How I became a miner, Part 1

I never truly intended to mine Bitcoin or any other type of cryptocoin. Dealing with hardware is not my strong suit and cryptocoins are easy enough to earn without the need to mine them.

When I earn Devcoins from writing, although I do not have to get my virtual hands dirty with any kind of hardware or algorithms, I am, technically speaking, mining them. My shares are calculated at the end of a round (which lasts one month), and my number of shares determines the number of times my Devcoin wallet address gets entered on a line in the receiver file for the next round. When that round starts my wallet receives generated Devcoins, and it looks as if I’ve mined them. However it’s actually other people with SHA-256 rigs doing the actual mining. Devcoins are merge mined with Bitcoin so Bitcoin miners are happy to also mine Devcoin and pick up a bit extra that way. Although I haven’t contributed much in the way of writing for the past two rounds, I do keep up with my various Devtome admin duties, and that rewards me with a steady trickle of freshly generated Devcoins.

I got involved in proof of stake generation when I discovered NXT. For several weeks I actually ran the little Java program which allowed me to forge NXT based on how much I had in my wallet. However I kept running into all the bugs which are inevitable with a brand new crypto protocol, and in the end the tiny reward made forging not worth it for me. Then I ended up spending most of my NXT on DGEX shares, a decision I regret in light of recent developments including but not limited to a recent hack on the DGEX site and the fact that there is currently no way to actually trade DGEX shares, nor have I yet received the monthly dividend for August. But anyway I did have some success with forging NXT, and I certainly appreciate the fact that I could do it just fine with my laptop and not fear the difficulty increasing to the point of rendering my computer obsolete.

When I bought my stake in FIMK, I found that forging that coin was much more rewarding than forging NXT had ever been. Each new forged block contained an additional 200 FIMK, not just whatever transaction fees happened to be added, which at this stage of the game are mostly zero. At this time there also are no assets I can spend my FIMK on, nor is the exchange rate particularly exciting, so I’ve just been holding onto my balance and collecting the forging rewards which have not been too shabby. And again, I can know that my own computer will always be sufficient for this purpose.

The vast majority of my other mining, whether it be Bitcoin or Scrypt, has been through cloud mining. I had a fairly good run on the Bitcoin Commodity Exchange and for a while I was mining over 0.01 BTC a day before increased Bitcoin mining difficulty and a new fee structure got the better of me. I then bought shares on Scrypt.cc and was doing well for a while until the value of my shares got cut in half while the rewards went from decent to lame. In short cloud mining has been a great way for me to lose funds. Unfortunately with the price of Devcoin hanging around in the 9 to 10 satoshi range, I haven’t been able to easily replace those lost funds.

Although all of the above options can certainly be quite profitable and so should be carefully considered, I do not consider any of them to be real mining. Mining-lite, maybe. It’s the kind of mining where you have made some kind of investment and you get to collect mining rewards, but you have nothing to do with setting up or maintaining the hardware. You also don’t get much say in which pool gets mined, nor do you even have to know what a pool is. And you don’t have to mess around with getting the hardware to run. Really, cloud mining is a bit like a black box, and that feature makes mining at all (or at least reaping the benefits of mining) more accessible to the less technically minded. But in any case, it’s mining-lite.

My foray into what I consider to be real mining started with the VirtaCoin launch in early July. VirtaCoin (formerly called VirtaPay) was a premined Scrypt coin designed for the sole purpose of turning the developer’s idea of a centralized digital currency into a decentralized cryptocurrency. The digital currency idea wasn’t a bad one. People who registered on VirtaPay’s website got to watch their virtual balance go up by $20 every day they logged in, and for close to a year I made a point to log in. When the conversion to VirtaCoin was completed I got a grand total of 1018 VirtaCoin in my new wallet.

