Operation Wants To Mine 10% of All New Bitcoins 275
An anonymous reader writes: "Mining new Bitcoins is computationally expensive — you can't expect to do much on your standard home computer. Many miners have built custom rigs to mine more efficiently, but it was only a matter of time until somebody went industrial. Dave Carlson's goal is to mine 10% of all new Bitcoins from now on. He's built literally thousands of units. They collectively use 1.4 million BitFury mining chips, which are managed by a bunch of Raspberry Pis. 'The current rigs each contain 16 boards, with each board containing 16 BitFury chips, for a total of 256 mining chips on each rig. Carlson said about 90,000 processor boards have been deployed, which would put the number of rigs at about 5,600. A new board [being designed] will have 756 chips on each rig instead of 256.' Carlson says his company spent $3-5 million to get everything set up. They current generate 7,000 — 8,000 Bitcoins per month, which, at current rates, would be worth over $4 million."
much industrial (Score:3, Funny)
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Bitcoin is the most valuable but is I were this guy I would do merged mining where you mine several crypto currencies on the same hardware simultaneously.
Re:What about the alternative virtual coins ? (Score:5, Informative)
You'd be limited to SHA256 based coins. Most altcoins are scrypt based.
Re:What about the alternative virtual coins ? (Score:5, Informative)
Litecoin has just enough credibility to have people trading it for non-trivial amounts of real money. The rest are generally worthless.
Re:What about the alternative virtual coins ? (Score:4)
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I'm not interested in the ledger because it simply records who owns what. I'm more interested in how the "what" (bitcoin in this case) came into existence.
I'm assuming a mining computer is similar to a govt. mint. A mint prints currency where each currency note is different from other notes based on its unique serial number. In a similar fashion, do these mining computers generate a coin which has a unique random number to differentiate it from the random numbers of other bitcoins? Is a bitcoin a random num
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THERE IS NO BITCOIN. Definitely not physical, but not even virtual! The closest thing is a wallet.
Bitcoin is nothing more than a ledger of transactions. You can't own a bitcoin. You can only own a wallet that has transactions associated with it. You create a wallet with a public and private key. The public key is what people use to increase your ledger count. The private key is what you use to decrease your ledge count by increasing someone else's ledger count..
It's like a fancy excel spreadsheet tha
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The ledger and the mining process are not separate things. Each ledger entry has a generation of 25 coins plus a long list of transactions affecting existing coins. You need to generate a hash within strict conditions in order to create a valid ledger block and the difficulty of that task adjusts to ensure a consistent block generation rate.
The original paper will explain all this better than I ever could.
https://bitcoin.org/bitcoin.pd... [bitcoin.org]
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A bitcoin is a unit of measurement. It's no more meaningful to ask what a bitcoin looks like than to ask what a centimeter (or an inch) looks like.
The global shared ledger of the Bitcoin system, the "block chain", holds transactions. Each transaction contains inputs and outputs. All inputs must be valid outputs of a previous transaction. Inputs and outputs have a size specified in bitcoins (with the base unit being 0.00000001 bitcoin, also known as a "satoshi"). All outputs are labelled with a bitcoin recei
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how the "what" (bitcoin in this case) came into existence.
It's a number, written in on the ledger. Just like how when the fed wants to give a bank a few billion dollars some zeroes appear in their computer.
The way bitcoin works is ALL in the blockchain. Each block consists of:
In order for this block to be valid, Qzukk has to find [variable data
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Bitcoin doesn't really work like that. A bitcoin is a generation event plus a chain of transactions, it's not a chunk of self contained data. You can read the original paper for the details.
https://bitcoin.org/bitcoin.pd... [bitcoin.org]
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Supply and demand, if many do like this guy, chances are the market will be flooded with bitcoins and the value will go down.
https://en.wikipedia.org/wiki/... [wikipedia.org]
Re:They aren't worthless... (Score:4, Insightful)
Bitcoin is designed so the market can't flood.
The work needed will go up if more people do like this guy (and his investment will be worthless...)
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I admire their spunk, but... (Score:5, Insightful)
My friends and I have already switched to Dogecoin. Sorry. And when you start mining that, we'll move again, etc.
