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.

Does video game music deserve more respect? http://wrd.tw/fVvSTT – @wired Yes. Video game music is…

Does video game music deserve more respect? http://wrd.tw/fVvSTT – @wired

Yes. Video game music is probably the only format in which music can (and should) be dynamic and based on the environment. In that way, music for games is completely different than music for film and television because both of those formats are static and therefore easier to compose for.  Creating movements that can dynamically shift and evolve based on a player’s actions in a way that is smooth and transparent (as opposed to the standard “uh oh, here’s the fight music, get ready to slay some monsters” soundtrack) is certainly worth its’ own category.

the not-so-hidden value of netflix

i’m pretty much completely in love with netflix.

it started with some casual experimentation through a friend during college.  he had a netflix subscription and we’d often get triple features of obscure asian action flicks (digging deep in the early career of jet li with the once upon a time in china series — which i highly recommend, btw) and post-modern art films like  eXistenZ and naked lunch (and pretty much anything else by david cronenberg).

after graduation, netflix and i drifted apart, and i spent more time with the cult classics, indpendent and anime sections at hollywood video.

all that changed when erin and i had kids.

what used to be a simple 20 minute trip to see what we haven’t watched already and browse the new video releases, suddenly became: “do we take G with us?  should one of us go alone?  this sucks…maybe we can just download something…”  suddenly, netflix was not only a great library of obscure videos, but a welcome replacement for what used to be the friday night trip to the video store.

sure there’s the fact that you don’t get your videos right away.  but i think that’s just a matter of retraining your brain.  rather than expecting you’ll hit the video store on friday, if you already have a queue set up of stuff you want, one that you’re watching and updating in between deliveries, you’re guaranteed that when friday (or whenever) hits, you’ll have something you know you want to watch.  and the recommendation engine really is pretty good (most of the time).

but even that isn’t what makes netflix a comcast- (or insert-cable-company-name-here) killer.  no, the real secret (that isn’t really a secret) of netflix is their instant viewing catalog.

i’ve been using the watch instantly feature a lot lately.  much more so than the dvd rentals themselves.  often, we’ll forget to put the dvd’s in the mail — something that was completely unfounded a couple years ago.  but i don’t beat myself up over losing value in the membership with netflix by hanging onto dvd’s longer than we need to anymore.  and the reason is that there are hundreds — if not thousands — of titles i want to watch that i can check out right this second.  my 4 year old just finished the full run of the original astroboy series, which he’s been working on for the past several weekends.  we watched wall-e for the first time streamed through netflix, and then for the second and third times.  we’re not really  huge on dora the explorer, but the fact that you can stream the full first and second seasons means that if and when it comes up, we can play it for the kids and not have to own the dvds.  and we’ve discovered great new kid shows like kipper and the rubbadubbers that we wouldn’t have found otherwise.

watch instantly is perfect for hermetic parents like us, who are more likely to buy books on amazon than hop in a car to barnes & nobles or a used book store because the latter means making oneself look vaguely presentable to the outside world, getting the kids’ jackets and shoes on, remembering to take the kids to the potty, making sure to take the dog outside to pee…by the time all that’s done, it’s time for lunch (or dinner, or bed, etc…).  i’d love to be able to go see new movies, but being able to see new-ish rentals streamed via netflix isn’t too bad, either.

it’s all thanks to their recent partnership with starz, a premium cable channel like hbo and showtime that honestly, i’d never even heard of before i read this article in wired.  but i’m sure glad they forged the deal, because all of a sudden, netflix exploded with streaming options the like of which longtime subscribers had never seen before.  and not just the weird, obscure, b-movie indie-type films like cannibal: the musical or B.U.S.T.E.D.(both of which you can stream, by the way, and i recommend both of them).  no, as previously mentioned, mainstream — and top selling — flicks like wall-e and bridget jones’s diary can be streamed as well now.

how netflix pulls it off involves a complex system of who has access rights for broadcasting films that i only understand half of.  i recommend reading the previously mentioned (and linked) wired article for a better explanation than i could begin to articulate.  what i do know is that it’s one thing to rent out dvds (or cds, or videos) because ownership law states that once you own something, you can pretty much do whatever you want with it shy of reproducing copies of it yourself and profiting off it — which includes renting out your copies of the originals.  once you decide to stream content — this applies to any content, be it video or audio — you enter into a whole different world of copyright law as it applies to broadcasting and who gets what royalties.  by partnering with starz, starz essentially deals with the legal stuff — because they already have that in place.  netflix shares starz’s access to new (and old) movies, and passes along the streaming content to its’ subscriber base.  i only hope that eventually hbo and showtime decide to stop fighting netflix and jump on the boat, because it shouldn’t matter to them — either way they’ll get their paycheck, and i’m guessing a whole bunch more people will jump onto netflix if netflix has a vast new library that includes everything hbo or showtime has access to.

this, of course, makes netflix public enemy number 1 in the eyes of the other content providers for movies and television — your cable company.  it will be interesting to see how things play out, but already there’s momentum to move stuff online and content providers will need to think (and act) more like isps to keep their users.  soon it will be hulu + netflix vs. cable tv with hbo.  i know what side i’m on: i may have a cable subscription, but it’s not tv that’s running through that coax — it’s data.