As people discover Bitcoin, they often become curious about mining (the process by which new Bitcoins enter the economy). After all, who wouldn’t be enticed by the idea of using a computer they already have to (legally) create currency out of nothing while putting forth minimal personal effort? Unfortunately, many, many other people have had that same idea before most of us. The Bitcoin system is designed to create new currency at a given rate. So, as competition between miners increases, it gets increasingly difficult to get a cut. Currently, the only way to directly break into the Bitcoin mining game (without spending more in electricity than the value of what you produce) is with single-purpose miners that cost as much as a car.
However, most folks do not realize that Bitcoin is not the only cryptocurrency out there. In fact, anyone can decide that they want to make their own cryptocurrency, so it is difficult to know exactly how many cryptocurrencies actually exist. Bitcoin and closely related altcoins are based on the SHA-256 algorithm, but there are an increasing number of coins being produced that are based on the scrypt algorithm. The powerful single-purpose miners are designed to mine SHA-256 coins, but cannot yet mine scrypt coins. So, until someone produces a dedicated scrypt miner, we all have a chance at success! Why do these altcoins have value? I have no idea. As far as I know, they have no purchasing power, but people trade them back and forth as if they do. Though, the same could have been said of Bitcoin until very recently. So, we shall see what the future holds for these altcoins.
I had spent some amount of time wasting electricity on Bitcoin mining with my aged ATI 4870 GPU, but I was never able to make more than what the electricity cost me. However, at my first shot at scrypt mining, I managed to make $0.11/day over the cost of electricity with Middlecoin.com (a scrypt multi-coin pool that pays out in Bitcoin) with very little system optimization. I was paid out 0.01027209 BTC after 10.5 days mining (http://www.middlecoin.com/reports/19ABK6Q653hay635CBP6fdosMAhpVSQBHB.html). At 830 BTC/USD, that is worth 8.53 USD. Over that time I burned 72.75 kWh which cost me about 7.40 USD. So, my total profit was 1.13 USD. I cannot imagine building a machine for the sole purpose of making $0.11/day, but I am more than willing to put a multi-purpose machine to work paying for its own electricity while I am not actively using it. If I were to leave my computer running idle at all times without going on standby, it would cost me $0.42/day. Why loose a little money at a time when you could make a little money at a time? If looking for an excuse to purchase a high-end graphics card, one could also consider that mining over the lifetime of the card during down times would take a nice bite out of the initial cost.
According to Dustcoin.com, mining specific altcoins could have brought me up to $0.60/day profit with this setup. So, it may be possible to make more profit by manually switching between mining individual coins and then exchanging them for USD, but it would certainly involve much more effort.
Looking at power consumption while idle compared to power consumption while mining gives you an idea as to how profits can be maximized. If you have a very energy efficient computer (just adequate power supply, passive cooling, relatively slow CPU) with a massive graphics card, you will get the best Hash:Watt ratio. Components intended for laptops are made to be energy efficient to extend battery life, so you would probably want to build a desktop with a 16xPCI-E motherboard and as many laptop components as possible. Combining extremely low power consumption with support for multiple PCIe cards (with risers), motherboards based on the low-power series of AMD APUs are probably the most efficient base for a mining rig (http://www.newegg.com/Product/Product.aspx?Item=N82E16813135364).
If I can beat the cost of electricity with my old rig, I would be very curious to see what someone with a cutting-edge, high-end graphics card can do. If you beat my profitability, please report back with your system specs and mining outcomes.).
My miner setup:
1) I created a file the following batch file named “Middlecoin.bat” (you will want to change “19ABK6Q653hay635CBP6fdosMAhpVSQBHB” to your BTC address and “-p x -I 17 -g 1 -w 128 –thread-concurrency 4192” to the parameters suggested for your GPU [https://litecoin.info/Mining_hardware_comparison]):
setx GPU_MAX_ALLOC_PERCENT 100
setx GPU_USE_SYNC_OBJECTS 1
sgminer -o stratum+tcp://middlecoin.com:3333 -u 19ABK6Q653hay635CBP6fdosMAhpVSQBHB -p x -I 17 -g 1 -w 128 –thread-concurrency 4192
2) Copy into sgminer directory (http://sgminerwindows.com).
3) Execute “Middlecoin.bat” and look for your mining stats to show up on the pool page (http://www.middlecoin.com/allusers.html).
4) If the miner fails, you may need to install the OpenCL SDK for your graphics card (http://en.wikipedia.org/wiki/OpenCL#Drivers). I had some issues with recent ATI OpenCL drivers, but found a fix (http://www.agilechai.com/content/archive/2013/05/13/downgrade-ati-catalyst-causes-problems.aspx).
5) If you are in the US, the easiest way to exchange your BTC for USD and get it out is through Coinbase (https://coinbase.com/?r=52cf6e214b7fd92f690000b0&utm_campaign=user-referral&src=referral-link). Give Middlecoin one of your Coinbase BTC addresses (Account Settings–>Bitcoin Addresses) to mine directly into a Coinbase account.
Download link for my miner setup (remember to edit “Middlecoin.bat”):
Scrypt hashrate: 139.1 kH/s
SHA-256 hashrate: 89.14 MH/s
Power consumption while idle: 172.38 W
Power consumption while mining: 288.69 W
Power cost: $0.101675/kWh (a bit higher in summer, a bit lower in winter: http://www.rpu.org/your-home/billing-payment/electric-rates.html)
This is a hypothetical build that was estimated to produce $14/day profit at the time this article was written:
Scrypt Mining Rig