Cryptocurrency Mining Software and Pools

In “Mining Cryptocurrencies” I wrote briefly about CPU, GPU and ASIC mining. All of these mining methods require software to get work (the complicated math problem) from the Cryptocurrency’s network and send it to the hardware to calculate.

Also, note there are several different kinds of math problems currencies use related to their protocol. I won’t go into a lot of detail, first because I’m not a math wiz, second because I could devote several posts to one protocol and there are several, but most importantly because that’s not the approach I’m taking in my blog. I’m here to help someone who doesn’t need to know every last tiny nuance of every Cryptocurrency to get started.

I will however list some Currency and Protocol pairs. Bitcoin uses SHA-256, Litecoin and DNote use scrypt, Dash (which used to be Dark Coin) uses X11, Ethereum uses Ethash, and ZCash uses Equihash. If you’ve taken my advice in previous posts you’ve checked out http://www.coinwarz.com/cryptocurrency and know you know what some of the items on that page are.

Going back to mining software… As I stated above, the hardware performs the math, but software is required to gather the math and send it to the hardware. That means a device is required to communicate with the hardware. In the case of CPUs, GPUs this usually means a computer with a hard disk to install the software. The first versions of ASIC miners were USB devices for computers and the software would detect them to send work to them. Standalone ASIC devices still have a CPU,  network interface and software, but these software is flashed to a chip or written to an SD card plugged into an integrated computer like a Raspberry Pi.

Nearly all mining software is available for free from Github.com. Start by either going to a mining pool or the coin’s community page to find links and instructions. Standalone ASIC miners have their own software. Upgrades are usually available from the manufacturer.

In most cases the software only provides mining for one protocol. That’s not always the case, some developers have created software that can receive a command from a pool that mines multiple pools to switch which currency the software is mining.

Mining software is almost exclusively written in C++. Which doesn’t mean a lot to many people. But it allows for two main advantages. First the software can be easily put together for multiple OS, Linux and Windows being the most popular. Secondly the software is modular, or it can be broken up into pieces.  Developers can take a miner currently available on Github for one currency and replace the parts they need for another currency and thus all the existing support for GPUs and OS come along for the ride. Likewise, if a new family of video cards is released it’s easy to add a new piece of code to support those cards. When you’re looking for mining software make to you download the right package for your operating system and your video card family (Windows/Nvidia or Linux/AMD etc.) Some software packages have both video card families available in each OS package, but you’ll find from reading through reviews that one software might work better with your hardware than another.

There is scant little mining software for Apple products. Mostly because Apple sucks. Yeah I said it. But also, because you can’t add and upgrade the Video cards for GPU mining and Apple locks down what software is made available to their systems. I guess the company is scared mining software might over heat the CPU.

As a funny side note, my son was actually trying to mine Litecoin on some of our old Android phones. He had to place them under box fans to keep them from over heating and in the end he never made enough to = $0.01, but the price of Litecoin is on the rise again so who knows.

Solo vs. Pool

I introduced a new term “pool” above, so now is a good time to talk about solo vs. pool mining. Solo mining means you use your hardware to mine blocks directly on the block chain. This can be profitable for the first 10 minutes a new currency network is up. Once the currency becomes popular and there is always a handful of miners who seem to have invested $1 billion in hardware to have the best Hash Rate, it’s time to find a pool.

Pool mining means miners pool their Hash Rates, or combine their work. The Pool itself gets the block reward and divides it among its member miners per the amount of work each contributed to finding the block. There are several different methods of determining how much each miner gets of the reward, but in general the miner who does the most work get the highest percentage. One of the bits of information you’ll get from Coinwarz.com is how much currency you should generate a day. Keep in mind that with Solo mining you only receive a reward when you find the block, but then you get the whole reward. You may not actually get that reward for several weeks… months? in the case of Bitcoin, unless you have spent $1 billion in your mining farm you will not see a reward ever. However, with pool mining, because you earn some of the reward every time a block is found, you should see your balance growing at the rate Coinwarz.com has calculated for you.

In the early days when most Bitcoin enthusiasts were altruistic and rebels against the world, all the software was open source and the pools were free. That’s not 100% the case anymore. Some of the best mining software for Altcoins has a DevFee built-in. For some part of your mining day the software will disconnect from your pool and connect to the developer’s pool and account and mine for them to reimburse them for the time they spent developing the awesome software you’re using. Likewise, mining pools almost universally charge a fee, 1 or 2% of your earnings to pay for the upkeep, fees and maintenance of the servers you’re using.

