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So it has become apparent to me from the constant questions on this subreddit that a lot of new miners/shibes need help, so I have decided to make a basic guide to most of the questions I see a lot here. 1) BTC - This means Bitcoin so If you see a miner that says BTC it does not work with dogecoin because dogecoin is Scrypt. 2) Scrypt - This is what dogecoin runs off of, or what your computeasic/gpu solves to support the network. 3) Asic - This stands for an application-specific integrated circuit, or in less confusing terms a miner dedicated completely to mining a particular type of coin such as dogecoin. 4) GPU Mining - Using a graphics card to mine crypto currencies. 5) CPU Mining - A slow and inefficient way of using your computers Central Processing Unit to mine crypto currencies. 6) Hash Rate - The rate at which you mine a crypto currency. The higher the better. 7) KH - This Means Kilo Hashes. 1KH = 1,000 Hashes a Second 8) MH - This Means Mega Hash - 1 MH = 1,000,000 hashes a second. 9) Should I buy an asic? - If you want to support the network yes. If you want to solely make money off of it No. Buy the coin if you want to make profit. This is my opinion, there is no one answer to this question. 10) Mining Pool - Pooled mining is a mining approach where multiple generating clients contribute to the generation of a block, and then split the block reward according the contributed processing power. Pooled mining effectively reduces the granularity of the block generation reward, spreading it out smoothly over time. Tl/DR You Work with other miners to solve stuff faster making you money faster. 11) Mining Difficulty - How hard it is to solve the problems to generate dogecoin. 12) Do I need a fan? - Yes I cannot stress how important it is to properly cool your units. Make sure your units are always cool or else they might melt. Do not think you are safe just because you turn your ac up, but a fan. 13) What Mining Pool Should I Pick? - Here is a list of all of the pools Pick one that works for you. 14) What is a wallet? - This is where you store your dogecoin and where you can send and receive dogecoin. 15) What Wallet Should I get? - Online is convenient but not safe. Paper Is the Safest But Not convenient. Cold Storage is the mostly safe and somewhat convenient. 16) What is cold storage? - Basically putting your wallet on an offline device like a usb. 17) Can I mine on a mac? - Yes look here for more info. 18) Cloud Mining - A service you buy that mines for you. you pay for a certain amount of hashes, lets just say 10gh for an example, and the company/service mines you this amount for the time you bought. It is not profitable usually. 19) What Is a Raspberry Pi? - A small cheap computer that people use to run their miners on. 20) Watts - The measure of electricity. 21) Should I pre-order? No Never F%&$ing pre order, you will get scammed 99.9999% of the time. 22) Can I still mine? - Yes, you probably wont make money but you will support the doge community. 23) Linux - An operating system like windows that people use to run mining programs on. 24) If you Have an animal make sure to properly protect your mining rig from them. Wires from the machines make great chew toys. 25) How Do I calculate if im going to make money with my mining rig? - Use This mining CalculatorThis is also a very good calculator 26 What Mining Program Should I use? Windows: CG MINER Mac: Astroid Linux: CG Miner again Goodluck mining I hope this helps. This Also Took A long time to make so support would be appreciated :)
The pools are all reporting the wrong network data (I hope its this - but the rate of discovery of blocks by pools would suggest otherwise)”
(https://bitcointalk.org/index.php?topic=583449.msg6782852#msg6782852) -2192: “New source (0.8.8.1) is up with optimizations in the hashing. Hashrate should go up ~4x or so, but may have CPU architecture dependence. Windows binaries are up as well for both 64-bit and 32-bit." (https://bitcointalk.org/index.php?topic=583449.msg6788812#msg6788812) [eizh makes official announce of last miner optimization, it is may 17th] -2219: (https://bitcointalk.org/index.php?topic=583449.msg6792038#msg6792038) [wolf0 is part of the monero community for a while, discussing several topics as botnet mining and miner optimizations. Now spots security flaws in the just launched pools] -2301: "5x optimized miner released, network hashrate decreases by 10% Make your own conclusions. :|" (https://bitcointalk.org/index.php?topic=583449.msg6806946#msg6806946) -2323: "Monero is on Poloniex https://poloniex.com/exchange/btc_mro" (https://bitcointalk.org/index.php?topic=583449.msg6808548#msg6808548) -2747: "Monero is holding a $500 logo contest on 99designs.com now: https://99designs.com/logo-design/contests/monero-mro-cryptocurrency-logo-design-contest-382486" (https://bitcointalk.org/index.php?topic=583449.msg6829109#msg6829109) -2756: “So... ALL Pools have 50KH/s COMBINED. Yet, network hash is 20x more. Am i the only one who thinks that some people are insta mining with prepared faster miners?” (https://bitcointalk.org/index.php?topic=583449.msg6829977#msg6829977) -2757: “Pools aren't stable yet. They are more inefficient than solo mining at the moment. They were just released. 