All About BTC, LTC, ETH mining as well as other alternative crypto currencies
We are very close to the introduction of the new generation Scrypt ASIC miners that would scale from tens of megahashes to the hundreds of megahashes. Most of these new miners have been pre-ordered months ago with expectancy that they will be delivered on time to quickly return the investment and make some good profit. This however already seems like something that may not happen so easy, or at all for that matter. The investment in the currently available Scrypt ASIC miners also may not seem as the best idea for the moment as well, even though the manufacturers do have some pretty sweet deals available. This is normal as they want to take the advantage and sell their production before it becomes something that nobody may be interested to buy due to high power usage and low performance when the new generation starts hitting the market by the end of September (most likely). Since Scrypt ASIC mining is much newer than the dedicated hardware for mining Bitcoin there is still more room for improvement here and there will be many chances for normal miners to actually make some money from mining for Scrypt crypto currencies such as Litecoin. However when the dedicated Bitcoin mining hardware started appearing there were still not so many alternative crypto currencies available like we have now, so the future of Scrypt ASIC mining is still a bit uncertain.
The situation with SHA256D or Bitcoin ASIC miners is a bit different, but it has its own problems as well. In fact you can consider that Bitcoin mining hardware has already moved away from the hand of the small-time miners to large mining operations. There are less and less ASIC miners available with a price tag and hashrate to make them attractive to smaller miners and these are more for people that just mine as a hobby or want to try out things. Making profit by directly mining for Bitcoins with one or two small ASIC miners that you bought as an end user is pretty much impossible already. But it is not only that in fact the Bitcoin ASIC manufacturers have already started pushing the limits in what they can achieve in terms performance by using the latest chip technology available. This means that it will be harder to go with big steps in terms of increase of the hashrate that the new miners will be able to offer. Optimizing efficiency and performance would still make things a bit faster and consuming less energy, still very important factors in mining. The real increase in terms of performance however should come from increasing the number of high performance miners and that does require a significant investment that not only goes for the mining hardware, but for infrastructure as well.
With some luck and if you were among the first that believed in Bitcoin and crypto currencies, and especially if you did mine and keep most of the mined coins and reinvested part of them smart you could’ve gotten a pretty nice and profitable mining operation. However in fact very few people have managed to do that as in the early days of Bitcoin nothing was certain so certain, just like many people do believe the situation with Litecoin is at the moment. Nowadays Bitcoin is already moving to a more mature state, already being quite widespread and popular among many people that have never mined coins. The same can be said about some alt coins as well, though Bitcoin remains “the king”, others such as Litecoin, Dogecoin, Darkcoin have also reached a well-established state and are pretty popular. So it does not come as a surprise that around the world there are already a lot of talks about regulating the crypto currencies or even banning them. This also means that a lot of new capitals are being invested in Bitcoin and crypto currency businesses in general, both old and new, money coming from investors that have seen the potential that crypto currencies have.
For the regular small-time miner however mining for crypto currencies remains either a hobby or something that will allow them to earn some extra cash. With the boom of new altcoins we have also seen another trend – the appearance of the so called scam coins, or new crypto currencies that are cleverly (or not so much) designed to attract user attention in short period of time and bring serious profits for their developers and then the new coins is left to die. And while this has been happening for a few months already it is still not driving users back to the more established and trustworthy coins, instead the greed of the get-rich-quick mining this or that new “promising” alt coin still keeps many users literally gambling on new launches. In fact this game of “act fast or you’ll be sorry later” is bringing some profit for very few users, but these profits come at the expense of many others that lose their investments. Sooner or later this trend should end and people should get back to their senses and put their trust in crypto coins that are here to last and not just quick scams designed to take their hard earned Bitcoins.
This all brings us back to the question what to go for – an ASIC miner or cloud mining service, that is if you want to invest into mining crypto currencies at all. There is of course another option and that is to continue mining new alternative crypto currencies with video card-based mining rigs, if you still have some of these available. There are still some interesting opportunities available that could still generate some profit when you do the math, but these usually require you to follow the altcoin market closely, always be on the lookout for new coin launches and so on. This in fact makes it very hard for people that are not all-time miners to do that, but also have a job and life that does not allow them to dedicate a lot of their time to mining. With specialized ASIC miners the time you need to spend mining is not so much when you make things working and you would usually need to pay more attention and spend time if there is some problem or something major happens. The other alternative, cloud mining, makes things even much easier for you – the miner, as all you have to do is monitor your earnings from time to time and maybe withdraw and exchange them. With cloud mining it may seem that all is easy and good, you invest and then just collect your profit, but things are not so easy or bright as you might think. While cloud mining may seem as the next logical step in the evolution of crypto currencies there are still a lot of things that may quickly drive you away from cloud mining as well. We are going to take a look at some of the caveats of cloud mining and why you should also be very careful with this new trend that is gaining a lot of attention lately and will most likely continue to be as many of the ASIC manufacturers and not only are already working on offering not only hardware, but cloud hashrate to their customers.
