Analysing my progress and profitability in cryptocurrency mining

TL;DR I purchased some cryptocurrency mining power in the cloud. I found that SHA256 mining is not that great, but Ethereum mining is more profitable. I plan on investing in more mining power.
If you want to jump in right now here are my affiliate links: https://www.genesis-mining.com/  Affiliate code for discount ODVnHM

 

Outsourcing Cryptocurrency mining

Previously I blogged how to mine Bitcoin on Azure (and why it is a terrible idea). In it I concluded that CPU mining is terrible with the advent of cheap USB ASIC miners and that you are better off purchasing one of them rather than wasting cloud computing credits.

I did more research and discovered rather than purchasing hardware, and running them myself and paying for electricity, maintenance, etc. I could just purchase raw mining power in a specialised mining datacentre.

Where did I purchase from

I eventually decided to go with https://www.genesis-mining.com
I liked that sign up was simple, that you could allocate your mining power/payouts (see below) and most importantly that it had Ethereum miners (look out for future posts on Ethereum!).

What did I purchase

I decided up front to invest a bit over $100 in SHA256 & Ethereum mining and roughly distribute it between the 2:

SHA256       USD $70.81        0.15 TH/s        $0.45 per GH/s      Lifetime contract
Ethereum     USD $57.62        3 MH/s            $17.99 per MH/s    1 year contract

Distributing the mining power

The reason I liked Genesis Mining was how you could allocate your mining and payouts across the many altcoins. Below I’ve included screenshots of the payout screens and my configuration.

SHA256
The original Bitcoin hashing algorithm. Mining power is being added to this at a crazy rapid pace with ASIC manufacturers trying to cash in and mine as many Bitcoin as they can. Profitability of mining this will drop rapidly.
Here I allocated my payouts as 90% Bitcoin (as that was the point of the exercise) but then 10% into Dogecoin. Dogecoin was created as a “fun” cryptocurrency and the development community has fun with using it as tips throughout Reddit. I wanted a small trickle of this so that I could tip people.

X11
Built to be more ASIC resistant by incorporating 11 different hashing algorithms.
I haven’t purchased any mining power in this mining algorithm yet, but I plan to in the future.

Ethereum
Not much in the way of options, as it has been designed to be a unique ASIC resistant algorithm. This is just for Ethereum mining.

 

Analysising the data

I’ve been mining for 9 days now and thought it would be a good time to analyse how my mining has been going.

Payouts occur at the same time every day, meaning my 1st day only saw a partial payout on the day I signed up. I have removed the datapoint to make the graphs clearer.
Exchange values used are from https://www.coingecko.com

Ethereum
The amount I’m mining each day has been trending very slightly downwards but is more or less stable.
Profitability/day: $2.77 / 9 days = $0.30/day

SHA256 Bitcoin
Fairly stable mining, but it is trending down sharper than Ethereum. This is most likely due to the rapid pace that additional mining capacity is brought on globally from all the ASIC miners
Profitability/day: $1.04 / 9 days = $0.11/day

SHA256 Dogecoin
A very sudden drop in Doge earned per day. This can be explained by looking at the exchange (see graphs below).
Dogecoin isn’t mined directly by Genesis mining, but instead Bitcoin is mined and then converted into Dogecoin. Over the last 3 days the price of BTC has gone down while DOGE has gone up, meaning during the daily conversion of earned BTC to DOGE the exchange rate is lower.
Profitability/day: $0.20 / 9 days = $0.02/day

Exchange rates for last 30 days

Profitability breakdown

Ethereum mining
1 year contact: $57.62
Daily profit: $0.30
Daily ROI: 0.30/57.62 =  0.0052
Yearly profit at current values^{^}: $0.30 * 365 = $109.5

SHA256 mining
Lifetime contract: $70.81
Daily profit: $0.13 ($0.11 + $0.02)
Daily ROI: 70.81/0.13 =  0.0018
Yearly profit at current values^{^}: $0.13 * 365 = $47.45

^{^}I do not believe that this will be the true yearly values. Exchange rates will fluctuate and amount mined per day will go down.

I was interested in the SHA256 miners because of the lifetime contract that will always be mining until it is no longer profitable. However I am wary of the long term profitability of it. The chart below from blockchain.info shows the crazy rate that ASIC miners are are bringing on more hashing power. This will rapidly diminish the amount of BTC I mine per day. I do not plan to invest more in Bitcoin mining as I don’t think it will economical to compete.

