Thursday, December 19, 2013

Alternative Cryptocurrencies: What to Mine?

After branching out into testing Hashco.ws and doing some Frozen mining, I started to realize that there's a huge amount of potential to make more money simply by mining some of the lesser known coins. New coins in particular can be quite profitable -- in the first couple of days of mining FZ, I managed to get something like 10K FZ. I traded that for roughly 6 LTC at the time, but today that same 10K could fetch probably 30 LTC. Even with the recent price drop, that would be a rather staggering $540 in two days. What's more, that was from mining with eight CPUs -- CPUs that were otherwise sitting idle on my GPU mining rigs!

Frozen is somewhat unique (or at least rare) in that it uses the Quark algorithm for proof of work, and Quark is more resistant to GPU mining as I've already mentioned. However, there are other altcoins where you can still generate a decent return without using your highest power GPUs. Most of these coins are newer or not traded as heavily, so you'll want to be cautious and not put all your eggs in one basket (at least not all the time). Personally, I am trading most of my altcoins for BTC right now, but with patience I could probably get far more by holding and waiting for a higher price. YMMV.

So which altcoins are the most profitable right now? The "created as a joke" DOGE (Doggy) is actually pretty common, but we'll have to see where that goes in the coming weeks. I wouldn't hold onto too much DOGE as all value could evaporate...but then again, never underestimate the power of humor! Hashco.ws and Multipool are both doing a fair amount of DOGE mining, for example. But if you want to go out a bit further on the fringe, take a look at Coinchoose.com. Here's a couple screenshots of the current average profitability relative to BTC and LTC:


What you can see in those charts is that quite a few coins are potentially outperforming LTC and BTC mining, sometimes by a substantial amount. If you go after one of the coins with a really low network hash rate, the risks -- and rewards -- can be even greater. But how do you go about mining these alternative coins?

Assuming you don't want to use a multicoin pool, you will either need to find a pool where your mined coins will be held, or set up your own wallet for each currency and then configure your miner(s) and pool(s) to send coins to the appropriate address. So let's just take the current top coin as an example, Diamond. Note that I have not mined any Diamond to date, so this will be a test run for me as well.

First, let's go find some information on Diamond. I searched for "Diamond Coin" and found this thread at Bitcointalk, announcing the coin, and later in that thread we find that Diamond has recently been revitalized. It looks like Diamond was launched back in July 2013. It has a steady state of generation of 1 block every minute, with each block being worth one Diamond (coin). So far so good. It also adds some other features to potentially secure the coin against a 51% attack, like Proof of Stake along with Proof of Work -- I won't get into that here. Diamond is scheduled to run for eight years at 1 block (and 1 coin) per minute, with bonus blocks randomly given out each day, yielding a total of 4,380,000 coins total (give or take). The current exchange rate can be found on Cryptsy: 0.0037 BTC per DMD. Network difficulty on the other hand is reportedly very low at only 1.27MHash/s, but perhaps that's not showing up correctly. Everything looks reasonable, so let's try mining some Diamonds.

First, decide if you want your own Diamond wallet (e.g. for long-term storage). If not, you can skip steps 1-4 and go straight to step 5.
  1. Download the Diamond client/wallet.
  2. Run the diamond-qt.exe (for Windows) client once and then close it; it creates a default directory (C:\Users\[UserName]\AppData\Roaming\Diamond) for you, though you could create that on your own if you prefer.
  3. Create a diamond.conf file in the above directory. There's an example given at the official site, but below is what I've put in my diamond.conf file.
  4. Run diamond-qt.exe again, and now it should begin syncing with the network. This may take some time as there are roughly 200,000 existing blocks to download. You don't need to finish syncing before you can begin mining, but you do need to be synced up to send/receive any DMD.
  5. Mining is pretty simple, as this is yet another scrypt-based coin, so you can mine with the usual cgminer, bfgminer, cudaminer, etc. But first we need a pool to mine with (unless you want to go solo).
  6. I created an account at this pool, since it looks active at around 12MHash/s (so the network hash rate is much higher than what Coinchoose is reporting). After verifying your account via an email link, create a worker in the usual way.
  7. Using your normal cgminer settings (or whatever miner you run), point it at the pool stratum and start mining. For a Radeon HD 6970, here's what I run:
cgminer.exe --scrypt --auto-fan --failover-only -I 20 --thread-concurrency 8000 --gpu-engine 925 --gpu-fan 50-100 --gpu-memclock 1400 --gpu-powertune 25 --gpu-vddc 1.1 --temp-cutoff 99 --temp-overheat 95 --temp-target 85 -o stratum+tcp://dmdpool.digsys.bg:3333 -u trogdorjw73.tester -p tester
With the miner up and running, you should start to see shares periodically. Based on the pool's information, it looks like the rate of return is around 0.08 BTC per 1MHash/s. At a current price of $650-$700, that works out to $52-$56 per day per MHash (1000KHash). If you were mining LTC instead, you'd be earning about 0.3 LTC per day, for around $6 per day.