The first and most important thing with cloud mining services is the trust issue. You need to earn the users trust, something that is not that easy with some many new companies and services popping out all the time. The trust issue is also a problem with ASIC mining hardware manufacturers, especially if they announce pre-orders and have not previously delivered any hardware to earn the trust of their customers. It is easier with companies that have previously sold mining hardware to move into cloud mining services, or for ASIC manufacturers to move from making and selling hardware to actually using their hardware and selling hashrate – they already have satisfied customers that have trust in them. This is exactly what is most likely going to happen in the next few months, we are going to be seeing more companies that were or are still selling ASIC miners to start offering cloud mining services as well as hardware manufacturers developing their own cloud-based mining services relying on their own hardware. In fast most of the ASIC makers already have announced that they are working on cloud mining services, some already have launched or are currently testing them so apparently this is what they see as the future of mining. There are also some early adopters that are already established names in the world of cloud mining, however the problem they have is that their expected profitability is low or even getting a return of investment may seem questionable. This leaves a lot of room and many customers willing to invest into such more profitable services, however this also leads to the appearance of a lot of scams related to cloud mining as already mentioned.
Moving past the trust issues with cloud mining services we go to another serious problem. Most cloud mining services are based on virtual hashrate that is spread on different hardware backing it up, so what you get in terms of control is severely limited. This is the easier approach for the service provider – to sell you hashrate that you have no control over, like the ability to point it to a pool of your liking to mine a specific coin for example. This is the most significant difference when you compare an ASIC miner to a cloud mining service, with the actual hardware in your hands you have full control over it while with cloud mining you usually don’t have any control what and where is mined. Do note that cloud mining is not the same as hosting service for your miners where you do have full control over actual hardware, the most you can expect from the more advanced cloud mining services is some control over what is being mined and what crypto currency you might be paid in if they run their own multipool where the hashrate is being pointed to. However with cloud mining you can forget about the ability to point your hashrate to some new crypto currency that was just launched and that seems promising to you and potentially make some extra profit from that, it is not possible. As already mentioned giving you no control makes it easier for the service provider to manage the actual hardware that is backing up the service, if there is actually any mining hardware as this also makes it possible to run a Ponzi scheme masked as a cloud mining operation. From our experience with multiple such services that have turned out to be scams, they are masked as new companies and services that usually do not last more than a month or two. So if you follow our general rule to start with a small investment and never invest more than you can afford to lose, should you decide to invest at all in such shady new cloud mining services you should generally be fine. Getting full control over your cloud mining hashrate as you would have with actual hardware miner is not impossible, just very hard to implement on a larger scale and especially if not using unified hardware.
When you walk about crypto currency mining with the unstable exchange rates of crypto currencies and the very rapid development of everything and you take into account the way these are designed with constantly increasing difficulty you need to plan careful and well. Most people do not make long term planning and expect to have a very quick return of the investment and then start making profit. You never can know for sure what will happen with the price of a specific crypto currency in a month, three size or a year and the same applies to its difficulty and that comes only for the more established coins as with new ones even short term planning is hardly possible. If you are investing in a cloud mining service or mining hardware you are doing the calculations to see if you can ROI in a matter of just few months in the not favorable scenario and then make some profit from your investment. Of course even if you manage to ROI very fast you still need to do the math what profit you can expect after that to see if there is even worth all of the efforts. Outside of the digital world so quick return of investment and in the world of crypto currencies usually is associated with very high risks and often with scams, that is why in the world of coins there are a lot of “traps” as well, so you need to be extra careful if you want to end up profiting from it all and not losing money in the end. This is precisely why may people give the advice to buy Bitcoins now as a long term investment and wait for their exchange rate to increase as an alternative to investing in cloud mining. This is especially good advice when the calculations for cloud mining investment don’t look in your favor and you are including external factors such as possible increase in price to help you get on the positive side and not actually loose from your investment. In the world of crypto currencies hashrate quickly loses value, so even after you earn back what you have invested in it, regardless of the time it takes, the additional profit it will bring you for a while may not be worth much. That is precisely why you need to take into account history data about difficulty increase of a crypto currency to estimate its value ahead in time and not do the math with the highest price that a coin has reached. As people say – “Hope for the best, prepare for the worst” and once you are prepared for the pessimistic results and things don’t look so bad, then you should go ahead and “pull the trigger” being optimistic. This can save you a lot of trouble, regardless if you are considering investing in either ASIC mining hardware or cloud mining services. Then again GPU mining will most likely not disappear anytime soon, although it might not be as attractive as it was while it was the only option available for mining crypto currencies.
We don’t know about you, but we here believe in the crypto currencies and the fact that they will play a more and more important role in our future… they will however probably need some more time to mature enough.
