote the Bitcoin wiki page: "The last block that will generate coins will be block #6,929,999 which should be generated at or near the year 2140."

So to directly answer your question, the whole reason for mining bitcoins is because you'll most definitely be dead before the last block chain is even completed.
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June 9, 2013 10:14:39 PM

Shitcoins definitely = fools gold!
Huge waste computing power IMO
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June 9, 2013 10:27:19 PM

smeezekitty said:
Shitcoins definitely = fools gold!
Huge waste computing power IMO


someone needs to rewrite the algorithm and somehow hook up block generation to folding@home or some similar constructive use of the computational power.
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June 9, 2013 10:28:24 PM

vmem said:
smeezekitty said:
Shitcoins definitely = fools gold!
Huge waste computing power IMO


someone needs to rewrite the algorithm and somehow hook up block generation to folding@home or some similar constructive use of the computational power.

That would be a great idea. Verifying a relatively small hash to screen out the cheaters then perform something useful like F@H.

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June 9, 2013 10:39:14 PM

A very interesting read. I had been reading about Bitcoins (mainly because I just couldn't figure out what they were exactly), but this clears a lot of things up.
Also, at the bottom of page 5, in the Comparison of FPGA and ASIC Chips table it says "Power Fraw".
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June 9, 2013 11:02:24 PM

Fiat currencies... I guess for some people the dollar wasn't worthless enough.
It is amazing how you can lose your "wallet" and your funds permanently disappear from the pool.
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June 9, 2013 11:02:42 PM

Never heard of this and I'm quite confused by it. Use graphics cards to find units of a currency that from what I can tell must be extremely succeptable to artificial inflation or all out collapse.
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June 9, 2013 11:54:59 PM

I'm offensive and I find this capitalist
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June 10, 2013 12:53:57 AM

In 2010 I started bitmining and reached 3 bitcoins in 2 months with a 5850. Each bitcoin was worth 3$ at that point so I just gave up and lost my wallet. If I only knew 3 years later they would change for 150$ each... :face palm:
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June 10, 2013 12:58:08 AM

Thanks for your calculations. I now have more things to laugh about here in Australia when I read about bitcoin "miners" setting up multi-gpu rigs when our power price is around the 25c per KWh mark and rising by 5% annually.
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June 10, 2013 1:16:53 AM

I've only skimmed the article, but I didn't see a good discussion of mining pool, trading and all the DDoS, phishing and hacking that goes with it.
The technical aspects and financial calculations are one thing, but going bitcoins is somewhat of a hornets' nest, and it's really worth discussing this stuff.
I haven't mined seriously, but the first time I tried (for two weeks, generated half a bitcoin), I left the bitcoins in the pool and one of the pool's founders embezzled and took what was there and left. I've seen other pools hacked, and there are regular DDoS attacks on them, changes in the terms, all kinds of things you really need to follow carefully if you want to mine effectively. Just leaving your miner running and hoping that you'll get the expected coins eventually doesn't cut it.
I currently mine a little LTC for fun (partly because after installing Catalyst 13.4 I can't mine BTC and can only mine LTC with an old cgminer version I have installed). I'm not sure that it's worth it financially, and I'll probably shut down mining in the not too far future.
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June 10, 2013 1:19:12 AM

Quote:
I bought a few Radeon HD 7790 graphics cards

7790 already out in June 2011 ? :lol: 
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June 10, 2013 2:28:20 AM

Anonymous said:

Or better yet, enjoy this crazy sideshow from the bleachers.


Yup, that's exactly what I'll be doing! There's always something in the news about it every month these days. :) 

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June 10, 2013 3:05:52 AM

this is why i think TH is one of the best IT news website around nowadays... thanks for a very interesting article and for sharing the good and the bad with newbies like me on that subject.
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June 10, 2013 3:29:57 AM

Maybe now we won't have to see this in benchmarks. It's over for gpus.
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June 10, 2013 4:17:55 AM

I am also wondering how he got the HD7790 in June 2011, except if this is a typo because later on in the same page he talks about November 2012.
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June 10, 2013 6:05:38 AM

