NineZeroNine

The past few weeks I have been experimenting with a technology called Bitcoin. I was introduced to bitcoins about a month ago and read over an article and at the end gave it a “meh”. As time progressed I read more and more about it which urged me to try my hand at generating and spending these so-called bitcoins. Since I am always on the breaking edge of all things internet related, I had to dig deeper and figure this out. So why is this important? At the time of this posting one Bitcoin is worth approx. $6.5/ USD. Over the past two weeks I have generated 20 of these bad boys. Here is my story.

My Research

I downloaded the official Bitcoin client and simply pressed the “Generate Bitcoins” button. After a few days of my i7-2600k chugging away I had 0 bitcoins. I was bummed. I headed on over to the official forums where I realized the days of CPU and solo mining as they called it were long over. Due to the nature of the software it gets more difficult over time to solve a block. The reason is to regulate the release of coins into the economy. Now days you need to join a “pool” which works by pooling several individual’s efforts to mine for a block and your reward is a percentage of the total block value. I also figured out that my CPU was working at about 11 megahash per second, or 11 million operations per second. Sounds like a lot huh? No. Turns out GPUs, more importantly ATI GPUs are MUCH more effective for Bitcoin mining. My HD 5870 can mine at 380 mh/s which is actually getting somewhere.

My First Pool

My first pool was the MtRed pool. I joined and added about 380 mh/s of power to the pool of ~10 gigahash per second and eagerly awaited to get a reward. After only a few hours I had mined my first Bitcoin. 1.5 of them to be exact. 1.5883 to be even more exact. I continued mining here and averaged about 1 BTC per day for a week. Turns out this particular pool was unreliable and inconsistent. It turns out all pools are inconsistent. Some days I would go without mining a single BTC and others I would get 3. Tinkering around I joined a much larger pool called deepbit. The pool rate there is an astonishing 1000 gh/s. On average this pool mines a new block every 20 minutes. Yielding the same payout but more consistently.

Upping the Ante

I’m hooked. Last week I ordered a HD 5830 to add to my mining efforts which upped my mh/s by 250. Add that to another card I had lying around and I’m up to about 700 mh/s. At this rate I average 2.5 BTC per day.  That’s 70 BTC/mo or $450/mo. Not bad. On my high, I impulse bought two more 5830s just yesterday which will leave me mining at 1.2g/hs and generating about 4.5 BTC/day.

This Can’t Be.

I don’t believe it either. I mean what is the catch? Simply put the days of mining will eventually come to an end. The network will only give out 21 million bitcoins and they are becoming harder to get. Pair that with electricity costs and before long (depending on the exchange rate) it may become unprofitable to mine, but that doesn’t mean Bitcoins are just a fad. Eight decimal places are built into one BTC which yields room for deflation and other economic stuff I don’t understand enough to explain but you can read more about it at the official site or Bitcoin wiki. Fees on transactions (very minimal but they add up) also allow for more theoretical blocks to be mined.

To Sum It Up

DO IT. Read more about it and understand how it works. There are tons of retailers already accepting these things. MtGox, the leading exchange site, deals with a volume of 20,000 per day. If you have an ATI card (nVidia turns out to not be so cost-effective for mining), join a pool and put it to work. The power consumption is minimal compared to the current difficulty. For instance my 1.2g/hs will consume about $45 USD of power a month but since I should be making over $800 that is hardly a concern. I will update with my progress.

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