Bitcoin is a peer-to-peer digital crypto currency introduced as open source software back in 2009 by a developer referred as to Satoshi Nakamoto, though it seems that nobody knows the real developer’s name. Bitcoin is called a cryptocurrency, because it uses cryptography algorithms to control the creation and transfer of the digital money. Users send payments by broadcasting digitally signed messages to the P2P network and participants in the decentralized network known as miners verify and timestamp transactions into a shared public database called the block chain. Bitcoins can be obtained by the process of the so called mining or in exchange for products, services, or other real currencies. There are multiple Bitcoin exchanges where you can trade BTC for other crypto currencies or real money, both buying and selling.
Commercial use of Bitcoin is still very small in the form of goods or services that you can purchase for bitcoins compared to its use by speculators on exchanges, which has fueled price volatility. The fact that the exchange rate of a single BTC can greatly vary not only form day to day, but it can also change very quickly in just a minute is one of the most serious concern to merchants that are considering of accepting bitcoins as a means of payment, but still the high exchange rate that is currently over $800 USD for 1 BTC makes it attractive alternative to real money, especially when you also consider the very minor taxes you need to pay for a Bitcoin transaction as compared to credid card processing taxes for example.
Bitcoin is the biggest and most widely known crypto currency nowadays, in fact it is the crypto that started it all and since it generated so much attention many other crypto currencies have appeared. Nowadays it is hard to just mine bitcoins with your computer and in order to actually mine bitcoins at a good rate per day you need a specialized hardware called Bitcoin ASIC or Bitcoin Miner. In the earlier days you could mine with just the processor of your computer, then it was possible to use your video card, but nowadays the network difficulty has gotten so high that mining Bitcoins with your computer you would not be able to just cover the electricity bill with what you earn. Bitcoin uses SHA-256 as its proof-of-work scheme, but there are a few other major alternatives of Bitcoin that use SHA-256 and can be mined the same way as Bitcoin and with the same hardware including the specialized Bitcoin ASIC hardware miners. These are Namecoin, Devcoin, IXCoin, Freicoin, Peercoin, Terracoin, Zetacoin and others. You can mine these coins and then trade them at crypto currency exchanges for Bitcoins and sometimes mining an alternative crypto currency and then trading it for BTC can yield a better profit than mining Bitcoins directly, especially if you have dedicated powerful hardware for that. And one of the latest trends is not buying directly the hardware, but renting it instead and as you can expect it is called cloud mining.
A cryptocurrency (crypto currency) is a digital medium of exchange that functions similar to traditional money, but has no physical equivalent and is only in digital form. The first major cryptocurrency that kind of started it all was Bitcoin in 2009, and since then a lot of other alternative cryptocurrencies have become available thanks to the huge popularity that Bitcoin has managed to generate. Cryptocurrencies are a form of digital currency that uses the principles of cryptography to implement a distributed, decentralized and secure economy where you can mine and trade them. When comparing cryptocurrencies to fiat money, the most notable difference is in how no group or individual may influence significantly the production of money (in the case of crypt it is called mining), instead only a certain amount of cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is bounded by a value both prior defined and publicly known.
Dozens of cryptocurrency specifications have been defined, most are similar to and derived from the first fully implemented cryptocurrency protocol, Bitcoin. Within cryptocurrency systems, the safety, integrity, and balance of all ledgers is ensured by a swarm of mutually distrustful parties, referred to as miners, who are, for the most part, general members of the public, actively protecting the network by maintaining a high hash-rate difficulty for their chance at receiving a randomly distributed small fee. Averting the underlying security of a cryptocurrency is mathematically possible, but the cost may be unfeasibly high. For example, against Bitcoin’s proof-of-work based system, an attacker would need computational power greater than that controlled by the entire swarm of miners in order to even have 1 / 2^(# authentication rounds for this cryptocurrency – 1) of a chance, which means directly circumventing Bitcoin’s security may be a task well beyond even a technology company the size of Google.
Most cryptocurrencies are designed to gradually introduce new units of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation. This is done both to mimic the scarcity (and value) of precious metals and to avoid hyperinflation. As a result, such cryptocurrencies tend to experience hyperdeflation as they grow in popularity and the amount of the currency in circulation approaches this finite cap. Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies are less susceptible to seizure by law enforcement. Generally cryptocurrencies are considered a pretty anonymous and untraceable means of payment.
The first cryptocurrency was Bitcoin that was created in 2009 by developer referring to himself as Satoshi Nakamoto (probably not a real person). Bitcoin uses SHA-256 as its proof-of-work scheme, later on the Litecoin appeared which uses scrypt as a proof-of-work, as well as having faster transaction confirmations. Another more notable alternative coin is the Peercoin (XPM) which uses a proof-of-work/proof-of-stake hybrid different from the other two. There are of course a lot more alternative crypto currencies available, but many of them are just clones of the major ones that add none at all or just a few innovations in order to generate a lot of user interest like the major cryptos already mentioned.