The entire reason I bought mining rigs in the first place was because I discovered the new alt coin speculation game. I don’t care what it is, if you succeed at something the very first time you try it you’re going to think it’s easy. That was the way I felt about new alt coin speculation when VirtaCoin came out and I decided to give mining it a whirl.
VirtaCoin was probably never going to amount to much in the long run. It certainly has a lot of strikes against it, its developer and community’s limited knowledge of cryptocurrencies going into it being a notable one. But in the beginning of its life it was worth something–twelve or thirteen satoshis. Twelve or thirteen satoshis is not much, unless the coin has block rewards in the thousands, minute long block intervals, and relatively few people mining it. Although I was using rented hashing power, and expensive at that, I was still able to sell VTA for more than it cost me to mine it. Had I owned the hashing power I would have been raking it in. It was that insight which motivated me to go buy my own hashing power already, which then led me to a number of twists and turns with GAW hosting, and finally to the data center where my hardware now lives.
For about ten days after I settled my rigs into the data center, I stuck with the multipools and with renting out on Mining Rig Rental.
But it wasn’t long before I felt the itch to go find a new alt coin to mine. By this time VirtaCoin was quite obviously on the decline. I spent a day or so mining it, but when it took me several days to be able to sell it for two satoshis I decided enough was enough. Not only that, I got spooked when I saw absolutely nothing on the buy side while I was still holding three million. Oh no! Now I won’t get anything for it. And then I proceeded to make absolutely sure that happened by dumping everything on the VTA/LTC market, and then screwing up my BTC withdrawal from the exchange. A rather disappointing and anticlimactic ending to what had been a successful, though long paused adventure. If only it hadn’t taken me so long to finally get my hardware to work the way I’d always wanted!
A new Scrypt coin gets launched every week or two. You can look up which ones have just launched or are about to launch on the Altcoin calendar. It’s hard to describe exactly what goes into it but I am starting to get a feel for figuring out which coins are worth jumping into and mining. What I look for is a positive chance that I can pay for the mining by selling off most of the mined coin. I especially like coins which already have a trading platform lined up prior to launch. Low block interval (a minute is my favorite) and high block rewards really help. Perhaps the best are coins which start out with a high block reward but then quickly decrease the block reward. This makes the initial mining very easy and those who mine tend to hold rather than dump, keeping the price higher, because they know that it will never be that easy to mine again. But low block reward coins can work too provided their price is much higher to make up for it. There is a lot of math involved in determining potential profitability of mining a coin, and I made up a spreadsheet which allowed me to enter all the variables and come out with both an estimate of BTC/MHs and the exact renting fee I should charge on MRR to match it.
Of course the best type of coin is one with both a high block reward and a high price. LiteCoin Dark, my second coin speculation venture, turned out to be exactly that kind of coin.
I didn’t catch it right at launch, but a couple days later I happened to read a post on Hashtalk which said simply “LiteCoin Dark is off to a great start!” I had just finished my spreadsheet and had tested it out on the VirtaCoin info, confirming finally that VTA was no longer profitable for me to mine. Why not enter the LiteCoin Dark parameters and see what happens?
The values I entered for LiteCoin Dark indicated right off the bat profitability. The coin was selling for 50 satoshis when I first logged into its trading platform, block intervals were one minute and reward was 3200 LCTD. While I was crunching my numbers I noticed that the price was already starting to climb. I figured I didn’t have to sell right away and could probably make some serious profit. So I jumped right in and mined LTCD for several days. I priced my hashing power ridiculously high so as to discourage people from renting it out from under me (despite that my rigs did get rented for short stints, giving me some nice up-front funds).
I did phenomenally well with LTCD. By not selling right away, but placing sell orders at the price I thought they would be in a few days, I was able to see huge returns for just having 16.8 MHs in a network which started off with 9 GHs and only got higher. The price fluctuated quite a bit too, so I even managed to make a very profitable day trade where I sold high and then bought it all back at a third of the price.
And the price kept going up, and up, and up. It was amazing.
By the time I sold the bulk of my holdings at what just a few days ago was an unbelievably high price (now with hindsight 20/20 it would have been better for me to have held on longer), I had amassed $150 worth of BTC. Earlier today, my last sell order (which was even higher) filled, and I have another $70 or so worth of BTC sitting on the exchange waiting for me to withdraw.
For the seasoned miner or day trader, these numbers don’t seem very high, but considering the scale at which I’m currently operating, this is fantastic. I bought the Black Widow for $200. In one week’s time I gained $220 on just one alt coin. It typically takes mining hardware several months to reach a full return on investment (ROI). My little adventure with LTCD just took care of my Black Widow’s ROI in one week’s time. That’s not counting whatever BTC it earned mining in the multipools or getting rented out. It’s also not counting the cost of the accessory hardware, but as its total cost came out to $300, all I need to pay for it is another LTCD-like adventure.
I know that not all alt-coin speculations are going to be this much fun or even this successful, but I’m very encouraged that both new alt-coins I decided to mine and sell have made me profit.
I’m not sure yet how my LTCD adventure will end. Once a coin’s price starts to escalate, so does network hash rate. That’s also about the time the block reward decreases. With LTCD, it cut in half. When I woke up one morning and found the network hash rate had grown to 100 MHs, I decided it was time to take a break.
At that point I can either pick a good multipool and bring my rental price back down to make it more likely someone will pay it (right now I can make more leasing out my hashing power than I get in even the highest earning multipool, including Zen/GAW Miner’s proprietary and possibly multi-algorithm pool), or I can go find another coin to speculate on.
Then it becomes a somewhat frantic time of looking up pools and exchanges and entering parameters into my spreadsheet and seeing what will come out on the other end. Most of the coins I try (some new and some old) won’t do any better than the multipools, and certainly not better than leasing out. But there are usually one or two which might turn out to be profitable, and the only way to know for sure is to try mining them for a while. So there’s a certain amount of pool hopping that goes on, and usually that part is not profitable.
I was going through this exercise at one point, not finding much, but feeling like there were so many decisions to make. Meanwhile my kids were needing me and house chores were needing to get done, and I didn’t have enough brain power to figure this out. And then it happened. An email came through informing me that my rig was rented for twelve hours. Twelve blissful hours of not having to make any more mining decisions.
I’m back to mining LTCD, but I also have my rigs priced to lease, as it’s a little more murky whether or not it’s profitable. LTCD network difficulty retargets every five hours or so. The problem is that network hashing power fluctuates a lot. For whatever reason, the difficulty retargeting never seems to get it right, and block interval is running between five minutes and a half hour rather than the intended one minute. This throws my profitability calculations way off. Yesterday I assessed that if I could sell at a much higher (though in my opinion attainable) price, I could still make out well under these circumstances. In any case, I’m mining to hold, rather than sell quickly. Because the actual mining difficulty is so much greater than it should be, that has probably helped a lot with keeping the price high. Miners are less inclined to simply dump coins their rigs had to work extra hard to get. In any case, we all want to make a profit. I’ve decided to keep mining it for the time being but keep my rental price reasonably competitive so that I’m also collecting that revenue. And I’m on the lookout for a new coin… when I can find the time to do the research.
I mentioned earlier that I sold off the bulk of my mined LTCD at a price that is now way low. I probably would have held it except for the fact that I had my eye on a new mining rig which would almost quadruple my total hashing power (while only tripling my colocation cost), and I needed a way to pay for it. A hundred and fifty Dollars made within a week sure came in handy for that purchase.
Which brings me to the next stage of becoming a miner–the part where you find yourself looking through mining rig auctions on eBay, and drooling over those powerful Zeus rigs named after various forms of inclement weather.
That story comes next.