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11. January 2014

BitCoin mining is not worth it anymore

BitCoin is the most famous cryptocurrency in the world and also has a lot of vendors at which you can spend them for various items like computers, electronics, clothes or apparel and even food. This improves its status as a valid currency, but recently with dedicated sha256 hardware mining has become useless for everyday user. Remember gold-rush in America at start of century? Bigger companies are now the only one who make money mining gold, while lone miners hardly dig out enough to earn a living. Bitcoin is now in this state. But there is additional hope. There are many alternative cryptocurrencies around such as LiteCoin or PeerCoin and even FeatherCoin which can be mostly divided into two major groups. One relies on sha256 encryption (same as BitCoin) while other relies on scrypt as encryption algorithm. For end user this changes nothing but for miner, it changes everything.



BitCoin, PeerCoin - sha256 coins

Lets talk a bit more about sha256 encryption and why we do not want to mine BitCoin anymore. Many vendors have produced special hardware to solve sha256 encryption which makes CPU and GPU mining useless, no matter what kind of pool you will join (solo mining is useless for more than a year now already). This means that unless you spend money on dedicated hardware you are better not mining BitCoin or even PeerCoin. Why am I mentioning the alternative coin along with all powerful Bitcoin?
Because difficulty is so high at BitCoin that you need a lot of hashing power to solve the block and the reward is usually very small. And if you do not have that much hashing power you might find some alternative coin (like PeerCoin) and then exchange it into BitCoin using BTC-E Exchange. This means that you can mine with easier difficulty, and then exchange the alternative coin into Bitcoin, which will increase your mined Bitcoins a lot faster than mining Bitcoin directly. Hashrate is again important and even Peercoin is not to be mined with GPU or even CPU.



LiteCoin, FeatherCoin - scrypt coins

LiteCoin is considered silver in cryptocurrencies, but this could be far from truth. There is no dedicated mining hardware for scrypt based coins and that is why mining with GPU and even CPU is far from useless. Litecoin is current future for mining as it enables you to use relatively standard hardware (which you can then sell to anyone) to mine coins. Of course there is again a catch and as before this catch is difficulty. Litecoin is so popular that difficulty is high (although it uses some algorithm to adjust difficulty it is no expected to get a lot lower anyway). And that is why some people again choose alternative scrypt based coins like FeatherCoin to mine their profit. Here margin of better profit in alt-currency is not so major and sometimes there is no profit at all (Litecoins are just better choice to mine, as you mine them with GPU) so the choice of mining scrypt based altcoins is really risky. Again you need to check current prices and be aware that some alt-coins get eliminated from exchanges (that means you can be left with a lot of useless coins at some point).

Bottom line is that you should not mine Bitcoin, but mine sha256 altcoins, while LiteCoin is still profitable enough to mine it directly. Also most people exchange LiteCoins to Bitcoins as it is nearly impossible to find stores that would take LiteCoins as payment option.

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