Aug 4 2021
I once knew a woman who used that phrase practically every second. It drove me crazy. In any case, the theory on the Pareto principle was nice but it crumbled when I tried to put it to use yesterday. Time management is not my forte (note to self - look up how to insert special characters in Vim).
Today I want to ramble a little bit about my foray in to cryptocurrency. HODLers and whales can mock me all they wish - actually, I don’t hide my ignorance. I think that’s part of the philosophy (and the fun) of this blog. You get to learn alongside me. Hopefully you’ll see that learning occur in the form of some background colors, a sidebar with posts like what you’d see on WordPress, and all that.
So, crypto. I was up until 1:30 AM (possibly later) last night reading about mining and trying to actually learn about the tech behind crypto for the first time. I finally bought in during the “dip” in June ’21, so now I’m at least invested (Sorry Buffet/Graham, but “speculated” doesn’t really roll of the tongue).
Every time I start looking into crypto, I get PFOMO - Post Fear Of Missing Out. I remember the first time I ever heard about Bitcoin. I was at a friend’s house and his older brother’s friend was going to school for IT stuff. He showed us how many Bitcoin he owned (this had to have been around 2011/12) and how he could use it to buy stuff on Silk Road. On an unrelated note, I remember this being around the time that whole Domino’s glitch with cinnamon sticks was happening, too. This happened so long ago that I quite literally cannot find it with a cursory Google search. It was a 4chan thing anyways, I think.
Real quick, the deal with the Cinnastix was that for whatever reason, a coupon allowed you to add as many free Cinnastix to your order as you wanted. So people were using it to literally order DOZENS of Cinnastix. This was back in 2010. Man, how the internet has changed.
So back to crypto/FOMO. Whenever I start looking into it, I get pissed that I could have swung several times and didn’t. So where does my mind go? To the most extreme places - mining operations! grassroots mining pools! a university sanctioned mining club (that’d be kind of cool, honestly). Apparently there was one at FSU but looks like it’s dead now.
My regret-driven brainstorms lead me to a company called Compass. They seem to act as a middle-man between ASIC (Application-Specific Integrated Circuit) vendors and miner hosting facilities. So their business plan is this:
It’s a pretty neat idea, honestly. Unfortunately, it’s so neat that it looks too good to be true. The best my due diligence has been able to scrape up are a couple of posts on Reddit claiming that Compass is indeed legit. But that’s simply not enough for me (or any reasonable person, really) to go off of. From what I can tell, the crypto world is rife with scammers. So I’ll stick to buying the currency outright on an exchange. That being said, I’d like to explain how I determined that even if I did go through with this (which if I ever do, I will write about - somebody has to be a guinea pig), the profits would have been marginally better than just buying Bitcoin outright, considering the risk.
I’m not going to do this justice, and if I’m misconstruing something, please email me at [c o m a c r a e 1 9 9 5]@gmail.com (get rid of spaces).
The act of mining bitcoin refers to the use of time/energy/computational resources to engage in proof of work, or the solving of an arbitrary math problem which leads to extension/validation of the bitcoin blockchain. Most importantly, the bitcoin “mined” is rewarded to the first person who solves the problem. It is NOT SPLIT in any way (unless you pool, which I will get to). So basically, if you were to go and buy a used ASIC (or even a new one, it seems), you would be absolutely destroyed by the massive warehouses of ASIC miners and distributed mining pools ( groups which have collected their mining power and agree to split the won bitcoin). But I got carried away.
You wanna mine? You gotta worry about a few things:
Buying miners from vendors is near impossible right now because of chip shortages, and the second-hand market is scammy.
Number 2 is enough for most people to give up on mining. Residential electricity is often so expensive as to render mining unprofitable.
But even if you had decent electricity costs (my city’s utilities website says electricity is around $0.075/kWh which is pretty damn good), you’re basically signing up to keep an extremely noisy space heater in your home on 24/7. I live in a 500 sq ft 1br/1b apartment. Not gonna happen.
Which leads me to the last point. Every second your miner isn’t running is a second you’re losing on your ROI (return on investment). This is true for several reasons:
This is where Compass comes in (assuming it’s legit). They charge a monthly fee in return for the following:
So let’s assume for a moment that a profitability calculator like this one is accurate.
Then an ANTMINER SJ19 PRO with a hashrate of 110 TH/s and power consumption of 3500 W would mine 0.1455 BTC a year at a Compass facility where electricity was $0.065/kWh (assuming it ran FLAWLESSLY, 24/7).
Compass sells that miner for $7500 and they require 12 month contracts with a month down, quoting roughly at $160/month.
$7500 + ($160 x 12) = 9420. Let’s make that $10000 just to make it an easier number.
So, you could pay $10000 to have .1455 bitcoin a year from now. The same amount of money TODAY would buy you $10000 / $38522.37 = .2596 BTC
My alarm went off so I gotta go. If I’m missing something, let me know, because it looks like at that cost, it makes way more sense to buy BTC now than try and mine it using a hosting facility.