I’d bet that most of you have heard of cryptocurrencies, whether it be Bitcoin, Ethereum, or another ‘altcoin’. You perhaps have started dabbling by buying a few of the coins here and there, or perhaps you’re in deep and you sleep, live and breathe crypto. Crypto has had a bit of a rough go here in the past few weeks, with bitcoin and many other coins being down 60% – 99% in value.

I’ve had an interesting journey with crypto myself, first learning about it in 2013. At the time it was a bit of the wild west and although it seemed cool, I decided not to get into something that was primarily at the time used by drug dealers and something that even if I got into it, was fraught with exchanges (i.e. Mt. Gox) getting hacked and risking my bitcoin. However, in 2021, I turned a corner, saw the light and go int! You can read more about my experience here, but in this post, I’m going to share with you the crazy story of how I became a crypto miner.

In a gold rush it’s better to sell shovels instead of mining

This is a fairly popular saying, and basically points to the fact that in times of mild hysteria around a financial security or product, it’s often safer, and more profitable to be in an ancillary or supporting industry. Financial trading firms don’t really care if stocks go up and down, as long as you’re trading because when you’re trading; they’re making money (even if they’re not charging commission, ahem RobinHood). However, in this mild time of hysteria with cryptocurrency, there’s a literal application here, and perhaps instead of mining the cryptocurrency, it’s better to sell the computer or software or services the perform the mining. 

I however, am not that smart and even though I think I’ve figured crypto out, it’s still a bit over my head. I suppose I could have bought stock in the chipmakers (mining requires expensive graphics cards in your computer), like NVIDIA or in a computer manufacturer like Dell. Neither of those options felt super intriguing to me, and so for better or for worse, I bought a shovel and started mining. Let’s see if I made the right decision

What do miners do

Cryptocurrencies are super cool (ok I’m biased), but the real feature that’s gotten people very excited is the blockchain. Think of the blockchain as a public ledger, or an accounting spreadsheet that’s open to everyone. As it’s open to everyone, it doesn’t necessarily have to be controlled by any one government or corporation or organization, it just exists on it’s own. Whoa. Think about that – no one government nor company owns the bitcoin protocol, it was a computer program written by an anonymous creator and released out into the wild. But now when I send someone a bitcoin, they have full faith and confidence that I a) have one to send and b) know when they get it and c) know that once that transaction is complete, I no longer have it but they do. It’s the whole notion of decentralization, and it’s pretty popular right now. There are all sorts of financial use cases, legal, real estate, NFTs (think modern day baseball cards), etc. Blockchain is hot. 

However, as no one organization controls the blockchain, someone has to keep the lights on and someone (or many people in this case) need to keep the blockchain public ledger up to date. Enter the miners. Similar to miners of previous ages physically mining for gold or silver, crypto miners today perform a risky task with the hope of a reward – the cryptocurrency. 

Still lost? So was I. Upon doing more research and wrapping my head around it, I learned the following: miners are the ones that update and validate the blockchain. At any given time there are thousands if not hundreds of thousands of individual computers all essentially running a program, think of it as the ‘bitcoin program’ an in attempt to keep it updated. All the transactions going back and forth need to be validated, reconciled and put into the public record. Miners (or their computers) are the ones that are doing this. 

Now, the actual process of mining is almost two fold – there’s the ‘solving of the crytographic puzzle’ piece and the ‘updating the blockchain’ piece. The 2nd piece is fairly easy to understand; a computer confirms that YMF has 1 bitcoin (lol, I wish), and desires to send it to you the reader (lol, you wish), ok let’s debit his wallet 1 bitcoin and credit their wallet 1 bitcoin. The first piece is interesting and it essentially involves building trust into the system. How will the anonymous program decide who gets to update the blockchain? It doesn’t take a ton of computing power to do but since there’s a reward (mining that gold), a lot of computers want to do it. To decide who actually gets to update the blockchain, the program puts in random math problems that need to be solved. Not to get too confusing, but in a proof-of-work blockchain, literally the first computer to solve the problem gets to update the blockchain and earns the price (newly mined cryptocurrency and/or the transaction fee), and in a proof-of-stake, the one that’s been staking (or pledging) the most for the longest, and also solves the math problem, they get to update the blockchain. 

Think of the math problem as a way to bring order to the system to keep it running smoothly, and also as it requires a fair amount of computing power, and electricity (which is somewhat controversial), you’ll reduce the risk of bad actors messing the blockchain up (known as a 51% attack and it’s not irreversible but it’s a lot of cleanup work). 

So, miners are computers that solve complex math problems in an attempt to earn the right to update the blockchain with the hopes of earning newly mined cryptocurrency and/or the transaction fee.

How did I pick the coin to mine

So, after finally wrapping my head around what mining is, I did some more digging. Is it profitable? Is it worthwhile? Would I be better served taking my money and just buying the cryptocurrency instead of buying a computer to mine for it? I mean mining does sound very appealing – running a computer program and essentially getting ‘free’ cryptocurrency that’s worth real money. 

I wish I had a more scientific approach but I literally started googling (I mean we all do it…) “what is easiest cryptocurrency to mine”. I’m fairly technical but I’m not a coder and I’m not one to take a bunch of graphic cards and string them together, so I was looking for something easy to mine. I was also looking for a coin that was profitable, I didn’t want some random cheap coin that nobody was talking about or trading, but I also wanted a coin that I could actually earn on – I’d heard stories about bitcoin miners essentially earning pennies after all their hard work. 

