Mining BitCoins

Today I read an article called “Why you should care about BitCoin” with a quote that I want to repeat here:

 “Hackers are the animals that can detect a storm coming or an earthquake. They just know, even though they don’t know why, and there are two big things hackers are excited about now and can’t articulate why – Bitcoin and 3D printing”
– Paul Graham

In late June I ordered a KncMiner Saturn BitCoin mining machine. I knew that it would be delivered in October. What I didn’t know was how the difficulty for mining would develop. It was rising fast, exponentially fast. Nevertheless it was tempting to see, that if I received the miner when I ordered it, return on investment would have been reached in 9 days. In the months since I ordered the device, the network difficulty went through the roof. So at the moment it’s not even sure if I will reach a break even point for the investment. It was a substantial investment for me. But I won’t complain, it was less than what I gained just by holding onto some BitCoins, that I earned with paragliding tandem flights. The mining business appears even riskier than just investing in BitCoin. But in late spring it looked as if the BitCoin price would stabilize, which would be a good thing for BitCoin adoption. Thus mining seemed to be a good strategy to gain something. And on top of that, everybody heard the stories of the people who made a fortune through mining BitCoins.

Last wednesday, I received an eMail from DHL, that they picked up a packet for me in Sweden and that it is on it’s way to me. With the tracking number I could see where it was. The first part of the voyage was quite impressive, but then they couldn’t locate my home, which shouldn’t be that hard. So I had it delivered to the office a day later:

October 16, 2013 14:13 Vasteras - Sweden     Shipment picked up
October 16, 2013 19:35 Vasteras - Sweden     Processed at Vasteras - Sweden
October 16, 2013 20:57 Vasteras - Sweden     Departed from DHL facility in Vasteras - Sweden
October 16, 2013 22:40 Copenhagen - Denmark  Transferred through Copenhagen - Denmark
October 16, 2013 22:42 Copenhagen - Denmark  Departed from DHL facility in Copenhagen - Denmark
October 17, 2013 00:52 Leipzig - Germany     Arrived at DHL facility in Leipzig - Germany
October 17, 2013 01:08 Leipzig - Germany     Processed at Leipzig - Germany
October 17, 2013 04:40 Leipzig - Germany     Departed from DHL facility in Leipzig - Germany
October 17, 2013 06:35 Basel - Switzerland   Arrived at DHL facility in Basel - Switzerland
October 17, 2013 06:43 Basel - Switzerland   Processed for clearance at Basel - Switzerland
October 17, 2013 06:44 Basel - Switzerland   Clearance processing complete at Basel - Switzerland
October 17, 2013 06:46 Basel - Switzerland   Processed at Basel - Switzerland
October 17, 2013 07:58 Basel - Switzerland   Departed from DHL facility in Basel - Switzerland
October 17, 2013 09:06 Basel - Switzerland   Arrived at DHL facility
October 17, 2013 09:19 Basel - Switzerland   With delivery courier
October 17, 2013 16:46 Basel - Switzerland   Address information needed; contact DHL
October 18, 2013 09:36 Basel - Switzerland   With delivery courier
October 18, 2013 15:03 Basel - Switzerland   Shipment delivered

Usually when I look at the tracking,  the steps that take minutes or hours for DHL, would take days or weeks for stuff that comes from China with economy shipping.

When I opened the package, I noticed that something shakes inside the case. When I opened it, I saw that the fans had fallen off the big heat-sinks. So I re-mounted them before starting the device. The software came fully configured, so this part was plug n play. Over the first few hours it was hashing at approx 240 GH/s. When I ordered it, 200+ GH/s was promised, but they stated that 275 GH/s would be normal after the first prototypes. For comparison: a high-end graphics card hashes at about 0.3 GH/s. So I upgraded the firmware to get some more diagnostics. One core was always at 57°C while the other was always at 44°C. So I guessed there should be a way to make the one with the lower temperature work faster.

On the KncMiner forum, I found a firmware mod called BertMod that should offer more detailed diagnostic. It didn’t work with the newest firmware though. Fortunately I could de-compose it, and run the perl script in an ssh session to get the diagnostics. It showed that on the second chip there were about 40 cores disabled.