10x optimizations have already been released since launch, I doubt there is much more optimization left.” (https://bitcointalk.org/index.php?topic=583449.msg6830012#msg6830012) -2765: “Penalty for too large block size is disastrous in the long run. Once MRO value increases a lot, block penalties will become more critical of an issue. Pools will fix this issue by placing a limit on number and size of transactions. Transaction fees will go up, because the pools will naturally accept the most profitable transactions. It will become very expensive to send with more than 0 mixin. Anonymity benefits of ring signatures are lost, and the currency becomes unusable for normal transactions.” (https://bitcointalk.org/index.php?topic=583449.msg6830475#msg6830475) -2773: "The CryptoNote developers didn't want blocks getting very large without genuine need for it because it permits a malicious attack. So miners out of self-interest would deliberately restrict the size, forcing the network to operate at the edge of the penalty-free size limit but not exceed it. The maximum block size is a moving average so over time it would grow to accommodate organic volume increase and the issue goes away. This system is most broken when volume suddenly spikes." (https://bitcointalk.org/index.php?topic=583449.msg6830710#msg6830710) -3035: "We've contributed a massive amount to the infrastructure of the coin so far, enough to get recognition from cryptonote, including optimizing their hashing algorithm by an order of magnitude, creating open source pool software, and pushing several commits correcting issues with the coin that eventually were merged into the ByteCoin master. We also assisted some exchange operators in helping to support the coin. To say that has no value is a bit silly... We've been working alongside the ByteCoin devs to improve both coins substantially." (https://bitcointalk.org/index.php?topic=583449.msg6845545#msg6845545) [tacotime defends the Monero team and community of accusations of just “ripping-off” others hard-work and “steal” their project] -3044: "image" (https://bitcointalk.org/index.php?topic=583449.msg6845986#msg6845986) [Monero added to coinmarketcap may 21st 2014] -3059: "You have no idea how influential you have been to the success of this coin. You are a great ambassador for MRO and one of the reasons why I chose to mine MRO during the early days (and I still do, but alas no soup for about 5 days now)." (https://bitcointalk.org/index.php?topic=583449.msg6846509#msg6846509) [random user thanks smooth CONSTANT presence, and collaboration. It is not all FUD ;)] -3068: "You are a little too caught up in the mindset of altcoin marketing wars about "unique features" and "the team" behind the latest pump and dump scam. In fact this coin is really little more than BCN without the premine. "The team" is anyone who contributes code, which includes anyone contributing code to the BCN repository, because that will get merged as well (and vice-versa). Focus on the technology (by all accounts amazing) and the fact that it was launched in a clean way without 80% of the total world supply of the coin getting hidden away "somewhere." That is the unique proposition here. There also happens to be a very good team behind the coin, but anyone trying too hard to market on the basis of some "special" features, team, or developer is selling you something. Hold on to your wallet." (https://bitcointalk.org/index.php?topic=583449.msg6846638#msg6846638) [An answer to those trolls saying Monero has no innovation/unique feature] -3070: "Personally I found it refreshing that Monero took off WITHOUT a logo or a gui wallet, it means the team wasn't hyping a slick marketing package and is concentrating on the coin/note itself." (https://bitcointalk.org/index.php?topic=583449.msg6846676#msg6846676) -3119: “image” [included for the lulz] -3101: "[…]The main developers are tacotime, smooth, NoodleDoodle. Some needs are being contracted out, including zone117x, LucasJones, and archit for the pool, another person for a Qt GUI, and another person independently looking at the code for bugs." (https://bitcointalk.org/index.php?topic=583449.msg6848006#msg6848006) [the initial "core team" so far, eizh post] -3123: (https://bitcointalk.org/index.php?topic=583449.msg6850085#msg6850085) [fluffy steps-in with an interesting dense post. Don’t dare to skip it, worthwhile reading] -3127: (https://bitcointalk.org/index.php?topic=583449.msg6850526#msg6850526) [fluffy again, worth to read it too, so follow link, don’t be lazy] -3194: "Hi guys - thanks to lots of hard work we have added AES-NI support to the slow_hash function. If you're using an AES-NI processor you should see a speed-up of about 30%.” (https://bitcointalk.org/index.php?topic=583449.msg6857197#msg6857197) [flufflypony is now pretty active in the xmr topic and announces a new optimization to the crippled miner] -3202: "Whether using pools or not, this coin has a lot of orphaned blocks. When the original fork was done, several of us advised against 60 second blocks, but the warnings were not heeded. I'm hopeful we can eventually make a change to more sane 2- or 2.5-minute blocks which should drastically reduce orphans, but that will require a hard fork, so not that easy." (https://bitcointalk.org/index.php?topic=583449.msg6857796#msg6857796) [smooth takes the opportunity to remember the need of bigger target block] -3227: “Okay, optimized miner seems to be working: https://bitcointalk.org/index.php?topic=619373” [wolf0 makes public his open source optimized miner] -3235: "Smooth, I agree block time needs to go back to 2 minutes or higher. I think this and other