I'm not serious, I haven't invested in any virtual currency. But isn't this a sort of problem? When it looks like a Major Player moves in and starts dominating the generation of your pet virtual currency, why wouldn't you just jump ship to the next one, where you can stand a chance to make money in the early days of generation?
It's not like mining gold. Gold is gold and there's only so much of it, and it's there or it's not. These virtual currencies only have value due to consensus, and can be abandoned on a whim, especially when some guy comes in with his 1.4 million mining chips and upsets everything. I know there's a limited number of bitcoins available before computation is done, so in that sense it's 'limited' like gold and thus perceived to be a scarce valuable item, but unlike gold, the users can just up and quit Bitcoin forever, especially when they sense 'unfairness' in the operation.
Re:I admire their spunk, but... (Score:5, Insightful)
When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.
I'm not sure when BTC is slated to have all of its coins mined, but it will be instructive to see what happens to it at that point.
Re:I admire their spunk, but... (Score:4, Interesting)
When I see how much hardware and electricity is wasted jumping out of perfectly good airplanes [wikipedia.org], I can only shake my head.
We humans tend to do things because we want to, not because it makes sense to you.
Re:I admire their spunk, but... (Score:5, Insightful)
Chicks love shiny things, Guys want chicks. Anything that impresses chicks has value.
Dorks love BTC, nobody cares what dork think. See it doesn't really work the same way.
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Stupid analogy. Chicks love shiny things, Guys want chicks. Anything that impresses chicks has value. Dorks love BTC, nobody cares what dork think. See it doesn't really work the same way.
Seriously? Damn, talk about stupid analogy. You don't even get what all of these things have in common, which is money.
"Dorks" don't love BTC. Dorks love what BTC can BUY, which is attention from "chicks" that love "shiny things".
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If the BTC were used to purchase a lambo or tesla roadster, it would probably get someone's attention..
Re:I admire their spunk, but... (Score:4, Funny)
There's a difference?
Re:I admire their spunk, but... (Score:5, Insightful)
Hardened carbon does have industrial uses. Jumping out of aeroplanes has military applications. Not sure what applications bitcoin mining has apart from an expensive to run currency. Maybe worthwhile for just that, I don't know.
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And part of these industrial uses are related to making the chips able to mine bitcoins faster.
I'm not sure you know what your final point is.
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My point? Simply that a lot of the things we do "because we want to" have other purposes that might be useful in an objective sense beyond fulfilling "because we want to." Parachuting and diamond mining are bad examples of things we " tend to do things because we want to, not because it makes sense [poster]." I am fairly confident the poster would see the sense in them.
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Bitcoin mining has a beneficial side-effect: it makes it hard for somebody to double-spend their coins. If this wasn't hard, people could spend their coins, get whatever they paid for, then unspend their coins (by overwriting the original transaction with one where they paid those coins to themselves). Having this be hard is beneficial for a payment system.
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You can buy stuff with Bitcoin, so that seems like a fairly worthwhile application. There must be a lot of pissed off miners out there though because at this point anything that isn't an ASIC isn't worth running, and people who spent thousands of Euros on ASIC miners are about to see their investments devalue even faster. At this point even most ASIC rigs aren't worth it and may never pay for themselves, let alone turn a profit.
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I'm waiting for it to make the jump to distributed malware.
It's an obvious step and shouldn't be long now.
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Actually it's a cheap to run currency. How much do you think is spent on printing, securely transporting, validating, and counting banknotes? Or on the VISA or Mastercard networks? Or on the various costs banks have running and stocking ATMs, websites, call centers, and so on?
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To be honest, I haven't quantified either figure, so it may then be a well worthwhile investment. Though having an engineering leaning, while I understand the value, I often wonder if we couldn't extract useful work as a byproduct of the mining process. Riecoin and primecoin may do this, but I question the practical uses of their results...
Re: I admire their spunk, but... (Score:2)
Right there with you. Wasting such resources on on computations explicitly designed to tax equipment for what amounts to a hardware pissing contest, burning actual finite resources to do so (metals, coal for electricity, etc.).
