How to mine bitcoins the alternative way

First of all, why mine alternate coins ?

Because Bitcoin comes with a number of issues:

1. Algorithm

Bitcoin uses SHA-256, which is a hash algorithms that almost entirely requires CPU cycles to calculate. This means that it is easy to create custom hardware to perform this calculations. That's the main reason why altcoins use Scrypt cryptographic function. Scrypt was specifically designed to make it as expensive as possible to create hardware that is specifically good at doing that hash function. Scrypt is more memory-intensive and therefore harder to implement in custom hardware. The first altcoin to implement Scrypt is Litecoin. 

2. Amount of coins that can be mined

Bitcoin has a limit of 21 million coins. Some altcoins raise this limit, such as Dogecoin, others lower it, such as 42.

3. The rate at which new blocks are created

Bitcoin blocks are mined at an average rate of one block every 10 minutes. Many merchants require that a transaction has been confirmed by several blocks before they accept it. With a confirmation time of 10 minutes (in fact, the recommended amount of confirmations to wait for is 6) can be quite cumbersome in certain use cases. Litecoin has a confirmation time of 2.5 minutes.

4. The time it takes before the maximum amount of coins is created

Block rewards usually have a halving time. Every halving time the block reward halves until it is too low to represent using the maximum precision and it becomes zero. With Bitcoin it will take until 2140 until the block reward becomes zero. Some coins shorten this period. Sometimes they shorten it so much that the creator (who mines first, of course) is accused of pre-mining because he can mine very fast and easy in the beginning of the existence of the coin. Be aware of scam coins like this.

5. Expensive mining

Unless you have a lot of money to invest in special equipment, mining just Bitcoins is way too expensive. In previous post I've explained a lot about Bitcoin mining and why you shouldn't support nor trust companies behind ASIC miners. 

With alternate coins you have a lot of choices especially when it comes to hardware. I noticed there aren’t a lot of good beginner tutorials for coin mining so I decided to make my own. Inside you will find info about optimal hardware configuration, what software is required and most important how to make money, how to brake even.

I decided to go with survey downloads but not because I like them that much. It's more a test to see how will it go. I know there are people who don't like surveys so I'll give you a hint: get this addon for Chrome first.

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Filed Under: mining on Saturday, February 1, 2014 No Comments

Bitcoin mining in a nutshell

You heard about Bitcoins, you want to get a piece of cake too and now you are looking for information how to join the bitcoinrush. Well, I have to disappoint you. First, there are millions of people out there just like you, looking for ways to get those valuable bitcoins. Second, it's already too late and the cake is good as gone.

Mining was worthwhile until the ASIC miners showed up together with companies that made them, and believe me when I tell you that those guys are nothing more then crooks. A small number of companies manufacturing 99% of miners are running them for their own benefit and drag their feet on selling them, or possibly have a deal with each other to keep delaying the ship dates on those mining units. The most powerful miners have to be preordered just to get shipped several months later. Delay is intentional because companies use them to mine Bitcoins several months just for themselves and then discard them to buyers when difficulty gets higher.

Those units were developed entirely to pull in the average Joe miner wannabe like you willing to spend a couple grand on a good setup. Money was not just the only key to entry in to a serious level of the market, there had to be a forced scarcity and true exclusivity. That was achieved by pushing up the difficulty within the bitcoin system itself of the calculations to the point that any GPU couldn't even do much of anything anymore. And especially, couldn't do much of anything for the amount of power it was drawing and heat it was generating. The first jump like that was from high end desktop and server CPUs to GPUs, but then everyone just went and bought a bunch of high end GPU cards, for example: 6950s/6970s. 

The ASIC miners made another jump, but this time it made that everybody else is essentially locked out of meaningfully generating anything, unless they have the right contacts (or one of the top ASIC miners). The people who got in before ASIC miners hit the scene are laughing right now. Can you imagine that years ago pizzas were worth a few thousand BTC and people have spent that much just to order a dinner ? Well, those times are gone and same can be said for bitcoin mining.

The gold rush for bitcoins is over. Even the people who managed to get ASIC miners won't do much now that there's systems like huge data centers just for bitcoin mining - see the picture above (not the mention the ones you won't ever even hear about). There is only one way in for average joe and his average system, and that is to hunt for alternatives. This is what this blog is all about: mining alternate coins. 

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Filed Under: Bitcoin mining on Thursday, January 30, 2014 No Comments