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Oh Bitcoin is still a thing? Should I embark mining then?

Oh Bitcoin is still a thing? Should I commence mining then?

In short… most likely not.

Why do folks ask this question? More often than not, the question pops up in times when Bitcoin’s price is rising, and they may see mining as the cheapest way to get their forearms on some. i.e. “Why buy bitcoin at $1,000/BTC when I could just buy a graphics card and get some for free, right?”

It is not as ordinary as this tho’, and in most cases not at all feasible. Here’s a breakdown of why that is, and of the very specific cases where mining may still be a feasible venture.

The Mining Premise

The basic premise of mining is that persons from around the world can contribute their processing cycles (CPU or otherwise) to the bitcoin network. In comeback they get paid for the number of cycles they contribute. These cycles are used to secure the entire Bitcoin network.

Payment is made in proportion to the number of “effective CPUs” a person can contribute. These contributions are relative to the current size of the mining network. The payment, better known as the ‘block reward’, is the thing that we’re interested in looking at.

Understanding the hardware

Bitcoin’s original vision as laid out in its whitepaper was ‘one CPU one vote’. Persons would contribute their CPU cycles to vie for the chance to ‘add the next block of transactions to the network’. In turn they would be paid for each block that they get to add.

In the early days folks did go the route of CPU mining as was the original design. This however, quickly accelerated through the ever evolving and creative use of more advanced chunks of hardware.

The progression of mining in Bitcoin went as goes after:

28 CPUs)¹

  • GPU mining eventually gave way to FPGA/ASIC mining

    (1 ASIC first-gen =

    33 GPUs)¹

  • ASIC mining rapidly improved until running headlong into Moore’s Law

    Size of the network today

    It is significant to note that the absolute rate at which bitcoin is paid out globally does not switch based on the number of miners. It is actually determined by a immobilized supply schedule. In the early days it was fifty BTC every ten mins and today it is 12.Five BTC every ten mins. This equates to about one thousand eight hundred BTC per day, and this is constant whether there is just one person mining or ten million people mining.

    Today, the bitcoin network has grown to the equivalent of Two,460 PHash/s which is just timid of 1 billion effective GPUs (if you’re a gamer) or 17.6 billion effective CPUs (if you’ve built a high end desktop computer).

    For perspective on just how large these numbers are, let’s consider the odds of winning the US$149 million Powerball. Winning is toughly a one in one hundred seventy five million chance.

    This translates into average payouts that look something like the following:

    • 1 CPU running at total capacity nets $0.000107 per day (or $0.025 per year) at current prices
    • 1 GPU running at utter capacity nets $0.001970 per day (or $0.47 per year) at current prices

    I’ve seen this myself with a little mining equipment that I set up just about a year ago. My equipment was as powerful as using two of the highest end GPUs you could most likely find today. Even then, daily payouts looked like what you see in the following picture.

    Feasible bitcoin mining

    That’s not to say mining is entirely dead tho’. Instead, it has evolved into a global energy arbitrage game of sorts, where feasibility is determined by two factors:

    • Access to the latest and most efficient ASICs (at a reasonable cost)
    • Access to the cheap electro-stimulation, wherever it might be

    Fortunately for us in Trinidad, we have some of the lowest power costs in the world. A friend of mine and I have taken advantage of this and we’ve been experimenting with some Antminer ASICs to see just how feasible mining is locally.

    What we’ve found is that if you can access industrial rates (US$0.02 – $0.03 per kWh) and you can avoid having to liquidate the mined BTC regularly to meet daily costs, then mining may be feasible. This of course assumes that you’ve bought into the overall Bitcoin value proposition and expect its value to proceed growing over time.

    With our own operation, and based on two hundred days of data, we’ve found that we can expect to eventually come out with

    70% cheaper coins after Two.Five years than if we would have bought those coins outright. This is a very optimistic projection tho’, based on a number of uncertain assumptions.

    The altcoin route: GPU mining lives!

    Mining with non-ASIC equipment may also be feasible if you get a little creative. Altcoins (alternative blockchains) usually have much smaller mining networks and different mining algorithms. These properties make them far more attractive for CPU or GPU mining. One can also take the proceeds from mining on these alternative blockchains and convert them back to bitcoin on a regular basis. This is a more technical route however and the trick with this method is keeping a close eye on which altcoins to mine. This is so because the specific altcoin mining network sizes and exchange rates can fluctuate very rapidly.

