It’s time for another Machine Learning update. This one is only tangentially related to Machine Learning. In this post, I am going to spill the beans on how I made 46 cents in only 12 hours – and I only had to pay an up-front cost of about $280 to make it possible!
About a month ago, I bought a new graphics card for $280 to use for neural network training. It’s a weird thing, but in addition to rendering computer graphics, graphics cards are also very good at performing large computations that require a lot of “parallel processing”.
There is another thing that requires a lot of parallel processing – and that’s mining cryptocurrency. What is a cryptocurrency? – and what does it mean time “mine” them? - both legitimate questions that I honestly didn’t have great answers to about a week ago. But I spent some time learning, and I just mined my first ever 46 cents worth of cryptocurrency over the last 12 hours.
You’ve probably heard of Bitcoin, which is the most famous cryptocurrency. Or perhaps its infamous, because it got a lot of news coverage for being an “anonymous” currency that could be used to buy illegal things. I initially wrote a lot about this controversial aspect of bitcoin, but decided to pull it from the post because it's just not that interesting.
In a general sense, cryptocurrency is a decentralized electronic currency. The “decentralized” part means that no singular entity sets its value or manages a ledger. All transactions are traced by all users – so when Lisa pays Tony a bitcoin, literally every bitcoin user would be able to see it (if they wanted to). But they wouldn’t necessarily know that it was Lisa and Tony – they would just see that account A4E23B11 paid 1 bitcoin to account 676BC144.
The beating heart of all cryptocurrencies is a technology known as the “blockchain”. This was a breakthrough invention made by an unknown person (or group of people) under the pseudonym Satoshi Nakamoto. I will have an entire post to write about Nakamoto – maybe later this week. The blockchain is a giant database that is concurrently maintained by millions of users; it contains information such as how much money every user has, as well as a log of every transaction. Without going into too much technical detail, the blockchain is able to do accomplish this thanks to the work of “miners”.
Miners are people who dedicate their souped-up computers to the task of processing transactions and maintaining the ledger for the cryptocurrency. The ledger is essentially compacted using a very difficult-to-solve math problem that all miners’ computers labor at trying to solve. Solving it comes down to luck, but a faster computer can attempt to solve it more times per second than a slower computer. The lucky computer that succeeds at solving the problem first gets rewarded 12.5 bitcoins – and since 1 bitcoin is equal to roughly $11,500, that comes out to about $140,000. Not bad! One of these is solved about once every ten minutes. Take that, Powerball…
So, obviously, the chance of successfully solving this problem before anyone else is very small, especially with a cheap $280 graphics card. There are miners out there who have rooms full of purpose built mining rigs that sound like a jet engine taking off – their electric bills from mining alone can be upwards of $1,000 per month.
So I clearly didn't make $140,000 - but, you might be wondering how I made 46 cents. I did this by joining a large pool of miners. By joining the pool, I agree that if my computer finds the solution, I will split the profits with everyone else based on how fast everyone’s computers are in the pool. And if someone else finds the solution, they need to split it with me too. Well, some folks in my pool must have hit it, and me and my baby graphics card got our 46 cents worth!
Now, 46 cents in 12 hours shouldn't be coughed at. If I do some tweaking I could possibly get that up to $1.50 per day. That comes out to $550 per year – enough to cover the cost of the card, and then some. And that’s not taking into account the value growth that cryptocurrency is going through. 1 bitcoin used cost only $3 back in 2012. So there is growth potential.
I know that the geek is strong enough in this post as it is – but I need to take this one step deeper before I sign off. I’ve been using bitcoin as an example in this post because most people are familiar with the term “bitcoin” – but that’s far from the only cryptocurrency in existence.
The second most popular cryptocurrency is called “Ethereum” – and it takes the blockchain idea established by bitcoin and pushes it to the next level. The defining characteristic of Ethereum is that it allows entire programs and all sorts of other data to be stored within the blockchain – not just a ledger. I am having a hard time wrapping my head around the possibilities of Ethereum, but my gut reaction is that it could become big in the next few years. So, I chose to spend my time (and I earned by 46 cents) mining Ethereum rather than bitcoin.