I started mining cryptocurrency on August 26th 2017. My first rig was a purchase from a friend of mine, looking to get out because the rig was noisy, generated a lot of heat and he wasn’t interested in having it running 24/7/365. Can’t say I blame him.
But then why would I buy it from him? It wasn’t for the used hardware discount, it wasn’t because I thought I could make millions in a month or a year (I knew better of course) it was because for me cryptomining was the perfect confluence of two things I love, working with computer hardware and a vision of a disruptive monetary system that may finally provide greater global economic equality.
It’s easy to get preachy about the (potential) benefits a medium of trade that is NOT based in any country, language, government, standing army, law, creed, or religion could provide. The distribution of crypto-currencies by their nature cannot be owned or dictated by any group or individual, and literally any person on planet Earth can gather up the necessary resources to essentially ‘print money’. Yes there is the initial investment of a few hundred USD(or 0.00001 BTC at the moment), yes there is the knowledge and expertise required, and yes mining requires a LOT of electricity. But you can do this anywhere. You don’t have to convince a land owner or park board they should let you roll your heavy equipment into the pristine wilderness so you can disrupt a beautiful stream turning over millions of tiny rocks looking for the shiny one. You don’t have to even own any land or property at all. You don’t have to be rich, violent, or elite. You, yes you anonymous person browsing internet, can print money.
A crypto transaction does not require any third party. No middlemen, no bank, no government just two people with their own wallet address and a high strength password to lock it. I can send you $10 in Bitcoin and literally no one else would know about it, unless they knew my and your wallet address. Oh, here’s one of my bitcoin wallet addresses if you want to send me some. 32TrweJNrYbSsMJPcjczxDRpEUPyz13Drb
Good luck guessing someones wallet address by the way. It has been estimated that the number of possible wallet addresses is equal to the total number of grains of sand on planet Earth if each grain of sand was another planet Earth with as many grains of sand. But each transaction on the Bitcoin blockchain is FULLY visible and public, so there is transparency built in. Right now you can see how much Bitcoin someone has in their wallet and the transactions that have used that wallet.
What is mining though? When you’re mining you’re using your computing power to validate the transactions on the blockchain and getting a tiny reward for doing so. A blockchain is a distributed ledger of transactions, such that each transaction is recorded on every node in the chain. This enables a high level of trust because each transaction has a record of a ‘debit’ or ‘credit’ on every node and its only after x number of validations (a node does math and proves the transaction is true) is the currency moved from one wallet to another.
A great explanation here –
Back to my original point. I got into the business because I can spend USD to buy Watts and convert those Watts into ZCash, Ethereum, Feathercoin, Expanse, Monero, the list literally goes on for another 1000 or so. Yes there are now over 1000 “alt coins” (alternate to Bitcoin) and most are still able to be mined by your average joe. (bitcoin however, no longer can be mined without a literal warehouse full of expensive mining electronics running at full power 24/7, its kind of gross, but this is the way the creator wanted it)
The alternative to mining to acquire crypto coins is of course to buy them. I have done this too, and the return on investment is just stupid silly high right now. But I keep mining anyways, because I can mine these alt coins at a discount. Let me give you a scenario…
December 1 – Ken buys a single Ethereum valued at $300 for $300, Bryce begins to mine Ethereum valued at $300 for $0. (I am intentionally leaving out the initial startup cost to acquire the hardware for now)
January 15 or about 45 days later – Kens investment of $300 has netted him $100 in profit as Etherum is now $400. Bryce has been mining for the last 45 days and finally has minted a single Ethereum, so he also has an asset worth $400. But what was his cost?
I’m using an electricity cost tracking device and it tells me how much I spend on whatever is plugged into it per day, week, month and year after I tell it how much a Killowatt Hour costs me. (here in Minnesota thats $0.18) So the device tells me the mining rig with 5 GTX 1070 graphic cards running on a barebones PC costs about $111/month.
The 45 day period to mine 1 ETH cost me $166. So instead of the 30% return on investment Ken received, I get a $234 profit or about 58% return.
As long as the price of the currency I’m mining stays at or above my 45 day cost, then I’m getting every bit of profit and more versus someone who just went out and bought it. If the price does drop below my cost, I just turn off the rig or mine a different coin. (1000+ to choose from, most are junk however)
Had I bought an amount of currency equal to my hardware investment for a rig however, there would be no contest. I bought crypto back in July and August of this year and I’m looking at over 40% return on the money. I wouldn’t have all this constant fan noise, I wouldn’t have to wake up early and turn the rig off so Kat can dry her hair without blowing the circuit breaker, and I wouldn’t have to babysit the rigs to make sure they’re always mining.
But dammit, what fun is that? Then its just another bank account, another risky asset class purchase or some kind of 401k. Plus, I feel a certain level of responsibility and pride knowing me, Bryce Blilie am partly responsible for validating transactions on the Ethereum blockchain. I am helping to change the world in a positive way and I’m doing it with borrowed big bank credit card USD money! Seriously I look forward to making enough to flush this debt down the toilet and from the looks of it today with BTC bumping $8k it won’t be long. But then that’s usually when the bottom falls out right?
This isn’t 1929, this isn’t 2007, this is 2017 and we are on the precipice of 3 (stock market, real estate, and bond market) crashes. So what will happen after that? I’m banking (see what I did there?) on a new international monetary system, one that is based on CRYPTO!