Wednesday, January 17th 2018

Confessions of a Crypto Miner: The Setup

As I have mentioned on the forums here at TechPowerUp a few times, I was an active crypto-miner during one of the most tumultuous times in crypto history: The period between 2013 and 2015. Rather than tell you a long and sad story, I will say just this: I ended up with a net loss by the end of this era, and it wasn't a good time to be an investor if you didn't like roller coaster rides. The reasons I lost money are many, but I think I can attribute them to primarily a lack of experience, a lack of written records, and really, a complete lack of a plan.

My New Plan
Yes, I'm planning on mining again. I've always been drawn to the tech, and I am in a much better position to do so now. Ironically, this time around, I'm not really in it for the money. I've already been there, done that, and it's too stressful for me. Having no end goal of riches doesn't set me up for failure. I think it is a more realistic mindset for taking on this project. It also gives me a chance to document my endeavor to the world, and to you, dear reader. I hope we all learn something here.
First off, a piece of advice: Personally, I would never really consider getting back into crypto mining for money's sake. But if you have the money available and want to do this as a side operation for some fun and the possibility of making some money while you are at it, it might be for you. The aim of this column is to show you what the life of a crypto-miner is like, by becoming one, and to keep you updated with the things that concern miners these days. It will show you the work that goes into producing that "magic Internet money" that a lot of people claim "grows on trees" and show you that it is indeed an occupation in its own right… or so I hope. If I get rich off this, I really won't mind per se, but my assumption is I'll probably end up making below minimum wage at the end of the day, as has happened in the past.

Also, this article is meant to educate you, the reader. It is meant to be a piece for those considering getting into crypto-currency mining, to help them know what they are diving into. The reason I have no problem with doing this series is, the outcome doesn't matter. If I break even, I'm happy. I still get to tell a story, even if I basically worked as a miner for free for a year. The math now indicates I'll be more than breaking even in that timeframe, so I'm comfortable with this, even if the math ends up being somewhat horribly off.

The Math
Yes, the math. Unlike my prior endeavors into crypto, I did some homework first. I found that due to the GPU shortage, I could only easily get my hands on NVIDIA GTX 1080 cards. So, I bought two of those and the cheapest modern motherboard and CPU money could buy. The complete build, for the curious, may be viewed in Newegg receipt form here (Note I supplied the HDD, though a prospective miner could easily boot from USB as well):
So, I decided from the beginning that to minimize risk, I would mine a somewhat mainstream coin rather than go for some higher risk options. That basically means ZCash or Ethereum (I eliminated Monero as an option because some exchanges are beginning to flag this relatively anonymous coin as "high risk" transactions, and I want my liquidity to be high). Of the two, GTX 1080s do significantly better in ZCash than Ethereum, making about $300 per month over my electricity cost (I pay roughly 0.10 cents per kilowatt-hour, for reference).

The whole setup will draw less than 650W. It must, because that's the max rating of the PSU it's being supplied with. I went with a Titanium Seasonic Prime PSU both for their excellent quality/efficiency and for the fact that it may be usable after the mining is done.

The whole setup cost around $1,640. At $300 per month, it will be paid off in a little under six months, so it's not too difficult to get to a profitable point if you can spend the money upfront. From there, the setup can be sold or you can mine further, so you have more than surpassed your "Return on Investment." But you need to account for hours of your time spent, if you want to ask if it's really worth it. I'll be reporting hours throughout this build.

The Build
The Build is of the open-air type and minimalist in all regards, except for cooling. I designed this setup (which may be a generous term) some time ago back in the Litecoin GPU-mining era with Radeon 7970s, back when things were much hotter, much nosier, and much harder to keep cool. Basically, the concept is simple. Use the motherboard box as a makeshift breadboard case and splay the innards of the PC around it on a shelf. Mount a big house fan on top of the GPUs to hold them in place (It will also provide cooling on hotter days, of course.) The result is pictured below, ready to mine. All in all, the assembly probably took two hours, but the install and setup of the OS (I went with Windows, but Linux options are available), various updates, and ZCash mining and wallet software probably took me another four hours. It really was a whole day of work, truth be told. I am listing seven hours of work for the moment on my chart. All for this:
The rig is mining right now (has been since the 8th of January, actually) and producing as expected from the looks of it. Expect a report in approximately two weeks and a biweekly column from this adventure. It should be an interesting ride.