    Fortunately, there are sites like the following that take the various factors into account and provide comprehensive tables on the altcoins that are worth mining at any point in time.

    What this means

    To get back to the original question of ‘should I mine?’, people usually ask because they’re thinking of what’s the best way to get their arms on some bitcoin. In most cases the reaction is usually that they should simply buy them outright on an exchange as this will afford you all the benefits of any future price increases without the headaches of having to manage a puny mining operation.

    These headaches come from:

    • having to maintain equipment and cover power/cooling costs
    • having to house them in a suitable location (climate-controlled, noise-tolerant, fire-safe)
    • taking on the risk of hardware issues or unexpected network growth that could significantly cut your proportion of payouts

    What you end up gaining by taking on this task of mining is a route to maybe marginally cheaper bitcoins.

    That being said, there are cases where mining does make sense even after taking the above factors into account. It might be preferable if you have:

    • Spare capital (in multiples of

    US$1,800 for recommended Antminer S9 ASICs)

  • Cheap power costs
  • A space where you can run noisy, high fountain devices in a relatively climate managed environment
  • It is also preferable in countries where accessing bitcoin is difficult because of lack of exchanges or currency controls. Miners are a excellent way to convert local power to a liquid asset and they effectively serve as direct foreign exchange earners for the owners of the operation in these sorts of locations.

    Oh Bitcoin is still a thing? Should I embark mining then?

    Oh Bitcoin is still a thing? Should I begin mining then?

    In short… very likely not.

    Why do folks ask this question? More often than not, the question pops up in times when Bitcoin’s price is rising, and they may see mining as the cheapest way to get their forearms on some. i.e. “Why buy bitcoin at $1,000/BTC when I could just buy a graphics card and get some for free, right?”

    It is not as ordinary as this tho’, and in most cases not at all feasible. Here’s a breakdown of why that is, and of the very specific cases where mining may still be a feasible venture.

    The Mining Premise

    The basic premise of mining is that persons from around the world can contribute their processing cycles (CPU or otherwise) to the bitcoin network. In come back they get paid for the number of cycles they contribute. These cycles are used to secure the entire Bitcoin network.

    Payment is made in proportion to the number of “effective CPUs” a person can contribute. These contributions are relative to the current size of the mining network. The payment, better known as the ‘block reward’, is the thing that we’re interested in looking at.

    Understanding the hardware

    Bitcoin’s original vision as laid out in its whitepaper was ‘one CPU one vote’. Persons would contribute their CPU cycles to vie for the chance to ‘add the next block of transactions to the network’. In turn they would be paid for each block that they get to add.

    In the early days folks did go the route of CPU mining as was the original design. This however, quickly accelerated through the ever evolving and creative use of more advanced chunks of hardware.

    The progression of mining in Bitcoin went as goes after:

    28 CPUs)¹

  • GPU mining eventually gave way to FPGA/ASIC mining

    (1 ASIC first-gen =

    33 GPUs)¹

  • ASIC mining rapidly improved until running headlong into Moore’s Law

    Size of the network today

    It is significant to note that the absolute rate at which bitcoin is paid out globally does not switch based on the number of miners. It is actually determined by a immovable supply schedule. In the early days it was fifty BTC every ten mins and today it is 12.Five BTC every ten mins. This equates to about one thousand eight hundred BTC per day, and this is constant whether there is just one person mining or ten million people mining.

    Today, the bitcoin network has grown to the equivalent of Two,460 PHash/s which is just bashful of 1 billion effective GPUs (if you’re a gamer) or 17.6 billion effective CPUs (if you’ve built a high end desktop computer).

    For perspective on just how large these numbers are, let’s consider the odds of winning the US$149 million Powerball. Winning is toughly a one in one hundred seventy five million chance.

    This translates into average payouts that look something like the following:

    • 1 CPU running at total capacity nets $0.000107 per day (or $0.025 per year) at current prices
    • 1 GPU running at utter capacity nets $0.001970 per day (or $0.47 per year) at current prices

    I’ve seen this myself with a little mining equipment that I set up just about a year ago. My equipment was as powerful as using two of the highest end GPUs you could very likely find today. Even then, daily payouts looked like what you see in the following picture.