Great article, I have been wondering what the fuss was all about. Now the only question I have is:
What is all this processing power being used to do?
As it was mentioned in an earlier comment, it would be great to use it for something like scientific research like F@H...but I have never seen anything explaining IF it is being used, and if it is, what it is being used to do.
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June 10, 2013 6:11:10 AM

Great news, since BTC mining with GPUs is now a lost cause, time to buy the nVidia GTX 780 card and enjoy its gaming performance instead of worrying about its OpenCL capabilities (or lack of :D ) LOL

EDIT: and yeah, that is such a waste of computational power and electricity, that is used to create really nothing at all, if this goes towards a good beneficial cause while mining it would be such a great project, like reCAPTCHA is used to digitize books while providing bot and SPAM protection!
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June 10, 2013 6:15:26 AM

dalmvern said:

What is all this processing power being used to do?

It is wasted cracking useless hashes while not doing anything useful.



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June 10, 2013 7:02:22 AM

Great article, thank you. It definitely doesn't seem like bitcoin mining is a worthwhile endeavor, unless you are predicting that its price will rise sharply over the next few years.
But in that case, you can also simply just buy bitcoins.
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June 10, 2013 7:18:21 AM

Thank you, I've read a TON of Bitcoin articles and this is definitely the most complete and balanced article I've seen. If you look at the Bitcoin Difficulty, you'll see that it's raising extremely rapidly. The one resource the author didn't mention is that there is a site that has accumulated orders from BFL (http://bfl.ptz.ro/) and is tracking their status. If you were to place your order today, you'd be around order #65,000. They recently shipped order #4,137. Yes, that means that there are still 60,000+ orders to be added to the difficulty before you'd get yours. By then, profitability will show to be probably 6 months, but every month that number will grow by 2-3 months so you may never recoup your investment. If you want to "get in the game" purchase Bitcoins and secure them - mining is a bad idea.
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June 10, 2013 7:30:16 AM

Please add cheap solar panels to the power computations.
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June 10, 2013 8:13:29 AM

I have had some interest in Bitcoins for a few years now. I tested a HD6790 for mining perhaps a year and a half ago (that card mined slowly, but had a relatively high Mh/W rate), but did not pursue it, especially when the value of BTC dropped. It remained in the back of my mind though, and when the value peaked over $200 recently, I thought at the very least, some mining would "discount" the cost of a graphics card. A HD7970 for <$200? Count me in, so I bought one and started mining 24/7. It may actually pay for itself, but likely only barely. Along with a HD7770, it has been steadily mining a little over 0.025 BTC per day.
The first question though, is Why Bitcoins? Some of the earlier comments clearly indicate a lack of understanding as to why anyone would use BTC. Two major reasons are that it is out of the control of any central authority (e.g. a counterfeiter like Ben Bernanke can't simply print BTC), it is anonymous, and it is irreversible (there are no chargebacks). That last point in particular enforces a level of honesty that we might have last known in our grandparents' days. In any case, it is beyond the scope of these comments to cover all of the theory behind Bitcoin (and similar currency), but it is knowledge worth pursuing. A central government could conceivably "take over" the network by obtaining more than 50% of its hash rate, but with the ASIC miners coming online, the odds of that are dwindling.
Remember too, that the Bitcoin network is handling a fractional percent of global economic activity. It is therefor either beneath the parasites' notice, or not of great enough significance to pursue.
In any case, here are some links to more information on BTC in general. Hopefully you will find them interesting.

Good source of information: http://www.weusecoins.com/en/getting-started

Charts and news articles: http://bitcoinwatch.com/

Lots more charts here: http://www.bitcoinx.com/charts/

Bitcoin forums: https://bitcointalk.org/
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June 10, 2013 8:16:17 AM

If this was ever a good legitimate economic idea, its utility expired early on. At this point it's all about bragging rights, because it's just not worth it anymore to chase the digital coins.
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June 10, 2013 8:17:36 AM

ET3D said:
...I currently mine a little LTC for fun (partly because after installing Catalyst 13.4 I can't mine BTC and can only mine LTC with an old cgminer version I have installed). I'm not sure that it's worth it financially, and I'll probably shut down mining in the not too far future.


