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

Other Crypto Currencies

ASIC-based mining hardware will soon dominate Bitcoin mining, relegating GPU-miners to the dustbins of history.

To the dustbins of history? Not so fast. There are other crypto currencies for which GPU-based mining rigs are still useful, and profitable, too.

Litecoin (LTC)

The Litecoin crypto currency was created in October 2011 and intentionally inherits beneficial features from the Bitcoin currency, while also making a few changes, all of them deemed improvements.

For instance, while there will be only 21 million Bitcoins, ever, eventually there will be a total of 84 million Litecoins. The block spawning interval has been cut from 10 minutes to 2.5 minutes, which leads to shorter confirmation times, making Litecoins more suitable for over-the-counter purchases (for instance, for a cup of coffee).

The core algorithm of the Litecoin crypto currency is not SHA-256, but Scrypt. Scrypt is quite memory-intensive. The underlying idea was to intentionally keep FPGAs and ASICs out of Litecoin mining, at least for the foreseeable future, thus ensuring that a purchase of graphics cards for Litecoin mining does not wind up being such a short-term investment, as in the Bitcoin universe. As a rule of thumb, a graphics card that can mine Bitcoins at 400 MH/s is capable of mining Litecoins at approximately 400 kH/s.

The Litecoin currency is gaining popularity and there are exchanges, for instance btc-e.com. At the time of writing, a Litecoin (LTC) was worth about $2.95. 

Assuming the (fictitious) 230 W, 230 MH/s graphics card used throughout this article can also run the Litecoin mining algorithm at about 230 kH/s, about 0.5 LTC per day would be generated, or the equivalent of $1.50. Thus, GPU-based Litecoin mining is already slightly more profitable than GPU-based Bitcoin mining.

If you want to try out crypto currency mining but don’t want to invest in ASIC-based dedicated mining hardware, mining Litecoins would be an excellent place to start using your existing, paid-for, discrete graphics card,.

PPCoin (PPC)

The PPCoin crypto currency was created in August 2012 and has its roots in the Bitcoin currency, but was intentionally designed to be more energy-efficient than Bitcoin. Instead of using only a "proof of work" concept, PPCoin uses a combined "proof of work" and "proof of stake" concept, the latter being more energy efficient than "proof of work". During the inflationary phase, however, the well-known "proof of work" concept is used.

Namecoin (NMC)

Namecoin is based on Bitcoin and is a generic peer-to-peer name/value data store. One of its prime applications is protecting DNS information cryptographically, in a peer-to-peer way. It is possible to mine Namecoins while also mining Bitcoins.

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    Top Comments
  • dannyboy3210
    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".
    12
  • Other Comments
  • Darkman69
    Finally a proper write up on Mining Bitcoin with the good the bad and the reality.
    8
  • esrever
    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.
    -9
  • s3anister
    Anonymous 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.
    -5
  • smeezekitty
    Shitcoins definitely = fools gold!
    Huge waste computing power IMO
    -6
  • vmem
    Anonymous 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.
    1
  • smeezekitty
    Anonymous said:
    Anonymous 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.
    -1
  • dannyboy3210
    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".
    12
  • slomo4sho
    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.
    -8
  • toarranre
    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.
    -9
  • dkcomputer
    I'm offensive and I find this capitalist
    -10
  • csf60
    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:
    9
  • choz
    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.
    3
  • ET3D
    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.
    0
  • Madn3ss795
    Quote:
    I bought a few Radeon HD 7790 graphics cards

    7790 already out in June 2011 ? :lol:
    4
  • immanuel_aj
    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. :)
    2
  • uruquiora
    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.
    5
  • somebodyspecial
    Maybe now we won't have to see this in benchmarks. It's over for gpus.
    -1
  • tlg
    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.
    0
  • dalmvern
    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.
    0