Confession of a lonely miner. Part 2.

Shortly after our first meeting, White Wolf called me back. Maybe he was concerned with some problem. Or probably we did not discuss everything with him during the first conversation. I did not even know.

We agreed to meet in the park, without much comfort, but closer to the nature. We have to pay tribute to it, by saving excessive electricity.

It was cold and chilly, there still was some snow in the hiding places of the park zone. A wooden bench near the footpath reminded me of the younger days and first dates. I was very excited and expected our new dialogue with impatience.

A young man came out of the depths of the park and went towards me. I almost at once recognized my vis-à-vis. He approached me, greeted and said: “Thank you for the literary processing of my first interview, although you have changed its original title. My title "Crypt for Dummies" sounded much better. Well, shall we continue our talk?”

White Wolf slowly began his story: Every 1-2 years, new generations of GPU chips from AMD and NVIDIA companies (graphic processors manufacturers) are emerging. Moreover, they are constantly improving its productivity, power consumption and architecture. Apparently, these companies are obeying Moore's law applied to electronics, or to be more precise, to the growth of its productivity.


ASIC vs Graphics cards 

Recently, AMD and NVIDIA companies have ceased to ignore mining, as a special phenomenon, which in turn resulted in the appearance of graphics cards, exclusively for mining. These video cards do not have any video outputs at all, to reduce the price of a unit of the product, configuration of the card is reduced to a minimum, there are simple cooling systems, in general, nothing superfluous. According to promises made by video card manufacturers, their productivity is higher than have solutions already available on the market. By the way, the guarantee for new graphics cards has already been reduced to a minimum: 1-2 months, that is actually dozens of times, and this is a rather controversial approach to attractiveness of the product. Because ideally, the farm should operate non-stop and with minimum failures of the hardware. Therefore, it is not really clear what to do with a buggy video card that failed after a couple of months. Although, I have not sold any graphics cards since 2012, some video cards were “retired” into special peaceful place - on the shelf of the closet.

Creators of the miner software are constantly trying to optimize their “brainchild” for the already existing hardware, as well as for the new architecture of video cards, and this process can be almost endless. Everything in this industry is interconnected in essence: there is no mining without people who write miner software, exactly, as well as vice versa, mining needs those who service farms, IT systems, play on stock exchanges, etc. All this is an extension of the continuous chain of interactions in this industry.

At present, eminent and not very famous manufacturers of motherboards offer solutions grounded for mining, for example, a motherboard capable of working with 19 cards at once. Regularly, our strategic neighbor, China, presents exotic solutions in the form of custom made motherboards and expansion cards that occupy one slot (Pci-e 16x), allowing you to attach 8 cards at once through this adapter. Power supplies with an increased number of additional power wires for video cards, various extension cables and other devices for ultimate mining began to be produced.

In fact, the whole industry of computer hardware (ASICs) manufacturers was involved into the work process, and I believe this is one of the real factors of Bitcoin and Altcoins provision. Although many people: politicians, financiers and just celebrities continue to argue otherwise -  that the crypt is worthless, and nothing ensures it. There is already a concept - Blockchain Processing, which can be translated as “support for the operational status of the network” or more precisely - the executing of Blockchain transactions, this is what actually all miners on the planet are doing today.


ASIC is an application-specific integrated circuit, customized for a particular use, taken from a Wiki. I do not want to talk about ASIC, because I consider it as a kind of trick. In 2013 I received one such copy, the manufacturer himself broke all conceivable delivery terms. At that time the complexity of the Bitcoin network increased with each recalculation in several times and the belated ASIC became no longer profitable. Since that time, it has been gathering dust in the box. I do not know how it works now, but previously, the companies (mainly from China) did not find any fault with earning some crypt for free, using clients’ ASICs before delivery. It was proven by the dust in the places of fans, for sure, it was not the dust from the testing before sending order to the client.

The result is that when ASICs stop paying off, they start to “eat” more electricity than they earn, and when this happens - their only way is into the museum, the box or into the trash. Of course, there are number of the details, when you can mine at a loss using these ASICs, but you should strongly believe that the price of crypto currency would significantly increase.

The limitation of ASICs is that they are adapted only to one algorithm SHA-256 (Bitcoin). It was so in 2013, then came ASICs under the Scrypt algorithm (Litecoin).

