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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.
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?
I have a chip that guarantees FIRST POST!!!!
The problem with Bitcoins is the same problem with any fiat currency. Essentially, they have no value other than the notional one which mindshare attaches to them. This makes them unattractive in the long run. Additionally, we have little assurance about their integrity, and you can bet that various world governments and private entities are working hard to break the whole system.
I'll keep converting my carnival tickets into precious metals, and leave the bitcoins alone.
Bitcoins is nothing but pyramid scheme that rewards the initial "inventor". The activity is nothing but nerd-gold mining, and unlike gold, it is actually even less useful.
Market pushes for people to make better and better products, what could possibly be wrong with an arms race in processors?
Walking about SC12 this, like many years there are literally hundreds of FPGA vendors that build some what custom hardware that would mine bit coins extremely efficiently. I can understand some hobbyist chip designer looking to do something interesting for the heck of it, but really, there's already a huge cache of available products on the market that have been through the ringer and are well tested to perform this exact type of work load.
Anything that results in research and production of faster and more efficient hardware is always a good thing, even if it came from this.
I never see bitcoin news in any other media and it gets far too much coverage here than it actually deserves.
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.
Is bitcoin that virtual currency where users lost heaps of cash a few years ago when its value crashed big time? I don't mean to be trolling (well, I actually do), but are there really people who still actually believe in this thing with built-in deflation?
thinking all the stupid articles about bitcoin have stopped.
You want a real currency? they're called gold and silver. They have lasted thousands of years, and will last thousands of years more, short of us figuring out a way to create them in the lab.
if you can buy the hardware on credit,
1. use the hardware to mine new BitCoins
2. pay back the hardware vendor with your BitCoins
3. ???
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).
Seeing as how computing power devoted by miners ramps up difficulty levels, won't this just create a self suppressing feedback loop?
"First they ignore you, then they laugh at you, then they fight you, then you win."
Bitcoin is halfway there!
http://en.wikipedia.org/wiki/Tulip_mania
Pretty soon we won't be able to tell the counterfeit bitcoins from the real ones!
Sorry, but gray text on gray background is making my eyes bleed.
Actually nearly all money in circulation is created as debt, which must be repaid with interest (that was created as debt that must be repaid with interest). Governments printing a little money (say enough to pay for their entire non-capital, non-military budget AND eliminate poverty) would probably help the economy so long as it was done quietly. In countries with a high currency due to a single resource being exported the effect could be even bigger. Of course this only works in countries that have their own currency (so not most of the eurozone) and the central bank is not a privately held cartel (so not the USA)
Bitcoin has a built in limit and a built in "profitability scale" for its mining. The faster you mine the less profitable it is. Unless you could jump WAAAY ahead of the curve (as some early adopters did) you won't be able to make money mining.
Bitcoin needs people to spend it, not mine it, and thats a difficult problem which can't be solved without top-down (gov't) influence. People have to psychologically learn to accept bitcoins, and that wont happen unless they are made to.
There are a lot of benefits to bitcoins, but I think they will remain an, at-most, black-market currency.
When it comes to digital currency, Timekoin already solved the issue of needing powerful hardware just to use it or prevent someone with a ton of processing power from owning the currency. I'm really surprised bitcoin is able to maintain the pace that it does since it requires faster and faster machines just to process transactions. Seems like an awful waste of power and resources for something that is already done better elsewhere in other open source projects.
Bitcoins don't just require an investment of cpu/gpu time and electricity. They also require an investment in disk space as well. I finally got around to seriously mining on a 3 year old video card, mostly just to experiment and finally see what the fuss was about, while getting a bit of 'free' heating for the house out of my videocard.
Long story short: 3 months of mining on a 'low-end' card (70~MH/s) has netted me a total of ~0.25 BTC. At current rates that's around 3 dollars worth of bitcoin (assuming a 12 dollar rate, I've seen it from the low 11s to mid 12s in the past month or so.). Mining is already cost ineffective for anyone who's not running cutting edge hardware, and worst yet wastes huge amounts of disk space to verify the blockchain (I'm up to ~5.5 gigs for the current blockchain, and there's still another.. 17 million BTC to go before mining is exhausted, not including what would happen if there was tons of BTC transfers to verify) And in order to 'recieve' your bitcoins you need to have a complete blockchain image to pick them out of, which will then show how many BTC you have. You would probably at current mining levels be better off brute forcing passwords to miner's accounts, BTC recieve keys (since unless you spent them they're all waiting in the blockchain for someone to swipe.). or running exploits against either the BTC exchanges or miners to gain access to pre-mined coinage.
