Cryptocurrency is a Settlement Network. It maintains a ledger of anyones' accounts. Allowing a decentralized digital ledger that is incorruptible, unfalsifiable, and indestructible of unit account for everyone. There are two main components to cryptocurrency with a growing number of additional components as Web3 grows. The ledger, also known as the blockchain and its associated coin.
The first step is to create a wallet. This is similar to creating a bank account. There are two types of wallets; hot wallets and cold wallets. A hot wallet is the term for a digital wallet or one that is on your phone or computer. Using a software wallet such as MyEtherWallet (MEW) or Metamask, here's a comparison of the two. These are Ethereum based wallets. For different cryptos, different apps would be necessary.
First install MetaMask either as a phone app or browser plugin. Once ready, open the app and click Get Started then Create a new wallet. It'll ask you for a unique password. Next, it'll ask to Secure Your Wallet by creating a Secret Pass Phrase. This is a 12 word code that will recover your wallet in the event that you lose your password. Your unique password actually doesn't matter, the 12 word Pass Phrase is the real password to your wallet. Write it down on paper and place it in a safe because it can be used to recover or steal your wallet. If you can remember the 12 words forever, you can go anywhere in the world with your wallet safe in your mind.
Now that you're logged into Metamask, you can see a few options to Send, Receive or Swap. This is just like a bank account in that you can send or receive money. The Swap option is to convert your Ethereum into a token. These are similar to foreign currencies. Swapping Ethereum for a token can be expensive with high network fees and it may be cheaper to use an exchange to buy the currencies directly rather than Swapping them yourself using your private wallet.
In order to send money, you're required to use your Private Key. Key is synonymous with address, so a public address and public key mean the same thing. Metamask does this behind the scenes so you don't have to worry about it. When receiving money, you just need to provide your public address. All public addresses are public. They are visible to everyone in the world and are relatively safe to share. People these days will post their public keys on their websites similar for people to tip them, similar to Patreon. Never share your Private Key, if your secret pass phrase or private key is compromised, the wallet is considered Burned and shouldn't be used.
A public key will look similar to 0x4AeC7ecf49F12D442AA9A3403FaD625EAC0B8C17, and using a website such as etherscan, you can look at the address and see its history and current value.
It can also been used as a QR code. This can be useful on websites or in stores where you could scan with your phone.
A cold wallet uses a physical key similar to a USB drive to secure your wallet. A cold wallet cannot be opened without the hardware key so it's impenetrable but can also be lost or stolen. They cost roughly $100 online, but are the most secure way to protect your crypto, you could literally bury your money.
In order to convert to cash or buy crypto, an Exchange is required. They are finance institutions similar to banks and have Know Your Customer rules such as ID and SSN. Some Exchanges such as CoinBase will give you your public and private keys in order to control your wallets. Other exchanges such as eToro allow you open a spread against a cryptocurrency similar to a stock. Exchanges such as eToro are frowned upon because you are unable to control the crypto wallet, you have to trust eToro to ensure your money is safe. Coinbase provides a flat fee of $3 per $100. eToro's Fees is based on a small % of the spread so it can fluctaute between a small fee to a high fee.
Some services such as MoonPay will let you use VISA to buy crypto using your debit card. These can be used in conjunction with metamask or MEW to buy more crypto without needing an exchange. MoonPay has Know Your Customer rules as well.
Each cryptocurrency secures its network with some form of consensus. With Bitcoin and Ethereum, they use Proof-of-Work, this is the most known form of Mining. Hardware attempts to solve a puzzle that on average will take an average of X minutes. For Bitcoin, this is every 10 minutes. Ethereum is roughly every 13 seconds.
Proof-of-Work (PoW) vs Proof-of-Stake (PoS).
Proof-of-Staking is the second most popular form of mining. It is similar to a savings account, in that, you hold crypto in your wallet and you get APY dividends. While it technically requires hardware to perform staking, many exchanges such as CoinBase offering Staking services so there's no setup on your end. Some cryptos pay out daily, some weekly. The interest rate is typically between 4% and 6%. If staking via an exchange, they typically a small fee of the staking reward.
