Dabbling with cryptocurrency in Sri Lanka

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What is Cryptocurrency? How do you mine it? More, importantly, how do you get rich off it? Back in December 2017 Bitcoin was valued at $17,000. Since then the price has dropped, but if you still want to jump onboard the bandwagon in Sri Lanka there are two ways to do so. You can either mine cryptocurrency coins yourself or invest in them. The two approaches are vastly different from each other. The only they have in common is that they’re both complex.

So how does one get started as a miner?

To answer this question, we met up with Kushan Dodanwala and Zaffran Zavahir. Both Kushan and Zaffran are Directors at Redline Technologies. They’re also avid PC hardware enthusiasts that constantly experiment with new ideas. To a normal person, these ideas would sound like those from a mad scientist. But to them, it’s a passion, which is why they’ve dabbled in the art of mining cryptocurrencies since it was first announced.

So how exactly does anyone earn any cryptocurrency? “It all starts with mining”, explained Kushan. Miners solve complex mathematical problems and approve a collection of transactions. For this, they are rewarded in the form of Bitcoin, Ethereum, or any other form of cryptocurrency coins. But to ensure the currency doesn’t get devalued over time, the mathematical problems become more complex over time.

Building a PC to mine Cryptocurrency

Kushan’s experiments with mining cryptocurrencies began in a simple manner. Kushan’s interest in Cryptocurrency and mining was purely because he liked to study and experiment with the tech, not to make a profit. His first mining PC only featured a 3rd Generation Intel Dual Core Procesor and 4GB RAM. That’s it. Contrary to popular belief you don’t need a supercomputer from NASA to mine cryptocurrency. Take away all the glitz and the glamor, a Mining Rig is just a glorified PC.

Cryptocurrency | Sri Lanka
Kushan Dodanwala stepped into the world of Cryptocurrency mining rather recently.

Just like how the CPU in a PC would be used to carry out multiple tasks at the same time, the same processing power can also be used to mine cryptocurrency. In fact, the PC you might be using right now is also capable of mining cryptocurrency. But while these systems can be used to mine cryptocurrency, they are nowhere close to being efficient at it.

The more problems and transactions you process, the more money you get. A simple PC or laptop, while perfectly usable to mine, will take ages to mine a bitcoin. We’re not talking months. Rather, we’re talking years.   So if your CPU is not the workhorse used for mining, then what is? Well, that would be your graphics card.

It’s not just about better graphics

Apart from being used for gaming and rendering your 3D animations, your graphics card is also quite a powerful number cruncher. It has a central processor called a GPU or graphics processing unit. This is significantly faster than a CPU, making it far better suited for mining.

In fact, even the cheapest graphics card on the market would be more efficient at mining cryptocurrency than the CPU of a PC. So the first step in building a PC to mine cryptocurrencies is to get a graphics card. Furthermore, since the mining process uses your graphics card, you don’t need a high-end processor or RAM.

Cryptocurrency | Sri Lanka
The easiest way to increase your mining power is to add graphics cards (Image Credits: Bitcoins & Altcoins)

But either way, the costs will add up. So you will spend a small fortune if you aim to build a PC to mine cryptocurrencies. As such, it’s important you ensure that you earn more than you spend. If not, it would be a waste of time and energy. So how do you maximize your returns? By adding multiple graphics cards to your mining PC. But this is easier said than done.

This is where Kushan’s ingenuity came into the picture. Remember his old PC? Using a hacksaw, and a lot of patience, he actually sawed off a part of the PCI slot on the motherboard so that he could fit an additional graphics card. Did it work? “Of course it did”, he replied proudly. But he wouldn’t recommend this approach stating that it was an extremely risky gamble. Even today, he has to keep it tilted slightly to ensure the motherboard doesn’t snap from the extra weight of the second graphics card.

