Confession of a lonely miner


Vladimir Elin - Ph.D., Investor, Inventor, CEO of Intersoft Eurasia, DO-RA Project Manager
 

 After the Cryptoconference in Skolkovo Technopark, which I wrote about in the article "Cryptocurrency traders of the world, unite!", I decided to get acquainted with the mining process deeper. And considering that the big players at this sphere are highly “sneaky’ persons, I decided to look for private specialist and ask him about that and that. I was quite lucky and such a meeting took place. After the conference in the cafe downstairs, I met a nice young man of about 30 years, who did not introduce himself for conspiracy, and asked me: what would you like to know about the mining? In connection with the lack of any names and nicknames, I called him White Wolf. I think this nickname would suit him. After the cup of coffee, White Wolf slowly began his story, which I outlined in the details, preserving the author’s style of monologue with minor edits and adaptation of the content for easier understanding of the readers.

- Somewhere in 2010-2011, the first publications about cryptocurrencies and new technologies of distributed computing began to appear in Russia. It was reported that in the nearest future we will decipher the human genome. Against this backdrop of grandiose luck in genetics and new technology trends made by Steve Jobs, as well as the largest failures of dot-coms, the crypto sphere seemed to be not really interesting and perspective. This area caused more mistrust than understanding, and the strange term “crypt” had something from KGB and CIA secret agencies.

 

First experience

Nevertheless, the first acquaintance with distributed computing I got, working on the project folding@home, which allowed everyone to make a feasible contribution to the fight against the most serious diseases of our planet, using a home computer during downtime. Thoughts on how it is possible - to get the crypt from the electronic ether and get paid for the operations - led me to the idea: why not to try to participate in the process by myself? Especially, when the rate of cryptocurrencies steadily grew as well as earnings, my desire and excitement were actively stimulated.

At the first stages of mining, only the processor could be used, but later it was possible to use the video cards. At that time, I had two AMD Radeon-6950 video cards, and I was interested in CrossfireX technology. I folded in the project f@h; but the idea of a small ​​contribution to the plague of the 21st century worked for me.

In the summer of 2011, I came across an article about bitcoin, it seems to be on the "Bitmedia" online recourse. I opened it, and I realized that I did not understand anything, closed it and temporarily forgot about it. Approximately the same situation, probably, periodically occurs with not very patient adepts, to whom I also belonged at that time. They certainly want to break into the world of generating cryptocurrencies or simply mining, without zero positive reinforcement.

 

The start

In six months, or more precisely - in early 2012, I again came across this article about bitcoin and began to study it thoughtfully, to get into the details and understand the idea. As always happens in such cases, it seemed that the case seems to be not a big deal, easy task for 5 minutes. I have downloaded the miner program and sent it to the pool of joint generation of cryptocurrencies. At the beginning of my work with the crypt, there were basically consultations with a search line in the Internet, dialogs on forums, studying articles on this subject on profile resources. Then there was not very much information about crypt, everything was somehow vague, incomprehensible. Readme, attached to the miner, were not really helpful as well, and my eyes and brain were a bit crazy after new terms and explanations on this topic. I had to go deeper into various forums - for example, Bitcointalk.

 

Miner's base

Because of the lack of information on mining, it was necessary to pay attention to what my workmates - cryptocurrency traders are doing. As I said earlier, initially I had two AMD Radeon-6950 video cards. The performance of bitcoin mining for one card was around 350-400 Mh /s (megahash per second). It was possible to overclock the frequency of memory and the core, which gave a small increase in the hash rate. But for bitcoin mining, the advanced miners lowered the memory frequency to about 300 Mhz, in order to reduce the consumption (less heating of video cards, more economical power consumption) and because the sha-256 algorithm was aimed more at using the core of the video card. And more experienced professionals started also to lower the voltage on the chip to the minimum working level, at which the video cards would work without errors and failures. Of course, after underestimation of the memory frequency (not the voltage!), the productivity dropped - but not significantly.

One video card, by my calculations, was using about 200 watts, but to be honest, it was long time ago - I do not remember the precise numbers.

 

Feeling the bit

Finally, the miner was launched and directed to the "nearby" 50btc pool. First payments have started. It seems, then there was an opportunity of auto-conversion at once to fiat money and payments to various e-commerce payment systems, which, I believe, were used by many miners. At that time, the majority of users withdrew the bitcoin at the minimum rate - just to feel real money in the pocket.

I found the bitcoin for $5. I was not even thinking to safe something, or hold back; many people simply did not believe in its growth. The first lesson was at $30 level. By the way, the lesson of the collapse of the 50btc pool was also the first - at least for me. Fortunately, I'm not a supporter of storing money, that’s why I set a minimally reasonable automatic withdrawal threshold, so I did not suffer. And can you really suffer with the earnings from two video cards?

 

The growth of the farm

Then it started to spread faster and faster: the jumps of courses, new heights and falls, which no one could believe and predict, the collapse (scam) of the largest exchanges, etc. Meanwhile, the farm began to expand to the balcony size, not a single generation of AMD video cards was replaced, I started to buy NVIDIA video cards, which also started to bring me a comparable income. I used the so-called “down voltage”, which makes possible to reduce the power consumption of video cards (almost always at the same productivity), replaced the standard cooling systems with specialized ones, bought outlets with remote control function (sometimes the farm was hanging so long, that the only way to save situation was hard reset from my country house or during my vacation overseas).

In a certain sense, for a combination of skills and knowledge, mining can be classified as a kind of profession.

I worked with a different crypt, but first one was Bitcoin. Later I learned that it is possible to mine Litecoin using a processor. I remind, initially, at the dawn of bitcoin, it could be generated only with the help of processors in your own computer. Then the miner programs that use video cards, thanks to the OpenCL library, appeared, first for bitcoin, then for lightcoin. (Why not at the same time? They use different hashing algorithms). And then – everything that was interesting and "profitable" was mined. Now it's Ethereum, and Zcach, and Monero, and all the others.

 

Learn the language

Over that period of time, there was not a big choice of specialized software for mining. Basically, everyone used the famous cgminer and bfgminer. They worked on both Windows and Linux. However, Windows was much preferable because of the ease of use and wide choice of additional software, which allows to control the frequencies of the video card. At the same time, Linux had a significant drawback, which was subsequently eliminated, - the impossibility of either controlling the frequencies, or controlling the voltage, honestly, I do not remember: not a big fan of Linux. Although for some period of time, I had to deal even with it.

As I mentioned earlier, my main source of knowledge on mining was the Internet. Now, of course, everything has become much easier, there are large aggregators like "NiceHash", they produced a convenient program "Miner" with a graphical interface. This program visualizes the changes for the most profitable algorithms at the given time (profitable cryptocurrencies, probably this term would be simpler for understanding of “untrained” person), and send to people bitcoin already converted at the exchange rate, of course, receiving its interest.

By the way, in those days basically there were console miner programs where it was necessary to prescribe additional parameters for the best optimization of the process, in addition to the pool address of joint generation. In general, all these instructions could be found on the forums. But honestly, in my experience, when person face with it at the first time, he immediately starts asking a hell of questions; apparently, as in any other unfamiliar kind of business.

 

Advice from veteran

There are many other subtleties in the mining process: for example, editing a BIOS card and firmware updates for chips to optimize productivity and power consumption. All instructions, again, are on the online forums, but for unprepared person who is new to this area, it would be extremely hard to get into it. To deal with it, you willh to spend your personal time and attention. But, of course, you can skip this. Just buy a video card in the store, put the farm for mining on the balcony or in the closet, press the “money” button – that’s it, you may sit and relax. But it would be much nicer, when your video card gives up to 20% of the hash rate increase after editing the memory timings, etc.

With a budget-class mining, I think it is advisable to place your mini-farm on a balcony. It is necessary to understand - in the summer time the farm is overheated, although autumn, winter and spring is a comfort climate period for it. By the way, the farm is noisy, although it does not attract much attention and does not cause too much discomfort; cheap and cheerful. There was an initial stage of mining, when a small farm (4-5 cards) was located in my room, which sometimes was not letting me to sleep at night because of the noise coming from it.

Of course, the participation of a human in a number of mining processes is simply necessary - to buy, install a system, configure it, optimize the equipment for mining, monitor the process and make sure that it not hanging and there are no bugs. You need to try to find what is the cause of equipment glitches, constantly be aware of the latest news and courses of cryptocurrency, the development and application of the legislative framework, etc. Although, if everything is set up correctly, farms can work for months without any human involvement - after all, for these purposes and stable functioning a lot of special programs have already been written.

 

Your hardware need to be loved

If we estimate the cost-benefit ratio in a private farm, rather than an industrial scale, then the equipment can pay off in 5-10 months, I say it from my own experience. Everything, of course, depends on the course of the cryptocurrency: whether you sell it immediately or hold it back and wait for the desired course in order to get more cash. Much depends on the correct choice of the basic cryptocurrency, which can suddenly rapidly increase in price in several times depending on various factors.

The work of the miner - first of all for those who like to work with hardware and configure it, then comes an overlap between psychological and economic interests. Although, sometimes it happens like this - everything works awful, the cards are constantly falling off, your farm starts to hang and you can't get over the rage. I do not even want to talk about it. In this case, it's easier to pull out the hanging card from the farm and put it on the shelf, if it's really a disaster. Or to put the video card with a defect separately from other video cards.

I can talk about the various events for a long time: for example, about the planned drops of awards in the bitcoin cryptocurrency ecosystem, the appearance of its clones and other cryptocurrencies, new breakthrough concepts, the split in the bitcoin developers’ community ... To discuss the cryptocurrency anonymity, its governmental legalization in various states, features of exchange trade, local wallets, etc., but for doing this I will have to strain hard...

Last off, I will express the idea that something similar was happened in time when the Internet appeared. Of course, this thought is too much trivial, but I do not come to other analogies quickly.

 

Conclusions

•          Mining as a new type of human activity seems to me to be more useful than harmful. A new technology and an ecosystem of monetary transfers, algorithms for interaction and optimization of various business processes of human activity are being worked out. In addition, it is possible to earn decent capital on this.

•          Of course, there are certain risks due to the high volatility of the cryptocurrency. Not everyone can analyse various trends, for example, you can rashly purchase expensive equipment, when everything has significantly fallen, and it takes a long time to make money from such kind of the investment.

•          For a budget home-based business, using the skills, knowledge and dedication listed above, mining is a quite profitable, self-sufficient business. I got one bitcoin and sell it parts, this is enough for life.

•          For the industrial scale mining, it is possible to apply the same combination of experience, knowledge, entrepreneurial intuition, considering it as a fully profitable business.

•          Let me remind you: we do not yet have mining in the legal field, and nobody knows how to pay taxes. Therefore, people will get out huge profits from the cryptocurrency mining, waiting with the horror for the law on its legalization or even full closure of this activity. By the way, the similar situation in Russia was with the appearance of the Internet – it was called the "hand of the West", that would bring only terrible consequences, but today it works in every house and everyone on the planet, except, perhaps, the Papuans use it.

•          You can learn everything, mining is not an exception. It's not even a study of programming; but you still have to read the forums to get into it. Although, now even on Youtube you can find videos where explained in the detail:  which button you need to push and what should you do to get money from mining.

•          It is very difficult to answer the question, what comes next if the mining would be banned on the governmental level, and what prospects can he have in this regard. It depends on what laws would be adopted.

•          Much will depend on the market: what and how much will cost. If something is unprofitable, who will be interested in it?

•          When the cryptocurrency was worth a penny, this, in fact, did not receive such a share of the attention in the society. But everyone wants to earn – especially a lot and with a minimal starting effort. Greed works as the engine of progress! Now, the cryptocurrency and blockchain technology are already more than just mining.

•          Can the cryptocurrency come to the end? Since the first appearance of bitcoin, several hundreds, maybe thousands, of altcoins have formed, some of which have collapsed in disgrace because it cannot offer anything new to the market. But there could be hundreds of new cryptocurrencies with their own blockchains. And only truly breakthrough concepts and technologies can survive in this struggle.

•          If you consider bitcoin and its self-regulatory system, it designed to operate until 2140. But even behind the self-sufficient bitcoin there are humans (the developers) – and no one knows what else they have in mind. They can change the hashing algorithm, and by doing this send all of us back to the first stage of mining on video cards. I will shortly remind, that now it is possible to mine using the ASICs (an application-specific integrated circuit), specially customized for a sha-256 algorithm.