I somewhat failed at gracefully HODLing Bitcoin

This bitcoin pump cycle caught me off guard. I’m Feeling pretty stupid at the moment; so it is important to process the underlying stuff.

a) Always look at the prices with a scale which starts with 0. Then it would have looked like this:

Scale at 0

Instead, what I saw was this, and then I pulled a trigger:

If I backtrack further, the other thing I’d say is: Don’t gamble with money that is “meant” for something else. I really need to pay off one particular credit card. However, the Bitcoin pump came around (i did not know about the halving cycle)… so I put whatever assets I had sitting around (which, mind you, I was NOT paying the CC with, but cushion for toys, more like) in .. and then it became very crucial to NOT DECREASE NOT TAKE A LOSS on that money. Truth be told, I wanted a guaranteed short term return, I was not ready for the long term HODL.

At first I was going to berate myself on “changing my mind” and selling then buying back in at a lower rate (retracement) or sometimes equivalent rate (it rebounded too fast!) because of the extra exchange fees and taxes I might be paying, but then I did the actual math — Looking at it in the long term, as long as all the tax rates are the same (Short term vs Long Term) – Sellng and buying on a retracement can be okay:

(link – also note that “What you get back” is after taxes are paid. Spreadsheet has many hidden lines. You just pay more taxes earlier in the latter case, but once all taxes are paid, its mostly exchange charges that get you. You probably have to have a retracement > 4 times the exchange rate for it to be worth it. )

I would write something in here about searching for the moving average that looks like it supports the price curve, basically getting a feel of the volatility — then making an internal rule, “I will sell when X dips below Moving Average Y for more than Z time units” – HOWEVER, that’s probably not in line with (a). Maybe it is. Do I really want to buy retracements? I just don’t want to miss the final top. When Do I knows its a final top? I don’t have an answer to that question yet. Maybe its just a “this is good enough” top.

And finally, the FOMO. I KNOW its happening. I don’t want to miss it. I don’t want to be the technical guy who KNEW it was happening AND MISSED it. I don’t want to look incompetent! to my imaginary audience who might be judging me. I judge myself. I judge how much my judge-o-meter is set at. I judge me judging my judge of my judgement.

(LPT: Take a failure, write a blog post about it, then it looks competent)

What is my goal? Financial Independence. Be more willing to take calculated risks rather than just running away and trying to be “safe” and then wonder why nothing happened.

Bitcoin and Cryptocurrency Info

Dumping knowledge while I have it for my future self.

Where to buy it: Binance.Us, but it takes a long time to get verified. Much better trading tools – can do limit trades, stop limits, etc. Coinbase.com, I was already verified there so it was easier to get back in. Only does Market price trades at least at my level, there’s a Pro thing as well. If you are international, Binance is a good place to go. CEO seems very honest. Many exchanges: https://coinmarketcap.com/rankings/exchanges/

Has it arrived: Yes, institutions and companies are getting into it, especially as Fiat currencies print money like crazy.

Why is it trustable: Its code, its decentralized, once the rules are set in place, they cannot be changed except by a truly majority vote of stake holders / miners (depending on your coin). Thus, it is not subject to the whims of a central authority to twiddle with the supply. Oh, and the code ensures stuff like money cannot be double spent, that once its done it cannot be un-done, etc. It does, however, require the Internet and electricity to function, so its not quite the same as Cash or Gold.

But isn’t it just made up? Yes, its as made up as the … German Papiermark or the US Dollar. There’s a consensus of human belief in its worth, and in that there is trust, and thus it exists.

How many people believe in it? 33 million or so right now, and now it includes folks like Square and PayPal and JP Morgan.

But there are so many of them? There are also many possible Social Networks, yet Facebook / Twitter seem to be “winning.” Somebody could clone Facebook, but unless you have the community buy in, you have not got anything. But you can have a cool set of features. But community may still not buy in. Similarly, the “winners” by Market Cap right now are these (coinmarketcap.com); they all have “features”:

Bitcoin = original, most widespread. Super fixed supply, which will yield a mad scramble as Demand picks up. Now super hard to mine. May get Smart Contracts soon?

Ethereum (ETH) = easier to mine (I can mine it on my GTX1070), but going to transition over to “staking” soon. Can do smart contracts where you put code in with the value. Many many other coins use Ethereum (2.0, not classic which is ETC) as their “backbone”.

After that, you’re starting to pick and choose. XRP was a big hitter, but there are .. lawsuits and problems there, at least in the US.

Where to learn more: I’d recommend these Youtube channels: https://www.youtube.com/c/CryptoDaily (very engaging entertaining host), or https://www.youtube.com/c/CoinBureau (much more bookish, slower pace of videos, but incredible research). There’s also Chicken Genius Singapore https://www.youtube.com/channel/UC0OnreqP55xLpA6W5nzxb5Q who touches on it a bit, but more focuses on Not Being a Donkey.

I want to mine something with my hardware:  https://whattomine.com/ choose your video card and exchange of choice. Right now ETH works. Costs me 40 cents a day (140W), earns about $2.30 a day (at current exchange). Basically, the CPU heats my attic office during winter, I don’t have to run a heater as much. Summer probably a no-go for me.