Proof-of-Work Mining requires you to use either your computer's processor (CPU), graphics card (GPU), or an ASIC. We will be focusing on GPU mining with Ethereum since it is the most flexible in terms of price, setup and knowledge.
Setting up a miner is similar to any other computer, it needs a power supply, motherboard and frame. There are solutions that allow you to buy ready to use rigs that just need GPU's to be installed. For large scale operations, these might need the best way to go since they save a lot of time. Building a custom rig from stratch can take days.
These standard rigs typically cost about $1000 dollars and can hold typically 8 GPU's. This comes out to a base fee of $125 for each GPU's housing. A custom rig would reduce this per GPU, but the man-labor might preclude making custom rigs.
GPU's are rated on Hashrate, Power Usage and Unit Cost. Hashrate is based on how powerful your card is and is the basis for its income.
Graphics Card Comparison, here's an example of my two preferred cards. Ethereum's protocol is called Ethash.
The chart shows the Hashrate in MH/s, the Power Consumption in Watts and the efficiency (Hashrate per Watt). 100 MH/s brings in roughly ~.07 Eth. This is roughly ~$250 a month gross at the current exchange rate. 1 KW is 723KW/h per month, at $.1 per KWh, that's roughly $72.30/month per KW. 30 KW is roughly $2200 in electricity. $1500 in rent comes to roughly $3700 in bills.
| Name: | NVIDIA RTX 3070 | AMD RX 5700 XT | AMD RX 580 |
|---|---|---|---|
| Protocol: | Ethash | Ethash | Ethash |
| Hashrate: | 61.786 MH/s | 54.282 MH/s | 32.74 MH/s |
| Power Usage: | 117 W | 91 W | 84W |
| Efficiency: | 0.528 MH/W | 0.597 MH/W | .39 MH/W |
| Cost: | $1200-$1600 | $1200-$1500 | $300-$600 |
| 8-GPU Rig Cost: | ~$12,200 | ~$11,800 | ~$5000 |
| 8-GPU Hashrate: | ~480 MH/s | ~432 MH/s | ~256 MH/s |
| 8-GPU Power: | ~1600W | ~1240W | ~1200W |
| Monthly Income: | ~$1200 | ~$1080 | ~$640 |
| ROI: | 10.1 Months | 10.9 Months | 7.81 Months |
| Rigs per 30KW: | 18.75 | 24.30 | 25 |
| Gross Income per 30KW: | $22,500 | $26,244 | $16,000 |
| Adjusted Income per 30KW: | $18,800 | $22,500 | $12,300 |
| Adjusted ROI: | 12.17 Months | 12.75 Months | 10.16 Months |
| Total Cost per 30KW: | $228,750 | $286,740 | $125,000 |
Amazon link for general search of NVIDIA gtx and rtx cards
Amazon links for general search of AMD cards
LHR stands for Lite Hash Rate. They are only produced by NVIDIA so AMD doesn't have this issue. They are designed to discourage miners from purchasing them. Ensure you purchase Non-LHR graphics cards due to their lower Hashrate. However, they are still sometimes up to 60% to 80% efficient as the original model.
Non-LHR vs LHR comparison. Also a list for custom rig parts off Amazon.
NVIDIA GPU HASHRATES
Large list of ranking various GPU's.
GPU Profibility Ranking, this ranking is nice because it compares each graphics card by daily profit. It doesn't take into account price or efficiency.
While I have chosen to focus on Mining Ethereum, it can be more or less efficient to mine other types of coins. Here's a chart showing the different coins and their profitability. I haven't gotten into this type of testing yet. One thing that this chart doesn't include is the Power Usage.
Here's some older GPU models that might be worth buying if their price is low enough.
Profit Switching is another form of PoW mining.
A Comparison of the different Protocols and their power usage.
ASICs are highly specialized, and very expensive equipment. Fake sites are found online all the time so it's hard to find a dealer who isn't a scammer.
This one is a scam while this one should be safe.