So here's the question: do you actually get that much DMD (or other altcoin) into BTC? I'll start one system mining as a test and report back later....

15 comments:

  1. Replies
    1. Don't I wish! But no, I'm not; I'm on the list and if you look closely you should be able to figure it out which one is my test miner.

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  2. Replies
    1. Fixed -- missed a 0. The other math was still correct. :-)

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  3. Help me my engine clock keeps lowering itself for no reason! itll just drop to like 700s or 800s... any idea? i have r9 290x

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    1. The GPUs will automatically downclock if they draw too much power. Try lowering the engine clocks a bit and see if they run faster/better on mining.

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  4. I've just recently got back into the mining game, building a rig based on some of the suggestions you posted a while back (thanks for that btw) and was wondering what you thought about middlecoin.com, where that automatically mines the most profitable coin and then converts to BTC once a day and pays out to your wallet (around a 3.8% fee with conversion/pool fees). With a half day of mining on one 7950 I got around $10, not bad. Just curious of your thoughts on that.

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    1. Middlecoin, Multipool, and Hashcows all basically do similar things, but Hashco.ws converts coins to BTC throughout the day (or allows you to keep certain coins -- it's a user setting), Multipool I believe doesn't auto-convert any coins to BTC (just gives you a "Cash Out" for each coin). I'm not sure exactly how Middlecoin does things. Anyway, they're probably all more profitable than mining LTC right now.

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  5. the difficulty of Diamond is 9, not 2 as coinchoose suggests...

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    1. It varies over time. Right now:

      blocks : 210381
      currentblocksize : 1000
      difficulty : 3.76359447
      networkhashps : 245,133,554

      You'll note that the network hash rate is at 245MHash, according to that report from getmininginfo, so the report of hash rate is off by a factor of around 100?

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  6. Hi Jared,

    Just wanted to let you know that you've got one of THE most helpful crytocurrency and mining blogs I have stumbled across. Wanted to let you know there's plenty of us out here who are reading daily :)

    Keep up the awesome work, man

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  7. Hi Jared! Thanks for writing about altcoins! I find your articles very interesting!

    What It will be nice is to have a special blog entre for all of those of us who have ASIC Miners for SHA256, specially considering that bitcoin difficulty is higher and higher, what will be the best currencies to mine with these asics?

    Thanks Jared!

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  8. Hi Jared, thanks for all the informative blogs. You are single best blogger on cryptocurrency out.
    Do you find yourself mining using multicoin pools or dmd or mixing of dmd/ltc/frozen?

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    1. I'm giving multicoin pools a long-term test this week -- I tested Diamond for a day or so and only mined 5.6 coins with around 600KHash, which seemed a bit low to me. Coinchoose is saying difficulty is currently 1.955 with a network hash rate of 3.76MHash; the Diamond-qt client on the other hand reports 3.72 difficulty and 220.5 MHash/s -- so at least those numbers are WAY off -- but profitability still looks about right.

      Based on the rate of 1500 DMD per day, I was providing around 0.36% of the network hashing power. My 600KHash got me 5.4 DMD worth a total of around 0.013 BTC. If I had mined LTC instead, I would have generated around 0.2 LTC, which would translate into 0.005 BTC, so it certainly worked out okay. Yesterday on the other hand appears to have been Hashcows' worst day ever (or at least, not all trades for BTC went through), so I only got 0.057 BTC from around 6000KHash of GPUs. Mining LTC I would have received ~2 LTC worth 0.054 BTC, so I still came out ahead. Ha!

      Also, trading an alt-coin for BTC manually via Cryptsy takes a lot longer and more work than just mining at Hashcows. If you want to take a chance, DMD is still looking very strong, but just go in knowing it will take some time before you can cash out.

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    2. Yeah going to try the multi and see if it stacks up to DMD which seems to do well, understanding that cash outs are longer, but aren't we in this for long game? :D

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