What is mining?
What Should You Know Before Buying an ASIC Miner presented by Mike Clear at Bit Block Boom.
Blog post by Cousin Edgar Stumblefield.
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Think of it like a really long math problem that requires some serious computation
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Mining performs two key functions for Proof of Work (POW) algorithms
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Mining confirms network transactions in the case of Bitcoin
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Miners are rewarded / issued bitcoins as a reward for successfully completing the computation
What's proof of work?
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Proof of work is a fundamental requirement to ensure the “trustless” part of the Bitcoin blockchain, as well as other blockchain technologies.
“Pre” Prerequisites:
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Run your own full node (or prove you can do it)
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Match hardware acquisition in current bitcoin holdings
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Scale your initial investment to <5% total net worth (including current crypto holdings)
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If you own one Bitcoin and you want to convert to 10 SO's
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Then, your net worth is > $250,000.00
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Measure ROI with mined coin as unit of account
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Hobby or business?
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Power / Electricity
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Management Software: great for 1 or many miners
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Hardware: ASICs, GPU Rigs, Cloud?
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Solo, or Pool, Multi-pool, or coin specific?
Hobby or Business?
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Plan for the financial implications of mining: #TAXES
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Hard lessons in electrical work can be prevented by hiring a licensed electrician
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Avoid running big ASIC's on 120v Power (it really does need this)
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Plan for more power than you think you'll need.
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If you happen to own a couple MW in solar, today's your lucky day!
Software?
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Get familiar with software before your buy miners
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Develop your own?
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Awesome Miner
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Simple Mining OS
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HiveOS
Jumping around into many mining pools is not going to make your money ;
Choosing Hardware
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GPU Rigs: build or buy?
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ASIC “Application Specific Integrated Circuit” requires a choice to be made as to what algorithm to mine.
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Bitcoin = SHA-256
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Litecoin = SCRYPT
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DASH = X11
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Ethereum = Ethash
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Zoash = Equihash
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Monero = CryptoNight
Bitmain is know for being controversial, but also makes a wide variety of hardware. Algo's including: SHA-256, SCRYPT, X-11, and SIA
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Canaan is not as big, but known for making reliable hardware
Bitmain
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Makers of the Antminer
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Order on eBay and Craigslist at your own risk
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If it seems too good to be true, it probably is.
Bitmain machines, the first 15 minutes you are mining on Bitmain's behalf ; you can use some proxies so that it will be mining for you ;
Canaan
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Makers of the Avalon Miner
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Small quantities
How long do they last?
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Different users report different experiences
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I've found that the more recent equipment lasts for 12+ months, and generally remains relevant throughout.
How much will I make?
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It is impossible to say exactly what your mining investment will produce, but you can make an educated guess.
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Most miners keep a detailed record of difficulty, estimated global hash power, and their own equipment hash power.
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Online calculators can help in assessing future growth: Examples: whattomine.com ; coinwarz.com ;
Q: Do you have an exit strategy? What do you think of POS?
A: I think my exit strategy is to let things play itself out. I sell my miners as I use them. Typically my miners sell before I try to get rid of them, then I can turn around and buy two more. The only thing that has kept me from getting greedy is electrical power, otherwise I would mine until I got tired of mining.
Q: One of the allegations against Butterfly labs, they were pre-mining and then selling used machines. Have you ever seen evidence of this?
A: I have only seen that in refurbished machines, where they were used, sent back, repaired and then sent to me, but that is probably due to bench testing because you have to run the machine to know that it will run. The way you can really tell is by looking at global hash power. When it climbs at an exponential rate, then there are probably lots of miners being used. I don't have solid evidence, but there are some weird things happening in hash rates.
Q: Despite prices falling, is it possible that people are just really interested in mining?
A: I would say the answer is ‘no' because any person, business or hobbyist, unless motivated by animal spirits, are going to do it [mining] either because there is a gun to their head or that its profitable.
Q: Company in Japan is developing their own chip. nVidia is developing CPUs so how do you see the landscape changing in the future?
A: I think Moore's law is going to come into play. Companies are trying to create machines they can either sell to the miner or the gamer. I do see the landscape changing but not fast enough. I do make a solid effort to diversify as much as I can, but the cost is a huge motivator in what you should buy. For Bitmain, a couple of years back they only sold one type of machine, now they sell so many other machines. If you want to keep going with a miner, just don't forfeit your coins just because. After I ran the math, it was stupid to part with my bitcoins.
CONTACT:
Twitter: @MikeAClear
Mike Clear, owner of myhash.io, is Director of Business Development at Watchman Payment Systems. In his role, Mike helps companies secure payments between non-traditional funding sources such as financial aid, points, or other non-fiat balances utilizing software which delivers instant payment to approved vendors in the form of a one time use digital credit card. One such solution, known as Automated Bursar Billing enables college students to access their financial aid using only their student ID to purchase authorized goods & services, such as educational materials, prior to the start of classes.
