Would like some more details on bitcoin and mining

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Would like some more details on bitcoin and mining

Postposted on Thu Sep 26, 2013 5:56 am

Hey guys, some ppl like to fold protein or search for Extraterrestrial life with their spare CPU and GPU power but i wanted to try bitcoin mining myself.
I don't expect to get rich or anything but it seems interesting.

So what program would you recommend for mining (can i mine with both the CPU and GPU at once?)
By the way im in Canada, i know different country have different laws regarding bitcoin.

So if someone could just give me some tips and in a nutshell outlines whats the best way to proceed and the risks involved with trading bitcoin for cash down the line.
Seems you can somewhat play stocks with them in a way too.

Anyways, thx for the info in advance, i appreciate it.
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Re: Would like some more details on bitcoin and mining

Postposted on Thu Sep 26, 2013 6:02 am

SS4 wrote:So if someone could just give me some tips and in a nutshell outlines whats the best way to proceed and the risks involved with trading bitcoin for cash down the line.


The risk is that the Government shuts down the exchanges, making your bitcoins utterly illiquid.
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Re: Would like some more details on bitcoin and mining

Postposted on Thu Sep 26, 2013 11:59 am

You are also too late. Lots of money was made by the early adaptors who had easy mining of bitcoins but the complexity has gone up as more btcoins are mined.
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Re: Would like some more details on bitcoin and mining

Postposted on Thu Sep 26, 2013 12:40 pm

To even get a single coin in the next year, you;d need a pair of ati radeon 79xx series cards operating in tandem... but also as mentioned, the US and EU are shutting them down as it is a untaxed currency .. and currently the number of DDoS and outright account thefts at the SERVER level make it damn near pointless.
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Re: Would like some more details on bitcoin and mining

Postposted on Thu Sep 26, 2013 12:48 pm

Its a waste of time and electrisity to mine bitcoins with a desktop computer even with radeon 7970s. You need to buy ASIC miners to mine for boitcoins now. bFL, knc, asic miner, etc sell them but they are hard to get, expensive, and a huge risk. Getting a return on investment is likely low even with asics.

You can mine litecoins instead. Amd video cards are best for that, since its architecture is suited for hashing scrypt functions.

Tldr, getting into bitcoin mining now is probably going to a net loss overall.

You can start trading bitcoins however, play it like a higher risk stock market. I don't think the exchanges will be shutdown anytime soon as most of them follow government regulations.

The flip side of the current extremely high hashrate of bitcoin is that the network is much more secure
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Re: Would like some more details on bitcoin and mining

Postposted on Fri Sep 27, 2013 9:45 am

Pretty much what others have said, non-ASIC mining is dead. You can try, and on a pooled mining setup you'll get tiny fractions of bitcoins.

I ran a miner on a machine here at work for research purposes. It was a GeForce GTX 460, so about one tenth the hash rate of a good AMD setup (I was averaging 100MHash/s), and I got the equivilent of about 1 USD per week mining.

The electricity used cost more. Keep in mind that a high end GPU will be the highest current draw in a modern gaming PC.

Also, it's hard to get into the ASIC miners, they're all either seriously overpriced or they are operating on a huge delay. Friend of mine here at work ordered an ASIC miner back in April, IIRC. He's currently expected to receive his miner sometime in spring 2014.
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Re: Would like some more details on bitcoin and mining

Postposted on Fri Sep 27, 2013 11:46 am

notfred wrote:You are also too late. Lots of money was made by the early adaptors who had easy mining of bitcoins but the complexity has gone up as more btcoins are mined.

This.

It's far too late to try now.
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Re: Would like some more details on bitcoin and mining

Postposted on Fri Sep 27, 2013 12:21 pm

ChronoReverse wrote:
notfred wrote:You are also too late. Lots of money was made by the early adaptors who had easy mining of bitcoins but the complexity has gone up as more btcoins are mined.

This.

It's far too late to try now.

Just a bit of background on why this is the case: It's a feature, not a bug. In order for bitcoins to maintain value, the total supply must be constrained somehow. The inventor of bitcoins accomplished this by setting things up such that the computational effort required per bitcoin increases exponentially over time. The total worldwide supply of bitcoins is asymptotically approaching the limit of 21 million; we're already more than halfway to the limit in terms of total bitcoin circulation, but only a small fraction of the way there as measured by computational effort.

