Race To Mine Bitcoins Drives Enthusiasts Into the Chip Making Business 320
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."
Great (Score:5, Insightful)
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.
Nerd gold (Score:0, Insightful)
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.
Re:Um? (Score:5, Insightful)
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? (Score:4, Insightful)
Re:Interesting but why? (Score:3, Insightful)
These are ASICs. The Bitcoin mining scene has already gone through its FPGA phase.
Re:Great (Score:5, Insightful)
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 (Score:4, Insightful)
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:Um? (Score:5, Insightful)
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.
Comment removed (Score:5, Insightful)
Re:Um? (Score:5, Insightful)
Re:Um? (Score:5, Insightful)
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.
Not really worth it with current technology (Score:5, Insightful)
Re:Bitcoins are junk... (Score:4, Insightful)
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.
Re:Um? (Score:5, Insightful)
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:Great (Score:5, Insightful)
Something people seem to forget: (Score:2, Insightful)
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.
Re:Great (Score:3, Insightful)
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.
Re:Actually money is debt (sorry to sound crackpot (Score:3, Insightful)
The Federal Reserve bank is.
LK
Re:Bitcoins are junk... (Score:5, Insightful)
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.
Re:Great (Score:4, Insightful)
Well, at least he has a Nobel prize winner with him, one that the current Fed chairman claims to follow:
I've always been in favor of abolishing the Federal Reserve and substituting a machine program that would keep the quantity of money going up at a steady rate.
-- Friedman
Re:Actually money is debt (sorry to sound crackpot (Score:4, Insightful)
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.