The first trading platform to list VirtaCoin was Atomic Trade, so I joined it. At that time, VTA was trading for 10 satoshis, which made my holdings worth a grand total of 0.00010180 BTC, basically dust. VTA has a sub-reddit which I followed for a while. There I learned that mining VTA was profitable and of course good for the network. I decided to give it a whirl with my laptop. I connected with someone on the Bitcoin Forum who pointed me to a good scrypt mining program which optimized the limited hashing power of personal computers. It took a bit of trial and error, but before long I figured out how to write a .bat file which would point the mining program to a pool. I pointed my laptop to one of the VirtaCoin pools and soon had all five Kh/s hashing away.

Within a couple hours the rewards started trickling in. I’d get 12 VTA, then 36 VTA a few minutes later. Then I’d get one or two. It wasn’t much but I could tell something was happening. It was rather fun to see those small deposits hitting my wallet. I could watch my progress on the pool itself, and in doing so I saw how my hashing power measured up to all the other miners in the pool, and in the VTA network. I studied the pool statistics, and found that I was pretty low down on the rewards totem pole.

It didn’t take me long to figure out that as much as I was getting with my lowly 5 KH/s, I could get a lot more rewards with more hashing power. Someone on Reddit referred me to Mining Rig Rental. It was on the fourth of July weekend that I rented my first Scrypt rig on MRR. I chose a data center based rig with an advertised hashing rate of 33 MH/s for twenty-four hours and pointed it to the VTA pool I was using.

The results were amazing. VTA happens to have a very high block reward and block generation time is just one minute. The amount of hashing power I’d just rented allowed me to mine over one million VTA in one day. When I sent the VTA over to Atomic Trade and sold them I was able to clear over 0.01 BTC. Having paid less than that for the rental, I transferred my trading proceeds to MRR and rented the rig for another 24 hours. Basically, from the get go, I was making a profit.

The costs to rent Scrypt hashing power were double what they are now, and this ate into my profits substantially. I started looking into what it would cost to actually own the hardware. This led me to GAW Miners, which I’d previously learned provided on-site hosting of mining hardware.

I registered an account on GAW and was immediately drawn to the Furies and Black Widows. They had a modest amount of hashing power but they were affordable. At first I thought I would try to save up for a Black Widow by renting rigs on Mining Rig Rental and mining VirtaCoin, then selling it on Atomic Trade. But it didn’t take long to figure out that I’d be spinning my wheels a whole lot less if I didn’t have to sink so much of my profits into the daily rental fees. What if I just bought a Black Widow and had it hosted? Then I could be mining with my own equipment.

If I was going to buy mining hardware, having it hosted was a requirement. I am adamant about not turning my home into a mining farm. I know that I’m not getting the best deal on electricity, and I live in a state where power tends to be more expensive. My Internet is adequate for most things but is not stable enough for mining, and I don’t feel like paying added fees for extras like static IPs or anything like that. With a growing family, our little home is already bursting at the seams. I do not have any extra space to dedicate to mining. And even if I did I couldn’t guarantee the toddler wouldn’t get into it at some point. My toddler already makes a beeline for my computer whenever he sees it unattended on the table with a chair in front of it. I have to pull the chair away from the table or desk just to keep my computer safe. I don’t want to take my chances with mining rigs. Finally, mining rigs are noisy. The Black Widow makes as much noise as a vacuum cleaner—a quieter one, but still. I don’t want to turn my home into a place where we have to yell at each other just to be heard over the hum (or dull roar) of the mining rigs.

GAW Miners advertised itself as a company which provided hosted mining, so it made sense for me to buy my hardware from them. They offered a couple sales on both Furies and Black Widows. After moving my Bitcoin from CEX.io to Scrypt.cc, and watching it divide in half in both cases, I had just enough left to buy three hosted Furies and one hosted Black Widow. GAW Miners offered me a year’s worth of hosting for the Furies and three months’ worth of hosting for the Black Widow. This was awesome as I wouldn’t have to pay any fees to mine for what seemed like a long time.

GAW Miners was very excited about a new cloud mining service called Zen Cloud, and all their new customers were by default hosted with Zen Cloud. Zen Cloud launched just a couple days after I bought my hardware and I eagerly awaited the email which would announce that my hardware was now activated and all I would need to do is select my pool.

I couldn’t wait to start hashing away in the VirtaCoin pool with my very own mining rigs.

To be continued…

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