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."

Comments

Great

[Anonymous Coward]

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.

Re:Great

[Anonymous Coward]

Bitccoin is partly regulated. Inflation is regulated by the laws of math. Better than the government printing money at the whim of bad political agendas.

Re:Great

[Anonymous Coward]

The official Bitcoin protocol is voted upon by everyone participating in the network, either accepting or not accepting changes. The official client implementation, as well as a few other implementations in other languages, are open source.

If that's "control by an elite cabal" I'm not sure Slashdot is the site for you.

Re:Great

[Squiddie]

Well, that shows how much you know about money.

Re:Great

[dadioflex]

Remember boys and girls, in bitcoin rainbow and unicorn land, deflation is good.

Like literally, the looneys recently celebrated the algorithm halving the new coin supply lol.

I mean sure a recession is just another word for deflation (it really is) , but lets not sweat the details.

Are you one of those clever spambots that assembles a comment from random words that kinda form a sentence?

Um?

[The Grim Reefer]

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?

Re:Um?

[Anonymous Coward]

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...

Re:Um?

[korgitser]

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.

Re:Um?

[ourlovecanlastforeve]

Most of the money made during the gold rush was made by merchants selling mining and panning equipment.

Re:Um?

[NitroWolf]

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.

Re:Um?

[TFAFalcon]

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.

Re:Um?

[Lagmo]

Actually one of the more serious projects(ASICMINER) DO plan to use the first batches of chips to compensate the IPO investors by using them for mining and later to possibly help fund more R&D and production runs. Additional and future income will be based on sales of the hardware

And since this is /. Preliminary chip info:
Built on 130nm node process (approximately comparable to the Pentium III generation)
It'll use a 15 x 15mm BGA package.
It's expected to run at around 200-300Mhz
It'll be a couple orders of magnitude more power efficient than GPUs and serveral times more than current FPGAs at hashing the SHA256 algorithm.
More info here: https://bitcointalk.org/index.php?topic=99497.980 and older (but more geek bait): https://bitcointalk.org/index.php?topic=91173.0

Project is only about 2/3rds of the way through the foundry process, so atleast a month left till these chips could be active on the BTC network.

Remember the Gold Rush lesson

[DigiShaman]

During the Gold Rush, it was the tool and equipment suppliers that made out filthy rich, not the miners (except for a lucky few).

Re:Remember the Gold Rush lesson

[ArcadeMan]

What you just said is a quote from Mark Twain: "When everyone is looking for gold, it's a good time to be in the pick and shovel business."

Yes but

[Spy Handler]

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. ???

Not really worth it with current technology

[ourlovecanlastforeve]

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).

Actually money is debt (sorry to sound crackpot)

[isopropanol]

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)

Re:Bitcoins are junk...

[Rockoon]

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.