Because of their high cost and possible chance of scams, I'm hesitant to delve into them though they would be higher profits and installation time is zero. More downsides to using ASICs are that they cannot be upgraded. Once they become dated, their value drops dramatically and can be hard to resell since their functionality is obsolete whereas GPUs are a lot more flexible and are better at retaining their value and are easier to resell.
Custom rigs can come in all shapes and sizes
Manual for building a Custom 14-GPU Rig
Standard Metal Frame
Wooden Frame
Milk Crates
Pallets!
Rail Rig
In order to Mine, you either have to Mine by yourself or in a Pool. It is near impossible to Mine solo these days and everybody participate in Pools.
Here's a graph of the different Pools for Bitcoin.
Ethereum
I currently use ethermine as my pool.
I have used nanopool in the past.
The Comparison of Pool Fees - https://help.poolin.com/hc/en-us/articles/360002728472-What-are-PPS-PPLNS-PPS-FPPS-SOLO-
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On July 1, 2021, Wyoming’s Decentralized Autonomous Organization (“DAO”) law (Wy. Stat. § 17-31-101 through 17-31-115) became effective. This makes Wyoming the first U.S. state to clarify the legal status of, and legally recognize as a separate entity, a decentralized autonomous organization and its members, and it helps lay the foundation for this growing sector to provide a formal legal entity structure for those participating in unincorporated groups whose governance is generally coded into smart contracts.
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Cryptocurrencies now recognized under commercial law in Texas. Texas House Bills 1576 and 4474 officially took effect on Sept. 1 after being signed into law by Governor Greg Abbott in June.
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More than a law: Texas takes steps to amend Bitcoin into state constitution. “There is the idea for a Texas constitutional amendment to allow property tax payment in Bitcoin. This would put Bitcoin on par with gold at the Texas Comptroller's Office and Treasury.”
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- “Until lawsuits are filed to present these laws to judges, it remains difficult to know how judges will rule to interpret either the constitutional amendment or enacted laws. Nevertheless, if the voters of Texas enact a constitutional amendment that would be an important milestone about how crypto is viewed in a larger social perspective.”
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Tennessee city wants to accept property tax payments in Bitcoin. Jackson Mayor Scott Conger believes that Bitcoin is the only solution to fix inflation and the U.S. dollar devaluation.
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Miami council supports mayor’s move to offer city worker salaries in Bitcoin. The City Commission of Miami is now looking into the feasibility of allowing Miami residents to pay taxes and receive salaries in Bitcoin.
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Signed into law in late May, LB 649, or the Nebraska Financial Innovation Act, will create “Digital Asset Depositories,” or banks, that trade cryptocurrency in the state. Also, existing banks in Nebraska have the opportunity to create a department that works with cryptocurrency. The new financial sector will be supervised by the Nebraska Department of Banking and Finance, with other regulations on the way.
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Rhode Island Expands Electronic Money Transfer Licensing Requirements to Certain Cryptocurrency Service Providers. Rhode Island has amended its electronic money transfer law to require state licensing for certain entities providing cryptocurrency or “virtual currency”-related services.
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Couple sue IRS over Proof of Staking Current Tax Laws
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SEC threaten to sue Coinbase over offering Staking to customers. SEC claim that the interest from staking is considered a security.
55 out of top 100 Banks are now investing in Cryptos.
Second largest mortgage lender United Wholesale Mortgage will start accepting crypto.
US Banks can now hold crypto assets for their customers.
Wal-mart will soon be accepting crypto.
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How does a smart contract work? Smart Contracts are contracts expressed as a piece of code that are designed to carry out a set of instructions. The term “smart contract” was coined in the 1990s, in an academic paper created by Nick Szabo. Dapps, or decentralized apps, are essentially a series of linked smart contracts.
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Ethereum (ETH) is much more than a cryptocurrency. Thanks to its flexibility and programmability, Ethereum made it possible to build smart contracts, also called decentralized applications — dApps.
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What is a dapp (decentralized application)? They are like normal apps, and offer similar functions, but the key difference is they are run on a peer-to-peer network, such as a blockchain. That means no one person or entity has control of the network.
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What’s the Difference between Fungible and Non-Fungible Tokens? NFTs run on the Ethereum blockchain and enable the tokenization of any data. Each token is pegged to a different identifier, unique to the owner. You can think of them like one-of-a-kind collectables or certificates.
