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."

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: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."

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...

[Agent ME]

I'd advocate choosing some other useless and less expensive random "commodity" to stockpile along with your guns and food.

Suddenly, the bottle cap currency in the Fallout series makes perfect sense.

Great side-effect

[Arancaytar]

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.

Re:Great

[IamTheRealMike]

Because you think Bernanke does? I don't think so [minneapolisfed.org].

Are deation and depression empirically linked? No, concludes a broad historical study of ination and real output growth rates. Deation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link.

What you think of as mainstream economic thought is all too often little more than dogma, beliefs based on neat arguments that are never exposed to the harsh light of data.

By the way, there's another term for what policymakers do with money printing. It's called a planned economy.

Re:Great

[Bill, Shooter of Bul]

1)Although the official prize name is ."Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel". Its listed on the nobel prize website http://www.nobelprize.org/ [nobelprize.org] That is not propagada, just common sense shortening of the name.

2) No, he did not

"“I agree with Milton Friedman that once the [1929] Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation. So, once again, a badly programmed monetary policy prolonged the depression.”

F. A. Hayek, interviewed in 1979, from Conversations with Great Economists: Friedrich A. Hayek, John Hicks, Nicholas Kaldor, Leonid V. Kantorovich, Joan Robinson, Paul A.Samuelson, Jan Tinbergen by Diego Pizano.

“I think it is certainly true that ending an inflation need not lead to that long-lasting period of unemployment like the 1930s, because then the monetary policy was not only wrong during the boom but equally wrong during the Depression. First, they prolonged the boom and caused a worse depression, and then they allowed a deflation to go on and prolonged the Depression.”

F. A. Hayek, interviewed in 1977

http://hayekcenter.org/ [hayekcenter.org]