And now there are already ASICs under the X11 algorithm (Dash). Yes, they are in dozens of times more energy efficient than graphics cards. But with increasing complexity of the network, your profit will literally “melting in front of your eyes” and therefore, only those who bought new ASICs faster and earlier than others wins! And sometimes, as I told you before, the first user of new ASICs is the plant in China, which produced it and delayed the delivery to the customer, explaining it that it was a process of testing and trial. You should understand that it looks like a kind of deception. It is not so simple to buy ASICs in the store, in comparison to a video card purchase. And before it was even more complicated process, you need to get the permission of the FSB to import product from abroad, because the only chance to buy ASICs was either to order it in China or in the USA. And by the way, these ASICs were too noisy...

With video cards everything is somewhat different, they become obsolete much less often, some of them work for me for 4-5 years. They are super universal, they can mine almost all Altcoins using various algorithms. The number of these algorithms is so huge, that people who are beginners in mining can just “get lost” in its variety. And what is more important, the video cards can be sold (of course you need to indicate where it was used before). Well, or you can just use your graphics cards for some other purposes, there are enough of them. 

Although, now it is impossible to use video cards for bitcoin mining, they were replaced by ASICs, whose productivity and energy efficiency exceeded the video cards by 100-1000 times. It is an interesting fact – that at the dawn of Bitcoin and Lightcoin appearance, the video cards in turn, replaced processors.


Hazards in domestic mining 

Objectively, mining is already not a process for the private homes. For instance, any balcony or closet has its volume limits. Also, we should take into account technical moments. Just a simple example - I had to build a copper wire from a shield with a cross section of 2.5 square meters on my own balcony. Once there comes a moment when the 16A limit of one outlet becomes the limit for energy expansion. At the same time, fire safety is an important thing, my balcony is trimmed with wooden boards. To secure my wooden balcony, I attached a sheet of metal to the wall with a steel rack, so it became a bit calmer for me... Although this is not a panacea for sudden fire, so it is necessary to make sure that there are no flammable materials nearby, curtains, wooden objects, and there is nothing to burn except for wires from the power supply unit. The main rule is that everything around domestic mining farm should be made from metal plus you need constantly control the level of electricity.

Be careful 

Now I will briefly discuss the cyber-attacks on the cryptocurrency wallets.  In other words, can your cryptocurrency be hacked? Moreover, you should understand that exchange platforms where you trade, and exchange cryptocurrency could be also attacked.

The first rule regarding exchange platforms is two-factor authorization and your operating smartphone should not have access to the Internet. Preferably to use smartphone without a sim card. Yes, it is necessary to allocate a special smartphone for this purpose. But even then, it will not be a fully safe process, because one day exchange market could burn out or be scammed.

Wallets could be cold and hot. Cold wallet is the one that should be on a removable hard drive or on a computer which is not connected to the network. Such wallet is launched only in order to accept funds. Because this type of the wallet is not connected to the Internet, usually it contains much of the money. Hot wallet - is the one which miners engaged in solo mining use, it is connected to the Internet 24/7 and accept payments come from pools, etc. In other words, the hot wallet is more like a current account, and the cold one – is a savings account. The ideal option is to store most of the bitcoins in a safe cold wallet offline and spend them using a hot wallet. And of course, you need to come up with complex passwords using different symbols, upper and lower cases, not a - QWERTY type passwords or something similar. Such simple passwords are firstly attacked by hackers using automatic busting and dictionaries for hacking.

Of course, there is a huge difference between buying Bitcoin for 1,000,000 rubles, or 100,000 rubles per BTC, the risk is incommensurable, especially if the exchange rate collapses. But the paradox is that when BTC reached 100 thousand rubles for the first time, people thought the same way – you cannot buy it for this high price, it's too late. It all depends on your own intuition, if you believe that BTC will reach 2.000.000 rubles, then why not buy it. But I would certainly recommend trying to trade with the Altcoins, where the price is not such a biting. Although in the end everything is decided not by the price, but by how many times will it go down or rise, because the volatility of the cryptocurrency is still stunning and not comparable with any traditional financial instrument. By the way, no one forces you to buy 1 Bitcoin, you can limit yourself to 0.1 BTC.

