There’s a new digital gold rush going on and this time its all about the math. The media, traditional banks, and governments seem to hate the idea but with the recent media attention its hard to deny the fact that Bitcoin is here and its spawn of other types of cryptocurrency(1) are exploding, from the best known Bitcoin(2), Litecoin(3) and Namecoin(4) to the less known and new kids like Dogecoin(5), Penguincoin(6) and the soon to be Rubycoin(7) at the moment its an endless sea of opportunity for those willing to take a chance on what coin might boom and what what coin will go bust. With the allure of being that guy that bought his super car(8) with the new hot coin, I have to admit I have tossed my hat into the ever growing ring.
:Disclaimer: The nature of cryptocurrency makes it a very risky investment. Use this information at your own risk. This information is for educational and entertainment only. You should make sure of your countries laws in regards to the practice of digital currency trading, as it might not be legal in your area. :Disclaimer:
I will be documenting my journey to the center of the cryptocurrency (I’m going to short hand it with crypto) world here while trying to make sense for those wandering what the nuts and bolts of this whole mining thing. Im going to be linking A LOT of other sites and keeping it to the bare bones basics here to keep more manageable.
If you feel like jumping right in I would suggest heading over to the source of all knowledge when it comes to crypto, the bitcointalk.org forum.
Dogecoin – DOGE
Bitocoin – BTC
Litecoin – LTC
Penguincoin – PENG
Hash-rate – The speed your miner can solve the math problems needed to find coins. The higher the has-rate the better.
Mining Pool(e) – A group that pools all there has-rate together to solve math faster. The findings are split between the people of the pool according to what ever rules have been set by the pool.
Miner – The thing doing to mining. The hardware
Worker – A type of account setup within a pool to track who has mined what.
GPU – Graphics Processing Unit or simply your computers graphics card.
ASIC – Application Specific Integrated Circuit its a chip to do one thing, mine.
FPGA – Field-programmable gate array(e) programmable chip that can mine at GPU speeds and uses low power. I have not personally looked into these yet.
Wallet – A digital wallet, coins are stored and sent from it using a unique id. Each coin type has its own wallet at the moment.
Mining coins at the moment comes down to the type of hashing algorithm(9) it uses, as of now most of them are based off of either SHA-256(a) or scrypt(b). With both types of coins you are more likely to see a return in your investment if you join a pool.
You will need a miner based off of ASIC(c) hardware. As a general rule of thumb if the coin takes an ASIC setup to mine it, its going to hit the pocket book HARD. At the moment a good miner of this type will run from about 1,500$ to 15,00$+ You can find slower ASIC minters on eBay and Amazon but the fact that they are being sold tells you they are no longer a viable means of making any sort of decent return.
At the moment you will be able to get away with using a miner based off of its GPU power. At the moment this is a very popular option for new coins to use scrypt as it levels the playing field since at the moment there is no real presents of ASIC miners for this type of coin.
:Common Mining Software:
CUDAMiner – Used with Nvidia GPU’s
BFGMiner – A cross-platform miner used with ASIC/GPU/CPU/FPGA
CGMiner – A cross-platform miner used with ASIC/GPU/FPGA
CPUMiner – A simple miner to use a CPU to mine. It was made to mine SHA-256 based coins, versions to mine scrypt coins are around
Ok with the info about what is used to do the work its time to move onto picking a coin, picking a pool and mining! For me I picked Dogecoin and Penguincoin, the reasons where both coins are scrypt based, meaning my gaming computer can mine at a decent rate, and the fact both are laughable as a currency and who doesn’t like a good laugh. Come on, it would be epic to be the guy buying a super car with Dogecoin!
My next big hurdle was picking a pool. When you search for mining pools I learned they seem to popup faster then Walmarts in the mid-west, and the look about as reputable as a used car lot at first glance. At the moment it looks as if the majority of the pools all use the same software to manage there site, thus making it that much harder to try and find the right one. With some trial and error, mixed in with a bunch of reading I settle with united-miners.com for my Dogecoin mining and multi-pool.eu for my Penguin coin mining. I choice these sites based off of the fact one the Doge one uses HTTPS, they where listed on the pool list of each coins site and the fact they had support that got back to me when I asked questions, and finally the percent they charge for fee’s. At the moment I have had no issues with either site and would be happy to recommend either. I will add though if united-miners adds penguin coins to the pool I will be transitioning from multi-pool to them as they enforce more security features when it comes to accounts and account changes.
Do not use the same password at the pool that you use anywhere else.
Use a strong password that is a random mix of upper case and lower case letters, numbers, and symbols. Personally I did a huge security sin and wrote it down on a piece of paper and have it hidden around my desk. Mind you I do NOT have it saved on my computer. If you are going to save it to your computer encrypt it so it can not simply opened and copied.
Its recommended to use a good email service that offers login verification. Gmail is a common one as its simple and fast to setup a 2-step verification. This is an important step to help minimize the chance of someone breaching your account and transferring you balance of coins from the pool to there wallet. Coin theft is real and can the losses and be huge!
Personally I setup a email account for just mining just as an extra step to protect my primary email from being breached. (Personal and work stuff email)
With my next post I will be covering setting up the mining pool account, getting a wallet, picking a miner and mining!
(1) – http://en.wikipedia.org/wiki/Cryptocurrency
(2) – http://en.wikipedia.org/wiki/Bitcoin
(3) – http://en.wikipedia.org/wiki/Litecoin
(4) – http://en.wikipedia.org/wiki/Namecoin
(5) – http://en.wikipedia.org/wiki/Dogecoin
(6) – https://bitcointalk.org/index.php?topic=442876.0
(7) – http://www.rubycoin.org/
(8) – http://articles.latimes.com/2013/dec/12/local/la-me-ln-lamborghini-bitcoin-20131212
(9) – http://en.wikipedia.org/wiki/Cryptographic_hash_function
(a) – http://en.wikipedia.org/wiki/SHA-2
(b) – http://en.wikipedia.org/wiki/Scrypt
(c) – http://en.wikipedia.org/wiki/Application-specific_integrated_circuit
(d) – https://en.bitcoin.it/wiki/Mining
(e) – http://en.wikipedia.org/wiki/Field-programmable_gate_array