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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.

  • Darkman69
    Finally a proper write up on Mining Bitcoin with the good the bad and the reality.
    Reply
  • 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.
    Reply
  • s3anister
    10943052 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.
    Reply
  • smeezekitty
    Shitcoins definitely = fools gold!
    Huge waste computing power IMO
    Reply
  • vmem
    10943126 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.
    Reply
  • smeezekitty
    10943157 said:
    10943126 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.

    Reply
  • 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".
    Reply
  • 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.
    Reply
  • 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.
    Reply
  • phenomiix6
    www.bitcoinpaypal.info
    Reply