Use the latest Catalyst Beta. You may also need to load the Stream SDK separately, but I think the beta is enough; that's what I had to do to get my HD7970 mining. Overclocked to 1130MHz, it is getting around 650MHash/s now.
I too anticipate that I won't be mining after another month or so, but then I'll have a nice card for games!

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June 10, 2013 8:32:28 AM

So basically, you're a POS who steals from other people using your PC? Great. Why would we even listen to your garbage?
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June 10, 2013 8:35:16 AM

JonnyDough said:
So basically, you're a POS who steals from other people using your PC? Great. Why would we even listen to your garbage?


Huh? As much as I hate bitcoins, I don't see how they are stealing.
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June 10, 2013 9:07:59 AM

There is no theft involved, unless you're talking about people who run their mining rigs on their employer's electricity. Yes, that is outright theft, likely grounds for termination.
Every time Bernanke prints dollars, they get their value from the dollars already out there (which used to be backed by gold); that is a particularly insidious theft. Sure, I'll get my $2K/month Social Security, I don't doubt that for a minute; trouble is, it will only be worth around $200/month. The same goes for other retirement savings, as their value is robbed to pay for the parasites' profligate spending. Bitcoin is immune to this game-playing. It has other risks, but the game-playing of a central authority's parasites is not among them. It also can't be arbitrarily jacked for taxes, as happened to Cypriot bank accounts earlier this year.
"Mining" bitcoins, because of the way the formulas work, will take until 2140, no matter how fast people try to mine. After that, "mining" will be a matter of recovering tiny transaction fees which can be imbedded in BTC transactions. For this reason, the BTC network will never simply shut down once all the BTC are found; at least it is not mathematically appropriate to do so.
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June 10, 2013 10:08:23 AM

smeezekitty said:
dalmvern said:

What is all this processing power being used to do?

It is wasted cracking useless hashes while not doing anything useful.





Makes money so it's useful.
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June 10, 2013 10:15:31 AM

Darkman69 said:
smeezekitty said:
dalmvern said:

What is all this processing power being used to do?

It is wasted cracking useless hashes while not doing anything useful.





Makes money so it's useful.

But nearly useless from a technical standpoint which is important IMO.
Beside the hardware is getting more and more expensive as the difficulty increases virtually negating gains.
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June 10, 2013 10:23:36 AM

I've often wondered about this. I would not go out and buy a rig with four GPUs and run like some do/have. But I do have a 7950 and I'm sure I can mine SOMETHING even though it won't amount to much. Why? First, one GPU probably won't amount to much in heat/power, and I have "free" electricity where I live. It's a part of the rent, and as long as I keep it at one GPU it shouldn't add to much overall. Second, I know I won't mine much, but if there is a bitcoin max and each bitcoin should raise in value I should eventually see a larger coin value over time. (like investing in bitcoin.) I will never "get rich" doing this but as long as I'll get something out of it it might be worth it. I'll probably need to look into LTC however as many feel it's better.
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June 10, 2013 10:37:22 AM

A cautionary tale in the digital age. As always, let the buyer beware.
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June 10, 2013 10:47:00 AM

smeezekitty said:

But nearly useless from a technical standpoint which is important IMO.
Beside the hardware is getting more and more expensive as the difficulty increases virtually negating gains.


A parallel crypto currency is a huge step in the right direction away from Debt based FIAT currency. You have to have a fairly solid foundational understanding of socioeconomic's and even politics before you can really make proper judgment and develop and clear understanding on this Bitcoin thing.
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June 10, 2013 10:47:48 AM

But one thing I never have known is what the heck do you do with these bitcoins once you get them!
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June 10, 2013 11:00:54 AM

Think of this: If you paid someone to crank a wheel without anything attached to it, does it make sense?
Sure the person gets paid, but it isn't accomplishing anything - so it really seems pointless to do it.

You cannot compare it to gold mining because gold mining results in fetching a physical object (gold).
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June 10, 2013 11:10:05 AM

smeezekitty said:
Think of this: If you paid someone to crank a wheel without anything attached to it, does it make sense?
Sure the person gets paid, but it isn't accomplishing anything - so it really seems pointless to do it.

You cannot compare it to gold mining because gold mining results in fetching a physical object (gold).