I'd be willing to bet that the people who are on long waiting lists to receive custom bitcoin mining hardware will discover that their hardware is worthless by the time they receive it (i.e. bitcoin production will not cover the cost of the device + electricity to run it).
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Re: Would like some more details on bitcoin and mining

Postposted on Fri Sep 27, 2013 6:25 pm

Yup, these days its 24/7 ASIC or don't bother. I put toghether a RasPi rig with a single ASIC as a weekend project, in the month or so it's been running it's pulled in less than ten bucks worth of BTC and the rate drops dramatically each week--I anticipate less than two months before even ASIC yield hits the break-even point. OTOH if you just like keeping your GPU going all the time for some reason the pennies you'll get from Bitcoin mining are still going to be worth more than the nothing you get from distributed computing.
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Re: Would like some more details on bitcoin and mining

Postposted on Fri Sep 27, 2013 6:43 pm

just brew it! wrote:Just a bit of background on why this is the case: It's a feature, not a bug. In order for bitcoins to maintain value, the total supply must be constrained somehow. The inventor of bitcoins accomplished this by setting things up such that the computational effort required per bitcoin increases exponentially over time. The total worldwide supply of bitcoins is asymptotically approaching the limit of 21 million; we're already more than halfway to the limit in terms of total bitcoin circulation, but only a small fraction of the way there as measured by computational effort.


Indeed but I feel there's a problem with the model in terms of the endgame. Unless I'm missing something:

It's stated that mining will cease to be profitable and that the main reason to "mine" will be to verify transactions. That is, you'll receive the transaction fees attached to the block you mined. But if the computational power rises exponentially for each new block, then there will rapidly come a point where physical computation power doesn't rise exponentially (we've been gaining rapidly for decades but all physical exponential growth eventually ends).

How then will new transactions be verified in a timely manner?

Even now, a Bitcoin transaction takes a while to be fully qualified. But I expect my credit card payments to be practically instant.



I don't mind being wrong (I have a hedge of 4 bitcoins in an offline wallet) but I don't see this working out in the long term.
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Re: Would like some more details on bitcoin and mining

Postposted on Sat Sep 28, 2013 8:47 am

@ChronoReverse -

I don't know the dirty details of how the calculations work. However, my understanding is that the verification step is orders of magnitude less expensive than the generation step; the delays are likely due to the fact that verification is effectively a "voting" system, where a majority of systems participating in the Bitcoin network need to agree that a transaction is valid. So as the network grows, verification takes longer.

Or maybe I'm completely off base; take the above with a grain of salt. Or maybe one of those big water softener salt blocks. :wink:
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Re: Would like some more details on bitcoin and mining

Postposted on Sat Sep 28, 2013 2:38 pm

I do agree that when ASIC mining falls down and the illusion of getting truckloads of free money from the internet dissipates, the BTC market is going to get very...interesting in a hurry.
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Re: Would like some more details on bitcoin and mining

Postposted on Sat Sep 28, 2013 3:33 pm

Yeah, at this point I'd say mining borders on a "Make Money Fast!" style scam unless you've got free electricity. I'd be willing to bet most miners are either A) living in apartments with utilities included in the rent; B) living in college dorms; or C) surreptitiously running it on systems at work.

As far as investing in them (without setting up your own hardware to mine them) goes, your guess is as good as mine. But my guess (worth what you paid for it) is that the risk/reward balance is probably not significantly better or worse than investing in tech stocks.
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Re: Would like some more details on bitcoin and mining

Postposted on Mon Sep 30, 2013 1:43 pm

CB5000 wrote:You can start trading bitcoins however, play it like a higher risk stock market. I don't think the exchanges will be shutdown anytime soon as most of them follow government regulations.


I'm not sure that's even true, but it also doesn't particularly matter.

Read the first paragraph of Satoshi's paper. He's explicitly talking about using bitcoin as "electronic cash" that circumvents "financial institutions."

What I am saying is that the USG doesn't like that. At all. Just carrying large amounts of physical US currency is already seen as de facto money laundering, so why would be bitcoin be treated any differently? Bitcoin evades any real notice and interest by the USG only because it remains a curio for libertarians, hackers and math nerds. If that changes, so will the USG. Likely overnight.

And should that happen, the exchanges are the obvious target. As the intersection with reality, they're unprotected by any of the whiz-bang cryptography. It's great to securely prove that party A really does own the BTC that was securely transacted to party B, but unless you are trading something equally as virtual, none of that helps you, does it? Without a ready exchange, BTC becomes extremely illiquid, and a "currency" that isn't current in the marketplace is no currency at all.