You should learn from everything 

You can have no skills and experience in mining, but simply bring money to the exchange platform and buy some cryptocurrency, and then sell it at a higher price and so on in a circle. Using money from a personal pocket on a stock exchange is usually more risky and nervous for the person, rather than investing in the equipment and receiving a stable profit from the cryptocurrency, which you can always speculate. In general, it is quite difficult to give recommendations on this topic, I had no advices on it. I did not even have friends who did this, I read forums, of course, asked questions, like everyone at the beginning. The book about the blockchain is useless if you want to trade on the exchange platforms. Of course, it will help to understand what the wallet addresses are, which are generated at random, how the cryptocurrency is created, the essence of a distributed register of transactions, etc. For sure, it is better to know the basic things of the cyber world in advance.

Ponzi schemes are different 

The financial pyramid (Ponzi scheme) is when people come to the car dealer, make an advance payment for the car, and this money goes to buy a car for previous customers without a guarantee forth and so on. Or the MMM pyramid by the unforgettable Mavrodi, where the amazing pseudo increase of his stock was financed by the influx of new and new adepts with simple advertising on TV with Leonid Golubkov: "I'm not a freeloader, I'm a business partner".

I do not really understand when our politicians and ministers argue that  Bitcoin is a financial pyramid. You bought a video card, put it into work, it can pay off in 4-8 months, or maybe it will not pay off at all if everything is failed. Or let’s take other example - you put money into a commercial bank at a high interest rate on the deposit account. But the bank goes bankrupt - you cannot return a solid part of the invested money, just a bad luck. So, in this situation you can say that this bank is just failed, and what is the difference with a BTC scheme here? Apparently, there are elements of financial pyramids even in banks, based on amazing interest rate, greed and recklessness of depositors.

I can provide endless number of examples of the bankruptcy of the largest global corporations and their shares, secured by the real manufacturing, etc. Everything has a beginning and an end, and no one is safe from risks.

About cryptocurrency exchanges

Regarding foreign cryptocurrency exchanges and stock exchanges in general. Nobody is safe from the loss of funds on any exchange because all of them are outside the legal field, I do not mean crime. Is there something criminal when person wants to earn money, using some of his skills and knowledge and modern equipment? Such an equipment is used almost in every house on a home computer. And then, miner decides to sell the generated cryptocurrency, because he did not deceive anyone, and did not steal anything. I mean that people's money is not protected by the government, and who will be responsible for it?

Support exchanges can show a reaction from sympathy to possible help. If the fault is on the side of the exchange, their reaction – it is your fault, no one can help. And even more so, you are not protected on foreign exchanges, you may be required for verification, they can also deny you and generally forget about your existence.

And of course, they can just take your money, what can you do, if even the state property could be taken away abroad. So, to block your account is just an easy action for them. By the way, Vladimir Putin constantly warned Russian citizens about risk of storing funds abroad, of course, this did not concern cryptocurrencies, but why not to use this advice for BTC.

Keep your ears to the ground

For example, on December 27, 2017, the United States-based cryptocurrency exchange Poloniex issued a press release containing information that in the first quarter of the year, for all non-verified accounts, forced verification must be conducted, otherwise access to the exchange and trading on it will be blocked. It is clear that they comply with the Anti-Money Laundering (AML) and Know Your Customer (KYC) Policy standards, but here comes the question - why it did not stop them from working before?

I can remember a lot of resources that started to ask for customers’ passport details and other private information just before the scam. And according to the reviews from the forums, verification occurs in a quite simple mode, using a web camera you need to take photos of your passport or a driving license, some of them asked to take a picture with your passport, poloniex inscriptions and the current date. Digital CIA at home for losers and dummies! Again, according to the reviews, some users had to wait up to 3 months, which started the process even long before this press release.

Concerning the new initiative of the United States, my opinion is that I do not want to expose my face and passport with an address on foreign resources. Perhaps, there is nothing illegal for users, but on the other hand after identification all transfers of any cryptocurrency can be connected with a specific person. And in this case, where is so-called anonymity? I thought that there was nothing for me to do at these exchange platforms and started to sell my altcoins and steadily phase them out. As well as I could sell nothing but bring them to other exchanges or local altcoin wallets, but here everybody better minds his own business.

Finally, my vis-à-vis told me - this may be our last conversation on this topic, it seems like we have already discussed everything…

The interview was recorded and adapted by Vladimir Elin, Ph.D., CEO of Intersoft Eurasia, Head of the DO-RA Project (

January 4, 2018