You can track the stats of how TPU's new mining project is doing at anytime here.
Add your own comment

161 Comments on Confessions of a Crypto Miner: The Setup

#103
FordGT90Concept
"I go fast!1!11!1!"
Silkroad getting destroyed may have caused the black market to turn away from crypto. That said, I don't know how credible of a source Elliptic is.
Posted on Reply
#104
R-T-B
"FordGT90Concept said:
Silkroad getting destroyed may have caused the black market to turn away from crypto. That said, I don't know how credible of a source Elliptic is.
It didn't. Coin validation just forced them to more obscure anon coins like Monero.
Posted on Reply
#105
yotano211
"FordGT90Concept said:
Silkroad getting destroyed may have caused the black market to turn away from crypto. That said, I don't know how credible of a source Elliptic is.
Monero and zcash are for the criminal elite.
Posted on Reply
#106
WikiFM
Dumb question, how do you change your crypto currency into real money? Is there an intermediary, do you pay a commission, how much?
I dont really know about it and get more confused after reading, how is the value of crypto currencies determined? Please give a very informed answer but simple
Posted on Reply
#107
yotano211
"WikiFM said:
Dumb question, how do you change your crypto currency into real money? Is there an intermediary, do you pay a commission, how much?
I dont really know about it and get more confused after reading, how is the value of crypto currencies determined? Please give a very informed answer but simple
How convenient or not this will be mainly depends on where in the world you are and which currency you wish to exchange :
  1. There are peer to peer exchanges like LocalBitcoin, where you’ll find people who are interested in buying the assets you wish to sell. This may be more or less successful depending on what you’re trying to do and how big the market for that is, but if you do find a buyer you’re likely to pay way lower fees than through a traditional exchange website.
  2. You might happen to live in an area where there are ATMs, which for now only exist for bitcoin. They charge very hefty fees though, but are probably the most convenient method (assuming there is one nearby).
  3. Coinbase, Gemini, CEX.IO, Kraken, Bitstamp and GDAX will trade cryptoassets for cash, to name a few. However, most of them only trade a few biggest cryptocurrencies for cash and are very limited when it comes to countries where you can use them.
  4. [list=1]
  5. If you have other currencies, you can trade them to one of the ones these platforms do trade for fiat money (through Switchain, for example) and then turn them into cash through, say, GDAX.
  • You can also do some research and check if something you’re looking to buy for fiat money can be bought with the cryptocurrency you have. This is especially true if you have bitcoin, since you can pretty much buy anything with it at this point.
    [/list]
  • Posted on Reply
    #108
    R-T-B
    "WikiFM said:
    Dumb question, how do you change your crypto currency into real money? Is there an intermediary, do you pay a commission, how much?
    I dont really know about it and get more confused after reading, how is the value of crypto currencies determined? Please give a very informed answer but simple
    In my case, I first exchange the zcash into bitcoin cash (for its low fees) and then sell it on coinbase as appropriate.

    Probably about 5% fees from this approach if done right.
    Posted on Reply
    #109
    Markosz
    A 1080 for mining? No wonder he ended up losing money in the first try.
    Posted on Reply
    #110
    silkstone
    "Markosz said:
    A 1080 for mining? No wonder he ended up losing money in the first try.
    1080's are one of the best cards for ZEC mining. High sols/W and almost double the hash of a 1060.
    Posted on Reply
    #111
    Vayra86
    I don't know but if you're hating on miners right now, you simply don't understand the way the world works. The situation of GPU, of crypto, its volatility and how that will play out in the long run really is blatantly obvious and predictable. If you've read my previous comments in several topics about mining - it is the discussion we have here that I was already miles ahead of back then - already in 2014 I had this same opinion, and it took FOUR F*king YEARS for people to catch on. Seriously damaged my faith in humanity to be fair... but it also confirmed everything I knew of it.