I can see you have no understanding of current debt based fiat currency.
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June 10, 2013 11:15:44 AM

" a scientist calling himself Satoshi Nakamoto " really? call himself? or his name?
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June 10, 2013 11:19:16 AM

Obviously trying to reason with bitcoin nuts is impossible...
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June 10, 2013 11:25:01 AM

smeezekitty said:
Obviously trying to reason with bitcoin nuts is impossible...


It has nothing to do with Bitcoin. What I am saying is the current monetary system is nut's. Bitcoin no matter how nut's it may seem is actually an improvement over the current system of currency. All Bitcoin really is an exchange of wealth simply. Currency is a means of exchange of wealth but where we went wrong today is in the pursuit of currency as a commodity and forgetting what is really is which is a simple and easy way to exchange wealth.
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June 10, 2013 11:29:51 AM

That is true. But you need to consider the reason currency was founded was primarily so that someone could hire other people to help with a particular problem and have a standardized exchange medium.

The system is getting more and more messed up. But I don't think bitcoin is an improvement - a sidegrade a best.

You are basically getting paid for doing useless work with BTC.
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June 10, 2013 11:37:41 AM

smeezekitty said:


You are basically getting paid for doing useless work with BTC.


It's actually getting paid to help secure the Bitcoin network is how it works. There are absolutely millions of jobs out there that add absolutely no value to society and even destroy value. Bitcoin is creating value and at the same time a secure parallel currency that is not control by government and inane politics. Bitcoin is a true free market and imo competition in the world of currency is just what is needed to keep greedy people and institutions like the Fed in line. If people had a choice to use a parallel currency not designed to economically debt enslave them to the banksters than I say why not support something good like that.
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June 10, 2013 12:50:38 PM

In general I agree with Darkman. A more in-depth research into Bitcoin, or any crypto currency, is necessary in order to understand how it differs from fiat currency; money that is money only because the parasites say it is. The [enforced] scarcity of Bitcoins will be part of what gives them their value; the parasites can't steal their value by arbitrarily creating more of them.
Some of the links I included explain how more places are beginning to accept them, so you can use them even if you don't sell them for your local currency.
Looking at the BTC network today, it would not make sense to buy one or more HD7970's for mining; two or three months ago it still did. Were I to cash out now, that HD7970 would have only cost me $200-$250. Should BTC double in value (probably more likely than crashing, but both are possible), the card would be "free;" and that is after electricity costs.
I don't believe anyone here is suggesting that mining BTC is enough to earn a living wage (or anywhere near it), but if it offsets the price of a [substantial] graphics card upgrade? It won't after this summer, but for the next few months might still be worthwhile if your electricity costs aren't too high.
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June 10, 2013 1:03:22 PM

Too dangerous and expensive. Hackers, governments, and rich people could ruin the whole thing in a snap! It seems like a get rich quick scheme to me.
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June 10, 2013 1:04:09 PM

The thing to remember, for those criticizing the currency system, is that currency itself does not limit your ability to barter in most situations. Sure you still get paid in money at work and major bills require you to pay back real money. But if you wanted to try it you could go to your local store and still barter if you liked, even exchange services. The only reason you're not liable to do it is because you as an individual, and/or whomever you seek to barter with, are not open to the process. It's why money exists in the first place - people got tired of negotiating for everything when they went to the store, so a standard form of exchange was created. Yes, the system is flawed, but that's more or less inevitable given how much reliance has been placed on the system as a whole, such that it now has to account for things it didn't used to.
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June 10, 2013 1:39:47 PM

wl589 said:
Too dangerous and expensive. Hackers, governments, and rich people could ruin the whole thing in a snap! It seems like a get rich quick scheme to me.

Hackers (possibly Government-sponsored) can do some damage; they can block exchanges, steal people's wallets, etc. but I don't think they can destroy the BTC network. Governments can try to outlaw it, but what is it they'd be outlawing? Good luck with that. Government supercomputers could be used to try to compromise the block chain, but about all they could do is slow it down; the hash rate is too high for them to take it over. Rich people? Not at all; the only thing they could hope to do is try to overwhelm the network (much like a government) by acquiring over half of its hash rate. With ASIC miners coming online, you can see that isn't happening.
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