SINGAPORE (Dec 22): Not unlike the shadowy world of cryptocurrencies, you may need help with your smartphone GPS to locate Mining.SG, hidden in the maze of industrial buildings a five-minute walk from Aljunied MRT station.
As the name suggests, the cryptocoins mining farm has rows and rows of mining rigs – basically a desktop computer with much graphics processing power with lots of fans to keep the rigs from overheating.
Instead of buying bitcoin or ethereum on an exchange, or going after an initial coin offer, cryptocurrency investors can mine their own coins at Mining.SG.
According to Edmund Ng, one of the partners of Mining.SG, each mining rig on average produces US$18.39 of profit per day mining 0.85 ethereum, and US$22 of profit per day mining zencash.
The profitability fluctuates daily as this is based on the mining level of difficulty and the price of the crypto coin. As a mining rig can make a net profit of $600-$700 per month, a rig costing around $6,000 can “break even” in 10 months.
A mining rig is just a computer in an open frame because mining a cryptocurrency requires substantial graphics processing power which generates a lot of heat. Each Mining.SG rig comprises six graphic adapter cards, solid state drive, a motherboard and around 4GB of RAM. Miners have to pay $100 for electricity every month.
“If you connect a mouse and monitor, you can surf the net and play games. It works like a normal PC,” Ng says. Mining rigs don’t have to connect to a monitor. Instead, miners need to install TeamViewer in their rigs and smartphones so that they can monitor the mining progress and the value of their coins. There is also a direct link to the mining pool to monitor the rig's hashrate which is the speed at which it completes an operation in bitcoin code.
Mining is actually solving algorithms that create blocks which are added to the public ledger. As they create new blocks, miners are rewarded with new coins. Over time, the algorithms have become more complex and computers require a lot more processing power to solve them, hence the need for specialised mining rigs.
Mining.SG will install the mining script or software which connects the mining rig to a mining pool. “The mining pool is like your internet service provider — the mining pool has all the users and subscribers who are connected,” Ng explains.
Imagine a mountain and within it is gold, says Ng. All the miners are using shovels to get at that gold. The shovels are the mining rigs, and the gold is the cryptocurrency. “If you’re digging by yourself, you will be very slow, it will take a few weeks or months to find one piece of gold. But the mining pool means you are all digging on the mountain with 500 shovels. You find the gold faster but you’re sharing the gold among all the other miners,” Ng says.
After a mining rig has mined a coin, it gets transferred to the mining pool, and then into small batches onto an online coin wallet.
Mining.SG’s rigs cannot mine bitcoin but can mine zencash as mining.SG is one of zencash’s approved mining pools. Ethereum, hashcoin, and bitcoin gold can also be mined on these rigs. “It’s so easy to start mining as the rig is simply 'plug and play' once we have set up the mining software to link to your wallet address. All the coins coming out are based on GPU (graphics processing unit) mining,” Ng says.
However, cryptocurrencies are still finding it hard to shed its shady associations.
On Dec 20, the Monetary Authority of Singapore issued a notice to warn against speculating in cryptocurrencies. The regulator reiterated that cryptocurrencies are not legal tender.
“They are not issued by any government and are not backed by any asset or issuer. MAS considers the recent surge in the prices of cryptocurrencies to be driven by speculation. The risk of a sharp reduction in prices is high. Investors in cryptocurrencies should be aware that they run the risk of losing all their capital,” the MAS advisory cautions.
There is also no regulatory safeguard for investment losses in cryptocurrencies, it adds.
That should be sufficient warning for investors thinking of trading or mining cryptocoins.