My problem is that bitcoin proponents naively presume that the USG's toleration of BTC is based on anything other than its financial irrelevance. Clap-trap about Constitutional/human rights or "They just wouldn't do that" is silly. Of course they'll do that. Read some justice.gov press releases for heaven's sake, people are routinely going to jail over secret bank accounts. Bitcoin apologists are utterly relying on what can only be categorized as willful disbelief.

And BTC is irrelevant.

http://eprint.iacr.org/2012/584.pdf

Most BTC doesn't circulate. Of the minority that does, most of the transactions are very small. When it comes to the very, very few large transactions, virtually all of them stem from one big parent transaction of 90,000 BTC back in 2010. And, even stranger, there have been attempts to obfuscate the origin.

*Real* currencies don't look like that. Should bitcoin ever look any different, so will the USG look differently upon it.
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Re: Would like some more details on bitcoin and mining

Postposted on Mon Sep 30, 2013 2:01 pm

just brew it! wrote:Yeah, at this point I'd say mining borders on a "Make Money Fast!" style scam unless you've got free electricity. I'd be willing to bet most miners are either A) living in apartments with utilities included in the rent; B) living in college dorms; or C) surreptitiously running it on systems at work.

It depends on when you mined and what you mined with.

Anyone beyond casual miners take into account the cost of electricity when determining if they made "profit".


In any case, I made off like a bandit considering I casually mined some bitcoins on my GPU a couple years back when the difficulty was lower and had cashed them out already.
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Re: Would like some more details on bitcoin and mining

Postposted on Mon Sep 30, 2013 2:09 pm

ChronoReverse wrote:
just brew it! wrote:Yeah, at this point I'd say mining borders on a "Make Money Fast!" style scam unless you've got free electricity. I'd be willing to bet most miners are either A) living in apartments with utilities included in the rent; B) living in college dorms; or C) surreptitiously running it on systems at work.

It depends on when you mined and what you mined with.

Hence my "at this point" qualifier.
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Re: Would like some more details on bitcoin and mining

Postposted on Mon Sep 30, 2013 2:36 pm

Glorious wrote:What I am saying is that the USG doesn't like that. At all. Just carrying large amounts of physical US currency is already seen as de facto money laundering, so why would be bitcoin be treated any differently? Bitcoin evades any real notice and interest by the USG only because it remains a curio for libertarians, hackers and math nerds. If that changes, so will the USG. Likely overnight.

Don't worry, Bitcoin and other attempts to evade money-laundering laws are definitely on our radar.

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Re: Would like some more details on bitcoin and mining

Postposted on Mon Sep 30, 2013 10:06 pm

Captain Ned wrote:
Glorious wrote:What I am saying is that the USG doesn't like that. At all. Just carrying large amounts of physical US currency is already seen as de facto money laundering, so why would be bitcoin be treated any differently? Bitcoin evades any real notice and interest by the USG only because it remains a curio for libertarians, hackers and math nerds. If that changes, so will the USG. Likely overnight.

Don't worry, Bitcoin and other attempts to evade money-laundering laws are definitely on our radar.

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Yeah, money laundering by using bitcoins is very difficult at the moment (it was very easy in the earlier days). It's only marginally easier than laundering actual cash after the shutdown of services like dwolla etc. Now, buying LTC, or other digital currencies with bitcoins and vise versa is way less traceable.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 2:05 pm

There are news reports today that a guy was arrested who is involved with the Silk Road website. The thing I found relevant to this topic is they seized a few million dollars worth of bitcoins also on suspicion of money laundering. I am a bit confused on how you "seize" a virtual currency.

Can't link from work because our Internet filters are draconian, but it is all over the news.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 2:18 pm

Hawkwing74 wrote:I am a bit confused on how you "seize" a virtual currency.

Anything that can be owned can be seized.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 2:33 pm

just brew it! wrote: Anything that can be owned can be seized.

Somehow I am picturing the FBI extracting database records from a server to a flash drive. I know that's totally wrong, and I don't understand how bitcoins move around. Somehow the bitcoins are "marked" as seized and can't be used in transactions in the bitcoin exchange, I suppose. Sort of like stolen paper money in banks being marked by a dye pack.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 2:49 pm

Hawkwing74 wrote:
just brew it! wrote: Anything that can be owned can be seized.

