MANIC MINERS: Ten Bitcoin generating machines Bitcoins are either the new bubble economy or the future of online commerce. It’s not the first time anonymous e-money has been tried – ask Mondex – but Bitcoin does seem to have traction. There are things you might want that you can buy with it, such as Tesla cars and Virgin Galactic trips to space. Zynga has announced that …
It sounds like some of the hardware manufacturers are quietly or openly developing and using their own chips to mine for themselves and only selling the hardware on when it becomes more profitable to sell it than to use it. I suppose there's a small window where there's still demand for the hardware - that being where the public can run it profitably before it comes obsolete.
My question is whether this will ever be attractive to the big chip development companies, like Intel. Being as they have the facilities to fabricate large quantities of chips quickly, is there any point in them making themselves a large number fo mining chips, even if it's still only a small percentage of their chip output. Another way of phrasing it may be to ask if the economies of scale available to them mean there's be profit in using some of their capacity purely to speculate on bitcoin mining at the cost of reduced output of chips that they normally sell.
The whole thing's fascinating, but it feels like we're well past the stage where it's worth getting involved in buying hardware - as a hobbyist anyway. Just buying some kit that's a month too old could completely kill any chance of profit, by the sound of it.
No, what it reminds me of is the Easter Islanders who cut down every single tree they had in the process of erecting more and more of those enormous moai totems until they'd completely deforested the entire island and then proceeded to collapse as a civilisation through lack of resources.
>>> No, what it reminds me of is the Easter Islanders who cut down every single tree they had in the process of erecting more and more of those enormous moai totems until they'd completely deforested the entire island and then proceeded to collapse as a civilisation through lack of resources.
At 30MW global consumption 24/7, bitcoin ranks, say, #100,000 on the list of energy consumers ranked by "industry". Look around you and see 1000 more powerful reminders every day. Look around your house and see 20. Look in the mirror and see someone casting the first stone somewhat prematurely.
You're wrong.
Most people have a useful job. That means, they create something, or perhaps they are part of an organisation that creates something. To keep it simple: if you work in a carmanufactoring plant, you get paid for making a car, and with that money, you can eventually by one of the cars you make.
Solving riddles doesn't create anything. So for the money they make, they don't create any wealth.
"No, what it reminds me of is the Easter Islanders who cut down every single tree they had in the process of erecting more and more of those enormous moai totems until they'd completely deforested the entire island and then proceeded to collapse as a civilisation through lack of resources."
That pretty much sums up the whole constant growth through "consumers" buying crap they don't need and then toss in landfill next year economic model that is currently dominating on this planet right now.
Some african who can barely feed his family obviously requires better living standards and more "stuff" that he did 10 years ago - I don't , and I'm tired of being sold the line that I must keep buying buying buying sh1t for the sake of "growth". Newsflash economists - growth is not an end in itself , its a means to and end and in the west that end was reached decades ago.
Alan G
No. The problem with the leaves was that they were abundant and easy to obtain. The problem with Bitcoin mining is that it is hard and getting harder all the time. If the price of Bitcoins increases in line with the increased difficulty, the miners will be quids in. If it doesn't, they (I) will be boned. It's a gamble.
So I'm buying expensive dedicated hardware that, due to the nature of the task at hand, is going to have an ever-decreasing rate of ROI *by design* so that, in order to maintain my *current* level of BTC return I'm going to have to upgrade to faster, newer hardware ad infinitum. In order for this to be viable, especially with ever increasing cost of energy, it's going to have to generate a shitload of BTC in order to be profitable. Which it won't because BTC creation is deliberately nobbled in order to retain scarcity, hence value. So as an end consumer I'm either going to have to keep giving manufacturers more money in order to maintain my position of BTC wealth (possibly slightly growing it) and these manufacturers, setting how efficiently these devices mine BTC thereby controlling how much BTC wealth I can maintain/grow, set the $ prices accordingly.
I think you've absolutely nailed it with your pyramid scheme appellation.
>>With the hardware vendors at the top of the heap!
This misunderstanding of a pyramid scheme can also be applied to land sales and every stock market in the world.
In a pyramid scheme, identified individuals occupy predefined positions in the pyramid. Newcomers' funds are designated specifically for specific recipients in specific amounts. Bitcoin does not operate this way. Bitcoin operates like a land sale and like every other stock market in history.
A pyramid scheme is when newcomers only serve to fatten up previous entrants and the first entrants are the ones who win the most.
In the BTC mining era, this is exactly what is happening. Newcomers today have no chance of making money. They are simply the treadmill mice running endlessly for no significant reward. The ones mining last year are better off, the ones mining last century are far better off, and the ones who started this whole mess are the ones who see their initial, easy mining results multiply in value without lifting a finger (I'm not saying it is their fault, it's just what is happening).
