12 Hours of Mining


I just finished up a 12 hour experiment, one which resulted in “riches” measured in Teraflops. I turned time and sunlight into heat and useless computations. Money began to fall from the sky one might even say. I became, or more accurately my graphics card became, a bitcoin miner. I wanted to get my digital hands dirty in the bitcoin mines but found a largely automatic and fruitless process. My journey began a few weeks ago when I bought some bitcoins as investments. The initial investment of ~$1000 is now “worth” ~$4000, a hell of a return. Soon I will cash back out $1000 and see what the rest does, riding out this crazy storm/bubble/speculative frenzy. Many have framed it as a pyramid scheme, or a fragment of fiction given value. But having watched companies stock prices rise and fall without regard to their performance and instead evaluated purely on the whims and rumors of the movements of giant hedge funds, I wonder how much more “real” our other investment vehicles are. One might ask about what good the $1000 dollars might do for the world vs participating in a valueless market, and I wonder what my purchase of Apple stock is doing for the world as well, sitting in their giant pile of extra money. All of my retirement investments are in “Socially Sustainable” funds for whatever that is actually worth, and one might question if any large funds do any good at all in a broader sense. But the real question for me is, what difference does this type of investment make vs a traditional one. All of the high return and dynamic small business investment seems to be done by venture capitalists these days, where you need a million dollars to walk in the door. Does my investment in bitcoin only serve to encourage the bitcoin miners, throwing piles of coal generated electricity at processors to solve useless math problems? I would point you to this great summary: http://gizmodo.com/the-worlds-most-powerful-computer-network-is-being-was-504503726

Typically my computer spends its down time running BOINC, ( http://boinc.berkeley.edu/ ) which is solving AIDS, and running protein folding simulations and other lifesaving projects, but for 12 hours my graphics card was instead screaming away (the fan was working overtime to keep it cooled) at bitcoin mining. A few notable items – every bitcoin mining website tells you up front that you will not make money mining bitcoins, period. It costs more in electricity to mine them than you receive in return. This is an interesting value transaction that keeps bitcoins from being discovered too fast, in addition to the fact that each time some are found, the rest are harder to find. They now are rolling out piles of hardware that are hyper-optimized computers and PCI cards that can do nothing but mine and do it way more efficiently and use less electricity. I am in a unique position value wise because our house uses solar panels and we make more than we use. This means I can run the bitcoin miners at no cost, electricity-wise (who knows what kind of wear and tear it did to my $500 graphics card). It turns out that my 6-core CPU is practically useless for bitcoin mining, only cable of churning out 1/10th of the blocks or flops as my graphics card (a GeForce GTX 570). As a miner you have two options, either to mine by yourself, or two join a pool. As a solo miner, you have a chance to find the bitcoin on your own (when you find them they come in clusters of 25, currently $820 each for a win of 22k!), but it is computed that with a typical home computer that could take about 5 years or more on average. It is a bit like a lottery, as you might get lucky and find them the first day, or you might still be mining 10 years down the road to no avail. With the mining pools, hundreds or thousands of people and computers mine together and when coins are discovered you get your share of them according to the percentage of work you did on the mining. The return is minuscule but constantly flowing. I used BitMinter ( http://bitminter.com ) as my pool. They make it super easy to setup an account and then run their java app to get mining. The interface is quite entertaining in that if you try to turn on the cpu mining it tells you that you are being silly and wasting electricity (Warning: Electricity-wasting slow CPU implementation in use). Over the 12 hours of experimentation, I solved 1518 work units running a bit more than 110 Mega hashes per second. I wont go into it too much, but that work earned me 0.00004426 bitcoins, or 3.7 cents. The 3.6 cents was in a sense “free” because I didn’t have to pay for electricity, and one might say it even fell from the sky. I had debated using one of my old towers and putting all my graphics cards into it for a mining tower, but suffice to say the noise and heat generation in my studio would just be too much to bear – not to mention that even if I were to get it to be earning 20cents a day, I would net a measly $73 a year – clearly not worth the time, maintenance, or effort. In some sense, that is the beauty of the design of bitcoin, as it gets harder and harder to mine, it becomes more scarce, and unlike the US government, you cannot simply make more of this currency when you feel like it (if everyone plays by the rules…). There is a beauty to having a currency that is separate from governments and countries, something universal. Perhaps eventually the insane speculation will level out and a sort of utopian global dream currency can exist without political maneuvering. Perhaps that is the good my money is doing in bitcoin – pointing to a different possible future? I look forward to finding out.