Is mining worthwhile?


I have been mining Litecoins for a couple of weeks now. In the meantime I have experimented with overclocking my GPU card, learning more about the protocols used for mining and reading sites and visiting (Bit)coin related sites. One of the things which I try to figure out is, is it worthwhile to mine?

Although there are sites which look into cryptocurrency from an investment point of view (more on that later), I am currently just interested to see if I can even get a Return On Investment (ROI). The ROI for mining is determined by multiple factors. First are the costs, which boil down to:

  1. The initial investment in equipment.
  2. The operation costs.

And then you have the earnings, which are the number of mined coins.

One problem with the costs and earnings is that they are not in the same currency which leads to an extra dependency, the exchange rate. Because of this exchange rate, the term investment becomes more important and this leads to a more complex situation. However, as I said before, for now, I will try to just see if I can get my investment back.

My setup

For my mining setup I use a server which is already constantly running on Linux. I bought a second hand Club3D Radean 5850 graphics card for 60 euros, which for experimenting I thought was alright (every hobby costs some money, if I ‘loose’ 60 euros I will still survive!).

Although I have a power consumption meter connected to this setup, I do not take into account the total power consumption as the system is not only used for mining. Through the power consumption meter I am however able to determine more or less what the consumption of the GPU is, which for me is around 130W.

I have been mining for 17 days and 5 hours which resulted in 5.00632037 Ltc, which are my earnings.

During this period I calculate the system used 56.817475 kWh of power. Now comes a tricky part, as I live in the Netherlands and from what I see on the Internet for calculations, we have a very high energy price. For me the price more or less boils down to 0.18981 euros (a lot more than the 0.15 dollar I see on a lot of sites).

If you calculate the power costs it becomes: € 10,78

Now comes the most difficult part. To calculate my profit or loss I have to somehow compare my earnings in Litecoin with my costs in Euros. This involves the exchange rate between these two currencies. However, I can also turn things around and calculate what I minimally need to at least cover my operational costs. This leads to:

5 Litecoins / € 10,78 ≈ € 2,15

Currently the exchange rate fluctuates a lot between aprox. € 1.90 and € 2.50, so if I can sell my Litecoins for the 1.90 I definitely loose money, if I am able to sell for 2.50, I have a ‘profit’ of 2.50 – 2.15 = 0.35 euros per Litecoin!

But…wait a minute, I also spend € 60,00 euro’s on my GPU. If I think my GPU will become worthless in the future, I need to earn enough to cover for the 60 euro’s. So in order to have a return on my total investment, I need:

  • € 60.00 / 0.35 €/Ltc ≈  171,50 Ltc
  • At least an exchange rate of 2.50 €/Ltc


So if I look at the route I took to mine LTC, it will take me (171,50 Ltc / 5 Ltc ) * 17 days and 5 hours ≈ 590 days to get a ROI on my current setup (not even making a profit). Although I will continue to mine for now, currently I can only consider this a hobby (which costs money). Unfortunately my Lamboghini will have to wait in the showroom (for now)!

Now someone could say that you might expect the exchange rate of Ltc to rise more in the future (related to the euro/dollar/etc). However, if you think like that, you are stepping into the world of investments where you ‘gamble’ on a certain future value. For those readers I suggest you read a very interesting article written by Bjørn Furuknap:

Litecoin Mining Profitability Guide

Happy mining!

Let’s fork, Litecoins, Namecoins….whatevercoins!

So my attempt to mine bitcoins failed up until now. I received some µBtc through bitvisitor but that’s it. But upon my quest I stumbled upon the fact that Bitcoins are not the only cryptocurrency. Litecoins, Namecoins, and if you go to exchange sites you see even more abbreviations for other coins. Most of them are a fork of Bitcoin but use the same principles. A nice post I stumbled upon gives a good summary on this topic. Read it here at reddit.

One big drawback of bitcoins is that mining is getting harder and special equipment is needed to really be able to mine effectively. The main reason for this is the algorithm used for mining bitcoins is based on SHA256 which apparently is very suited for creating custom FPGAs and ultimately ASICs. The downside is that normal people do not have an ASIC laying around in the attic! Buying them means a significant amount of investment for equiment which can only be used to compute hashes based on SHA256, nothing else!

Litecoins are developed to overcome the problem where special equiment is needed for mining by using a different hashing algorithm called Scrypt. Apparently (I do not know the details of Scrypt or SHA256 for that matter) the idea was that Scrypt is not suitable for GPU, FPGA or ASICs. This, however proved to be partially wrong as GPU’s are currently widely used to mine Litecoins. However, there have not yet been developed any specific FPGA or ASIC devices for Litecoin mining.

The next step for me was therefor to create a Litecoin wallet and see if I start mining for these coins.

Finally this proved to be much easier. Although I do mine in a pool (coinotron) I got mining running immediately with cpuminer. My Laptop is offcourse no performance beast, but at least I can see things happen. Now I need to start learning what all the figures mean and I also need to look into GPU mining.

