Does Bitcoin mining work
For Steve Vittitoe, bitcoin is a fun way to make some extra money.
This unassuming 31-year-old family man, who is a computer programmer for a cybersecurity firm, runs a mini bitcoin-mining operation from the basement of his home in Valparaiso, Ind.
"It's as if there's a machine in my corner printing money, " Vittitoe said.
In one corner of his basement he has set up a rack of specially equipped computers. These are called "miners" in the world of bitcoin. The machines run 24 hours a day, competing against other computers around the world to solve complex math problems. The first computer, or group of computers, that solve the problem receives a fixed amount of bitcoins.
Vittitoe's mining operation produces 1.2 bitcoins a day. If bitcoin trades for $600, that means $720 worth of bitcoins a day, or $262, 000 a year. But that is a big "if" given bitcoin's volatility. In the last six months, bitcoin's price seesawed between $400 and $1, 150.
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Vittitoe, who has done well so far, doesn't mind the volatility.
"If I can get in at the right time, and get out at the right time, I've made money, " he said.
How much has he made? Enough to pay for his son's private preschool and more.
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What Vittitoe calls a "fun experiment" nets him less than 5 percent of his total income. His partner provides most of the computers so he gets most of the bitcoins, and Vittitoe covers the cost of electricity which can be more than $500 a month.
Eleven hundred miles to the south of Vittitoe, in Austin, Texas, a start-up company sees mining as a business, not an experiment.
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The megaminer Cloud Hashing expects its nearly 3, 000 computers in Dallas and Iceland to produce $100 million worth of bitcoins this year, divvied up between investors who buy contracts from Cloud Hashing.
"People pay anywhere between $1, 000 all the way to $1.5 million to mine with us, " CEO Emmanuel Abiodun said.
Abiodun, a former programmer for JPMorgan Chase, didn't buy into the bitcoin uprising at first.
"I thought bitcoin was a scam back then, " he said.
His conversion came studying the program. Abiodun said he saw it's potential to revolutionize the existing payment system.
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"This thing is solid, this is well-written. This thing is going to really solve a lot of problems, " Abiodun said.