 

Conclusion

I am very happy with the progress of my Ethereum miners. Ethereum is more resistant to ASIC miners and therefore the amount of global mining power brought should not reduce my profitability as much as quickly as it is with SHA256.
Ethereum mining is also almost 3x as profitable per $ as SHA256 mining (0.0052 vs 0.0018).

Because of this I plan on purchasing more Ethereum mining power as well as some X11 mining power. But I will not be investing any further in SHA256 mining.
I’d like to get some data points from the X11 miner to share next time.

 

Remember if you want to signup for your own, here are my affiliate links to get a discount
https://www.genesis-mining.com/  ODVnHM

Mining bitcoin with Azure (and why it is a terrible idea)

Update:

I posted about my experience purchasing mining power from a dedicated hosting provider https://davidburela.wordpress.com/2016/01/30/analysing-my-progress-and-profitability-in-cryptocurrency-mining/

Disclaimer:

This is extremely inefficient and will not earn any bitcoin. You will spend $1,000s of VM time for a near 0% chance of earning anything. A $30 USB device is ~100,000x faster for mining.

Again: YOU WILL NOT EARN ANY BITCOIN (less than 1c in a month)

TL;DR The commands to create a machine in Azure to CPU mine are at the bottom. But don’t bother.

 

I have been playing with the blockchain lately, most notably the programmable blockchain Ethereum. I was interested in seeing how difficult it was to set up a machine to mine Bitcoin. What I discovered through my research was that it is possible, but pointless to do CPU mining in the cloud.

Why is mining on Azure bad?

While it is easy to set it up, CPU mining is extremely inefficient. Mining on CPUs was depreceated a long time ago when it was discovered that it was faster to do on GPUs. But now even GPUs have been deprecated in favor of power efficient ASIC machines

Here are some hardware comparisions of ASIC devices from https://www.bitcoinmining.com/bitcoin-mining-hardware/

There are even cheap USB devices that you can plug in that give you GIGAhashes/second

How did my Azure miner go?

My 2 core Azure machine costs $85/month, and doing CPU only getting me 4.24+4.25= 8.5 kilohash/second (0.0000085 GH/s), compare that to the 3.6 GH/s that an ASIC $30 USB device provides.

And after 2 days of mining I didn’t even get a single hash even accepted by the mining pool, effictivelly making my mining worth 0%.

Could this be faster?

On Azure, renting servers with a faster CPU (D & G-Series) would net negligble increases due to CPU mining.

The upcoming N-Series of VMs will have dedicated GPUs attached that you can offload work to. This would be an order of magnitude faster in mining. http://www.hpcwire.com/2015/09/29/microsoft-puts-gpu-boosters-on-azure-cloud/

The price per hour of a N-Series VM would be so high that you would be better off just paying to rent dedicated ASIC bitcoin mining rigs e.g. there is a list at the bottom of this blog post https://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/

Instructions for creating on Azure (if you really want to try it)

1. Sign up for a mining pool e.g. https://bitminter.com/ (to give you a higher chance of getting a trickle)
2. login to https://portal.azure.com
3. create a new Ubuntu virtual machine from the marketplace.
   I recommend Ubuntu on a basic size VM as we won’t be using the features of standard
4. use Putty to remotely connect to your VM
5. Install bitcoind (bitcoin daemon)
   sudo add-apt-repository ppa:bitcoin/bitcoin
   sudo apt-get update
   sudo apt-get install bitcoin-qt
6. Configure bitcoind
   Run bitcoind to see instructions on what should be in the bitcoin.conf
   Create a bitcoin.conf file under ~/.bitcoin
   sudo nano ~/.bitcoin/bitcoin.conf
7. Install a miner (cpuminer). Instructions from https://bitcointalk.org/index.php?topic=55038.0
   sudo apt-get install build-essential libcurl4-openssl-dev
   wget http://sourceforge.net/projects/cpuminer/files/pooler-cpuminer-2.4.2.tar.gz
   tar xzf pooler-cpuminer-*.tar.gz
   cd cpuminer-*
   ./configure CFLAGS=”-O3″
   make
8. start the miner to test it all works
   ./minerd -o stratum+tcp://mint.bitminter.com:3333 –u <username_workernumber> -p X
9. add the miner to startup. Edit /etc/rc.local to add it
   sudo nano /etc/rc.local
   Then on a line before exit 0, add the full path of your startup command with & at the end of the line
   e.g. /home/youruser/cpuminerXYZ/minerd -o stratum+tcp://mint.bitminter.com:3333 –u <username_workernumber> -p X &