    Feasible bitcoin mining

    That’s not to say mining is entirely dead however. Instead, it has evolved into a global energy arbitrage game of sorts, where feasibility is determined by two factors:

    • Access to the latest and most efficient ASICs (at a reasonable cost)
    • Access to the cheap electric current, wherever it might be

    Fortunately for us in Trinidad, we have some of the lowest power costs in the world. A friend of mine and I have taken advantage of this and we’ve been experimenting with some Antminer ASICs to see just how feasible mining is locally.

    What we’ve found is that if you can access industrial rates (US$0.02 – $0.03 per kWh) and you can avoid having to liquidate the mined BTC regularly to meet daily costs, then mining may be feasible. This of course assumes that you’ve bought into the overall Bitcoin value proposition and expect its value to proceed growing over time.

    With our own operation, and based on two hundred days of data, we’ve found that we can expect to eventually come out with

    70% cheaper coins after Two.Five years than if we would have bought those coins outright. This is a very optimistic projection tho’, based on a number of uncertain assumptions.

    The altcoin route: GPU mining lives!

    Mining with non-ASIC equipment may also be feasible if you get a little creative. Altcoins (alternative blockchains) usually have much smaller mining networks and different mining algorithms. These properties make them far more attractive for CPU or GPU mining. One can also take the proceeds from mining on these alternative blockchains and convert them back to bitcoin on a regular basis. This is a more technical route however and the trick with this method is keeping a close eye on which altcoins to mine. This is so because the specific altcoin mining network sizes and exchange rates can fluctuate very rapidly.

    Fortunately, there are sites like the following that take the various factors into account and provide comprehensive tables on the altcoins that are worth mining at any point in time.

    What this means

    To get back to the original question of ‘should I mine?’, people usually ask because they’re thinking of what’s the best way to get their forearms on some bitcoin. In most cases the reaction is usually that they should simply buy them outright on an exchange as this will afford you all the benefits of any future price increases without the headaches of having to manage a puny mining operation.

    These headaches come from:

    • having to maintain equipment and cover power/cooling costs
    • having to house them in a suitable location (climate-controlled, noise-tolerant, fire-safe)
    • taking on the risk of hardware issues or unexpected network growth that could significantly cut your proportion of payouts

    What you end up gaining by taking on this task of mining is a route to maybe marginally cheaper bitcoins.

    That being said, there are cases where mining does make sense even after taking the above factors into account. It might be preferable if you have:

    • Spare capital (in multiples of

    US$1,800 for recommended Antminer S9 ASICs)

  • Cheap power costs
  • A space where you can run noisy, high fountain devices in a relatively climate managed environment
  • It is also preferable in countries where accessing bitcoin is difficult because of lack of exchanges or currency controls. Miners are a superb way to convert local power to a liquid asset and they effectively serve as direct foreign exchange earners for the owners of the operation in these sorts of locations.

    Oh Bitcoin is still a thing? Should I begin mining then?

    Oh Bitcoin is still a thing? Should I commence mining then?

    In short… most likely not.

    Why do folks ask this question? More often than not, the question pops up in times when Bitcoin’s price is rising, and they may see mining as the cheapest way to get their forearms on some. i.e. “Why buy bitcoin at $1,000/BTC when I could just buy a graphics card and get some for free, right?”

    It is not as plain as this however, and in most cases not at all feasible. Here’s a breakdown of why that is, and of the very specific cases where mining may still be a feasible venture.

    The Mining Premise

    The basic premise of mining is that persons from around the world can contribute their processing cycles (CPU or otherwise) to the bitcoin network. In come back they get paid for the number of cycles they contribute. These cycles are used to secure the entire Bitcoin network.

    Payment is made in proportion to the number of “effective CPUs” a person can contribute. These contributions are relative to the current size of the mining network. The payment, better known as the ‘block reward’, is the thing that we’re interested in looking at.

    Understanding the hardware

    Bitcoin’s original vision as laid out in its whitepaper was ‘one CPU one vote’. Persons would contribute their CPU cycles to vie for the chance to ‘add the next block of transactions to the network’. In turn they would be paid for each block that they get to add.

    In the early days folks did go the route of CPU mining as was the original design. This however, quickly accelerated through the ever evolving and creative use of more advanced lumps of hardware.

