Nasty Mining: The nicer way to mine
Friday 04 July 2014
Miners are a vital part of the bitcoin ecosystem. Mining is a complicated business for non-specialists, but essentially it can be thought of as putting a cryptographic padlock on every ‘block’ of new transactions to prove their validity, before they are added to the permanent ledger (the blockchain). The padlock is a mathematical puzzle called a hash, which needs to meet certain very narrow requirements. The requirements are so narrow that thousands of dedicated computers calculating trillions of hashes per second will only find one that meets the right criteria every 10 minutes, which is when the next block is added to the blockchain.
Because the winning miner is paid with a 25 shiny new bitcoins, mining can be a very lucrative business – which is why it has become steadily more competitive over the last three or four years. With the recent 51 percent threat from mining pool Ghash.IO, it’s more important than ever for miners to opt for smaller pools – enabling them to continue to mine effectively without compromising the security of the very network they are designed to protect.
BitScan catches up with OgNasty, the owner of a set of different mining initiatives, to find out more about his intriguing way of approaching the field.
OgNasty has organised three related community-owned projects, all under the ‘Nasty’ name. (The bitcointalk forum handle is derived from his real name, and it’s pronounced ‘Aug’ not ‘O.G.’, in case you were wondering.) "Most people who know me in real life refer to me as Og. People seemed to enjoy the “Nasty” part of it, so I figured it would make an interesting “brand” of sorts that could be easily connected back to me.
"NastyMining is a pretty straightforward mining operation focused on having the latest technology that I run from my home. What makes it unique is that I pay for all the electricity costs out of my own pocket, and then donate all of the mined coins to NastyFans."
NastyFans is a fanclub run by another well-known, respected and long-standing bitcointalk member, nonnakip. "Fans support NastyMining with helpful information and fundraisers. As a bonus for being in NastyFans, donations to the club are distributed to the members proportionately to the number of seats they hold." Seats are essentially shares in the mining pool. "Members can trade these on nastyfans.org, vote in polls, mint their seats into physical coins, or review any number of details regarding the donations and distributions."
Then there’s NastyPool, which Og describes as being still a work in progress. "Currently it exists as a 0% fee P2Pool node. Development has been ongoing for several months now to implement a new payout system as well as a bonus lottery system, and integrating live statistics with nastyfans.org so that miners can view their earnings in real time, which is one of the shortfalls of P2Pool currently. We’re hoping to bring out a beta version of our payout system later this summer and we have already begun handing out lottery tickets to pool miners for our bonus system that is yet to be implemented." (NastyPool is open to anyone, and miners don’t need a NastyFans account to mine there: just point your miner at nastyfans.org:9332 and use your bitcoin address as the username to receive payouts.)
The Difficult job of mining
Mining has changed a lot in the last few years, since Og started. Whereas it was once possible to mine with a standard desktop computer, profitable mining now requires expensive specialised computer chips called ASICs. For all that, says Og, it’s not so very different than it used to be.
"Mining really hasn’t changed much in practice. The equipment has gotten faster, but the issues haven’t changed. Managing heat, noise and electricity are the same challenges I had when running a room full of GPUs three years ago. Keeping up with the network growth is in my opinion a fool’s errand. The adoption rate of Bitcoin is so great and with multi-million dollar investments in private mining companies happening on a regular basis, I try to focus more on having the best, most efficient miners. This allows our operation to remain small, so I can cover the costs of electricity as well as continue using my home for a mining space, but also allows us to grow as we send older, less efficient miners to NastyFans members willing to host them to open up electrical circuits for newer, faster, more efficient miners.’
The emphasis is on sustainable mining, rather than maximising profits like the big players.
"I’m not worried about what the network is doing or what my share is. I’m more focused on making sure that NastyMining and everything associated with it will exist 10 years from now."
One of the ways Og has encouraged members to join and stay is through the fanclub, which aims to create a fun culture of mining as well as reward its stakeholders. "There are lots of advantages to membership. The biggest is that you get to be a part of something awesome. Our members are supportive of each other, courteous, and we continue to grow almost daily. You’re also supporting something positive for bitcoin. All our mining is done via P2Pool to help decentralize the network, our developer nonnakip is working to advance P2Pool software capabilities, and all our statistics are publicly available and verifiable through 3rd parties. We also have an iOS app for people to view statistics on the go and our thread at bitcointalk has more transparency and statistics than any other mining operation I’ve come across. I truly believe we are setting the bar extremely high and hope that our example of running this operation out of pocket will encourage others to create open and honest operations that support the health of the Bitcoin network."
Then there’s the NastyCoin: a new type of cold wallet for mining participants. "Nobody is more excited about the NastyCoin than myself. I saw it as an opportunity to create something the world has never before seen (to my knowledge): a coin that increases its denomination forever with zero cost to its owner."
It’s worth noting that the coin looks fantastic, whatever its bitcoin value: it’s made of .999 silver, with a stunning design and finished on the back with a tamper-proof hologram bearing the Nasty logo over the engraved key (no paper inserts).
"It also acts as a way to decentralise the actual NastyFans seats from our website, which I believe is another first for any type of bitcoin investment or club. While I think the idea is still a bit slow to catch on, I have no doubt that after a few years and some more distributions, these coins will be seen as a truly innovative creation. The structure of NastyMining makes it a perfect match for the NastyCoin and I look forward to releasing new coins and seeing copycats in the future," says Og.
The bottom line
The reality is that most miners are in it at least partly for the money. Bitcoin mining has become so competitive that many amateur miners simply can’t keep up, with the advent of industrial mining farms. For prospective miners, it helps that all costs are paid by donations, meaning everything that comes in is revenue. Og explains, "Since inception more than two years ago, NastyMining and later NastyFans has distributed around 0.06 BTC per seat, or roughly $4 per seat at the time of the distributions. The original IPO for NastyMining was at $1.54, so those who got in at the beginning have received back more than double their original cost in distributions and they still have the option of selling their seats – which have recently traded around $20. I plan on releasing a detailed performance table in the near future with all publicly available information from back to the GLBSE days."
The future of mining
With fears over mining centralisation and the difficulties small miners face in continuing to compete, it seems likely that this kind of mining setup will play a greater part in bitcoin’s future – effectively comprising a kind of social enterprise for the bitcoin ecosystem, versus the corporate multinational approach of the vast pools and mining farms.
"In the future we plan to continue exploring additional donation sources. Currently NastyFans receives donations from NastyMining, merged mined coins on NastyPool, and sales of the NastyCoins. We’re planning to implement an automated NastyEscrow service later this year, and will continue exploring ways we can participate in the Bitcoin community by providing safe, trustworthy, and fun services to support Bitcoin."
Want to get involved?
"Getting involved is easy," says Og. "You can join the conversation in our thread. You can buy seats at nastyfans.org or if you don’t feel like signing up, you can anonymously own a physical seat by ordering one without an account at nastyfans.org/mint. We also appreciate all miners willing to mine with us on our 0% P2Pool node, and if you register your payment address with nastyfans.org, you can view the accepted P2Pool shares you’ve submitted, which count as lottery tickets for our soon-to-be-implemented bonus lottery."
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