changes discussed (https://bitcointalk.org/index.php?topic=597878.msg6701490#msg6701490) should be rolled into a single hard fork and bundled with a beautiful GUI wallet and mining tools." (https://bitcointalk.org/index.php?topic=583449.msg6861193#msg6861193) [tail emission, block target and block size are discussed in the next few messages among smooth, johnny and others. If you want to know further about their opinions/reasonings go and read it] -3268: (https://bitcointalk.org/index.php?topic=583449.msg6862693#msg6862693) [fluffy dares another user to bet 5 btc that in one year monero will be over dash in market cap. A bet that he would have lost as you can see here https://coinmarketcap.com/historical/20150524/ even excluding the 2M “instamined” coins] -3283: "Most of the previous "CPU only" coins are really scams and the developers already have GPU miner or know how to write one. There are a very few exceptions, almost certainly including this one. I don't expect a really dominant GPU miner any time soon, maybe ever. GPUs are just computers though, so it is certainly possible to mine this on a GPU, and there probably will be a some GPU miner, but won't be so much faster as to put small scale CPU miners out of business (probably -- absent some unknown algorithmic flaw). Everyone focuses on botnets because it has been so long since regular users were able to effectively mine a coin (due to every coin rapidly going high end GPU and ASIC) that the idea that "users" could vastly outnumber "miners" (botnet or otherwise) isn't even on the radar. The vision here is a wallet that asks you when you want to install: "Do you want to devote some of you CPU power to help secure the network. You will be eligible to receive free coins as a reward (recommended) [check box]." Get millions of users doing that and it will drive down the value of mining to where neither botnets nor professional/industrial miners will bother, and Satoshi's original vision of a true p2p currency will be realized. That's what cryptonote wants to accomplish with this whole "egalitarian mining" concept. Whether it succeeds I don't know but we should give it a chance. Those cryptonote guys seem pretty smart. They've probably thought this through better than any of us have." (https://bitcointalk.org/index.php?topic=583449.msg6863720#msg6863720) [smooth vision of a true p2p currency] -3318: "I have a screen shot that was PMed to me by someone who paid a lot of money for a lot of servers to mine this coin. He won't be outed by me ever but he does in fact exist. Truth." (https://bitcointalk.org/index.php?topic=583449.msg6865061#msg6865061) [smooth somehow implies it is not botnets but an individual or a group of them renting huge cloud instances] -3442: "I'm happy to report we've successfully cracked Darkcoin's network with our new quantum computers that just arrived from BFL, a mere two weeks after we ordered them." [fluffy-troll] -3481: “Their slogan is, "Orphaned Blocks, Bloated Blockchain, that's how we do"" (https://bitcointalk.org/index.php?topic=583449.msg6878244#msg6878244) [Major FUD troll in the topic. One of the hardest I’ve ever seen] -3571: "Tacotime wanted the thread name and OP to use the word privacy instead of anonymity, but I made the change for marketing reasons. Other coins do use the word anonymous improperly, so we too have to play the marketing game. Most users will not bother looking at details to see which actually has more privacy; they'll assume anonymity > privacy. In a world with finite population, there's no such thing as anonymity. You're always "1 of N" possible participants. Zero knowledge gives N -> everyone using the currency, ring signatures give N -> your choice, and CoinJoin gives N -> people who happen to be spending around the same amount of money as you at around the same time. This is actually the critical weakness of CoinJoin: the anonymity set is small and it's fairly susceptible to blockchain analysis. Its main advantage is that you can stick to Bitcoin without hard forking. Another calculated marketing decision: I made most of the OP about ring signatures. In reality, stealth addressing (i.e. one-time public keys) already provides you with 90% of the privacy you need. Ring signatures are more of a trump card that cannot be broken. But Bitcoin already has manual stealth addressing so the distinguishing technological factor in CryptoNote is the use of ring signatures. This is why I think having a coin based on CoinJoin is silly: Bitcoin already has some privacy if you care enough. A separate currency needs to go way beyond mediocre privacy improvements and provide true indistinguishably. This is true thanks to ring signatures: you can never break the 1/N probability of guessing correctly. There's no additional circumstantial evidence like with CoinJoin (save for IP addresses, but that's a problem independent of cryptocurrencies)." (https://bitcointalk.org/index.php?topic=583449.msg6883525#msg6883525) [Anonymity discussions, specially comparing Monero with Darkcoin and its coinjoin-based solution, keep going on] -3593: "Transaction fees should be a fixed percentage of the block reward, or at the very least not be controllable by the payer. If payers can optionally pay more then it opens the door for miner discrimination and tx fee bidding wars." (https://bitcointalk.org/index.php?topic=583449.msg6886770#msg6886770) [Johnny Mnemonic is a firm defender of fixed fees and tail emission: he see the “fee market” as big danger to the usability of cryptocurrencies] -3986: (https://bitcointalk.org/index.php?topic=583449.msg6930412#msg6930412) [partnership with i2p] -4373: “Way, way faster version of cpuminer: https://bitcointalk.org/index.php?topic=619373” (https://bitcointalk.org/index.php?topic=583449.msg6993812#msg6993812) [super-optimized miner is finally leaked to the public. Now the hashrate is 100 times bigger than originally with crippled miner. The next hedge for "cloud farmers" is GPU mining] -4877: “1. We have a logo! If you use Monero in any of your projects, you can grab a branding pack here. You can also see it in all its glory right here: logo […] 4. In order to maintain ISO 4217 compliance, we are changing our ticker symbol from MRO to XMR effective immediately." (https://bitcointalk.org/index.php?topic=583449.msg7098497#msg7098497) [Jun 2nd 2014] -5079: “First GPU miner: https://bitcointalk.org/index.php?topic=638915.0” (https://bitcointalk.org/index.php?topic=583449.msg7130160#msg7130160) [4th June: Claymore has developed the first CryptoNight open source and publicly available GPU miner] -5454: "New update to my miner - up to 25% hash increase. Comment and tell me how much of an increase you got from it: https://bitcointalk.org/index.php?topic=632724" (https://bitcointalk.org/index.php?topic=583449.msg7198061#msg7198061) [miner optimization is an endless task] -5464: "I have posted a proposal for fixed subsidy: https://bitcointalk.org/index.php?topic=597878.msg7202538#msg7202538" (https://bitcointalk.org/index.php?topic=583449.msg7202776#msg7202776) [Nice charts and discussion proposed by tacotime, worth reading it] -5658: "- New seed nodes added. - Electrum-style deterministic wallets have been added to help in the recovery of your wallet should you ever need to. It is enabled by default." (https://bitcointalk.org/index.php?topic=583449.msg7234475#msg7234475) [Now you can recover your wallet with a 24 word seed] -5726: (https://bitcointalk.org/index.php?topic=583449.msg7240623#msg7240623) [Bitcoin Pizza in monero version: a 2500 XMR picture sale (today worth ~$20k)] -6905: (https://bitcointalk.org/index.php?topic=583449.msg7386715#msg7386715) [Monero missives: CryptoNote peer review starts whitepaper reviewed)] -7328: (https://bitcointalk.org/index.php?topic=583449.msg7438333#msg7438333) [android monero widget built] This is a dense digest of the first several thousand messages on the definitive Monero thread. A lot of things happened in this stressful days and most are recorded here. It can be summarized in this:
28th April: Othe and zone117x assume the GUI wallet and CN pools tasks.
30th April: First NoodleDoodle's miner optimization.
11th May: First Monero exchanger
13th May: Open source pool code is ready.
16th May: First pool mined block.
19th May: Monero in poloniex
20th May: Monero +1100 bitcoin 24h trading volume in Poloniex.
21st May: New official miner optimization x4 speed (accumulated optimization x12-x16). Open source wolf0's CPU miner released.
25th May: partnership with i2p
28th May: The legendary super-optimized miner is leaked. Currently running x90 original speed. Hedge of the "cloud farmers" is over in the cpu mining.
2nd June: Monero at last has a logo. Ticker symbol changes to the definitive XMR (former MRO)
4th June: Claymore's open source GPU miner.
10th June: Monero's "10,000 bitcoin pizza" (2500 XMR paintig). Deterministic seed-based wallets (recover wallet with a 24 word seed)
March 2015 – tail emission added to code
March 2016 – monero hard forks to 2 min block and doubles block reward
There basically two things in here that can be used to attack Monero:
Crippled miner Gave unfair advantage to those brave enough to risk money and time to optimize and mine Monero.
Fast curve emission non-bitcoin-like curve as initially advertised and as it was widely accepted as suitable
Though we have to say two things to support current Monero community and devs:
The crippled miner was coded either by Bytecoin or CryptoNote, and 100% solved within a month by Monero community
The fast curve emission was a TFT miscalculation. He forgot to consider that as he was halving the block target he was unintentionally doubling the emission rate.
newbie lurker - some BTC impressions from the non-initiated
Disclaimer: Work in computer field, wanted to take a look at BTC as an investment, or mining it. It was a bit hard to get things going (considering I'm not a PC user newbie or something) and because I came in late, it was disappointing to realise mining without ASICs etc is essentially pointless, unless I mine an altcoin via CPU or GPU (mostly pointless), or perhaps take a chance on a less-adopted purchase like eth. I get it of course though, cheap power, early adoption, increasing difficulty, limited coins. I tried to read up anyway.. recently, I guess the drama with Craig Wright drew me in (I mean, it's quite the tale/effort) - to see what the latest state of things were. I was considering buying some BTC now its come down from the maximum height it was at. I've also been seriously considering buying a chunk of Litecoin, given it mirrors BTC value movements and has a higher quantity (though I worry about its adoption and always being seen as second-rate to BTC perhaps?) All that said, I just wanted to share some first impressions, from someone coming from Fiat to BTC and trying to make it feel OK. Don't burn me and I know some are invalid...it's just me communicating an initial perception.
The arguments, the rage, the drama between Blockstream and core and whomever else, the religious undertones from that guy who wears the hat (I can't even remember his name despite posting really annoyed about him the other day)...all of these, really really turns off the home wannabe 'investor' like myself, and I can imagine the general public too, as well as institutional investors, when we come to looking at BTC as an investment vehicle. I'm honestly scared to buy BTC. From the point of view, of how will all these things get resolved, without any detrimental effect on my stored value? Let me explain a little
The personalities and the basic infighting over the protocol(s). This has the potential to cause loss of value to the currency. This doesn't appear to be resolving. What am I to think? 2Mb blocks, soon?
The delays and problems with the network transaction rate. I want to know I can send the BTC reliably, easily, between wallets or accounts etc. I don't know that right now. The horror stories of no confirmations, stuck transactions (incorrectly calculated fees), and various other extensive delays, are horrifying to someone like myself who doesn't have a fortune to invest (/lose/get stuck in limbo)
Exchange credibility. again let me explain... If a bank exists in Australia it has to meet a lot of regulatory requirements, including guaranteeing customer deposits, holding insurance of various forms, not over-leveraging, etc. This means that the number of actual banks that fail (and result in all customers losing all funds) is miniscule. Mt Gox is hardly an isolated incident. In 2 weeks I've found literally - 20+ current issues happening, from people waiting extended periods of time to cash out from BTC to USD, or BTC to AUD, to $79 just going missing from an exchange account (explanation was bank charges when moving the converted fiat value around). Total loss of access to coins (stolen, shutdown, run). While this might statistically be 'rare' (compared to # of users), the severity when it happens is very high.
As a value store. OK great, if I bought big anywhere before what 2010, I'm rolling in money now, and if I bought big at just the wrong time, I'm only down 70%. In theory that's not bad, from a gambling/probability perspective. However - as a value store, this variability is terrifying. I can put $1million into USD or AUD in a government-guaranteed savings account and feel very safe that this money will retain on the high side of 90% of its value or increase perhaps 5-10% value. The risk of total loss is near-zero. This gives me the comfort level needed to store real value in this way. BTC moving between $350 - $850 wildly with no apparent definitive reason (it's not like a stock where a company has made an announcement and rises rapidly/retains most afterwards), causes me to not want to use it as a store of value. The loss possibility is too high, the stress from experiencing the variance is too high.
The Numeracy of it. $100 sounds nice, it's 100 of something right? $1 sounds OK, it's at least a whole number. It's quite obvious $1,000 is starting to become a lot, and $1,000,000 even more so. This is the reason that when you see a very devalued currency, it seems laughable. Like paying 36,721,941.06 bellarussian rubles per month in rent, doesn't seem 'right' to most people. Because we're used to the metric system. Bitcoin has a problem here for 'everyday' usage. Devs/enthusiasts wildly proclaim No! What! It's just 0.01 BTC! you can divide it up to 100,000 times (or whatever the resolution really is). BTC will reach $35,000 per coin! OK if it does. The problem's worse. 1BTC means I will spend for example, 0.0013428 BTC on petrol today. Does that really sound reasonable to you? I don't think society is quite at the point yet where it's like Black Mirror and we have a huge number of 'credits' on our screen. Even then, I'd want to see the decimal point somewhere else. Working for 3.5BTC per year for example, is not a nice sounding thing. OK sure you say, let's make another unit. Call it... mBTC. It will be 1,000th of a BTC. So in the future when BTC is $35,000 USD, one mBTC will be $3.50(USD equiv). The USD will inflate, more than BTC, since BTC is not inflationary. This potential increase in Bitcoin's value (some argue, increasing forever) means the required Unit for small daily purchases continues to change. mBTC will work for $35k BTC's but it won't work for $350k BTCs.
I'm confused about the security. It's one thing to have a hash-based peer to peer system with an effective crypto scheme - but when the end user of this system, is subject to processes and systems that are by nature difficult to understand, this makes them prone to human-induced insecurity. A little like a highly-complex password policy on a network that results in users handwriting their password on a post-it note. Also at first I thought...Paper wallets (so I'm just printing my keys now? how the heck is that secure unless I lock it up in a safe? this is not security. Can anyone copy my keys and use them?). I don't need people to answer about how paper wallets work because I did end up reading up on it, I'm explaining my initial confusion and questions. Same went for electronic offline wallet systems, versus online wallets, versus exchanges that hold your coins, verus sending them to an offline computer. I mean really. If this was a commercial line of products the product manager would slap the developers and say STANDARDISE! how are you expecting people to seriously adopt this. Open platforms and software can (and should!) still create, drive, and adhere to standards.
Anyway, I digress, I still bought a small portion of some BTC (I mean..I'm not an IDIOT ;p). But - the things I went through - given I already know the general field quite well - and the thoughts, concerns, etc I had, do mean investing in this currency is going to be tough for a period of time that is perhaps longer than some of the estimates I see. I noticed its picking up a lot in the mainstream retail industry (places accepting BTC) which will help a lot. However the sorts of things listed above, do need to get sorted. As an aside, not preaching here, but there's a reason most commercial companies don't allow their development teams to run the company, and I have to say these reasons are really showing through at the moment in the BTC arena. Just because as a group BTC supporters are generally anti-centralisation, doesn't mean you have to be anti-standards, or anti-organisation. Also to prevent unnecessary criticism and infighting, it's wise for there to be a common public image and an agreed upon set of standards, not this bickering, public infighting, dramatic stuff going on all the time. Blockchains and their usage is stealing BTC's thunder a little lately too. I hope the BTC players can get things back on track a bit. The problems are making it all too easy for talented devs to go to Blockchain projects and leave the drama behind. DISCLAIMER2: I apologise for misunderstanding, offensive comments, please don't steal my dog and burn my pet bird in retribution. Just throwing out there first impressions. I know I probably also misunderstand the 'security' of fiat and make many other potentially grave errors, but what I'm doing here, is communicating my first perceptions which I think will be shared by some, and unfortunately, for most people, perception=reality
TL:DR: Don't bother mining if you want to get rich yo. You're way too late to the party. Welcome to the exciting and often stressful world of bitcoin! You are wondering what looks like a once in a lifetime opportunity to get rich quick. Of course you guys probably heard about this "mining" process but what is this? Simply put, a bitcoin mining machine that performs complicated calculations and when deemed correct by the network, receives a block which contains 25 bitcoins (XBT). This is how bitcoins are generated. So your brain instantly thinks, "Holy shit, how can I get on this gold rush?" Before you proceed further, I would like to explain the concept of mining further. Bitcoin is limited 21m in circulation. It is coded to release a certain number of blocks at a certain time frame, ie: this year the network will release close to 500,000 bitcoins. What this means is that the more people (or specifically the amount of mining power) mine, the less each person gets. The network tries to keep to this time frame through the process of difficulty adjustments which makes the calculations harder and this happens every 2 weeks. So every 2 weeks, you get less bitcoins with the same hash rate (mining power) based on what the difficulty changes are. Recently, the changes have been pretty staggering, jumping 226% in 2 months. You can see the difficulty changes here. Now, why are these changes so large? A bit of a simple history. Bitcoin's algorithm runs on SHA-256. This algorithm can be solved using many hardware, from CPU to GPU and dedicated hardware (Application Specific Integrated Circuits). When bitcoin first started, mining on CPU was a trivial process, you can pretty much earn 50 XBT (the block size then) every few hours between Q1 and Q2 of 2010. In late 2010, due to the difficulty increase that is reducing the effectiveness of CPU mining, people started to harness GPU mining. Only AMD GPU's architecture design are better optimized for bitcoin mining so this is what the community used. Immediate improvements of more than 10x was not uncommon. In time of course, GPUs reached their limit and people started to build dedicated. In the same vein as the CPU to GPU transition, similar performance increase was common. These ASICs can only perform SHA-256 calculation so they can be highly optimized. Their performance mainly depends on the die size of the chips exactly like CPU chips. In general, think of bitcoin mining's technological advancement no different to mining gold. Gold panning (CPUs) vs pickaxes (GPUs) vs machinery (ASICs) and we are still in the ASIC mining race. ASIC mining started with ASICMiner and Avalon being first to the market, both producing 130nm and 110nm chips. The technology are antiquated in comparison to CPUs and GPUs which are now 22nm with 14nm slated for Q1 next year by Intel but they are cheap to manufacture and with performance gains similar to the CPU to GPU transition, they were highly successful and popular for early adopters. At that point in time since there were less competing manufacturers and the low batch runs of their products, miners became really rich due to the slow increase in difficulty. The good days came to an end mid August with an unprecedented 35% increase in difficulty. This is due to existing manufacturers selling more hardware and many other players coming onto the market with better hardware (smaller die). Since die shrinking knowledge and manufacturing process are well known along with a large technological gap (110nm vs 22nm), you get an arms race. Current ASIC makers are closing in on our technological limit and until everyone catches up, the difficulty jumps will be high because it is just too easy to get a performance increase. Most newer products run at 28nm and most chips are not well optimized, so it will be around another 6 to 9 months before we see hit a hard plateau with 22nm or 14nm chips. The estimated time frame is because manufacturing chips at 22nm or 14nm is a more difficult and expensive task. In the meantime most manufacturers will probably settle at 28nm and we will reach a soft plateau in about 3 months. Now, you might ask these questions and should have them answered and if you have not thought about them at all, then you probably should not touch bitcoin until you understand cause you are highly unprepared and probably lose lots of money.
