Free electricity: Cryptocurrency mining in a dorm

Mark had just gotten into MIT in Cambridge and he began mining cryptocurrencies more or less by accident. In November 2016, Mark stumbled upon NiceHash, which is an online marketplace where you can mine Cryptocurrencies for willing buyers. He started small, with a desktop computer topped up with a graphics card.

Within a few weeks, he had recovered the Rs. 8000 ($120) cost of his card, and earned yet another Rs. 13,500 ($200) which he used for buying another one.

e went up to his professor and asked for his old desktop systems which he had lying dormant. Because when equipped with a graphics card, those 'garbage' PCs worked just fine for mining. Mark switched from NiceHash to mining ether, which was then the most popular Bitcoin alternative.

Every time he mined enough ether to cover the cost, he bought a new graphics card and traded the leftover currency into Bitcoin for safekeeping. By 2017, he was running 7 computers and mining ether round the clock from his dorm room.

By September, his profits totaled 1 Bitcoin, which was $4,500 (approx. 3 lakhs) at that time. And just about four months later, when Bitcoin blew up and he'd diversified his portfolio, he had amassed well over 13 lakhs ($20,000) in digital cash.






What helped him?

In typical mining scenarios, electricity costs take up the highest fraction of operational costs. Mark benefitted because he operated his rig at his dorm, and MIT doesn't charge hostellers for electricity bills. The electricity and internet are part of the tuition.

What is mining?

Paper currencies are issued by the bank and thus they come to us printed as a physical entity, which we call banknotes. Cryptocurrency, like Bitcoin, on the other hand, does not come in a physical form. This creates a major risk from hackers, who can thus create Bitcoins from theoretically nothing.

Bitcoin mining is a way to keep transactions secure. Imagine a public ledger which has records of every transaction made through Bitcoin. This is what is called as Blockchain. In this ledger, you can't remove entries, and so to make a change you'll have to add another entry.

To keep Blockchain secure, it's distributed and hosted by various computers all over the world, and those computers are known as miners.

Sources:

The Rule Breakers Guide to Cryptocurrencies: What Is Blockchain? — The Motley Fool