    Mankind is very good at putting personal gain above a gain for the greater good, and will do any and everything to one-up the rest. Always been that way. If anyone ever thought that 'distributing the new wealth' in a good way was to let people 'mine' it, get yourself checked out. Its the gold rush all over again - a time notorious for legalized slavery, extortion tactics, and some of the most brutal greed-driven adventures we've known. Nothing is spared in the pursuit of wealth. We have that same pursuit in the 'real economy', except for the fact that over time, we've created systems of checks and balances to keep a degree of stability, and avoid volatility. The whole premise of crypto and bitcoin is and was fundamentally flawed: the idea that something like this would or could ever work by itself, without regulation, rules or boundaries. At the same time, this is the capitalists' wet dream, case in point, the state of crypto today.

    As long as crypto and its accumulation has no boundaries defined by common sense, but only has a few basic rules like the proof of work concept, it will never work, and we will keep seeing what you see now: endlessly chasing the next big thing, infinitely jumping from one big bubble onto another, trying to capitalize on bursted bubbles, and gaining more and more control over a piece of the market. Already there are hundreds, if not thousands of whales that have a large enough percentage of coin (X) to get rich off manipulating markets, meaning they literally, directly get rich out of someone else's loss, something quite akin to plain theft. And there is no legislation, no regulation, nothing in the system that stops them. I completely understand how this is attractive to people. At the same time, it doesn't take a rocket scientist to figure out this model will never be sustainable.

    This is why, by principle, I will not mine, have never mined, and would prefer to see the whole concept of it die a quick death or get penalized severely through our regular tax systems. The latter would be my preference - Tax the potential profits of mining to death, and it will be gone in a few years. Or play it like China and just ban any kind of mix with the real economy. Because that's where it should be: outside of our daily lives, out of sight, forgotten and never returned to again.

    The waste of time, energy, effort, computing power is gargantuan and counterproductive to everything we live and stand for. Use that power and energy for some real crunching, like folding, it'll make you feel a whole lot happier in the long run.

    Oh, and one last thing: Satoshi should enter the history books as one of the most ridiculously twisted minds we've known. This was all his idea and it will backfire to the degree of potential self-destruction, after a long period of tremendous wastefulness.
    Posted on Reply
    #112
    moproblems99
    "Vayra86 said:
    Mankind is very good at putting personal gain above a gain for the greater good, and will do any and everything to one-up the rest. Always been that way. If anyone ever thought that 'distributing the new wealth' in a good way was to let people 'mine' it, get yourself checked out. Its the gold rush all over again - a time notorious for legalized slavery, extortion tactics, and some of the most brutal greed-driven adventures we've known. Nothing is spared in the pursuit of wealth. We have that same pursuit in the 'real economy', except for the fact that over time, we've created systems of checks and balances to keep a degree of stability, and avoid volatility. The whole premise of crypto and bitcoin is and was fundamentally flawed: the idea that something like this would or could ever work by itself, without regulation, rules or boundaries. At the same time, this is the capitalists' wet dream, case in point, the state of crypto today.
    Right, most appointed officials have our best interests in mind...Humanity will always exploit whatever system it has.
    Posted on Reply
    #113
    Captain_Tom
    1) If it was hard to make money off of mining, GPU's wouldn't be selling out at double their MSRP. People are buying them because of how easy it is to make money (If you are good with computers).

    2) In my opinion one of the biggest mistakes people make is: Mining the most "profitable" coin that second. You should read whitepapers and mine the coins that you believe have real potential.

    So for example - mining Zcash over Ethereum is somewhat idiotic in my opinion. 10% more profit (only if you cash out every coin you IMMEDIATELY make) is not worth the horrible longterm prospects. Ethereum has a very bright future ahead, and Zcash is not going to beat its main competitors (Monero or DASH) at any point. It offers no benefits over those far more established coins. Now maybe the OP does understand the benefits of Zcash, and does in fact believe it to be a better longterm investment than the other "Privacy Coins" - but I highly doubt that.

    Furthermore, Duel mining continues to make Ethereum + Siacoin (or whatever other combination) have even more leverage than most people realize over other Penny Stock coins.

    "moproblems99 said:
    Humanity will always exploit whatever system it has.
    You would think people would understand this by now lol. The world has seen small-scale total democracies, monarchies, Republics, The Soviet Union, and plenty of Totalitarian governments.