As to the posting, it was only a matter of time before disruptive forces like this began to pop up. One way or another, in order for BitCoin to become what it wants to become (a legitimate currency) it's has to succumb to the very thing it was trying not to be (at the mercy of "b
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what about usd? doesn't their production, maintenance and operation require large amounts of resources. What with counterfeiters getting more sophisticated, maintenance of the currency amounts to a "press technology and police pissing contest"
I still wouldn't accept payment in the form of bitcoins.
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Really? It allows Bitcoin to provide the same general service that companies like Paypal do, and a lot of people do use Paypal, which suggests they find it useful for something.
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You could equally say the same about all the infrastructure needed to validate USD.
Re:I admire their spunk, but... (Score:5, Funny)
When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.
The hardware and alectricity is no more wasted than hardware and electricity and employees used by your bank to secure your account.
I'm not sure when BTC is slated to have all of its coins mined, but it will be instructive to see what happens to it at that point.
The last BTC should be mined sometimes in 2140 but the miners will carry on because they are needed to verify transactions. The'll get their profit from transaction fees.
Re:I admire their spunk, but... (Score:5, Interesting)
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Re:I admire their spunk, but... (Score:5, Interesting)
Bitcoin developer here. Yes, by all means shake your head, it's clear that the current level of mining is a large waste of resources. Nobody has been reporting double spends caused by hashpower attacks, which is what mining is designed to stop, suggesting that right now there's too much security.
But what else would you expect? Inflation causes misallocation of resources. This is basic economics and is the reason Bitcoin is designed to eventually target a stable monetary base. Yet you cannot create a new currency from scratch without inflation, by definition, because the money has to come from somewhere. What's more you can't create a currency fairly if you simply give yourself all the money (pre mining), so there has to be a fairly long drawn out allocation process so everyone gets a chance of taking part in that initial inflation.
This initial misallocation of resources towards excessive security is annoying, but tolerable - existing currencies inflate all the time and this causes huge misallocation of resources towards things like asset bubbles. If we're going to misallocate towards something, more security against rollback attacks is perhaps not the worst thing we could want, especially as market incentives should push people towards using renewable power over the next few years.
The rate halves every four years. It rounds to zero in 2140 but will presumably become irrelevant long before that. How irrelevant really depends on Bitcoin's long term value in dollar/euro/fiat terms though, which is impossible to predict.
At that point mining will be supported entirely by fees. How much mining takes place will depend on how much security the Bitcoin user community really needs, which I am expecting to be determined by letting it fall until double spending attacks start to become commonplace and an actual risk to business. Then the game theory becomes quite complicated because mining is a public good, but I'm expecting merchants and other big sellers who need the security to form assurance contracts with each other to incentivise mining. In theory this solves the problem of people not wanting to subsidise their competitors, but the use of assurance contracts for continuous goods like hash power is a rather under-researched area. I'm looking forward to reading papers written by academic economists and game theorists over the coming years to learn more about what the post-inflation world will look like.
Re:I admire their spunk, but... (Score:5, Insightful)
Random guy here. I may be wrong, but I think you are confusing inflation with deflation. The value of BTC is rising against real goods. So in other words, it costs less in BTC to buy things today than it did last year. This is deflation.
I have been watching Bitcoin with interest to see what it will do. In hindsight, if I were to criticise Bitcoin, I would say that it is too difficult to receive BTC. It is interesting that the very thing that makes it secure has the potential to limit its distribution. As the price of BTC goes up, it becomes more lucrative to mine. This increases interest in mining and encourages people to invest in hardware to mine. This, in turn, increases the difficulty, raising the barrier to entry. So new BTC are likely to remain in a relatively small group of people.
Of course, people can buy BTC, but if they do so speculatively, they may be loath to part with the BTC until they have made a profit. This can further limit the spread of BTC. In other words, you could get into a situation where people holding BTC are largely those who have spent a large amount of money mining it, and those who are speculating on its value. For those who wish to use BTC as a token of exchange for goods and services, it can be difficult/expensive to acquire in any quantity.
I think it would have been better to encourage inflation. In an inflationary system, currency essentially expires. The longer you hold it, the less value it holds. This is an excellent feature because it encourages the use of the currency, allowing it to get into the hands of people who will use it for true growth (i.e., producing something that has tangible value to someone else). If I can not get my hands on currency, or the barrier to entry to getting currency is too difficult, then my potential productivity is wasted. I can't obtain the resources I need to do my work. The currency has failed to do its job.