Somehow I am picturing the FBI extracting database records from a server to a flash drive. I know that's totally wrong, and I don't understand how bitcoins move around. Somehow the bitcoins are "marked" as seized and can't be used in transactions in the bitcoin exchange, I suppose. Sort of like stolen paper money in banks being marked by a dye pack.

The FBI doesn't extract the records. They seize the whole bloody server, bit-image the drives for chain-of-custody purposes, then load the boxen in a moving van. I've witnessed it first-hand. Whatever they do in their labs after that is unknown to me. I do know, though, that they're leaving with the box whether you like it or not.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 4:40 pm

I got a cheap Radeon HD 6870 for mining. I made half its value back in Litecoins though, but ever since I moved out of a dorm, I don't think it's really worth the noise and electricity bill. You'd have better luck with altcoins, but those come and go. People start new *coins in order to take advantage of the easy start, hope it gets listed on an exchange, and then dump their mass quantities of useless coins for Bitcoins. It's more profitable that way, assuming the value doesn't tank too hard as people realize this altcoin isn't going to take off either. But you have to stay on top of all the altcoins and pick one which you think won't tank. There are way too many to mine.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 6:13 pm

Captain Ned wrote:The FBI doesn't extract the records. They seize the whole bloody server, bit-image the drives for chain-of-custody purposes, then load the boxen in a moving van. I've witnessed it first-hand. Whatever they do in their labs after that is unknown to me. I do know, though, that they're leaving with the box whether you like it or not.

Exactly.

As I understand it (and please bear in mind that I don't do Bitcoin; this is based upon my interpretation of what's been written elsewhere, and could be somewhat off base), you "own" bitcoins by having them in a digital wallet, which is a file stored somewhere on your computer. If the FBI seizes your computer, you need to have a backup of that wallet somewhere that you can access; if you have that backup, you may be able to keep control of your bitcoins, but I'm not entirely sure what happens if the FBI manages to get into your digital wallet first (or even if they'll try.)

Bitcoin only has value because some people say it has value. In that, it's like most fiat currencies. The key difference, though, is that it doesn't have a government behind it; if it ever reaches the point where it threatens a major (*cough*US*cough*) government's ability to pull in taxes from its population, it will be stomped on, and stomped on hard. The exchanges are the vulnerable point; guaranteed, that's where the pressure will be applied if it comes to that. Right now, it's flying somewhat under the radar; I doubt it will ever be allowed to become significant.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 6:43 pm

sjl wrote:Right now, it's flying somewhat under the radar; I doubt it will ever be allowed to become significant.

At both the Federal and State level, bitcoin exchanges will eventually be required to register as money transmitters (it's already under high-level discussion), meaning they'll be subject to Federal and State examinations/inspections, will have to honor the anti money laundering laws and file the appropriate reports, and will have to report to the gov't any suspicious activity (what, bitcoin is inherently suspicious?). Essentially, the regulatory plan is to make it impossible to convert bitcoins to dollars in the US without passing through a regulated gateway and stripping away the anonymity. I can pretty much assure you that the exchanges, if they ever do get a money transmission license, will be heavily regulated until the Feds find enough reason to shut them down.

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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 8:31 pm

Here's the link to The Verge's article about the FBI seizing the Silk Road and arresting the owner.
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Re: Would like some more details on bitcoin and mining

Postposted on Wed Oct 02, 2013 8:51 pm

Bitcoin wallets are a lot like RSA cryptography, there's a public key and a private key and while you can send stuff to someone with only their public-key wallet address, the private key is required to access it. So once the cops (or anyone who gains access to someone else's wallet) transfer the BTC to their own wallet(s) that they're sure nobody else has the private key for, it's theirs. It acutally is possible to 'mark' Bitcoins, because the blockchain keeps a record of all transactions and so it's possible to follow a series of transactions from A to B.
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Re: Would like some more details on bitcoin and mining

Postposted on Tue Nov 05, 2013 11:20 am

http://hackingdistributed.com/2013/11/0 ... is-broken/

And the protocol is broken as currently implemented so that there is a way to earn more revenue than you "should" earn for X amount of crypto calculations.
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Re: Would like some more details on bitcoin and mining

Postposted on Thu Dec 26, 2013 7:39 pm

Well, that was quite informative, thx for everyone's input.
Much apreciated!
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Re: Would like some more details on bitcoin and mining

Postposted on Thu Dec 26, 2013 10:54 pm

Just to add to the thread. You can still make a sizable amount of money by mining other crypto currencies and then converting them to Bitcoins. If you buy hardware and mine smartly, your time to break-even can be as low as 30 days.
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