Is It Better To Buy Or Generate Bitcoins?
You may have experienced this scenario:
You are interested in bitcoins and have decided to download the bitcoin client and run it on your machine. You have been running it for days but no bitcoins have been generated. You decide to take matters into your own hands, and so you decide to build a faster computer with more CPU power.
The question is, "Is it easier to buy bitcoins, or should I build a better computer that could mine the cryptocurrency faster?"
What should I do? Let's examine the cost of building a really strong computer that is under $2000. I chose the amount of $2000 because it is probably the highest amount a hobbyist would spend, and this article is targeted to the average user.
First, I choose the AMD processor over Intel's because it is a lot cheaper. I need as much CPU speed as possible at an affordable price, so I am going to be focused on multi-core processors. The more cores I can buy the better. AMD has a six core processor available for $290 a piece, and I will need four of them since the motherboard will have four CPU sockets. (AMD also offers 12-core processor but they are out of our price range). The computer will have a total of 24 cores.
How many hashes can I expect with a 24 core machine? I have a quad-core generating 4,300 hashes-per-second, so I am estimating a 24-core machine could mine bitcoins at 25,000 hashes-per-second.
Now, I need some RAM but I don't need that much because I just need to run the bitcoin client. I'll just buy a 2GB stick of RAM for each CPU.
Shopping List From Newegg.com
CPU: $290.00 x 4 = $1160 - AMD Phenom II X6 3.2GHz Six-Core
Motherboard: $444.99 - SUPERMICRO MBD-H8QIi-F-O Quad Six-Core
RAM: $181.98 for 4 sticks of RAM - Kingston HyperX 4GB (2 x 2GB)
Keyboard: $4.99
Mouse: $3.99
Monitor: $99.99 - 17-inch LCD
Tax and Shipping - $100
Total Cost: $1995.94
How many bitcoins can I buy with $2000? As of this writing it is about $0.066 per bitcoin. So I could buy 30,303 bitcoins if I had $2000 laying around.
Now, how long would it take for my newly designed 25,000 hashes-per-second machine to generate 30,303 bitcoins? Using the bitcoin generation calculator available at http://www.alloscomp.com/bitcoin/calculator.php, on average it will take 1 day, 19 hours, and 44 minutes to generate 50 bitcoins. After doing a little arithmetic that means it will take a little over two years to generate 30,303 bitcoins!!! Let's not forget to mention that the difficulty levels seems to be rising over time so it could take much longer than that. In addition, the electricity costs to run a server could add up.
Conclusion
So, it seems like it would be a lot cheaper to buy bitcoins than to generate bitcoins. I would suggest buying from bitcoin4cash.com since he sells bitcoins in bulk. For a review of bitcoin markets, read this link. http://www.bitcoinblogger.com/2010/08/bitcoin-exchange-review-my-experience.html
Just my two cents...I mean my two bitcoins.
You hit the nail on the head with this article.If you also take into account the running costs of your electricity and depreciation of your machine plus bandwidth the actual cost to generate would be much higher than buying them.
ReplyDeleteRight, it makes so much more sense to work for bitcoins or to buy them rather than generating them.
ReplyDeleteHow about dedicated hardware, think FPGAS or even GPUs? They should possibly me a lot faster than CPUs.
ReplyDeleteSome members of the bitcoin community have written GPU clients that can do more hashes than CPU. See bitcoin.org for more info.
ReplyDeleteEven though the GPU clients are faster I think difficulty levels have increased considerably thus making it just as hard to mine coins.
GPUs are a much more cost effective solution. Asus makes a board called the "supercomputer" with four pci-x slots. I've estimated a GeForce 295 at around 84,000 khash/sec. So that's a possible 336,000 khash/sec in one machine :)
ReplyDeletein fact it make sense on recent computers with opencl/guda that are running for other purpose. idle power consuption is not so low and it would help to pay computer's electrical consuption and obsolecence.
ReplyDeleteCalculator says for 25k khash's, it's 28 days 19 hours.... has it changed that much (14x longer) since this was posted Aug 30 2010???
ReplyDeleteW, it is based on the difficulty level which is now at 14000. In August it was very low. Maybe under 1000 if I remember correctly.
ReplyDeleteI love the idea of this technology. But it has some flaws in my eyes. It seems hellova easy to use this for crime - money laundering and what-not. Also, owners of botnets could use them for mining, at the expense of the actual computer owners. Just my two bitcoins.
ReplyDeleteJust another post from another person who didn't read documentation. My suggestion is to move on.
ReplyDeleteAt present difficulty levels and exchange rates, if you design your system to produce the most hashes per second as efficiently as possible, it will pay for itself in about two to three weeks. Anything after that is pure profit, plus you have what is probably a fairly impressive gaming machine.
ReplyDeleteI think in answer to this blog posts question, I'd like to point out that 30,303 BTC is (currently) worth $581,817. So it would have made a lot of sense to skip the computer build in favour of buying $2,000 worth of bitcoins.
ReplyDeleteHow powerful a machine can you get for a cool half million?
This article got my attention - 24 cores machine generating only 25,000 kilo hash per second ?
ReplyDeleteIndeed GPU is the way to go - my measly ATI Radeon HD 5670 generates 86,000 kilo hash per second.
Plain, no tweaking / overclocking.
Others have built specialized rigs, up to 6 x GPUS per computer, generating 2,000,000 kilo hash per second.
Anyway - another VERY interesting point in your article is how cheap bitcoin was (compared to US$).
You mentioned that it was only US$ 0.666 per bitcoin. Whereas now it costs up to US$ 12 per bitcoin.
I think it'd be interesting to "mine" / generate bitcoins, and then keep it for investment - so it'll generate even bigger value out of your mining equipment.
Thanks again for the very insightful article.
HAH, if you were smart you took this guy's advice. $0.066 per bitcoin then, versus $21 (Avg.) now per coin. using his investment example of $2000, that person would now have $63636. I'm not sure that 6 cents per bitcoin was accurate then, but if it was, that's one hell of a RoI.
ReplyDelete