I stumbled onto Vertcoin, which calls itself the “People’s Coin”. Ah, I was onto something. First thing I liked about it – it’s a simpler set of mathematical problems which don’t require ASIC, which are super advanced (and expensive) graphics cards, and it claimed that essentially anybody with a gaming computer (or arguably any computer) could mine. So I wouldn’t have to spend thousands of dollars buying a mining computer, just hundreds. The second thing I liked – it seemed easy to use. It literally has a “One-Click-Miner” and after watching plenty of youtube videos and reading Reddit, it felt like something I was tech savvy enough to handle. Thirdly, it was traded on a few exchanges. As you get into exchanges you’ll learn of Coinbase, BlockFi, Gemini, Binance, RobinHood, Kraken, etc and it’s not listed on any of those but it is listed on a few, namely Bittrex. So I felt good about being able to sell or trade my newly mined Vertcoin if needed. Lastly, it had a great community on Reddit, Twitter and this new thing called Discord that apparently all the cool kids are on. Mining bitcoin seems super competitive but mining Vertcoin everyone seemed to be willing to lend a virtual helping hand. 

Ok, so I’d found my coin but would it be profitable? This was a bit tricky and I kind of came to the conclusion that I wouldn’t know for sure until I tried it. As best as I could on Reddit, I compared graphics cards to get a sense of what I could be earning. I found a few calculator websites but they were honestly all over the place (as in I’d either earn $1/day or $100/day…). I did finally find a decent enough one that I could map to both the graphics card I was eyeing and the coin (Vertcoin) I was planning to mine. The final estimate was that I’d be mining about 1-2 Vertcoin/day with electricity cost (a whole other calculator) of $0.25/day. At the time, Vertcoin was trading at $0.60/day so I figured I’d be making a little bit each day, but the hope was that the price would rise and so would my earnings. 

What setup was like

So, I finally had convinced myself that it would be profitable and that I could manage the setup. I then had to find a gaming PC that I could start mining with. I ended up going with a Dell as I figured it’s a good name brand and it had a graphics card (a NVIDIA one) that seemed to be in use by other miners who were earning 1-2 vertcoin/day. I also had a $100 American Express offer for buying a Dell, got it during their Spring sale (17% off) and used my corporate employers discount (which to be fair is for employees to use). All together I spent just over $600. 

It actually took about 3 weeks to arrive, I guess gaming PCs are a hot commodity right now with everybody spending more time and home and many new gamers playing video games, and/or mining cryptocurrencies. I was like a kid at Christmas and hurriedly set it up when it arrived. I felt like I had been practicing in the past few weeks, having done plenty of research and having watched plenty of YouTube videos on it. The setup took a few hours as the installation wasn’t the fastest (it actually downloaded the entire blockchain ledger) but I got it running! It was a truly beautiful site seeing it start earning 0.000001 Vertcoin. I felt like I had gotten a tamagotchi, if you remember those and I would check on it every 30 minutes or so. It was working and I was excited!

How it’s been going 

I actually went into this with a partner, being too cheap to shell out $600 myself and had another buddy looking to get into the mining game. Another selling point was the fact that he has a warehouse where he could keep it, and also has solar panels on the roof, so it’s not free electricity, but it is cheaper electricity, and we both felt a bit better about the environmental impact of it all.

I will say that the process has been more challenging than expected. There were a few gotchas that I had to work through – like not having the computer go to sleep after inactivity and making sure it kept running without the monitor being turned on. Easy settings to fix after a few minutes googling. We then ran into an issue of the antivirus software stopping it after a few hours/days, so we just uninstalled it. There was also the issue of not being able to monitor the progress, as I had written my wallet (where mined cryptocurrency is stored) code down incorrectly, but after I got that typed in correctly, I could monitor it virtually from the mining pool that we are a part of (working together with other miners and sharing the reward). I also ran into an issue in which the miner will shut-off about every 5-7 days, which is easy to rectify, just relaunching the miner, but it still takes time to do and as it’s at an offsite warehouse, if it happens on a Friday, it’s not getting turned back on until Monday, losing 2-3 days of mining. This was supposed to be fairly hands-off so after doing more research (you can learn basically anything online), I found that I could write a short program that would essentially shut the mining program down and then restart it. I have this running every day. Lastly, I’m learning that internet and power issues can come into play. At the warehouse I learned of an issue with the internet being a bit spotty, which led to the miner shutting down for longer periods of time than I would like. Even power outages, which short ones I feel are a bit more common, can force manual intervention to restart. 

All that said, it’s been a fun learning experience. Am I going to get rich off of mining cryptocurrency? I don’t think so, but I’m a big believer in having a bunch of small, passive income side-hustles going on and this one just earns me about $0.50/day (I do split it with my partner). Also, Vertcoin has risen in value from $0.30 when I first started researching it to $0.60 when I started mining, up to $1.20-$1.50, now back to $0.12. Even after it got listed on a few other exchanges, which is good for liquidity, the price didn’t jump as I had hoped! 

Would I have been better off just taking that $300 and putting it directly into Vertcoin? Potentially! But this is a longer-term play that I’m ok with and I hope the little miner will continue working and bringing in 1-2 vertcoin/day for the next few years! I also had some fun trying this, learned more about computers, cryptocurrencies and blockchain and was able to problem solve and improve the process! 

Summary

All in all I consider this a fun learning experience! I’m probably losing money especially given this crypto crash of 2022 but I’m still running the miner, holding out for hope that it comes back one day!