But for now at least things are working!

Experimenting with GUIMiner

So how do I get started with mining?

First of all, I will start experimenting on my laptop which I use for work and is running Windows. Later on I could try it on my home server which runs Linux. After reading quite a bit, multiple times GUIMiner was mentioned so this is the one I picked.

Downloading GUIMiner was a bit awkward! The website looked a bit dodgy to me. Also when I clicked the download link, I first got a really bad advertisement which did not make me comfortable. So I went to the github website to look for the software and also check comments and statistics to at least get a little bit comfortable about what I am about to install. So in the end I used:

And picked up the latest version (guiminer-20121203.exe at the time of this writing).

This is a self-extracting zip file, so you can put the contents anywhere you like. I put it in D:/bin/guiminer (influenced by my  Linux background). In this folder the executable guiminer.exe is found.

After starting up I was presented with a message I had no clue about (remember I am still new at this!):

GUIMiner Warning - No OpenCL devices found

GUIMiner Warning

So now what!

Apparently GUIMiner uses OpenCL (Open Computing Language) which needs special drivers for my hardware. Through OpenCL GUIMiner can access the available hardware to make computations in a uniform way. So now my task is to get OpenCL for my hardware.

The only thing I could find for my system (Intel based hardware) was an Intel SDK, so I downloaded that (from

The installation kit wants to install 2 things, but I am only interested in the OpenCL runtime so I deselected the other option (Keeping the CPU only runtime option selected for installation).

After this guiminer actually started up without a warning and I could select a mining device as shown below.

GUIMiner Default Mining Configuration

GUIMiner main window with an available mining device.

So now I need to configure a mining server and get going…………….Eughm, what does that mean, a mining server. I want to mine ‘solo’ (yes I know that is of no use with this hardware, but again, I just want to see if it works!). I was under the impression that with mining software installed I could start mining, but apparently I am wrong!

To make it easier on myself, I decided to create an account on slush’s pool (It gets mentioned quite a lot, so I guess it should be ok), configured a worker (each device you want to mine with is called a worker and needs a separate ‘registration’ in the pool) and use that for the default configuration. That should work!

Unfortunately not!

It keeps mentioning starting… and if I select a menu option or something else, it changes in connecting…, but nothing happens.

Opening up the ‘console’ view, I have to stop and start the worker again to see some messages. Apparently the default slush’s pool configuration uses an old URL, so I decide to configure the miner manually using the Server: ‘other’ option and use the following URL: with port 3333

So now it seems to connect to the server and it confirms it is using stratum (whatever that is, I need to find out), however, nothing else happens!

2013-08-20 22:43:21: Listener for "Default": 20/08/2013 22:43:21, checking for stratum...
2013-08-20 22:43:21: Listener for "Default": 20/08/2013 22:43:21, started OpenCL miner on platform 0, device 0 (Intel(R) Core(TM) i5-2520M CPU @ 2.50GHz)
2013-08-20 22:43:22: Listener for "Default": 20/08/2013 22:43:22, no response to getwork, using as stratum

This is where I give up, no bitcoin mining today!

Digging for coins, mining the modern way

Without writing a full explaination of what mining is (there are plenty of sites doing that), in short, it is the way the creation of new bitcoins is called. The whole idea of bitcoins is that everybody in the bitcoin network, is part of the proof of everyone elses transactions. To store all these transactions so called blocks are used. The entire system needs blocks to store these transactions and these blocks are depending on cryptographic principles. Each block needs certain kind of cryptographic calculations to get ‘generated’. Everybody in the network can help to do these calculations and thus help create blocks to store transactions in. As a reward, each block being generated also results in the ‘creation’ of bitcoins which are given to the one who generated that block. This process is called mining.

There are two ways to start mining:

  1. Alone
  2. Together with others (using a so called pool)

The problem with mining is that you either generate a block or not, but you cannot partially generate a block. Because of this, you only earn bitcoins once a block is generated. And this gets harder and harder every time. Because of this the first option is not really viable anymore for individuals because the amount of computing power required is exceeding that of what a normal guy would have to his disposal. From what I have read, mining has become a real competitive business!

The second option is actually showing the power of the internet again. By working together with other people it becomes easier to generate a block. The principle is quite easy. The calculations required are spread over the computing resources all pool members make available. The difficult problem is cut in to little pieces and if someone finds the correct result for one of those little pieces, it gets rewarded with a share. Once a block is found, all the people who had a share get rewarded based on the amount of shares they have.

The start mining you have different hardware available. Depending on the hardware, you can do more calculations and therefor have a bigger chance of either finding a block of receiving a share. The following four main types of hardware are available:

  • CPU (use the power of your normal computer)
  • GPU (use the power of you graphics card)
  • FPGA (use a special electronic component which is programmed to do the calculations)
  • ASIC (use a special electronic component which is designed and created to do the calculations)

For bitcoin mining the first option is not really an option because the computing power is way to little to make a chance of finding a block or even make a contribution when using pooled mining. On the other hand to get started and just see how it works, this is probably the cheapest way to go.

