Crypto
September 2023
Ethereum Mining (and how I lost 210 ETH)
As a first year computer science student in 2017 I got introduced to blockchain technology through some friends. Initially, I didn't understand the technology all that well, but the concept was sufficiently interesting for me to get involved in the mining operation. We bought two sets of 5 GPUs and hooked them up to a motherboard and a rack. We then connected to mining pools and started hashing (a brute-force mathematical operation which rewards you in proportion to computational capacity). In addition, most of us bought extra Ethereum on varius exchanges in the price range of 10-15 dollars a piece.
After building the initial rigs, we considered renting a warehouse and taking up loans to finance a much larger mining operation. We called the owners of a vacant facility that had been used as a car repair shop, which we thought would have sufficient electrical supply for the mining rigs. The project never came to fruition, however. Perhaps it was a lack of conviction, or it may have been the upcoming exams.
The two rigs we did build provided consistent deposits of Ethereum, which at the time were worth enough to cover the power bill from the rigs plus provide a small profit margin. However, small price movements could also wipe the profits out. But that didn't matter for long, because it turned out we got in at just the right time. Just a couple of weeks later the price started spiking and it didn't slow down.
From then on it was clear that this would be a good investment. Within 6 months, the price of ETH (ethereum) had 100X'd, from 10-15 USD/ETH in May 2017 to 1400 USD/ETH in December 2017. The holdings would vary 10's of thousands of dollars per day, which was more money than I had ever seen. Because of this, it also didn't feel like real money.
...The following is a live tracker of the size of that mistake. The combined holdings from the mining operation and buying early was 210 ethers, which are currently valued at:
Total value: 330788.85 USD
That is with the current exchange rate of:
1 ETH = 1575.185 USD
The combined holdings from the mining operation and buying early was 210 ethers, which are currently valued at: