Bitcoin mining: a huge waste of time?

I admit. I got sucked in.

I read the glowing article in last month’s Wired about bitcoin. Thus far, I’ve been pretty oblivious. Future of currency, blah blah blah, whatever. The way it’s been built on open source software is interesting, though, the value is, of course, appealing, and that there are more PayPal-like services to handle money transfers is a huge boon. So, okay, bitcoin. It’s legit (probably). How do I get some?

Well, I could buy a bitcoin or two, but jeez, as of the time of this writing, that’s $500 for one bitcoin. Five hundred dollars!!! Seriously? I’m not dropping five hundred bucks on a virtual coin with limited resources to use it. But being a digital currency, certainly there are other ways to acquire bitcoins besides begging people to give you some out of the goodness of their hearts or only accepting client payments in bitcoin.

Let’s take a step back. The way, say, the American dollar works is that, in theory, it’s backed by gold. You could — the theory goes — exchange your dollar bill for an actual chunk of gold, if you wanted (but good luck spending it). Gold is a precious metal that’s mined from the earth. It’s scarce — on a long enough timeline it will all disappear — and that gives it value. The value increases as the scarcity increases.

Bitcoin works on the same theory except that the scarcity is artificially induced. A new bitcoin is “mined” when a complex cryptographic puzzle is solved. The puzzles get increasingly complex as time goes on until 21 million bitcoins have been mined. Then that’s it, after 21 million bitcoins are in circulation, there will be no more new bitcoins. There’s the scarcity.

Mining bitcoins is a little like mining for gold. Except, rather than climbing down into a dirty mining cavern with a lamp and a pickaxe, you need to decrypt an algorithm. And by you, of course, I mean your computer. Or, a computer, at any rate. That got me thinking, well, surely that could be my computer. Because certainly nerds have been doing this for years already.

I went into research mode to figure out what bitcoin mining actually entailed. I was right, nerds have been doing this for years, enough to have developed fairly user-friendly tools for wallets (where you store your bitcoins) and mining programs. Only these days, no one mines for bitcoins anymore. Instead, you donate your CPU cycles (GPU, actually, as graphics processors have been found to be better able to crunch through the algorithms) to a mining pool, where your share is divvied up (generally) based on your contribution to the pool (exactly how this works depends on the mining pool). Effectively, it works similar to the way you can currently donate your processor power to SETI and help search for aliens.

First you need a wallet for your bitcoins. I downloaded Hive, which is listed on the bitcoin main page. I also set up an account on Coinbase — which Hive integrates with — so I can accept online payments in bitcoin. Coinbase is basically like a PayPal for bitcoins, making it extremely easy to send and receive bitcoins or integrate bitcoin payments into your online store. Then I needed to find a mining app. Asteroid is a bitcoin mining app for OSX and it’s pretty easy to set up, so I downloaded and installed that. Before I can mine for bitcoins, I need to connect to a pool. I had read some references to Slush’s Pool, so I figured that was as good a place as any. Create your account there and you get a worker. The worker identification goes into your mining program so it can connect to the pool and sync the progress it makes in helping the mining process with the pool’s system so the pool can manage your contribution and what that means in terms of payouts. I was all ready to go, now it was just time to start mining.

Asteroid
Asteroid, a mining app for OSX

So I started mining. And mining. And mining. Most of last week, I was writing, so I didn’t really need my main computer — I was working off my laptop. I figured I could just let my desktop mine while I did other things, and anyway, the mining process didn’t seem to have any detrimental effect on overall performance (though, since I’m using an iMac, there are warnings when you set up Asteroid that you might cause damage — e.g. overheating — to the GPU, but I set up the mobile app that hooks into Asteroid on my iPod which can give me alerts if the system temperature is too high).

After a week of casual mining, all I’ve got left to show for my work is a fraction of a fraction of a bitcoin. In Slush’s Pool, you can define a threshold for payouts. I set mine to 0.05, roughly $20 at the time I set it. To date, I’ve earned exactly 0.00003003 bitcoins equal to — ready for this? — a whopping 1 cent

 

0_01365_USD_·_Preev
A week of mining bitcoin and I’ve earned…ugh, let’s not even talk about it

 

So here’s where my dilemma is:

On the one hand, that’s freaking ridiculous!!! One week and all I have to show for it is a penny? What is this? An allowance from 1840? And this is only going to get harder as more people — and big businesses — jump onto the bitcoin mining bandwagon. Hardcore miners build machines — possibly even multiple machines — dedicated to mining. And it terrifies me to think that, sure, I could do that, too…wait, am I even considering this?