A lot of computers have very powerful graphics cards these days. Originally they are designed to do a lot of calculations for, for example 3D games. However, these processors are so well designed for doing calculations that they have been found to really do well for mining as well. The big drawback of mining with GPU’s is that they ‘eat’ electricity (power consumption) which makes you electricity bill go up if you do these calculations 24×7!

The next step in mining was the use of FPGA’s (Field Programmable Gate Arrays). This is an electronic component which can be programmed once. After that it is an intergrated circuit which is designed for a specific purpose. The big advantage is the reduction in power consumption and the increase in computing power.

The last step is the creation of an ASIC (Application Specific Integrated Circuit). These are fully designed integrated circuits which are created at a manufacturing plant. These are the fastest and also have a power consumption benefit. However, they are also the most expensive to create.

After reading the above, please remember one important aspect. Mining does not only cost you money if you buy special devices, but running these devices uses up quite some energy. That is why there are lists available which show the performance of devices compared to the power they consume.

Do not only take computing power into consideration, but also power consumption!

For me the first step will be to get something working, so CPU mining will be my starting point.

I thought I would write here also about my first mining attempts, but I think this post is already longer than expected, so I will end this one now and I will write a new one about my first attempts soon.

My first (micro) bitcoins in the pocket!

Yes! I earned my first litle bit of bitcoins. It’s only an amount of 0.0001077 but at least it is something and I now know it is actually working.

Unfortunately I did not earn this by mining, which I still want to learn more about, but through one of the many affiliate/free earning sites. The site I used is:

The idea is very simple, you enter your bitcoin address through which you want to receive your earnings and then you are presented with offers to visit a website for a certain amount of micro bitcoins (yes it is really, really little money!). You have to enter a captcha to make sure you are a human being (otherwise it would be really easy to automate this) and then you are presented with the website. On the top of the screen is a information bar showing you a countdown timer which counts down from 5 minutes to 0 (this is the amount of time you should watch the website. When the countdown timer hits 0, a ‘next’ button appears, which you should press to confirm your earning.

BitVisitor does not pay immediately because of the small amounts, but it keeps track of you earnings using your bitcoin address. I visited multiple pages over a couple of days, so I also had to re-enter my address, but they paid out as was promised.

So my first 107.7 micro bitcoins is in my pocket (how happy can someone get with less then 1 eurocent!).

So I have wallet…now what?

A wallet is all nice and beautiful, but if I buy a new wallet in a shop, I do not intend to keep it empty! So now I have the wallet, but how do I get coins in it so that eventually I am able to spend them again!

As far as I can see now, there are three ways to get Bitcoins in my wallet:

  • Mine coins
  • Earn (parts of) coins
  • Buy coins through an exchange

The first one is the hardest, The second is less hard (depending on how you look at it) and the last one is the easiest, but will take ‘real’ money from you.

To begin with the last option, you could have two reasons to buy coins. The first reason is that you have seen a product/service which you can (only) buy with bitcoins and you are really interested in it. The second reason is as an investment. For the last reason, in my opinion, you should really know what you are doing. For me it is way too early to make that step.

The second option is to look for a way to earn coins. Either to deliver a service or product or to use one of the many sites which offers ways to earn coins.

My first interest goes to mining coins. The main reason for this is that I want to learn more on how Bitcoin works and mining is an important aspect of that.

To know what the value is of money, you have to know where it comes from!

In my next post I will describe more on mining and my attempts to mine coins.

My first bitcoin wallet

My first wallet is a fact!

It took quite some time to get it completely synchronised with the network but in the end I have the wallet software on my computer. At first I had trouble installing it because there was not enough space on my windows c: drive (currently the complete set of data takes approx. 11Gb of space!) where it stores the datafiles per default, but after changing the configuration to use another location, the synchronisation completed in a couple of days (not constantly connected to the internet though).

For the installation of the bitcoin client I followed the general installation instructions. However, after about 1 day of synchronizing, the software complained about not enough diskspace. I off course had no idea how much space was needed and that the wallet would consume already so much. After googling around, I found out that it is possible to add a configuration file in the default application folder in which it is possible to specify a different data folder.

The configuration file is located in:


All parameters which are available on the commandline (information you can add directly upon startup of an application) can also be added to the config file.

My config file now looks like:


This places my data on the E: drive which has plenty of space left.

My brand new wallet adres is: 14rE3diPaKFKsm1nrruUgMqhpZN9KSNuKp

So if you find this blog to be useful, you can always make a small donation🙂

New questions:

  • I have a wallet, so now what, how does it get filled?
  • How does the bitcoin wallet software find other peers? (there must be a first entry to find others, is this centralised?)