    All of these systems can be exploited because certain humans will always try to exploit everything they can. Thus the goal should be to make the most fair and yet libertarian system we have, because you can't hate the playa - you hate the game!
    Posted on Reply
    #114
    R-T-B
    "Markosz said:
    A 1080 for mining? No wonder he ended up losing money in the first try.
    The 1080s are actually doing better than my 7970s back in the litecoin era.

    I made a shitton of money before losing it all too, that story will be another day...

    There is no substitute for a good plan.
    Posted on Reply
    #115
    yotano211
    "Markosz said:
    A 1080 for mining? No wonder he ended up losing money in the first try.
    I have 7 1080s on 1 rig mining ETH. I throttle it down to 50% and only draw 760w from 7 1080s.
    I now I can mine zcash with that and get more than ETH but I prefer to mine ETH and I think this is the year for ETH to shine.
    Posted on Reply
    #116
    R-T-B
    "Captain_Tom said:
    So for example - mining Zcash over Ethereum is somewhat idiotic in my opinion. 10% more profit (only if you cash out every coin you IMMEDIATELY make) is not worth the horrible longterm prospects. Ethereum has a very bright future ahead, and Zcash is not going to beat its main competitors (Monero or DASH) at any point. It offers no benefits over those far more established coins. Now maybe the OP does understand the benefits of Zcash, and does in fact believe it to be a better longterm investment than the other "Privacy Coins" - but I highly doubt that
    I'm not an expert on modern coins (part of why I am a valid choice for an "average joe" experiment), but I don't hold ZCash precisely because of this. I don't believe any anoncoins hold longterm prospects over mainstream coins due to regulation worries. My ZCash mining is more or less immediately shifted to bitcoin cash via exchange, which I view as being in a slump right now. So yeah, your concerns have been thought of. More on this in an upcoming article.

    I do know the technical and philosophical differences in Zcash quite well if you read on, btw.
    Posted on Reply
    #117
    Captain_Tom
    "R-T-B said:
    I'm not an expert on modern coins (part of why I am a valid choice for an "average joe" experiment), but I don't hold ZCash precisely because of this. I don't believe any anoncoins hold longterm prospects over mainstream coins due to regulation worries. My ZCash mining is more or less immediately shifted to bitcoin cash via exchange, which I view as being in a slump right now. So yeah, your concerns have been thought of. More on this in an upcoming article.

    I do know the technical and philosophical differences in Zcash quite well if you read on, btw.
    I have no problem with the premise of your post, but I do become concerned about the messaging that some people might take from this. When I first started mining, it was definitely looked at as a hobby (mining Litecoin). But then I read the whitepaper for Darkcoin and immediately switched all of my hashing power even though it was "Half as profitable." It was a good choice made by someone who made an informed decision.

    Right now there are a lot of people acting like it's all luck, or that no one is really making any real money off of this. If all you do is mine the top coin with 2 graphics cards for fun - yeah, you are likely to just make $1000 worth of fun money per year (Not that there is anything wrong with that!). But if you put forth extra time and effort into building a few serious rigs, and you also do the research to mine some emerging coins part of every week: You can seriously make a lot of money. But not everyone will be good at it.

    "yotano211 said:
    I have 7 1080s on 1 rig mining ETH. I throttle it down to 50% and only draw 760w from 7 1080s.
    I now I can mine zcash with that and get more than ETH but I prefer to mine ETH and I think this is the year for ETH to shine.
    What is your hashing power mining ethereum with your 7 1080's? Don't lie, you have noted they are only using 760w.
    Posted on Reply
    #118
    R-T-B
    "Captain_Tom said:
    I have no problem with the premise of your post, but I do become concerned about the messaging that some people might take from this. When I first started mining, it was definitely looked at as a hobby (mining Litecoin). But then I read the whitepaper for Darkcoin and immediately switched all of my hashing power even though it was "Half as profitable." It was a good choice made by someone who made an informed decision.

    Right now there are a lot of people acting like it's all luck, or that no one is really making any real money off of this. If all you do is mine the top coin with 2 graphics cards for fun - yeah, you are likely to just make $1000 worth of fun money per year (Not that there is anything wrong with that!). But if you put forth extra time and effort into building a few serious rigs, and you also do the research to mine some emerging coins part of every week: You can seriously make a lot of money. But not everyone will be good at it.
    Oh I agree, but my experiment is for those who believe you can just "plug it in and make money." Yes, you can often do this, but it isn't the best money by any means. And if you count hours, I question if you are still really doing anything less than a fulltime job.

    I think you will always do better investing if you have the mental knowhow, frankly. You can do very very well that way if it doesn't drive you insane. I may drive that point home in a future entry. Thank you for the feedback.
    Posted on Reply
    #119
    trog100
    "But if you put forth extra time and effort into building a few serious rigs"

    you forgot to mention the build cost tom.. it takes serious money to put together a half decent mining rig.. spending the money is what stops most folks from doing it.. as for the full time job factor.. i have an 8 card rig in my caravan.. it been running 24/7 solid the the last four months.. i have a look at it from time to time.. but thats about all.. it runs its self.. my desktop machine also runs its self.. i can even run spintires mudrunner and mine at the same time with it.. :)

    would i build another one.. nope because you can make far more money simply by buying some coin and sitting on it.. part of me would like to build another mining rig but the current hardware cost is just too high..

    over the last six weeks i have chucked about 7000 into buying coin.. about a week back that 7K had turned into 14K... then that 14K rapidly dropped to 9K.. now its back up to 12K.. even at 9K i am still in profit.. at 14K i was making about 1.5 K per week profit over the six week period.. after the big drop down to 9K my profit dropped from 7K to 2K.. ouch.. back up to 12k my profit is at 5K.. what will it be next week dunno but i am hoping for 10K profit over seven weeks.. i have done spending now so any upward moves will be all profit..

    the down side with hodling is of course you cant spent what you have.. i am lucky enough not to have to... a week back my eth miner was turning out 50 dollars per day.. the little crash we have just had knocked that down to 30 dollars per day.. its now around 35 to 40 dollars per day.. total hash power just over 300 mhs.. 10 x 1070 cards.. the 8 card rig pulls around 1000 watts from the wall..

    i am talking in UK pounds not US dollars.. add 30% or so for US money equivalents..

    trog

    "Captain_Tom said:
    I have no problem with the premise of your post, but I do become concerned about the messaging that some people might take from this. When I first started mining, it was definitely looked at as a hobby (mining Litecoin). But then I read the whitepaper for Darkcoin and immediately switched all of my hashing power even though it was "Half as profitable." It was a good choice made by someone who made an informed decision.

    Right now there are a lot of people acting like it's all luck, or that no one is really making any real money off of this. If all you do is mine the top coin with 2 graphics cards for fun - yeah, you are likely to just make $1000 worth of fun money per year (Not that there is anything wrong with that!). But if you put forth extra time and effort into building a few serious rigs, and you also do the research to mine some emerging coins part of every week: You can seriously make a lot of money. But not everyone will be good at it.

    What is your hashing power mining ethereum with your 7 1080's? Don't lie, you have noted they are only using 760w.
    Posted on Reply
    #120
    Captain_Tom
    "trog100 said:
    "But if you put forth extra time and effort into building a few serious rigs"

    you forgot to mention the build cost tom.. it takes serious money to put together a half decent mining rig.. spending the money is what stops most folks from doing it.. as for the full time job factor.. i have an 8 card rig in my caravan.. it been running 24/7 solid the the last four months.. i have a look at it from time to time.. but thats about all.. it runs its self.. my desktop machine also runs its self.. i can even run spintires mudrunner and mine at the same time with it.. :)

    would i build another one.. nope because you can make far more money simply by buying some coin and sitting on it.. part of me would like to build another mining rig but the current hardware cost is just too high..

    over the last six weeks i have chucked about 7000 into buying coin.. about a week back that 7K had turned into 14K... then that 14K rapidly dropped to 9K.. now its back up to 12K.. even at 9K i am still in profit.. at 14K i was making about 1.5 K per week profit over the six week period.. after the big drop down to 9K my profit dropped from 7K to 2K.. ouch.. back up to 12k my profit is at 5K.. what will it be next week dunno but i am hoping for 10K profit over seven weeks.. i have done spending now so any upward moves will be all profit..

