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Race To Mine Bitcoins Drives Enthusiasts Into the Chip Making Business
holy_calamity writes "MIT Technology Review looks at the small companies attempting to build dedicated chips for mining Bitcoins. Several are claiming they will start selling hardware based on their chips early in 2013, with the technology expected to force many small time miners to give up. However, as happened in the CPU industry, miners may soon be caught in an expensive arms race that pushes development of faster and faster chips."
An unregulated currency plagued by theft and controlled by an elite cabal of basement-dwelling enthusiasts who can afford the thousands of dollars worth of hardware to drive smaller players out of the market. I'm sure nothing will go wrong.
Because the companies themselves don't believe in the Bitcoin. They're basically in the divining rod business. The only reason they wouldn't just use the rods themselves to find gold is because...
see: http://en.wikipedia.org/wiki/Time_value_of_money
These are ASICs. The Bitcoin mining scene has already gone through its FPGA phase.
By that logic, you would want to do everything by yourself. Well, if you are a fisherman, you probably will not start a bank yourself even if being a bank looks profitable. Unless you are from Iceland, that is.
There is a thing called the division of labour which says that if each of us specialize, we will get more stuff done as a whole. This is what built the civilization.
Also, if you are looking into investing, you can choose between a high-risk high-profit endeavour, like building chips for your own mining operation, or a low-risk low-profit endeavour, like building chips for other's mining businesses. By going the second route, you can hedge yourself against the uncertain final success of bitcoin, while pulling your profit from the general public's current and certain interest in bitcoin.
FCKGW 09F9 42
During the Gold Rush, it was the tool and equipment suppliers that made out filthy rich, not the miners (except for a lucky few).
Life is not for the lazy.
Most of the money made during the gold rush was made by merchants selling mining and panning equipment.
If mining Bitcoins was so profitable why would they want to sell the chips? Wouldn't they be better off keeping these chips and mining the Bitcoins for themselves?
If BFL were to mine instead of selling the chips, they would quickly have more than 51% of the network hashrate and the confidence in the bitcoin network would erode and the value would drop. It doesn't make any sense for one entity to mine all the bitcoin and devalue the currency... then it's worth nothing and it was for naught. No, it's far better to distribute the hardware far and wide, making it impossible for any single entity to gain a controlling portion of the network.
No, it doesn't make any sense for BFL to mine with their own hardware, it makes much more sense to grow the bitcoin network and for BFL to supply the hardware to do so.
I was mining bitcoins with two AMD Radeon 9790 cards and was barely turning a profit. The problem is that the electricity cost to run the computer and the video cards is very expensive. It tripled my electricity bill. Then the difficulty was doubled, now I'm making negative profit. There is very little chance that if I continued to mine, the bitcoins I have in my wallet would ever become worth enough to make the money back. The same is true for everyone else: The more GPU's you add the more electricity costs and so you need so much hardware to break even that you'll never go into profit. The only hope is that you're one of the lucky few first people to receive one of the ASIC units from the two companies that claim to be close to shipping. Of course neither of those companies has actually shown a working unit even though they've taken thousands of orders (including two orders from me, one to each company).
Precious metals are just as worthless as fiat currencies in most scenarios where a collapse occurs. Unless there's another fiat currency to exchange your lump of gold for, it won't do you any more good than paper money. No one will want it and you won't be able to easily exchange it for anything that's actually useful. Any currency is just a proxy for the idea of wealth. If shit hits the fan hard enough that the several local currencies become heavily devalued, it will probably happen on a global scale as everything is so intertwined at this point.
Precious medals will eventually become valuable again over a long enough period of time, but they won't guarantee that you'll see that time. Depending on the severity of the collapse, means of protecting yourself, food, and other basics to ensure survival are far more valuable, but knowledge is probably the most valuable currency available. What good is a mound of money if you're dying and don't know how to stop it?
Precious metals suffer from the same problem as any other form of currency: it's only as valuable as everything considers it to be or as someone will pay to use it to produce something else.
So what are you trying to say? Changing the owner of the equipment won't make it make more/less money. So it either produces enough money to pay for itself or it doesn't. And if the companies are selling it, the answer is probably that it doesn't or they'd just keep it and mint for themselves.
The Federal Reserve bank is.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Guns and government don't uphold the value of a currency. Trust does.
If you can pay your taxes with it, then it has real value.
If you can manufacture things with it, then it has real value.
If you can eat it, then it has real value.
If you can't do any of those things with it, then it has only speculative imaginary value.
"His name was James Damore."
Comments like this are why I added "(sorry to sound crackpot)"
It is a great shame that any discussion of novel monetary policy which mentions the ownership of the Fed as a limiting factor gets accused of being associated with schitzophrenic delusions and/or anti-semitism.
The US Federal Reserve Bank is literally a privately held cartel. This is a statement of fact, and it has monetary policy implications. My original comment was about a specific method of quantitative easing which would be more difficult without a national currency or with a privately held central bank. This is not a conspiracy theory, it is monetary policy.
Most money now does enter circulation as bank account balances countered by interest bearing loans. This is a very usefull system. Without it I and probably the vast majority of people in the western world would not own any real estate. Sadly though it has nasty side effects in a contracting economy. This is not a conspiracy theory, it is economics.