On the other hand, there’s literally no work involved. I fire up a program and let it run. It doesn’t affect hardly anything I do (unless it fries my graphics card, which kind of freaks me out). Surely the complete lack of effort is worth something?

The problem is that I know that my current setup is not optimized for bitcoin mining. And I keep thinking about “well I wonder what the best GPU for bitcoin mining would be” — but then that leads into the whole why am I considering making a monetary investment into something that’s yielded a penny?  Bitcoins are prohibitively expensive and not widely exchanged outside of nerds and investment firms. For those people, they’re riding high, because the value of bitcoins is rising by the second. And it’s possible that, at some point, my 0.00003003 bitcoins will be worth a chunk of cash if I just sit on it long enough — like a government bond, it just needs to mature. But right now, I’m wondering if the time for mining for bitcoins — even in a pool — has passed.

Caution: Beware of Fireballs

are there any regular readers out there?  anyone who might know about the whole upstart blogger and twitter/genesis rocket debacle?  a few?  well, good.  if not, check the archives for a refresher.

the short story is that over the last year i followed, became entangled with, and then uncovered all sorts of unsavory things about mister ashley morgan and his blog upstart blogger, about which i’m writing a book.  the sad thing is that i actually learned a lot about blogging in the process, but the downside is that he’s a scam artist and one of his cons is/was Twitter/Genesis Rocket, about which i wrote, then purchased, then exposed as a scam and a recipe for how to create a twitter spam account.  the good news is, i can’t imagine this new thing works anymore given twitter’s increasing crackdown on spammers, but the bad news is, no one’s told mister morgan, and he’s back at it again.

it came to my attention today when i suddenly saw two incoming links from comments i’d posted on upstart blogger from august and september 2009 on my wp-stats page.  given they weren’t there yesterday (and they weren’t, i’ve been checking since my traffic suddenly peaked with my post about the “test it and keep it” ipad scam).  i scanned the post for any link to me and saw that it was just my old comments.  but something else had changed on the posts.  he’s gone through, more than once, all the posts on upstart blogger replacing “twitter rocket” with “genesis rocket” and then “twitter rockstar” and then some other crap i can’t even remember, but this time he’s done the switcheroo again and the new name is “twitter fireball.”  (anyone following his blog will know there’s been a fire theme of late.)

let me make this as plain as possible:

Twitter Fireball is nothing more than a rebranded version of Twitter Rocket.

this is obvious when you consider that the promotional copy written about Twitter Fireball is almost identical to the copy for Twitter Rocket, then Genesis Rocket, with a few minor modifications here and there.

Twitter Rocket is a scam.  the method itself is not a scam, it works fine — it works fine, that is, if your goal is to build a zombie following of marketers and other spammers and add no value whatsoever to twitter or the blind hordes of followers you’ve raked up from the depths of twitter sludge.  no, the scam is the air of legitimacy that Twitter Rocket, and then Genesis Rocket given to it by the author and his untouchable PageRank 7.

Twitter Fireball is the latest attempt at reaching the success and level of income (at the expense of hundreds, if not thousands of marks — myself included) that he tasted briefly at the height of Twitter Rocket (before he got hit by EMI lawyers by posting about Lilly Allen and, simultaneously, have several of his own twitter accounts suspended for suspicious activity).

run far and fast.

after posting a half-hearted apology for some of what he had been caught doing the first time around, he’s trying to build up the empire again.  scrolling down to the bottom of the Twitter Fireball page, you’ll see that it’s an “upstart fireball” product.  (sound familiar?)  a google search for “upstart fireball” brought a wordpress site running the default theme on sonicfireball.com (his twitter name du jour is @morgansonic).  sonicfireball.com currently has all the content from upstartblogger.com that has to do with making money, and — as far as i can tell from a brief scan — not much else.  the tagline is “making money since 2009.”  the intent is fairly obvious.  this is going to be the hub.  he’s setting it up and he hasn’t launched it yet.

upstartfireball.com itself is being parked currently, but, having dug up all kinds of dirt on him back in december and january (that being the pretext to my book), i recognize the parking page as being a domain registrar he’s used in the past.

let me say it again: Twitter Fireball is a scam.  Do not purchase Twitter Fireball.  If you want to be a spammer, fine, whatever, by all means give ashley your $97.  twitter will deal with you eventually.  if you have any intention of using twitter for what it is — a social network and communication platform — run far, far away.

and, ashley, i know you’re reading this.  don’t think i’ve stopped working on the book.  i would just like to say thank you — this adds more fuel to the fire with which i can complete it.  fireball indeed.