Obviously this topic is too broad to discuss intelligently in a /. post. However, I would encourage Bitcoin developers to look at modern economics with a more critical eye. I think many people are unwisely discarding a lot of economic theory without really understanding it properly.
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Alright. If you insist on that definition please re-read my post substituting the word inflation for money supply growth.
Does it? Who told you that? Central bankers?
Here's some economists who tes [frb.org]
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How much electricity does the conventional banking system use? And computer games? And street lights?
BTC mining will be profitable on transaction fees once the coin generation stops. Miners will drop out until it's profitable thus making all remaining miners more profitable. The sliding difficulty scale doesn't just go up you know.
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Perhaps somebody should create a folding at home/cancer research coin, that gives each person who dedicates CPU time a folding coin, with increasing difficulty. Once any research is commercialized with the results of the computations, a 50% share of the patent is disbursed to the coin holders. CPU calculations and GPU calculations would be separated and compensated differently. Like a CPU computation is worth 20x more than a GPU computation, because GPU computations can only solve certain problems and CPU c
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because the graph that represents all transactions ever made continues to grow exponentially and is increasing the complexity of cracking each transaction which requires more computing power and thus more energy.
No, that's not how it works: miners only have to consider the transactions they want to put into the block they're working on, not any of the transactions already in blocks. (I don't think their work even scales with the number of transactions they're considering, because an obvious optimization is to save the state of the SHA256 hashing code after you've fed the transactions in, rather than recalculate it each time.)
Re:I admire their spunk, but... (Score:4, Insightful)
A more precise way of saying it: the value of gold varies according to the supply and demand curves. Bitcoin will vary the same way.
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Gold has supply and demand.
Regular currency is linked to the supply and demand of gold.
Wasted electricity has no demand.
Bitcoin is linked to the supply and demand of WHAT exactly?
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Bitcoin has its own supply and demand curve, like every other currency in the world.
Re:I admire their spunk, but... (Score:4, Insightful)
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Unless you're Australia.
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I know it's a hard concept to understand, but gold only has its value based on consensus as well.
Largely true, but not entirely true. Gold is useful, and therefore valuable for that reason alone.
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I know it's a hard concept to understand, but gold only has its value based on consensus as well.
Largely true, but not entirely true. Gold is useful, and therefore valuable for that reason alone.
Expanding on the OPs point: the investment of resources into extracting gold from the Earth is unrelated to any "practical" (industrial) use. The world's current gold stock is 170,000 tonnes, but consumption by industry is about 300 tonnes, so we have a 600 year industrial supply on hand right now, even with no recycling. The price/value of gold is determined entirely by gold investors, not by industrial or even purely ornamental use*. It is only the consensus value for investment that motivates mining.
*Mos
Re:I admire their spunk, but... (Score:4, Informative)
Also most of golds value has nothing to do with its usefulness. About 10% of mined gold is used. The rest is hoarded for perceived value based historically on the fact that its shiny when not many things where.
Re:I admire their spunk, but... (Score:5, Insightful)
You forgot (Score:5, Interesting)
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Gold is worth as much as it is because the qualities that make gold useful for so many products also make it useful as a material for currency. A material used for currency should have the following properties: it can be made into various forms useful for trading (such as coins or bars), it does not oxidize or otherwise decompose over long periods of time, it is rare enough but not impossible to find, it is relatively dense so you can efficiently measure by weight and not volume, and it would be nice if it
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I know it's a hard concept to understand, but gold only has its value based on consensus as well.
Yes, but gold is pretty.
It has other values. It's been used as a display of wealth since prehistoric times.
Bitcoin? Not so much.
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Gold is something I can hold in my hand. It will NEVER be worth nothing - it has value in industrial processes and making wedding rings.
Sure, but on the other hand, how would you like to exchange your gold for an equal weight of aluminum -- which is also not worth nothing, but until the late 19th century was more valuable than gold. . Or silicon, which is also valuable in industrial processes, particularly in the manufacture of semiconductors, but only after tremendous work has been done to purify it?