While it's a cool experiment in alternative currency, it's just as intangible as fiat currency and unfortunately requires the processing capacity of a large base of miners to stay ahead of the 'pure processing' curve for BTC theft (If someone were ever to have more processing capability than the Bitcoin network itself, they could essentially hijack the entire blockchain and claim their fork as legit due to having more 'legitimate work' processed than the actual network did, at which point the currency will collapse. This isn't likely to be much of a problem while mining demand is still high, but unless the worth of bitcoins goes up to match the cost of electricity, fewer and fewer people will be mining heavily, which will lower the barrier to hijacking the blockchain.
The fact that more people didn't flag the potential abuse case in this (it was actually in one of the security reviews of bitcoin a year or two back), and consider how/when it could happen, just shows how shortsighted so many of the bitcoin miners are in their quest for 'free' money. Much like the gold rush there's a limit on return for when it's worth making the trip, and for bitcoin that point is already past for all but the most well funded expeditions.
The US treasury is not a privately held cartel lol.
Seriously, delete the rothman lizard people conspiracy videos from your HTPC dude.
Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
What has always bugged me about bitcoins is just how pointless those calculations are.
Why not use them for the good of humanity? Why not link with projects like seti, @folding or other?
Surely the technical hurdles aren't that high, and instead of causing localized heating (cpu) just to get a hash value, one would benefit society too?
TODO: 753) write sig.
From a society-level point of view I see a business model which consumes resources for hardware, energy for operating the hardware, and man-hours spent planning and operating the mining setup. And what is created? Nothing at all. Just some half-random redistribution of wealth based on a dubious scheme. Participating in this type of setup seems about as good an idea as being in the bottom 1-2 layers of a pyramid. May I suggest visiting a casino instead; probably a lot more fun, and consumes less of the planet's resources.
As I understand it, no matter the speed of calculating, there are only a set number of bitcoins given out per time, for one year this is 1,310,400 BTC, which are currently worth $13 so roughly $17M total will be awarded. Your amount is only based on what percent of the mining force you represent, it will never go over this. So lets say butterfly could dominate and take 50% of the computational force (which is highly unlikely since there are 5 companies making ASICS and the huge stock of FGPAs and GPUs still online), regardless this would bank them perhaps $8M. Making a HUGE assumption the exchange rate of BTC doesn't fall, which I think it will (explained below). In threads on butterflys website you can read that they have already sold 20k units, and are expecting 2 more rounds of 30k units each, at $150/pop this is $13.5M, already over what they would expect to make mining themselves. Note manf costs are irrelevant in comparisons since butterfly has to make the units if they keep themselves or if they sell them.
I think the exchange rate price is going to tank for 2 reasons, first it will take a while for the difficulty to catch up with the new onslaught of computing power, as is always the case since it is adjusted once per week, during this time there will be a flood of BTC on the market driving the price down. Secondly you will see a huge shift of BTC production from small groups with GPUs to much larger capital intensive groups with ASICS, this is not a graphics card you are using in your spare time, this is a custom built piece of hardware built solely for the purpose of speculating on mining bitcoins, and is worthless otherwise. This will vastly reduce the population mining BTC and thus reduce the number of people using and interested in BTC. As the BTC mining industry ramps up it may be the very thing that unravels interest in BTC. Coupled with more BTC for sale it could crash the market, again.
The Federal Reserve bank is.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
The US treasure is not a privately held cartel. It also doesn't print money.
The US Federal reserve IS, and DOES. To quote Wikipedia ". The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers. "
http://en.wikipedia.org/wiki/Federal_Reserve_System
So, while what you said is true, its irrelevant. The people who make the money, are bankers. Banks are insolvent. The Feds job is to keep banks afloat. The banks benefit. Banks are privately owned. Etc. Etc Etc.
US treasury is not the US' central bank, the Federal Reserve is.
Race To Mine Bitcoins Drives *Opportunistic Businesses* Into the Chip Making Business... There, fixed it for you.
Bitcoin is susceptible to having the block chain taken over by authorities, some of whom have built up significant processing power.
