My First Experiences with Cryptocurrencies
Everyone talked about cryptocurrencies this year. Not for no reason: Ethereum started with 8 Euro per coin and has increased its value eighty-fold. Today you can buy a coin for 630 Euro. The all-time high was over 700 Euro (19th of December 2017). Bitcoin, the best known of all cryptocurrencies, has increased its value from just under 1,000 Euro to 13,500 Euro. (All-time high: 16,700 Euro on the 16th of December.)
A few years ago — it must have been about five years ago — I was already interested in Bitcoin. After some considerations I decided not to buy a Mining-PC because I didn’t see enough potential in cryptocurrencies. Well, what a mistake…
CPU Mining (Monero)
Since May of this year, I have been dealing with cryptocurrencies as well. First I focused on Monero, because I read that it can be mined with a normal PC (without a high-end GPU). After trying some miners, I decided to use the mining software from Minergate. Minergate offers a very cool GUI mining client for Windows, Mac and Android. I really like it. The software supports mining of Bitcoin, Ethereum/Ethereum Classic and some CryptoNight-based coins, including Monero.
(The CryptoNight hash function is a memory-hard hash function. It is designed to be inefficiently computable on GPU, FPGA and ASIC architectures. CPU mining of CN-based coins is therefore not a significant disadvantage compared to GPU mining.)
GPU Mining (Ethereum)
After a few weeks I finally bought a Mining-PC to mine Ethereum, because some people told me that Ethereum is the new Bitcoin. I mined it for some weeks. And then I read about the ice-age, Byzantium, the difficulty bomb and the new Proof-of-Stake (PoS) consensus.
During the summer of 2017 the difficulty increased to 3000T. Mining was no longer profitable, even with a Mining-PC (with a very fast GPU). So, I sold my PC again — after just running it for a few weeks. In mid-October the Difficulty dropped from 3000T to 1500T. Due to the decreased difficulty and the higher value of Ether coins, mining would meanwhile be profitable again.
Cloud Mining
I also tried cloud-based mining. Cloud mining can be a very cool and worry-free opportunity to mine cryptocurrencies. All you have to do is keep an eye on the cost of the service. Most services calculate the costs in such a way that you can’t really make a lot of profit. You should always calculate the costs of the mining contract and ongoing maintenance fees against the expected earnings — at least as far as this can be deduced from the expected coin price and difficulty.
I started a two-year Ethereum mining contract with Genesis Mining. An Ether mining contract can be used to mine various coins based on the Ethash hash function. I started mining Ethereum and switched to Ethereum Classic, because of the previous mentioned increasing difficulty. (My hash rate was so low that I would only have received a payout once a year; because of the less difficulty with ETC, I receive payouts every 2 weeks.)
In November I started a second cloud mining contract with Hashflare to mine ZCash. The had a Black Friday/Cyber Monday special offer with very good discounts. If everything works as expected, I can quadruple my investment.
This was a first overview of my previous mining experience. In the next post I will present some of my favourite coins and explain why I think that these coins are “better” than the other 1375 coins on the market.