Up next a look at networks and wallets.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/

 

 

 

Adventures in Mining Bitcoin with ASIC Hardware

In “Mining Cryptocurrencies” I wrote briefly about ASIC Mining. I have purchased some of these units, so I have more than just a cursory understanding of the technology and the considerations to make in such an investment.

In my previous post, when I wrote, “Cryptocurrency ASIC manufacturers are largely new companies without any reputation or large amounts of R&D funds, and in many cases, no support whatsoever.” there are some implications I alluded to. I will go through those now.

Here are some basic concepts. Cryptocurrencies and blockchains are still relative young technologies. Your typical lending institutions, like Banks, aren’t interested in making big investments in something that still hasn’t been proven to work as a replacement for fiat. Companies developing these technologies or technology that is related to blockchain tech are also young.

In established industries startups, can usually find traditional sources for income. Cryptocurrency focused companies must find alternative means of financing. If they’re lucky they might catch the eye of venture capitalists. In the case of ASIC manufacturers, most turned to pre-orders. These companies would publish specifications (Hash Rates and power consumption) on proposed devices that had only been designed or perhaps prototyped, hoping eager miners would pre-order enough units to actually pay for the manufacturing and testing ahead of beginning production. I think the potential for abuse or lost investment is obvious here. Equally great, was the potential for acquiring new mining systems that would for some time put early purchasers ahead of the rest of the miners and earning more of the rewards.

Both scenarios played out. Some companies took the money and ran. Some tried very hard to deliver on their promises but due to component suppliers or unexpected costs could not. Refunds were given, companies were sued… And in some cases, ingenious devices were delivered, extras were sold out immediately, and the company could not produce fast enough. The success of the first generation of these devices funded additional generations and the advances kept coming. Surprisingly, at least to those of us who reside in the US, many of the failures were domestic while one of the greatest successes came from China. I invite you to review the various threads on consumers of these products experiences https://bitcointalk.org/index.php.

I never pre-ordered any hardware. I just didn’t feel like I had enough money to gamble. In my desire to be safe I waited for other people to receive their orders and write about the experiences at the forum above. How’d that turn out? I was never disappointed with the products I did purchase, however I had a dickens of a time purchasing them. With my approach, I was left either completing with other purchasing left over pre-order stock, or waiting until someone decided to list theirs used (usually at a significant markup) on eBay. My hesitation also lead to shorter profitability for my devices. I have touched on the fact that the more miners on the network, the more difficult the math must become, to keep the coin generation stable. When a batch of ASIC hardware was delivered the network Hash Rate would jump, and so would the “Difficulty”. So I was always increasing my personal Hash Rate after the early adopters had drove up the “Difficulty”, thus reducing my rate of generating rewards.

Another aspect to consider is the conversion price of a given Cryptocurrency. At the time I was running my Bitcoin mining farm at its peak, I was using around $500 of electricity every month. When the “Difficulty” was low and the Price was high, I was making a nice profit, basically double my electric bill every month. The price of Bitcoin didn’t stay high. Eventually, my mining was no longer covering my electric bill, or I was only making $30 profit. That’s why this site I’ve linked several times is so important http://www.coinwarz.com/cryptocurrency. This site allows you to plug in your Hash Rate, the amount of power it takes to support that rate, the price of your power, and the price of currencies to determine which one is the most profitable for you to mine. At the time of writing this, Bitcoin is over $1100 and I could make a little over $1.00 a day mining it. $30 a month, not worth the amount of heat the devices give off I’d have to offset with running the A/C.

All my hardware investments paid for themselves, it was a great experience learning about this new technology, and sparked a lot of interest for my oldest son. I hope that some very smart people out there come up with some other purpose for these devices that I could again make money from running them or selling them.

I have not investigated any new advancements in ASIC hardware, I know there are some now available for Atlcoins. It could very well be that even more advancements have been made and there is a new ASIC bitcoin miner that is profitable.

Up next a detailed guide into mining software.

Stay tuned!

Wikipedia – Bitcoin

https://en.wikipedia.org/wiki/Bitcoin

Bitcoin Forum – The most popular place to discuss all Cryptocurrencies

https://bitcointalk.org/index.php

Cryptocurrency Trading Charts

https://coinmarketcap.com/

Most Profitable Mining Calculations

http://www.coinwarz.com/cryptocurrency

Some Exchanges

https://poloniex.com/

https://btc-e.com/

https://www.gdax.com/

https://www.bittrex.com/