    the down side with hodling is of course you cant spent what you have.. i am lucky enough not to have to... a week back my eth miner was turning out 50 dollars per day.. the little crash we have just had knocked that down to 30 dollars per day.. its now around 35 to 40 dollars per day.. total hash power just over 300 mhs.. 10 x 1070 cards.. the 8 card rig pulls around 1000 watts from the wall..

    i am talking in UK pounds not US dollars.. add 30% or so for US money equivalents..

    trog
    All of my mining rigs have paid for themselves several times over (More money made then if I simply bought coins btw), and if I ever choose to stop - I will be able to sell off the cards for even more money. The hardware is insurance against the "doomsday" scenario (Although at this point I say it's near zero chance that Crypto could ever disappear overnight like some people used to worry about).

    As for "hodling", I make sure to cash out a little bit here and there anytime there is a massive uptick.
    Posted on Reply
    #121
    R-T-B
    One of the reasons I am trying to pay this machine off in 1 year or less is simple: Most credit lines at newegg amazon and similar allow you "no interest" promos for one year.

    The saying goes "you should not invest anything you can't afford to lose" but that being said, I can't pretend the credit lines are not somewhat relevant.

    "Captain_Tom said:
    Although at this point I say it's near zero chance that Crypto could ever disappear overnight like some people used to worry about).
    I agree. Though this seems to be the dream for the anti-crypto basher everywhere, I don't see it happening ever to the extent they dream. Crypto may get hurt somewhat from regulation, but dissapear? Never. The genie is out of the bottle kids.
    Posted on Reply
    #122
    Captain_Tom
    "R-T-B said:
    One of the reasons I am trying to pay this machine off in 1 year or less is simple: Most credit lines at newegg amazon and similar allow you "no interest" promos for one year.

    The saying goes "you should not invest anything you can't afford to lose" but that being said, I can't pretend the credit lines are not somewhat relevant.



    I agree. Though this seems to be the dream for the anti-crypto basher everywhere, I don't see it happening ever to the extent they dream. Crypto may get hurt somewhat from regulation, but dissapear? Never. The genie is out of the bottle kids.
    The way I would put it, is this: Bitcoin could crash 90% right now, and that would be enough for all of these bashers to call it "dead"; and Bitcoin would still be worth $1300. That's far more than anyone thought it would ever be worth. It would still be a success.
    Posted on Reply
    #123
    R-T-B
    "Captain_Tom said:
    The way I would put it, is this: Bitcoin could crash 90% right now, and that would be enough for all of these bashers to call it "dead"; and Bitcoin would still be worth $1300. That's far more than anyone thought it would ever be worth. It would still be a success.
    Heck, I remember when people were calling bitcoin dollar parity the "success marker."

    I had largely dismissed it then as something too hard to exchange and too weird to comprehend... if only man, if only!
    Posted on Reply
    #124
    Captain_Tom
    "R-T-B said:
    Heck, I remember when people were calling bitcoin dollar parity the "success marker."

    I had largely dismissed it then as something too hard to exchange and too weird to comprehend... if only man, if only!
    Haha I wasn't quite in the game yet at that point. I believe Bitcoin was worth like $500 when I got into the game, but GOD do I wish I would have followed through sooner.

    Actually it's funny because the first thing that deterred me for a few months was when I thought I had done something wrong with my Bitcoin wallet. It was taking so long to sync that I must have screwed something up, and gave up for a while.
    Posted on Reply
    #125
    R-T-B
    I have a 7.0 LTC wallet somewhere in the ether that I lost a million harddrive formats ago... mined on a Pentium M's single core. :laugh:

    "Vayra86 said:
    Satoshi should enter the history books as one of the most ridiculously twisted minds we've known.
    That's not how I see it. It's also not what his final comments before his vanishing suggest. He seemed at best an idealist, and at worst, a guy who really disliked paypal. :laugh:

    I honestly think he is hiding because he is deeply ashamed of what he has created at this point. He didn't really forsee any of this. Keep in mind he was getting upset at it's exposure level and the mining hashrate exploding at dollar parity times.

    IIRC the last confirmed statement from his email was one simple phrase: "I am not involved with bitcoin anymore."

    That should say it all.
    Posted on Reply
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