Cryptocurrency | Sri Lanka
This should definitely not be tried at home. (No motherboards were harmed)

But if you want a safe alternative that doesn’t involve a hacksaw, you can invest in motherboards build specifically for mining. These boards come with extra slots for graphics cards. Of course, on top of all this, you’ll also need to invest in a decent power supply unit. As we said before, you’ll need to spend a small fortune building a PC to mine cryptocurrencies in Sri Lanka. So make sure to do the math and ensure you earn more than you spend.

Kushan explained that his mining rig, now complete with two Gigabyte GTX 1060 graphics cards ran non-stop for around a month. During that time, his electricity bill went up by around LKR 4,000/-. On the other hand, the cryptocurrency he mined amounted to around USD150 which is more than enough to cover for the electricity bill and have some cash leftover as well.

All that power but nowhere to house it

This also begs the question of how to house all these components. A regular PC casing, even a high end one, can only accommodate a maximum of 3 graphics cards. If your mining rig has around 4 or more, then you’re looking at getting a custom casing made.

This was the mission that Zaffan Zavahir set out to accomplish. He literally went to the drawing board to design a frame to house his mining rig. Using two variants, one of Aluminum and one of wood, Zaffran perfected his design and began his mining journey.

Cryptocurrency | Sri Lanka
Zaffran with his custom mining rig

The reason he made two variants was that the wooden one would be easier to transport. Meanwhile, the aluminum one was stable and rigid enough to withstand extended use. Both frames used an open bench layout, eliminating the need for additional cooling, meaning that the heat generated from the system was dissipated quickly.

Additionally, Zaffran also invested in a high-quality power supply unit. Why? Because having an efficient power supply unit goes a long way. Power supply units such as the FSP Hydro series are certified to be more energy efficient under load. This means that they can actually save you money in terms of your electricity bill. And as we saw with Kushan’s experience that’s how you ensure you remain profitable.

The biggest challenge is stress

By this, we aren’t referring to the stress Kushan and Zaffran faces from the fluctuating prices of cryptocurrencies. Rather, the biggest challenge they face as miners is the stress on their hardware. The components inside a mining PC aren’t meant to run at 100% capacity 24 hours a day. Doing so puts a lot of stress on the hardware.

Furthermore, this stress is not covered under the manufacturer’s warranty terms. As such, a manufacturer has all the right to decline warranty within the first year of the card being purchased, if it has been subjected to mining. Kushan and Zaffran shared that Redline has seen people in Sri Lanka return graphics cards that were used in mining PC’s seeking warranty claims.

Cryptocurrency | Sri Lanka
Prolonged stress on a graphics card can cause damage and even cause it to burn out (Image Credits: YouTube)

But with the rise of cryptocurrency mining, companies like Asus and Sapphire now run tests on graphics cards prior to honoring warranty claims. These tests are designed to check if the graphics cards have been subject to extreme stress. If the tests return positive, then the warranty claims are immediately rejected.

On the other hand, Kushan explained that manufacturers have begun producing cards for mining. These are cheaper than regular graphics cards as they’ve been stripped of their display ports. This makes production for manufacturers easier. And for miners, they offer graphics cards that take up less space and generate less heat.

Because these cards are being used purely for number crunching, one graphics card with a display port would do. The others are just for pure horsepower.

The hardware designed for mining

Another alternative to the problems with graphics cards for mining cryptocurrencies is ASIC’s. In case you’re lost, ASIC stands for Application Specific Integrated Circuits. These are essentially small devices that you plug into an available USB port on your laptop or desktop. Once connected, it will carry out the mining operation for you so that you don’t need to use your system resources. One such ASIC is the AntMiner by BitMain.

Cryptocurrency | Sri Lanka
The Bitmain Antminer E3 is specifically designed for mining cryptocurrency efficiently (Image Credits: websawa)

Their latest model, the AntMiner E3 is significantly faster than a system with a Nvidia GTX 1070. So, clearly, ASIC devices are a lot more powerful. If so, then why not just stock up on them for your cryptocurrency mining needs?

Well, for starters, the algorithm that BitMain uses is tailored specifically for certain types of cryptocurrency. That algorithm is not open to the public. Secondly, it’s also expensive. An ASIC such as the AntMiner E3 starts off at around USD 800. Once you factor in the taxes and shipping and markup costs, you’re looking at spending around LKR 250,000 upwards for a single device in Sri Lanka.

Cryptocurrency | Sri Lanka
Does the BitMain AntMiner spell doom for mining cryptocurrency by graphics cards? Well, maybe not.

That cost will obviously escalate if you’re buying more. In addition, the ASICs are market and region-dependent so it might not even be available in Sri Lanka. Are they available in Sri Lanka, you ask? Well, according to Kushan, a couple of units were sold via Redline Technologies in Sri Lanka for around LKR 300,000.

Despite their high cost, one could assume that ASIC’s would make graphics cards obsolete for mining because of their efficiency. “Unfortunately, people prefer to find other currencies that can be mined using graphics cards,” says Kushan almost weary at the thought of arguing with another miner demanding warranty on an overstressed graphics card.

Investing in Cryptocurrency

An alternative to building a mining rig is to invest in Cryptocurrency. This involves buying a selected type of cryptocurrencies such as Bitcoin or Ripple. Once purchased, your cryptocurrency goes into a wallet. In order to convert one currency to another, you will have to use an exchange. From there, whether you’re in Sri Lanka or elsewhere, you will have to study market trends, look at sales volumes and look at currency announcements.

The goal is to sell it off for a profit when its value increases. And as we’ve seen in the past, the value can go up from 20% to even around 200% or 300%. It is, of course, no easy task. You will have to be constantly vigilant about monitoring trends.

Cryptocurrency | Sri Lanka
Abdul Ahad Ashraff prefers to invest in Cryptocurrency rather than spend time mining for it.

“Crypto is high risk, high profit. The points I look for before investing are a good use case scenario for the token, a well written white paper and last I see what the community sentiment is about the coin,” said Abdul Ahad Ashraff – a local cryptocurrency investor. Ashraff has been in the mining scene for quite a while. He too started off with a mining rig that consisted of three Nvidia GeForce 1070’s.

Today he buys coins and holds onto them while devoutly checking Twitter and Reddit. This is because they are both community driven, the odds are in their favor in terms of reliability. When the time is right, he chooses to sell the coins for a profit. Yet, despite actually making profits, his parents still believe that he’s doing something shady on the internet. Despite his best efforts, Ashraff’s parents haven’t been keen on understanding how blockchain works.

But another approach investors in Sri Lanka and elsewhere use to earn money through cryptocurrencies is to back the underlying technology of the currency. This approach involves holding onto cryptocurrencies expecting more people would use a particular platform. As the number of people using the platform increases, so too does the value of the currency itself.

The gambles to obtain virtual gold

Today, there’s an active community of cryptocurrency investors and miners in Sri Lanka. Many of them are investors rather than miners as it’s no longer profitable to mine cryptocurrencies unless you have an entire farm of mining PCs. But whether you’re an experienced techie or a curious onlooker, you shouldn’t blindly jump into the world of cryptocurrency. Both the path of a miner and of an investor is fraught with risks. As we saw earlier this year in South Korea, it’s easy to lose it all. Thus, you should always do your research without being afraid to ask stupid questions.

13 COMMENTS

  1. it’s up to central bank to decentralize bitcoin through block chain and disperse money throughout the island via bitcoin atm outlets(forex reserves should also be taken in to account. It is like central bank+decentralized bitcoin banks sharing coins on exchange basis

  2. Sri Lanka is one of the worse places on earth for crypto-mining.

    The main driver in mining profitability is electricity cost. And the electricity cost in SL is ridiculously high. Add to this the need for extra cooling to offset our hot climate; hence more even electricity and HW.

    This is why China, with its very low electricity tariffs and cold temperatures (especially up in the mountains and up north), is dominating the field.

  3. Bitcoin or any other so called cryptocurrency is not recognized buy any central back of any country in the world as legitimate currency for use in buying goods.
    So called cryptocurrency exchanges are set up by private companies and not government institutions.

    These private exchange companies can manipulate the value of cryptocurrency and they are not accepted or approved by any central bank in the world
    Actually in my opinion cryptocurrency value will increase as long as they keep hype and let people believe into buying bitcoin as a good source of investment.
    as long as bitcoin value does keep going up forever you can buy it today and sell it for higher price next day and make a profit in real money like US Dollars.
    But if the price stop going up or keep going down word all who bought coins spending real money like US Dollars will lose all invested real money and stuck with some digital numbers.

    As for miners if the cost of mining (electricity) is lower than the value of the cryptocurrency then they can sell it for US Dollars and make a profit. But really? are they able to sell it for the exact current amount the cryptocurrency is valued at, in these private exchanges.

    There are so many videos on youtube uploaded by miners themselves that says I mined 200 worth bitcoins (cryptocurrency) this week and that week so and so with all the hype but they never say how much they really earned after selling them for real US Dollars or for any other legitimate real money. I bet they aren’t able to sell those for the hyped worth value of that cryptocurrency .
    Maybe they sell it for pathetic low amounts and they make videos writing articles, getting it on national television to talk about it and publish advertisements one social media, youtube to exaggerating things all to make those cryptocurrencies look so glamorous and luxurious in order to keep its speculated value keep going up.

    All these buggers who spends money on these to keep up the hype are those who already have money in US Dollar millions earned through doing other legitimate businesses, inheriting from rich parents, robbing banks in daylight, those psychopathic greedy hedge-fund managers, bankers, professionals, money launderers, rogue nations, who already have so much money that they can throw at it and play with it to keep up the hype and robbed innocent hard working peoples hard earned money.

    So young Lads get a real job or do real work produce something real and tangible and useful to people sell it and earn genuine paper money and have a secure life.

    Cryptocurrency mining is for pathetic looser and for spoiled children coming from rich families and have nothing meaningful to do in life. Its just a bubble and it gonna burst very soon!

  4. It’s really great to see Sri Lankan’s involvement in concurrency too. Bitcoin is a bubble but it’s hard not see the change it bought in to the world.

    Also even it’s bubble the current value of Bitcoin is “977,266.02 LKR” which is quite a success from their initial years where people used hundreds of bitcoins to buy a pizza.

    However personally biggest revolution came from Bitcoin is “Blockchain”, the possiblities are endless and also I would appreciate future post from Mr.Ashraff on this.

    Once again really it was really great writeup guys.

  5. Cryptocurrency is the future of money. At some point when the technology advances enough to handle millions of transactions per second it will match that of Visa and MasterCard networks, who are currently servicing the planet.

    For those who say it’s a scam, bubble, or a joke. Please do your selves a favour and stop voicing your comments on things you don’t understand.

    The NASDAQ stock exchange is considering opening cryptocurrency markets. JP Morgan, Morgan Stanley, Goldman Sachs (the biggest banks in the world combined in terms of managed assets) Rockefeller’s and many other billionaires are investing in cryptocurrency. It’s already legal in America, South Korea, Japan and many other countries. These people know it’s a serious investment. These countries are also working on regulations.

    The very nature of the technology means you cannot stop it from spreading. It is impossible to control. It is highly efficient.

    Good coins like Ethereum and Bitcoin will last a long time and perhaps decades.

  6. We are interested in opening a Cryptocurrency Exchange in Sri Lanka. Can someone advise us of the process for opening such a business

  7. Government block all the payment for the forex trading and option trading in Sri Lanka. Any idea we can continue trading with forex.

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