    The progression of mining in Bitcoin went as goes after:

    28 CPUs)¹

  • GPU mining eventually gave way to FPGA/ASIC mining

    (1 ASIC first-gen =

    33 GPUs)¹

  • ASIC mining rapidly improved until running headlong into Moore’s Law

    Size of the network today

    It is significant to note that the absolute rate at which bitcoin is paid out globally does not switch based on the number of miners. It is actually determined by a stationary supply schedule. In the early days it was fifty BTC every ten mins and today it is 12.Five BTC every ten mins. This equates to about one thousand eight hundred BTC per day, and this is constant whether there is just one person mining or ten million people mining.

    Today, the bitcoin network has grown to the equivalent of Two,460 PHash/s which is just timid of 1 billion effective GPUs (if you’re a gamer) or 17.6 billion effective CPUs (if you’ve built a high end desktop computer).

    For perspective on just how large these numbers are, let’s consider the odds of winning the US$149 million Powerball. Winning is toughly a one in one hundred seventy five million chance.

    This translates into average payouts that look something like the following:

    • 1 CPU running at total capacity nets $0.000107 per day (or $0.025 per year) at current prices
    • 1 GPU running at total capacity nets $0.001970 per day (or $0.47 per year) at current prices

    I’ve seen this myself with a little mining equipment that I set up just about a year ago. My equipment was as powerful as using two of the highest end GPUs you could most likely find today. Even then, daily payouts looked like what you see in the following picture.

    Feasible bitcoin mining

    That’s not to say mining is entirely dead tho’. Instead, it has evolved into a global energy arbitrage game of sorts, where feasibility is determined by two factors:

    • Access to the latest and most efficient ASICs (at a reasonable cost)
    • Access to the cheap electric current, wherever it might be

    Fortunately for us in Trinidad, we have some of the lowest power costs in the world. A friend of mine and I have taken advantage of this and we’ve been experimenting with some Antminer ASICs to see just how feasible mining is locally.

    What we’ve found is that if you can access industrial rates (US$0.02 – $0.03 per kWh) and you can avoid having to liquidate the mined BTC regularly to meet daily costs, then mining may be feasible. This of course assumes that you’ve bought into the overall Bitcoin value proposition and expect its value to proceed growing over time.

    With our own operation, and based on two hundred days of data, we’ve found that we can expect to eventually come out with

    70% cheaper coins after Two.Five years than if we would have bought those coins outright. This is a very optimistic projection tho’, based on a number of uncertain assumptions.

    The altcoin route: GPU mining lives!

    Mining with non-ASIC equipment may also be feasible if you get a little creative. Altcoins (alternative blockchains) usually have much smaller mining networks and different mining algorithms. These properties make them far more attractive for CPU or GPU mining. One can also take the proceeds from mining on these alternative blockchains and convert them back to bitcoin on a regular basis. This is a more technical route tho’ and the trick with this method is keeping a close eye on which altcoins to mine. This is so because the specific altcoin mining network sizes and exchange rates can fluctuate very rapidly.

    Fortunately, there are sites like the following that take the various factors into account and provide comprehensive tables on the altcoins that are worth mining at any point in time.

    What this means

    To get back to the original question of ‘should I mine?’, people usually ask because they’re thinking of what’s the best way to get their mitts on some bitcoin. In most cases the reaction is usually that they should simply buy them outright on an exchange as this will afford you all the benefits of any future price increases without the headaches of having to manage a petite mining operation.

    These headaches come from:

    • having to maintain equipment and cover power/cooling costs
    • having to house them in a suitable location (climate-controlled, noise-tolerant, fire-safe)
    • taking on the risk of hardware issues or unexpected network growth that could significantly cut your proportion of payouts

    What you end up gaining by taking on this task of mining is a route to maybe marginally cheaper bitcoins.

    That being said, there are cases where mining does make sense even after taking the above factors into account. It might be preferable if you have:

    • Spare capital (in multiples of

    US$1,800 for recommended Antminer S9 ASICs)

  • Cheap power costs
  • A space where you can run noisy, high stream devices in a relatively climate managed environment
  • It is also preferable in countries where accessing bitcoin is difficult because of lack of exchanges or currency controls. Miners are a good way to convert local power to a liquid asset and they effectively serve as direct foreign exchange earners for the owners of the operation in these sorts of locations.

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