I recently became interested in learning more about crypto currencies and how they work. There is no better way to learn than to build out a miner (aka rig) and try it out myself. I happen to have an old motherboard, power supply, and hard drive lying around (who doesn’t?) – the only thing I was missing, and most vital component is the GPU (a high-end graphics card). Note, due to the mining craze, the cost of graphics cards has shot up.
I opted for an ‘open air’ build. Literally, I bought some cheap plastic shelving and used zip ties to secure it down. It’s not pretty, but functional, and also has great heat dispersal.
Once the hardware is build, you will need to load the mining software. You need to pick a coin – certain coins are better mined with specific graphics cards. Once you know what you want to mine (you can check whattomine.com), you’ll need a corresponding wallet to deposit currency in to, as well as a pool to join. Unless you have significant hardware, solo mining isn’t possible, so pool mining allows small rigs to participate in the mining, while making profit from a share of any blocks that are collectively mined. Once it was up and running, I tuned the hardware (called over clocking) to get the most processing power from my GPU’s. Now I just sit back and wait..and burn electricity.
There are lots of good videos on YouTube, or websites that can get you going. I learned a lot from Reddit, in the /Ethermining subreddit. Make sure you read the in-depth guide before posting, as it’s considered bad etiquette to post a question that is already covered.
Keep in mind, now may not be the best time to invest a lot of money in mining, as there are changes coming that may make it much harder for small miners to make any money. If you still believe the coins will raise in value, you can just buy some coins directly.
While the crypto currency aspect of mining is interesting, the real exciting game changer is what the crypto currency is based on – blockchain technology. The blockchain is what it sounds like – a continuously growing list of blocks (chunks of data) that are linked to one another using cryptography. In more general terms, its also known as a ledger. Currency is an easy way to understand the model. Like bank transactions, you can record the movement of value between individuals. However, unlike a bank, there is not a central authority. The blockchain is completely distributed, and works with an unknown number of nodes dropping in and out of the network. In fact, the network is untrusted, and its possible some nodes may behave in a way that is negative. Once a block is written to the chain, it becomes nearly impossible to go back and alter it. You would need to alter every subsequent chain (since they are linked by information from the previous block) and the cost and compute power to make this type of change grows exponentially. The fact that a secure, completely transparent, peer-to-peer system was created is quite mind-blowing.
Now, replace currency transactions with other things, like land ownership records or other contracts and you can start to understand the power of the blockchain. In fact, one coin, Ethereum was created to allow people to put code in to the blocks and have self executing contracts. The example I heard was around travel insurance. If someone has a contract that if the weather disrupts a trip, the contract can self-execute and make a payment based on weather data. This example just scratches the surface – there are many other uses like providing micro-payments directly from person to person (with low fees, and incredible speed), or potentially could be used for voting. A more whimsical use is cryptokitties – a virtual pet that is collectible and breedable.
My next venture is to learn more about the programming language (Solidity) and see how these contracts work. I predict this will be one of the most disruptive technologies to come along – and goes well beyond just making money off of a crypto currency.