Author Topic: Adventures in CryptoCurrency  (Read 1008 times)

Offline Ryex

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Adventures in CryptoCurrency
« on: June 23, 2013, 10:52:53 PM »
I the Idea of a Crypto Currency is a relatively simple one. simply put you pore a shit load of computing power into reversing an extremely long hash and the result is that a block chain with proof of work starts to
 build up. If you start awarding units of value for each block successfully generated and you have yourself a currency, one that's impossible to forge and where all transactions with it must be independently varifyed and are part of the public record. and most impotently, it's completely decentralized and thus resilient to malicious market manipulation.

That was what Bitcoin tried to do. sadly it fell victim to hardware specialization. as it stands now it's only profitable to mine Bitcoin if  1) you have 20k worth ASIC hardware, 2) a space with enough power to run that hardware AND keep it cool that doesn't cost you an arm and a leg to maintain, and 3) your pointing your miners at an extremely large mining pool in which case your going to be generating about 100-200 dollars a month. that is for the next half a year or so. because, you see, the rate at which the difficulty is increasing that same hardware is only going to be able to generate about $10-$20 once ASIC hardware has flooded the market and raises the global hashrate by by 10x.

The end result is that in another year only really big mining operations and pool operators will actually make any profit off bitcoin mining and so it seems that Bitcoin has failed at the one major thing it tried to acheave, decentralization of currency generation, true I guess 20 organisations is better than 1 but that not what it was supposed to be.

All this I discovered when I finally got fed up with hearing the hype and decided to do my own research.

now of course Bitcoin isn't the only cryptocurency there are close on 20 different variants that have sprung up in the last year all with different features that try to improve on bitcoin and the other variants.

One of these is Litecoin a Variant of Bitcoin that trouts that it is impervious to hardware specialization (at least for the time being) because it uses a significantly more ram and CPU intensive algorithm incited of just running off massive amounts of operations/s. Litecoin seems more stable in the long run compared to bitcoin. not only can transactions be confirmed faster but there will eventually be 81 million litecoins incited of Bitcoin's limit of 21 million of course litecoins are worth about $3 USD as opposed to Bitcoins $120USD so you need a lot more of them them to feel rich but hey, that's how the cookie crumbles. funny enough Litecoins are more profitable to mine from the typical end user standpoint when you take into account USD exchange value profit minus the electrical cost to generate 1 coin.

I decided to do an experiment in mining Litecoins. I gathered all my computational power together, fired up some workers and pointed them all at a mining pool and achieved a mediocre 220 Khash/s hashrate (note that were I mining bitcoins the hash rate would be an order of magnitude higher do to algorithm complexity, but at the same time the rate would be an order of magnitude worse when compared to how much USD it could generate)
12 hours later and I had myself a whooping 0.15 LTC to my name that's right folks a whole $0.45. by this metric I can generate about .3 LTC every 24 hours or about 60 cents. about $18 a month. coesadently it would take about $12 worth of electricity to make that $18 where I live bring my net profit to a whopping $6,

$72 in a year. and all I have to do is dedicate 3 grand worth of hardware and hope none of it breaks from over use as it will be pushed to it's limit 24/7 for that entire year. and this doesn't even take into account the fact the difficult rises by about 7% every 7 days or so. so realistically I'm looking at closer to $10 profit in that year and a loss there after.

This is fools gold people. Fools, gold.
« Last Edit: July 14, 2013, 07:43:57 PM by Ryex »
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Offline Blizzard

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Re: Adventures in CryptoCurrency
« Reply #1 on: June 24, 2013, 12:48:03 AM »
Lol, this just reminded me of a calculation I did with my friend about those eco-friendly light bulbs. Their lifetime was relatively low and people we saying that they wouldn't last half a year. With my rough calculation it turned out that it takes half a year until such a light bulb actually pays off and you start saving money since they are much more expensive than conventional light bulbs.
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Offline Ryex

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Re: Adventures in CryptoCurrency
« Reply #2 on: June 24, 2013, 02:31:06 AM »
the funny thing is that there were people in that pool with hashrates of over 12,000, thats a shit load of money invested in hardware as to get that high they would need at least 8 top of the line ATI GPUs. they were only generating about 17 LTC a day or about $40. estimating about $600 per card  and you have $4800 in GPUs then your going to need enough motherboards with enough slots to hold all those cards. assuming they their board can take 2 cards at max because they are trying to save money and you need 4 at $200 each you have another $800 then add the cPU for each board to get it running 4 * $75 = $300. and THEN you need 1000W+ Powersuplies for each so 4 *$250 = $1000

altogether they are looking at least a $7100 investment
it would take 177 days to break even. and by that time the difficulty will have increased by 7% at lest 12 times cutting their relative profit in half from that point on so about 2 years to have a 100% profit.

2 and half years to make a measly 7 grand.
you could of pointed all that power at rendering out peoples 3d modals and movies, charging a small fee, and made 10 times that.

of course I'm not taking into account things like the USD value of a litecoin changing, but then if your counting on that kind of thing to make the venture profitable your basically gambling at the stock exchange, and if you think stock fluctuates. stock has nothing on cryptocurency, $260 to $24 a Bitcoin in 18 hours anyone? it's happened to bitcoin once, and the value of litecoin and bitcoin seems to be tied together for the moment..
« Last Edit: July 14, 2013, 07:47:08 PM by Ryex »
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Offline Blizzard

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Re: Adventures in CryptoCurrency
« Reply #3 on: June 24, 2013, 08:33:00 AM »
Actually 7k in 2 years isn't as bad as it sounds. It probably beats investment fonds or some sort of saving in the bank. But you are still right about the market fluctuation, this is a real boner-killer. The longer you try to make this work, the higher the risk. One would probably be better off with another plan to get rich, lol.
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