That is a pyramid scheme.
You are free to not agree, and I will gladly leave you on the treadmill. Happy running !
My gaming PC is paying for itself, whilst the sceptics sit in cold room wondering what it's all about. £100/month after electricity is not to be scoffed at from alt-coin mining, but please continue to play it down whilst I continue to milk this whilst the going is good :)
We aren't sceptics, we are simply people who have a slightly better understanding of how the system works. For a start, you are not earning £100/month - you are earning a perceived £100/month. Also, your alt-coin is just another attempt at trying to get on the band wagon at the beginning to take advantage of being an early adopter. It seems every 6 months someone else is inventing a xxxx-coin to reap early rewards in the hope that someday in the future it will become a viable currency. You need enough people to think it has value before it becomes 'valuable'. BTC is only just knocking on the fringes of legitimacy after many years, you think your xxxx-coin will have that kind of momentum? Nah.
"For a start, you are not earning £100/month - you are earning a perceived £100/month"
Actually if he's doing it correctly, he really is earning £100/month.
I have some GPU's setup mining alt-coins. Each day I trade my mined coins for BTC. Once a whole BTC is accumulated, and if the market is good ($800+ per BTC), I sell. I then withdraw that money into a bank account.
But please go ahead and tell me how this isn't actually 'earning £xxx'...
And even if he isn't selling, I'm not sure what the difference is between perceived value and value is. Is my house only worth so many "perceived pounds" rather than "pounds"? Sure, when it comes to valuing things, it's clear this is dependent on if you sold it at the current market rate, but that's true of anything. No one says their house is worth "perceived pounds", because that's assumed, and no need to be stated.
On another note though, I'd argue that it's better for Bitcoin miners to argue that they aren't "earning" it, as that would make them liable for income tax (capital gains tax on the other hand means most people wouldn't have to pay any tax, unless the value is more than the annual threshold).
I have some GPU's setup mining alt-coins. Each day I trade my mined coins for BTC. Once a whole BTC is accumulated, and if the market is good ($800+ per BTC), I sell. I then withdraw that money into a bank account.
But please go ahead and tell me how this isn't actually 'earning £xxx'...
--
How much is your electricity cost to power those GPUs that would otherwise be idle?
And what are you doing with your mined alt-coins? Most people mining alt coins seem to be doing it as a cheaper or easier way to get bitcoins?
scrypt mining can be accelerated by asics just like sha256 mining has been. it has absolutely nothing inherent in its design that prevents acceleration. the only reason there aren't already asics available that can do scrypt mining is because it wasn't valuable enough. once the market justifies making asics, then the asics will appear (theres several in development). once asics appear, then the alt coins will have to stand up on their own two feet and not be a cheap backdoor way to get bitcoins with old out of use graphics cards.
most alt coins have little other use except in the exchange of other coins especially bitcoins, whereas bitcoins are becoming adopted by more merchants each day and are the one that the public has heard of.
will litecoin be as popular once you can't use a graphics card to mine it? we shall soon find out!
Hashfast and Cointerra have been involved in all sorts of shenanigans(sock puppets, stealth changing ToS etc) recently and should be treated as vaporware. They were due to start delivering in December and charged people a premium for December versus January orders.
Black Arrow are delayed by about 3 months.
BFL were 7-9 months late on their first lot of ASICS and the Monarch has been delayed. It is unlikely given their track record this will be on time and they lie about release dates to the point "in two weeks" has become a catch phrase in the bitcoin world.
Bitmain is a lot less shady then made out in this article and plenty of ant miners have been shipped out. You can even get them on ebay from uk resellers if you want. they also produce a USB stick miner.
Don't deal with Butterfly Labs. I ordered one last year in March with an expected delivery date of June. I waited until September and still wasn't getting anywhere. Their support personnel just said, "we are making them as fast as we can", yet their support site didn't show delivery of a single one of the model I requested, nor the most expensive model.
It was quite challenging getting my money back from them. Fortunately I paid through PayPal on a "Pay It Later" account. I was able to do a chargeback and get my money back. Most people aren't so fortunate.
" Solving this requires a number of hashing operations. How many depends on how many coins have been minded previously so it’s an increasing level of difficulty."
Actually no, the difficulty to generate coins is based on the computing power of the network and adjusted every two weeks to keep the flow of coins constant. So the more mining rigs running the harder it gets.
There is a separate adjustment made every couple of years that halves the rate of coins produced, but this is purely based on time.