It's too bad about this whole thing since BTC is more stable the more people are doing the cryptography. It was however predictable with a deflationary (less being produced over time) and obviously dedicated hardware being developed.
Oh and for those who don't know on December 1st the amount of BTC entering the market was cut by 50%... so far price increase is about 20%
Google is useful, and GP is correct. The US Department of Treasury is not a bank at all, let alone the central bank. Per Wikipedia:
You are wrong. The Bureau of Engraving and Printing prints money and the Mint produces coins. The Fed does NOT. I work(ed) for it and we just move it between commercial and private banks, physically and electronically. Thanks for reading our wikipedia page in full.
They don't work with dollar bills and coins, they work with bonds.
http://www.peakprosperity.com/crashcourse/chapter-8-fed-money-creation
I thought BitCoin was dead ... a failed social experiment in monetary systems with no centralized clearance house. I was under the impression that BitCoin was an abysmal failure.
Why does anyone imagine a Bitcoin has any intrinsic value? Just because it's hard to compute? It's very difficult to construct an enormous ball of twine and yet that has no value as legal tender.
Associating monetary value with computing cycles would eventually incentivize the development of faster and better technology.
I just hope that whatever these guys come up with will also have applications in the real world.
I had to try to explain to my mom what Bitcoin is and why it was created and how (if rarely) it is actually used for real world purchases. Even though I just have a passing familiarity with it from reading /. I know more than the average watcher of "The Good Wife". ;>)
the rothman lizard people
What? The Rothschilds and the Mothman had viable offspring? We're all DOOMED!
> companies attempting to build dedicated chips for mining Bitcoins
There were artisans specializing in construction of arcane symbols decorated vials, retorts and crucibles for alchemists. Porcelain came out of that effort.
One must wonder if there will be a beneficial or harmful side effect of Bitcoin-induced chipmaking?
There's always folding@home. But curing cancer is not as fun as getting free money so no one cares.
Are you being deliberately obtuse? It's quite clear that when people refer to the Fed "printing money" they don't literally mean running printing presses or forging coins out of molten metal. They are referring to the process by which they type a new balance into their own accounts and then proceed to use it for, eg, buying bonds. This is creating money from nothing and we use the term "printing" to refer to it, as that's a simple metaphor everyone can understand.
And if the Fed had Staples print the physical money you would claim that Staples is the money printer, right?
Is non-literal terminology really that complicated for you? When the Fed increases the number in an account balance in exchange for the ownership of, say, some treasuries we call that money printing. This is Economics 101, heck it might be in Economics 001.
Bitcoin is inherently flawed. It costs more electricity to generate a coin than the coin is worth. In the real world where you are performing work, that has intrinsic value... that is, the work you perform ( and the energy you expend ) benefits someone or something else. The generation of a bitcoin itself has no value, except ironically in devaluing existing bitcoins. The costs of electricity and computation far outweigh the value of a bitcoin ( on average, since it is technically possible to randmly generate a coin fairly early on ). So, unless you are generating your own electricity through some low cost means, anyone generating bitcoins legally is losing money.
Creating a CPU to perform this calculation with a lower cost may cause you to lose less money when mining, but you are still losing your generation is also devaluing the currency.
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.
When people say "printing" in this context they really mean creating.
The Bureau of Engraving and Printing and the Mint produce the physical manifestations of money but they don't legally become money until they are issued.
The fedral reserve creates money, that money may be either in the form of numbers in a database or in the form of notes that are printed by the Bureau of engraving and printing.
The treasury also creates money (but in much smaller quantities) by issuing coins produced by the mint.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
http://www.nobelprize.org/nobel_prizes/economics/laureates/2012/
https://www.google.com/webhp?sourceid=chrome-instant&rlz=1C5CHFA_enBR505BR505&ion=1&ie=UTF-8#hl=en&safe=off&tbo=d&rlz=1C5CHFA_enBR505BR505&output=search&sclient=psy-ab&q=there%20is%20no%20nobel%20prize%20for%20economics&oq=&gs_l=&pbx=1&fp=ca4c450a0550195d&bpcl=39650382&ion=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.&biw=1920&bih=1062 Sorry dude, but a *bitcoin bank* has just been licenced in Europe, so I don't have the time nor the interest to keep educating zombies. http://www.reddit.com/r/Bitcoin/comments/14e048/bitcoincentral_first_exchange_licensed_to_operate/