Dealing with Taxes: In the US, you get to report everything, and you really need to use software to calculate that. Expect to spend $100 per fiscal year on that software, unless all you do is stay on one Exchange, in which case they may have reports you can download. I personally use cointracking.info, its not the easiest to use, but it supports API pulls from Coinbase and Binance and Trezor, so I’m good with that.

Hardware Wallet:  I got a Trezor; but reality, unless you get above say $10k in a exchange account, don’t bother. I no longer use my Trezor.

How to actually do Crypto: Don’t do what I did. Instead, Dollar cost average – a little bit per paycheck – into.. pick two or three that you think might be around long term. Do that for 3.5 years awaiting the Bitcoin Halfling .. https://www.coindesk.com/bitcoin-halving-explainer – March 11 2024 .. and then think about exit strategies at that time, and the year or so after that. (Maybe – institutions may change the charts). Understand the Bitcoin / Altcoin pump cycle and “Altcoin Season” – https://medium.com/swlh/understanding-cryptocurrency-market-cycles-for-better-investments-c6cc4bc80099 – before you go putting money in Alt Coins. While your money is in Crypto, its not available for anything else unless you get a line of credit against it.

Next post may stay private, its about how I … screwed up, and lessons learned.

What To Mine

I finally understand WhatToMine.com.

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This bit is which video cards you have.  The ones in Red are ATI cards .. the ones in green are NVidia cards.  Well, technically that’s just the chipset, but .. yeah.  You put in how many of them that you have, and you click the button.  Green or Red = on, Gray = not on.

If you hover over the button, you get this:

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The +150/+500 is the tuning you can do in MSI Afterburner:

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You can see the numbers applied .. I’ve also additionally limited power to 50% and temp limit at 60 because I don’t want to burn out my new graphics card…

So you put those numbers in, and then it tells you what it thinks you can do:

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This is where you turn on or off the various algorithms .. for example Ethereum uses Ethash and Monero uses CryptoNight.   Based on the graphics cards selected, it prepopulates the numbers, but you can change those numbers to reflect what you actually get. 

So far its been very accurate – with the tuning in place, i get 29.42 Mh/s for Ethereum, and 680 h/s for Monero (although Monero I get an additional +160 via CPU if I so choose).

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Then, there’s the list of exchanges.  Some exchanges deal in some coins, but not in others, and that narrows down the list of coins ..   join Exchanges to Algorithm.   My favorite exchange, Binance, is not listed.     And then that gives you ..

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  • The Profit is the estimated Profit per day based on mean difficulty and current prices.
  • The % is “as compared to Ethereum”.  The time period has to do with market fluctuations over time … looks like CRC is on a roll right now, so its way more profitable (that usually balances out pretty quick as everybody floods to it and then the algorithm stabilizes).

Looking at used graphics card prices … the break even for a card appears to be in the 7 to 10 month range.   The lifetime of a graphics card .. who knows?  I wouldn’t do it.  Plus proof-of-stake will probably flip a lot of things. 

Visualizing Bitcoin Adventures

I’ve been riding a Bitcoin (and Ethereum) roller coaster for a year .. and its been a fun little diversion.   However, its hard to see the journey .. it feels like I’ve come out ahead, but have I really?

I doodled various (complicated) ways to try to show stuff via a 3D graph .. but when I actually went to play, this 2D version works just as well:

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  • Vertical (down) drops ==  I transferred bitcoin (either to another account, or buying something with bitcoin).
  • To the top-left = I bought bitcoin for USD
  • To the bottom-right = I sold bitcoin for USD (for buying something usually)
  • Note: A similar chart would exist for my Ethereum account.  No, i did not buy a switch for $90, it was more than that.
  • Steep curve vs Shallow curve gives a feeling for price.   buy Steep, sell Shallow is the desire.
  • I could beat myself up .. if only I hadn’t spent the bitcoin, I’d have so much more now…
  • Currently, my experiment is net-positive.  Even if bitcoin goes to $0 right now.

How I created this

  • Download transaction report from Coinbase.   This is a .CSV file, which I then open in excel.
  • Their report has a “Amount” (Column C) which has + for bitcoin added, – for bitcoin removed.
  • Their report has a “Transfer Total” (Column H) .. but it isn’t signed. 
  • Their report also has a Transfer Fee column .. I’m ignoring that for this graph.    I did sum it up, I’ve paid $30 in fees this year.
  • Add a new column, “Signed Transfer Total”   formula is something like “=IF(H27<>0,H27*SIGN(-C27),0)” – to get a signed USD column.  Note that I’m reversing the sign so that a plus in bitcoin is a minus in USD.
  • Add a new column, “USD Balance”, which sums up all the Signed Transfer Total to date.   Something like “=SUM(J$6:J27)”.  For simplicity I added it right next to their bitcoin balance column
  • Grab those two columns and chart it, scatterplot, lines
  • Adjust the vertical size of the graph till you get something that works for you.  

In summary

I do not regret this Bitcoin experiment.

I do hope to leave stuff in Bitcoin, i think it will continue to grow for a while.