I read that you can mine with a CPU/GPU, should I do so?
No. If you have to ask, please do not touch bitcoin yet. You will spend more on electricity cost than mining any substantial bitcoin. Seriously. At all. A 7990 would produce a pitiful 0.02879 XBT (USD $14 @ $500/XBT exchange rate) for the next 30 days starting 23 Nov 2013 at 35% difficulty increase. And if you think you can mine on your laptop either on a CPU or GPU, you are probably going to melt it before you even get 0.01 XBT.
I get free electricity and I have existing hardware, should I still mine?
Probably not because you probably forgot that GPUs and CPUs produce a ton of heat and noise. You can try but I see no point earning < $20 bucks per month.
Should I buy an ASIC machine?
No, because your machine will probably not mine as much as buying bitcoins. This situation is called the opportunity cost. While you can still make money if XBT rise in value, it is a fallacy.
IE: if you start mining on 1 Dec 2013, a KnC Jupiter running at 450Gh/sec (KnC lies as not all chips run at 550Gh/sec) will yield you a total revenue of 9.5189 XBT with a profit of 0.7859 XBT in profit by 30th Jan 2014 at a constant difficulty increase of 35%. The opportunity cost is: 8.5910 XBT @ USD $580/XBT with USD $5,000 which is the cost of a KnC Jupiter. This is the best you can earn and it's a bloody optimistic assumption because:
You are assuming your pre-order will arrive on time. (I do not think any first batch pre-order from any manufacturer has arrived on time).
All pre-orders are sold out for 1 Dec.
You are assuming your chips will run at 450Gh/sec minimum but many miners here will tell you their chips have been under performing.
Electricity cost have not been taken into account.
Shipping cost and time has not been taking into account.
Import Tax or VAT has not been taken into account.
Risk of downtime due to DOA or warranties has not been taken into account.
You are assuming the difficulty increase will be a constant 35% which is very unlikely because Cointerra with a team that has worked on some of the world’s highest performance CPUs, GPUs and chipsets for NVIDIA, Intel, Samsung, Qualcomm and Nortel has pre-sold an absurd amount of hash rate. Difficulty increase of 45% or more (which we have seen when a small player, KnC shipped their 1st batch) will be repeated commonly. This is only 1 company, imagine what the rest will come out with. I have failed repeatedly and so have many in estimating future hashrate. You wont be able to do better.
Even if you earn some profit, it will be < 15% and will probably be not worth your risk or your trouble. I can buy and hold XBT with no risk of losing them.
The only circumstances where you will earn money is when XBT exchange rates is so high that it makes the opportunity cost pales in comparison. Unfortunately this is not the case. If XBT stabilized at 900/XBT today (20 Nov 2013) then we might have a good case. The risk is just generally not worth it. Unless you have at least a hundred thousand and can make a contract with a manufacturer for a lower cost, do not bother. Just wait until the arms race is over then you can start mining.
I understand I probably won't earn any money, I just want to do this for fun/hobby...
Okay, go buy an AsicMiner USB Block Erupter. They are cheap and pretty fun to have.
I want something with more omph and still do not mind losing money
Sure, just read the answer below on who NOT to go for. You are doing bitcoin a service by securing the network and you have our (the users') gratitude.
Who are the manufacturers?
You can check out the manufacturers and their products below along with a calculator here. If you still insist on buying, do not to go for BFL. Their track record is horrid and borderline scammish. KnC fucked up a lot with defective boards and chips. Personally, I think CoinTerra is the best choice. Alternatively, you can go on the secondary market to buy a delivered product. You can get a better deal there if you know how to do your "return on investment (ROI)" calculation. Personally, I will go for a 45%-50% difficulty increase for the next 3 months for my calculations and a 2% pool fee. However, most products on ebay are sold at a cost much higher than it should. bitcointalk.org is a cheaper place because everyone knows what are the true value is so you will find less options. If you are unclear or need assistance, please post a question.
Which pool should I use?
I actually do not use any of the pools recommended to the left because I think they lack features. My favourite is Bitminter (Variable fees based on features used; max 2%). It has all advanced features for a pool, very responsive and helpful owner on IRC. Variable fees is good for those who do not need a large feature set, even with all features turned on, it is still cheap. Eligius (0% fees) has high value for money but lacks features. It has anonymous mining which might be attractive to certain subset of people but not for others. Many other community member and I disagree highly with the opinions of the owner on the direction of bitcoin. I do use his pool for now but I do so only because I share my miners with a few partners and anonymous mining allows us to monitor the machines without using an account. Bitminter uses only OpenID which is problematic for me. BTC Guild (3% fees) is another big pool and is fully featured and does charge a premium for their fees. That said, they are the most stable of the lot. I do use them but do so only because my hoster uses them for monitoring. I try not to use them because a pool with a very large hash rate (they are the largest) presents a large vulnerability to bitcoin's network if compromised. All of them pay out transaction fees.
So you're sick of just mining on your GPU, and not a fan of the electric bill after a month of mining? There has to be a better option out there than your loud GPU in your gaming computer. There is! Shortly after GPUs became popular for bitcoin mining, enterprising folks started looking at other things they can re-purpose to mine bitcoins more efficiently. Around mid-year 2011, the first devices sprang up that are called FPGAs or Field Programmable Gate Arrays. These are nothing new to the hobbyist community, they've been around for a while for crackers and other security-conscious folks looking at ways to defeat cryptographic locks. Hey! I know something that uses cryptographic calculations to secure its network! BITCOINS! Yep, so some miners developed their own boards and slapped some FPGA chips on them (most commonly the Spartan-6), and wrote specific firmware and "bitstreams" to more efficiently calculate bitcoin hashes. The first generations were sort of slow, but still they had better efficiency than a GPU. Some of the latest generation included the Icarus boards, Cairnsmore, x6500, and ModMiner Quad. In early 2012(i think my timeline is right), Butterfly Labs(BFL) was selling their own FPGA miner that hashed at 800 Mhash/s using 80 watts and only cost US$600 amazing! These grew very popular, but people could see that FPGAs still weren't the most efficient way to hash their shares. BFL then announced that they would be designing their own chips that would be orders of magnitude faster than anything ever seen. These would be the ASICs (or Application Specific Integrated Circuit)everyone is raving about. ASICs are--as the name implies--specifically designed for one thing, and one thing only. Bitcoins. This is all it can do, and can't really be repurposed like an FPGA to other applications. Who wouldn't want a US$150 "Jalapeno" that hashes at 3.5 GIGAhashes/s using only power from a USB port?? Crazy! So summer 2012, BFL says they will ship before Christmas. Various things happen and we now still don't have any confirmed ship dates from BFL. A few other companies have sprouted up, ASICminer which I believe is developing their own chips to mine themselves, but in a responsible way as to not threaten the network with a sudden influx of hashing. bASIC was a fiasco that was developed by the creator of the ModMiner Quad(which is actually a fantastic miner, I own one, and love it.) where he took many preorders, promised lots of people amazing ASIC performance, but in early 2013 the stress of the whole endeavour got to him and he gave up, refunded money(I think it's still being refunded now, or maybe it's been cleared up already.) Avalon is the only company we know has ASIC mining hardware in the wild. It is not certain exactly how many are out there, but they have been confirmed by independent sources. The Avalon units are expensive(75 BTC) and have been in limited production runs (or batches) of a few hundred units that were pre-sold out very quickly. All of this info is gleaned from the Custom Hardware forum over at bitcointalk.org over the past year or so I've been involved in bitcoin. I may have some facts wrong, but this is the gist of the situation and hopefully gives you an insight on the state of the hardware war against bitcoin Thanks for reading!
I don't think the currency trading game is for me...
Two years ago I GPU mined 12 Bitcoins at zero cost to myself. When they hit $34 and crashed I immediately regretted not selling. Eight of them I sold last year to a friend for at $12 each and have never stopped regretting that. I've been obsessively checking the markets, constantly calculating my returns and stressing out about when the best time to sell is. Sure I could make $600 but wouldn't $800 be nicer? What if it's $1500 tomorrow? Obviously I don't want to repeat my mistake and multiply my regret. But what if I leave it too long and it crashes again? And should I even be worrying about the short term? It could be $1000 in a few years... The stress that goes along with such a volatile and unpredictable market was evidently too much for me and I cashed out all my Bitcoins today. I figured whether I sell them at $300 each or $150 each, it's unlikely that I sell them at the peak and so I'd probably still end up regretting it. I'd probably regret it more if it levelled out and their value became $20 though. I can guarantee I'll be kicking myself a year from now (my Bitcoin experience has been synonymous with regret so far) but still, $700 is a lot of beer money for an unemployed student, and an excellent return from a $0 investment. I understand the importance of Bitcoin and it will be interesting to see where it goes, but from this day forth I shall stop checking the market values. I did keep one Bitcoin in my wallet. Hopefully I won't end up regretting that too...
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