First, as the article says these ASICs are paperweights if the bottom falls out of the market tomorrow. That's why the smart money (in my opinion) is in Litecoins. You can mine those with high end graphics cards and likely will be able to till they're all mined. They're not worth near as much (around $30/litecoin last time I checked), but you get a ton more of them. I've got a friend with mining rigs for both kinds of coins and he makes far more money off his litecoin rig with two GPUs than his bitcoin rig with two ASICs (though, to be fair, one of those ASICs is absolutely tiny). The bitcoin rig barely pays his electric bill (all of it, so he's doing a little better than breakeven with them). As an added bonus if the bottom falls out of the market tomorrow he can put his graphics cards on Ebay and get almost all his investment back out of them. If the bottom stays firmly in place for another month he won't even need to do that as they'll have paid for themselves.
Second, Butterfly Labs. Here we have a company that is owned by a convicted fraudster. Their rep is well earned I think.
I don't mine coins seriously. Once in a while when I know my computer's going to be collecting dust otherwise for a few days I'll fire up a litecoin miner. I think I've managed to make about half a litecoin doing that since November. Still, litecoins make much more sense right now than bitcoins.
Litecoins are barely profitable to be honest. If I were you, I'd look in pools like middlecoin.com which mine different cryptocurrencies based on their profitability and sell them for bitcoins, which go directly to you. My two r9 290x are mining every day when I'm at work and my PC isn't needed for gaming or other purposes and are pulling in 0.008 bitcoins per day like this.
Its interesting to note that the ASICs used for BTC mining might not be totally useless if BTC imploded tomorrow.
A suitably advanced compiler could use them as password cracking rigs, in fact one suggestion was to use them to bruteforce WPA2.
Also possible, using them as parallel processors for AI research.
They brute-force SHA256. That's all they do. That's all they can do. It's how they are wired. Useless for anything else. With some software hackery you might be able to make them brute-force SHA256 in a slightly different manner and use them for password cracking, in the unlikely event you get hold of some unsalted or known-salt SHA256 password hashes, but that's the most you an possibly hope for.
ASICs are designed and built to do one thing only, and do it well.
"ASICs are designed and built to do one thing only, and do it well."
And in high enough volume they can do it for a sensible price per chip, once you've covered the one off engineering costs.
In lower volumes (such as the volumes these things are likely to sell in?) what do these ASIC things do that couldn't be done as quickly (and as "affordably") with suitable FPGAs? The one off costs can be much smaller, the "idea to implementation" time can be much smaller thab waiting fo chips to be fabbed and packaged (which sounds like an important factor here), but the cost per chip may be higher than a specific ASIC implementation of the same logic. So at the low volume end, FPGA is more cost effective, at the high volume end, ASIC is more cost effective, and in the crossover area, who knows...
They brute-force SHA256. That's all they do. That's all they can do. It's how they are wired. Useless for anything else. With some software hackery you might be able to make them brute-force SHA256 in a slightly different manner and use them for password cracking [snip] but that's the most you an possibly hope for.
How about brute-forcing digital signatures based on SHA-256 hashes?
That is: trial-and-error discovery of subtly different messages that have the same hash -- and so signature -- as legitimately signed messges. If you could (say) change the recipient of a payment instruction and find different values for (say) the amount and date that resulted in the modified instruction having the same hash as the original the world would be your mollusc.
Not true, nobody encrypts passwords with double SHA-256.
It would only be good for cracking what it was intended to crack, double SHA-256.
Also GCHQ wouldn't make much money if they turned their (tiny in comparison) supercomputers to the task, they aren't any better at mining scrypt than someone in their bedroom with some graphics cards. A graphics card is order of magnitude better at this than a CPU is and something tells me their supercomputers aren't packing 10,000 cores of graphics power in there too.
I read an article on coinbase about a sysadmin who plans to use his schools computer lab to mine coins over the summer while the school is out. Well he's just going to end up with a big electric bill and not very many coins... again... unless his school lab all has Radeon 290x's in them in crossfire...
I read an article on coinbase about a sysadmin who plans to use his schools computer lab to mine coins over the summer while the school is out. Well he's just going to end up with a big electric bill and not very many coins... again... unless his school lab all has Radeon 290x's in them in crossfire...
Correction: The school will end up with a big electric bill and he'll end up with somewhere between half a bit coin and a couple bit coins, depending on the size of the lab. Which he'll need, seeing as how he probably won't have a job anymore. That's assuming a moderate sized school. It could be higher if it's a big school or it could be laughably low if it's a small one.
GPUs are no longer much use either. Anything seriously is done with custom ASICs. The single-chip USB sticks that process a few hundred million hashes a second also only consume a few watts of power, drawing it directly from the USB port - compared to a graphics card which you could be using to heat your home at the same time...
If heat is always such a problem, then why not plug it into your central heating system in your house? It might sound daft, but a normal British home has maybe 8-10 radiators all fully hooked up to water system. A standard radiator is about 4,000BTUs with 1200W of power required to heat it.
By the very inflationary nature of it this is just currency rather than money. Money is something with intrinsic value whereas currency is just a number. If we took away the need to mine for bitcoin currency then anyone could do what governments do and print more money, this just puts in a process to slow that down and control the inevitable inflation.
RE:By the very inflationary nature of it this is just currency rather than money. Money is something with intrinsic value whereas currency is just a number. If we took away the need to mine for bitcoin currency then anyone could do what governments do and print more money, this just puts in a process to slow that down and control the inevitable inflation.
It was intended to be non-inflationary. The system is only going to allow so many divisible bit coins to be made. The bitcoins themselves are not infinitely divisible. According to what I have read a bitcoin may only be divided into 1 x 10^-8 fragments. So, if you look at the bitcoins in terms of total (eventually) fragments you get (2.1 x 10^7) * (1 x 10^9) = 2.1 x 10^63 fragments. Because the currency is limited by its very design, it is little different from platinum, gold or silver. There is only so much of it, as much of it as there is, and those tiny fragments will all be worth something some day in distant future.
Alas! Bitcoin is not the only crypto-currency system in existence. It has competition; there is Ripple, Litecoin, Namecoin, Dogecoin, Peercoin and Primcoin, all of which compete with Bitcoin. They all have roughly the same limits as Bitcoin. At least one of these competing "crypto-currencies," Peercoin, is designed to be inflationary at the rate of 1% per annum.
What I see happening is that as soon as the crypto-currency becomes credible with enough people, they will all want to become miners, rather than the producers of other goods. This will lead to more amd more competiing crypto-currencies. This will create as much inflation as we are seeing with our fiat currencies now in common use.
There are advantages to these currencies despite their flaws. They are not heavy, in that you do not have to carry them around with you in your wallet or purse. They are not mined in the classic sense, because they are not made of any physical substance. They are created on specialized computers that jump trhough special hoops to make the creation of the currencies very difficult. So this type of currency does not contribute to the impacts made by mining metals or making paper or plastic currencies. They are "earned" by computers owned by the people that own said specialized computers.
The chief disadvantage of these currencies that they are not inflation proof; they can be lost without any hope of recovery should something happen to one's machine that is the maintainer of one's digital wallet; there is a total lack of anonymity in their use. There is no way to spend them without someone somewhere being able to identify you.
They are mined in exactly the same sense. The limiting value of metals is how much it costs to get it out of the ground, this varies around the world with concentration of ore, distance from markets and the cost of workers. Bitcoins depend on the cost of electricity which follows exactly the same rules as the cost of mining.
Bitcoin's real competitor is aluminium - if it's more profitable to use your electricity to mine bitcoins than smelt bauxite - you "mine" numbers
As someone who invested heavily in Gold in 1997 when it was about £5,500 per kg, you can keep your pretend money. At least I know Gold will never reach that low again, and when you think that it peaked at £36,000 per kg not that long ago (when I traded some in), real, hard, tangible metals will never be beaten by virtual currency.
Lets be fair, BC isn't even virtual currency because it's being hoarded as an investment more than it's being spent on products. It's basically a stock share now.
people who bought bitcoins as little as 18 months ago have seen them go up by over 100X... pretend currency or not (and I agree, they're ridiculous when stacked up against commodities such as gold or compared against the classic definitions of money), someone who bought a couple of thousand of them summer 2012 is now a millionaire - its relatively easy to shift a few thousand of these a day now on the exchanges or via localbitcoin etc.
(no, not me sadly to my eternal chagrin)
I cannot trust anything I cannot put my hands on. Gold is completely out of my reach as is silver. Both of those are being played by Big Banking anyway. Even Big Government cannot tame Big Banking. What's a little guy like me to do? I am convinced that the answer is bronze. When we make our money out of bell metal we will be allowing freedom to ring. Yes, I really am that corny, and yes, I really am serious. You may keep your bitcoins. I prefer something I can hold in my hand while being able to acquire it. I think that a 31 gram bell metal coin is the perfect answer.
These kinds of systems have a very chequered record. Go here and follow the chain of links and you will find much that is unsettling.
https://en.wikipedia.org/wiki/DigiCash
And I am wondering how the Bitcoin system will achieve its predicted deflation when it has compeition such as litecoin.
http://en.wikipedia.org/wiki/Litecoin
And then there is the additional complication that middlecoin offers:
http://middlecoin.kobal.org/index.php/Main_Page
So, you're gonna git rich how?
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