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What Is the Bitcoin Lightning Network? How Does It Work? Lightning is a decentralized network that uses smart contract functionality in the Bitcoin blockchain to facilitate instant payments across a network of users. It’s considered an off-chain or layer-2 solution because it involves activity that doesn’t occur directly on the blockchain.
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What is Polygon (MATIC) and Why It Matters for Ethereum. Formerly known as Matic Network, Polygon is an interoperability Layer-2 and scaling framework for building Ethereum-compatible blockchains.
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NFTS Explained: What Are Non-fungible Tokens and How Do They Work?
https://en.bitcoin.it/wiki/Invoice_address
https://news.bitcoin.com/everything-you-should-know-about-bitcoin-address-formats/
A cryptocurrency similar to a Coin is a Token, it may be bought and sold similar to coins. In addition to Tokens, there are also smart contracts, decentralized autonomous organization (DAO's), and more. See the Web3 section for more.
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Dollar cost averaging (DCA) is an investment strategy that aims to reduce the impact of volatility on large purchases of financial assets such as equities. Dollar cost averaging is also called the constant dollar plan (in the US), pound-cost averaging (in the UK), and, irrespective of currency, unit cost averaging, incremental trading, or the cost average effect.
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Warren Buffett has this advice for investing in a volatile market: Dollar-cost averaging
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Warren Buffett praises stocks dollar-cost averaging — But does it work for Bitcoin? Warren Buffett likes to dollar-cost average into major stock market indices but data shows that the same strategy has worked very well for Bitcoin buyers too. Warren Buffett has a message to young investors: dollar-cost average into major stock market indices. However, data shows that the same strategy has worked quite well for Bitcoin (BTC) too over the past decade.
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Bitcoin’s expensive but this technique proves it’s never too late to buy BTC. Retail investors may think Bitcoin is now too expensive to buy, but dollar-cost averaging has proven to be one of the most effective methods available.
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SOPR (Spent Output Profit Ratio) SOPR is an indicator which reflects the degree of realised profit and loss for all coins moved on-chain.
The Bitcoin blockchain currently uses the RIPE-MD160 hash function, as long as this protocol is used, 2^160 Bitcoin addresses are possible. This makes exactly 1,461,501,637,330,902,918,203,684,832,716,283,019,655,932,542,976 possible Bitcoin addresses. If all Bitcoin addresses where equally distributed to everyone on earth, each person would get 196,385,600,286,334,710,857,791,565,804,391,698,421 Bitcoin addresses.
On Windows, the command to run the software would be similar to the one below.
miner.exe -a ethash -s us1.ethermine.org -n 5555 -u 0x4AeC7ecf49F12D442AA9A3403FaD625EAC0B8C17.worker1 --ssl --ssl_verification --logfile miner.log --mt --cclock 0 --mclock 0 --electricity_cost 0.1
Linux
nsfminer -P stratum1+ssl://0x4AeC7ecf49F12D442AA9A3403FaD625EAC0B8C17.worker1:x@us1.ethermine.org:5555 --report-hashrate
There is also the comparison of the different Mining Software. I currently use nsfminer on Linux.
Fold is a neat app that lets you buy gift cards to shops like Amazon, BassPro and even airlines, and earn you satoshi's (the Bitcoin penny) as rewards. Fold Referral
There are some services called Mining Rig Rentals (MRR's), you can rent equipment that's probably placed in a data center somewhere. I'm not really interested in any of these services.
https://www.miningrigrentals.com/
https://ethereum.stackexchange.com/questions/375/what-is-swarm-and-what-is-it-used-for
https://github.com/ethersphere/bee
https://blog.ethereum.org/2014/08/18/building-decentralized-web/
https://www.tomshardware.com/how-to/optimize-your-gpu-for-ethereum-mining
https://www.investopedia.com/terms/n/nonce.asp
https://braiins.com/blog/when-and-why-bitcoin-miners-sell-btc
https://braiins.com/blog/bitcoin-mining-analogy-beginners-guide