The next thing I found was the official EnableCores patch. As the name suggests, it enables all the cores in case they were disabled erroneously. Shortly after applying it, the hashrate went up to 260GH/s, but not for long. It stabilized at 250GH/s. And now, I get lots of messages like this:

KnC: core 4-xx was disabled due to 10 HW errors in a row

The technical support told me they are working on a new firmware to improve the performance.

Since solo mining is too risky for my taste at the moment, I am participating in pooled mining. My device should statistically find about 1.3 Blocks in it’s lifetime. But if I were unlucky, it could find nothing at all. When experimenting with GPU mining a while back, I used the 50btc pool. Thus, it was my first choice for the Saturn as well. But after a day or two, they were attacked by a DDoS and later also their billing server was hacked. Mining still worked, but the situation seemed a bit risky, so I looked for alternatives. At the moment I configured slush, bitminter, eligius and solo mining as failover alternatives. They have problems of their own, but these can be worked around:

  • slush wouldn’t send confirmation emails to my regular account. So I had to use gmail.
  • bitminter uses OpenId for logging in, which is great. But the first two OpenId’s that I tried, didn’t work with their site. They would provide additional security as they are self hosted or backed by a client certificate. So I had to use my OpenId, which is only secured with a password.
  • eligius is based in the US

BitCoin hits CHF 100 mark

Yesterday one BitCoin was, for the first time, worth more than CHF 100!

When I first learned about BitCoin in early 2011, CPU mining was still enabled in the default client. I mined for a few days, but it was probably already too late for the CPU. GPU’s took over before that. Last year, you needed FPGA’s to profitably mine, and now it’s shifting over to fully custom ASIC’s. I still sometimes mine with the GPU in the background while the Computer is running anyway, and I don’t use the GPU for anything else. It didn’t find a block so far. But for me that’s kind of like playing the lottery. The chances are slim, but if my computer could find the proper hash, that would cash in 25 BTC at the moment which would equate to CHF 2’500. And that slim chance starts over roughly every ten minutes.

There is a site somewhere on the net (I forgot the location) where you get free BTC. Back in those days, you got 0.05 BTC. That’s how I started off. This would now equate to CHF 5, but these days you get much less.

Since July 2011, I accept BitCoins as payment for the paragliding tandem flights. In fact only one guy payed that way so far. In October 2011 the flight cost 75 BTC at a rate of less than CHF 3 per BTC. If I still had those 75 BTC, they would be worth a whopping CHF 7’500 today.

I was thrilled last August, when it had an 80% increase within two weeks. But what happened this year was just insane. The price went from CHF 11 to CHF 110 in just three months. There were weeks with 10 to 15% increase every day.

The other day I walked past a local bank, and saw an advertisement for a defensive savings plan with an 8 year obligation where you get 1% profit. Of course it’s an unfair comparison. Noone knows what will happen next to the BTC value. It could drop any day for any number of reasons, or it could keep rising. I wouldn’t invest my savings so far.

There is a lot of speculation going on about the future value of BTC, and how certain events could influence that. Last week I read an interesting article about that. But there is also a lot of speculation about a bubble about to burst. Indeed the recent rise in value was so unnaturally fast, that it looks like a bubble. But such a bubble already bursted in 2011, and BTC recovered remarkably well.

Let’s not concentrate on the value itself. I think for BTC it would actually be better if the value was a bit more stable. The system was designed as a means to transfer money quick and easy. The main motivator was being able to transfer funds around the globe without waiting for a couple of days to arrive, and paying ridiculous transfer fees, as with current bank wire transfers, credit cards or paypal. That’s where BTC really shines. Of course it’s nice to see the value of your Coins rise, but I hope a possible bubble will not harm the system too much, and I strongly hope if that bubble should really burst, BTC will recover even stronger.

Update : additional links to good articles:

The bitcoin bubble and the future of currency

Are BitCoins the future?

The target value of BitCoin

BitCoin in the 3rd world

Accepting BitCoin

As of today, we accept BitCoin as payment method for our tandem flights at

BitCoin is a decentralized online currency. It was in the news lately. While banks and politicians made it sound bad, it’s actually a great experiment. True, it has some shortcomings, but these shouldn’t bother us for the next couple of years.

If you want to learn more about BitCoin, check out these podcasts: