A little known fact is that I started mining Bitcoins back in June of 2011 -- right around the height of the initial Bitcoin bubble. I had some spare hardware handy, read an article, and decided to give it a shot. After mining a couple coins in a couple days and selling them for over $20 each, I did some math and figured as long as the price stayed above $3 or so and difficulty wasn't too high, I could make a bit of extra money with Bitcoin.
My initial set of hardware allowed me to hit roughly 2000 MHash/sec, which was good for over 1 BTC per day. As the price came crashing down, eventually bottoming out at just under $2, many people quit Bitcoin and so with an improved 2500 Mhash/sec and an electricity cost of about $125 per month for the PCs I was mining with, I started seeing as many as 4-5 BTC mined per day. At $2 I was right around the break even point, and other than a week or two I kept mining. Sadly (for me), I kept selling the coins to pay for power and other bills, and I lost 80 BTC with the Bitcoinica disaster.
Last January, I watched the price go from $3 or so back into the $10+ range and suddenly I was clearly making a profit again. Hindsight is always 20/20, but I sure wish I had hoarded a few coins, because in the past two months BTC went from $20 to the current price of $135! Over the nearly two years I've been toying with Bitcoin, I figure I've mined in the neighborhood of 800 coins (primarily with the Deepbit.net mining pool, if you're wondering). Had I saved those coins rather than selling, I could have paid off all my debt and half of my house today!
So why this post, and why now? With custom ASICs coming online and the mining reward halving late last year, Bitcoin mining is becoming increasingly questionable on GPUs, and CPUs are totally out of the equation. But there are alternate cryptocurrencies, like Litecoin. Due to differences in the cryptography algorithms backing the currencies, ASICs aren't likely to touch Litecoin for a while, and it was designed to actually be more CPU mining friendly. So, now I've decided that while my high-end Bitcoin mining GPUs will continue in that realm for now, I'm going to see about mining some Litecoins with the lower end GPUs as well as my various CPUs.
LitecoinMiningCalculator.com and look at the reward estimates. A single CPU mining at 50 KHash/sec will get you nearly 10 LTC per month. With Litecoin now trading at over $4.00, that's $40 per month of potential income, with one of the worst ways of mining for LTC. (Doing Bitcoin, that same CPU would only manage about 15 MHash/sec, with a potential monthly income of around $5.)
Where does all this take me? First, I've started mining LTC now at around 500 KHash/sec, which means potential earnings of $400 or more per month. Second, my Bitcoin mining is now making me around $1100 per month, and currently rising. So, while I might sell a few coins here and there, my plan is to only sell enough to pay for power if needed, and just keep all the LTC and BTC I mine for the foreseeable future.
I thought a year ago that Bitcoin would never reach $20 again, let alone $50 or $100. Now, with the massive increase in public awareness over the past couple of weeks I'm thinking $1000 might not be all that crazy -- and that's a tame estimate compared to the bulls over on Bitcoin.org forums talking about $10K and more for a single Bitcoin! Meanwhile, I can see Litecoin potentially following a similar path, and even if it remains valued at 1/25 of Bitcoin it's actually currently more profitable to mine LTC with the prices we're seeing.
If you'd like to know more, or if you're a friend who lives nearby and would like to give Litecoin or Bitcoin mining a shot, I'd be happy to build you a potent mining rig. I talked with a friend last night about this and ran some numbers, and I figure $2000 for a system that could mine at around 1500-1600 KHash/sec (or MHash/sec if you do Bitcoin) is entirely possible. I think BTC mining is set to get even more difficult as more people start doing it, plus all the ASICs, so Litecoin looks to be the better long-term proposition. That $2000 PC would end up mining roughly 300LTC in the first month, which would be $1200. In less than two months it would pay for all the high-end hardware inside, at which point everything else is profit! (Bitcoin would be more like $500 per month, and less if/when the difficulty goes up.)
Okay, there's a TON of terms and phrases used above that I didn't bother to explain, but let's end this simply: cryptocurrencies have serious potential to outperform gold and silver, so long as we have the Internet. If you want help setting something up, drop me a note and I'll be happy to provide some input. I'll even accept payment in LTC if you want a "no risk" proposition! My plan is to have well over 1000LTC stored up by the end of the year, and if all goes well at some point down the road I'll have several thousand LTC that are each worth the $135+ Bitcoin is currently valued at.
I missed out on stockpiling BTC because I was too timid, but I'm not going to make the same mistake with LTC! So come join the fun, and if you find this useful then please donate to one of the following addresses: