Our Bitcoin Mining Adventures

Why we chose to investigate bitcoin mining

Investment returns in the UK remain low despite the recent increase in the Bank Rate to 0.5%. For some time now we have been looking at ways to improve the performance of our investments. One of the many methods that we have looked is Bitcoin and, in particular, Bitcoin Mining.

Bitcoin is a virtual cryptocurrency and payment system that is based on a very complicated computer generated sequence of so-called “hashes” that are added together together to form a “blockchain”. How all this works is beyond the scope of this article but if you want to learn more, try the Wikipedia desription here.Suffice to say that Bitcoin is here to stay and seems to have value.

Getting and Using Bitcoins

In order to use Bitcoins, you have to purchase them, generate them yourself by running mining software or invest in a so-called “mining company”. Running mining software yourself is very computer intensive and it is most likely that the cost of the electrical energy used would exceed the value of Bitcoin generated. If you just purchase them in the hope that the value per Bitcoin unit will increase is very risky. The value of each coin has varied by as much as 50% in the space of a month or less and can go very much down as well as up very quickly. After a very detailed study, we decided to make a very small investment in an existing mining company to try the system out. To use Bitcoin for trade or conversion to normal currency (e.g. $, £ etc.) you need a Bitcoin Wallet. This can be either software based or a real piece of hardware.

The BitCoin Mining project so far

The first step was to obtain a web based bitcoin wallet. For this we chose blockchain.info as it was rated quite highly be several authoratative sites and seemed to us to take security very seriously. Security is VERY important when you are dealing with any financial matter. The sign up process was very simple and setting up the wallet security was detailed and easy to follow. We opted to have a 2 factor sign in using our mobile and sms.

Our next step was to sign up with a “mining company”. We chose sun-mining.com. Our research showed that there are a lot of what can only be described as scam or ponzi mining schemes out on the web. This company looked to us to be fairly legitimate at first but note that we have not given any link to it’s site! Caveat Emptor! Again, the sign up process was quick and easy to follow. Sun-mining offer a range of “contracts” for various cryptocurrencies. We chose to take out a VERY small contract for 3 years mining bitcoin at a total cost of US$18.

This contract promised a return of US$3.70c per month for this investment, i.e. full payback in about 5 months. We transferred the amount requested and “mining” started as soon as the payment was received as promised. After a few days we checked that our promised rewards were accumulating and it looked as if they were.

All too good to be true? Probably yes. When examining the site in detail it became obvious that there were some bad signs and a few pitfalls as follows:

  • It looked as if the minimum transfer amount back to your wallet is .01BTC (bitcoin), i.e. approx. US$71 at the rate on 7/11/17. If this is correct, you would not be able to get any of your minimum contract return back for 19 months.
  • The site offered an affilliate program that looks too generous.
  • The site offered a re-investment plan. If you take advantage of this the accumulation will be quicker but the time until you can withdraw any money increases. This, if repeated, could eventually result in no payback until the end of the contract, if ever!
  • Immediately we started mining, we were offered discounted larger contracts. Why discount if the investment is so great?
  • The company offers no details of their location except what appears to be an accommodation address in Sydney. We are currently checking this out.
  • The company offers no information as to where their staff or equipment is/are located. It is a “secret”, very suspicious. They don’t even say that it is in Australia. it could be in Russia, China or anywhere else as far as we can tell.

Our Conclusions

We make no immediate judgement. All could be well but it does not look good. On our scoring system the likelihood of this being yet another scam is about 8 out of 10. Watch this space for episode 2 soon!

Every Penny Counts – Update

Following my last post, I sent an email to our local MP, David Burrowes outlining my concern. To his credit, his office replied promptly as below. Needless to say, I am not holding my breath whilst waiting for the reply but well done David burrowes MP for taking the matter further.

Dear Mr ******

I am writing on behalf of David Burrowes MP who has asked me to thank you for your email of 11th January regarding your concerns about the Department of Work and Pensions (DWP).  Please accept my apologies for the delay in replying.

Mr Burrowes was concerned to note the issues you raised and the problems you encountered whilst trying to gather further information about claiming your state pension.

I can confirm that Mr Burrowes will be forwarding a copy of your email on to the DWP to ask that they address the points you raise.  Mr Burrowes would however appreciate you sending him your postal address details so that he can send you a copy of any reply he might receive from the DWP.

Thank you once again for taking the time to contact Mr Burrowes and he will let you know when he receives a response.

Yours sincerly

Rebecca Chard

Constituency Caseworker for David Burrowes MP

Every Penny Counts – Wasting of taxpayers money in small ways.

Hello everyone!

This is the first post to our new blog and we hope that you find it interesting. Email us if you want to comment or possibly join in.

The subject today is “every penny counts” and describes one small way that arose recently where it was obvious that taxpayers money, i.e. yours and mine, is being wasted.

The story starts on Monday the 10th of January 2010. I received a letter from the Department for Work and Pensions (DWP) dated the 29th December 2009 saying that it was time to claim my State Pension. I am not due to receive this pension until late April 2010 and so was pleased that the bureaucratic system seemed to be working to help me in plenty of time.

The letter said quite clearly: “Claim your State Pension” and gave a phone number (0845 30 01 084) that I should phone going on to say “You can claim your state pension now…”

Having gathered together the information required, I duly telephoned the number given only to to hear that:

a) the number had changed, it is now 0800 731 7898 and

b) that there was “no need” to claim my state pension now, it seemed that I could wait until 2 months before hand, i.e. late February if I wished. However, I decided to proceed as I was fully prepared.

I dialled the new number and received the same recorded message to the effect that there was “no need” to claim yet but I persevered because I wanted to get it finished having spent some time already.

To cut a very long conversation very short, I was told that I could not claim my state pension at this time and I had to wait until 2 months before the due date to claim.

My questions for the bureaucracy are:

1) Why send a letter that gives the wrong number to call? It would be a trivial act to change it to the correct number.
2) Why send a letter nearly 4 months early when you cannot claim until 2 months before? Surely it would be better to send it out 2 months before the claim date?
3) Why is it that the recorded message is phrased in bureaucratspeak? The phrase “you no longer need…” implies that one could make a claim now if one wanted – in fact you cannot, you have to wait.

As I see it this is a typical example of how small wastes of money can add up to very large sums. Given that the population of the UK is around 60 million, there are probably nearly a million of these letters going out each year. Each letter probably costs around £1, not that this money could be saved but it could certainly be deferred for 2 months. The next waste is the money paid by us for the wasted phone calls. 0845 numbers are not free, cheap maybe unless you are calling from a mobile, but not free. OUR money being wasted because no-one can be bothered to do their job properly.

More money is wasted by the government itself as they have to pay for the (maybe 1 million) phone calls to the 0800 number. My guess is that the wasted cost to the government is around £50,000 just for the 0800 calls that will have to be repeated at a later date.

For the cost of maybe 1 days work by a civil servant (who is probably paid less than £50,000 a YEAR) this money could be saved.

In todays straightened time, every penny counts – how many other wastes do you know about?