The fact that some physical substance always has some utility doesn't mean all that much. The actual industrial value of gold is not nothing
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Why do you believe "unlike gold, the users can just up and quit Bitcoin forever"?
I don't use, mine, or own Bitcoin - but it's fairly obvious that beyond the use of Gold for conducting materials, it has little to no intrinsic value - it's almost identical to Bitcoin.
Everyone invested in Gold could decide tomorrow to shift their investments to Aluminium...or Dogecoin. This would leave Gold almost worthless. The same is true of Bitcoin - but why do you feel one is more likely than the other?
I think you do not
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Gold actually isn't that good a conductor. It's worse than copper. It does make a superior conductor under chemically harsh conditions though, as it's almost corrosion-proof.
Actually... (Score:2)
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I can't claim to understand bitcoin (or virtual currency in general), but as far as I can make a mildly educated guess, the value stems from the fact that the work required to produce them is so great that it has to be a collective effort. If it somehow becomes easy, then they are no more than a form of pyramid scheme.
Other currency standards are based on things of tangible value - even gold or diamonds have a practical value far beyond being pretty. Bitcoins, on the other hand, have no intrinsic value - we
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When it looks like a Major Player moves in and starts dominating the generation of your pet virtual currency, why wouldn't you just jump ship to the next one, where you can stand a chance to make money in the early days of generation?
Well, generation of US Dollars has been monopolized by the US Government for over 200 years, and I don't see anybody in a rush to jump ship to the South Sudanese Pound.
Bitcoin was designed to be a currency - not a way to make money. The hype factor has caused value to surge, which largely limits its actual value as a currency. At some point value will stabilize and mining/etc will become economically efficient, and at that point nobody will make significant money off of mining or trading Bitcoin, but it w
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That's the value of everything. Say a nuclear holocaust happens, 90% of people die. What do you think happens to the value of gold or coca cola stock?
You can move to dogecoin or whereever, but bitcoin has the same value as ebay. Firstmover status. Do you know any online auctions? Because I do. Places like epier or ioffer. None of them are inherently less valuable than ebay in its early days, but people just don't use them. So their entire valu
how (Score:3)
Current value of Bitcoin (Score:5, Insightful)
I'd strongly recommend that they start selling enough now to pay off their hardware and debts in the first couple of months. Maybe gamble on keeping half the take for future appreciation, but if they're mining it this fast they ought to nail down their initial stake quickly in case the Bitcoin ecosystem colllapses.
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It's like much in finance: Sophisticated gambling. You can sell now and get your money, or you can wait and gamble on the price change. You might make more that way, or you might make less. The bitcoin price is ridiculously volatile, as there are so many speculators involved and comparatively little business being conducted in it.
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How do they know the current value of BitCoin? Who is considered the primary exchange now? Are there any that are considered even remotely trustworthy?
The value is determined on exchanges by suply and demand. You can use site like bitcoinaverage [bitcoinaverage.com] to get price index based on more exchanges and their volume.
There is no exchange considered primary at this time. The biggest ones are probably: bitstamp, btc-e, huobi and btcchina.
Why? (Score:5, Funny)
Why mine them? It's much easier to set up an exchange and just steal them.
Also, FP.
First step of a virtual central bank ? (Score:2)
What we need now is not more "exchanges" for virtual coins but a "central bank" in charge of the virtual coins.
If they are successful in accumulating 10% of all Bitcoins they may want to use them as the base of the first ever Virtual Central Bank
As the central bank for virtual coins, they can function much more than the "exchanges" that we've heard so much about.
They can manipulate the value of any virtual coins via "buying" and "selling".
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Not even one of the biggest (Score:5, Informative)
All serious Bitcoin mining is now industrial-scale using custom ASICs. CPU-based and GPU-based mining are dead. They can't even cover their own power bill. This guy's setup is primitive compared to this large high-density liquid-cooled mining facility in Hong Kong. [theverge.com] The two biggest mining pools control over half of the mining power, and the biggest, "ghash.io", would have over half if they hadn't deliberately split up to avoid that happening.
The thing to remember about Bitcoin mining is that all miners are in competition for a fixed number of Bitcoins produced each week. More mining does not mean more Bitcoins are generated.
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If you don't increase your mining more and more, others will do it and your global share of future Bitcoins shrinks and shrinks, since more and more mining power means less and less Bitcoins per GH/s due to difficulty adjustment.
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All serious Bitcoin mining is now industrial-scale using custom ASICs. CPU-based and GPU-based mining are dead. They can't even cover their own power bill. This guy's setup is primitive compared to this large high-density liquid-cooled mining facility in Hong Kong. [theverge.com] The two biggest mining pools control over half of the mining power, and the biggest, "ghash.io", would have over half if they hadn't deliberately split up to avoid that happening.
The thing to remember about Bitcoin mining is that all miners are in competition for a fixed number of Bitcoins produced each week. More mining does not mean more Bitcoins are generated.
The one other thing to remember is that once a monopoly is stood up of this size and they come in and repeatedly mine the majority of coins all the time, from this or any other virtual currency, people will want to start making this activity illegal by regulation.
Then it's going to get really ugly.
I realize this is nothing next to HFT, but (Score:5, Insightful)
What if (Score:2)
What if 10 other people also decide to mine 10% of all bitcoins?
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Difficulty rises until they all get about 5% of all bitcoins and the previous people get their share of the remaining 50%.
Current rates (Score:5, Funny)
They current generate 7,000 — 8,000 Bitcoins per month, which, at current rates, would be worth over $4 million
And at tomorrows rates $125, and the day after's rates $1.7 billion, and the day after that...
Is this how we're funding science now? (Score:2)
Interesting that the main investor in this operation (and apparently the chip design) seems to be an academic bioinformatics institute in Poland: http://bioinfo.pl/ [bioinfo.pl]
I guess it beats applying for research grants...
Virtual Vapor Pressure (Score:2)
"They current generate 7,000 â" 8,000 Bitcoins per month, which, at current rates, would be worth over $4 million." ...and at tomorrow's rates will be worth $0. Oops. Virtual evaporation leaving no trace behind, not even a ring around the bathtub.
Porkcoin Mining (Score:2)
If you send me $30,000 (a pittance compared with $3 million) I'll supply you with pork for life. Real food in the real world which you can really eat. You can also trade your real pork for other real goods with other real people or just serve it up as a delicious meal with real friends in the real world.
Hundreds of real people have send me real money like the above and smaller amounts to get their real pork CSA Pre-Buys. It's real. This money helps us finish building our on-farm USDA/State inspected butcher
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That's why his plan is to covert it all to bars of Xanax.
Stockpiling a prescription anti-anxiety drug?
Unless he is planning on some massive illegal drug parties or become a dealer of some sort I don't see how that would be a good investment.
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Quite informative IMHO
It's paid itself off [in bitcoins] many times over already."
Call me when it has paid itself off IN DOLLARS many times over.
Dumping a gazillion btc on the market will likely push the price down and hence the profit.. It must be nice being able to dump a couple of million$ into a "hobby" project like this; but really... the only ones making a profit out of this IMHO are those who fabricate the boards/cables/etc... Off course he's going to say he makes huge profits, after all he is trying to lease out (a portion) of his infrastructure... which in
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Dumping a gazillion btc on the market will likely push the price down and hence the profit..
It's not exactly a gazillion. They say "7000-8000 bit coins per month", when MtGox just found 200,000 bit coins that they lost behind the sofa. However, I would be worried how much in bit coin is just paper profits, and how hard it would actually be to sell 8,000 bit coins every month. How many people are actually willing to pay high prices for bit coins?
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They would essentially have to launder the bitcoins to not kill their value. They could do this buy buying lots of random things that can easily get resold from retailers that accept bitcoins.
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Doge coin rig, built in December for 850$ has earned 4800$ so far and another ~1200$ is expected before it turns obsolete (cost of power passes turnover). It has paid itself in DOLLARS many times over.
Bigger rigs, like in TFA have a bit longer lifetime and higher profit margins (assuming you use top-of-the line
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OK, I'll prepare for that call that's coming then =)
Anyway, I'm still having a hard time seeing this as anything but a waste of time and resources... The fact that it actually 'makes' money doesn't change that, it makes it all the more saddening to me as more people will jump on the train with bigger rigs .. all out of simple greed...
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It is immoral to let a sucker keep his money
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No. Proof of work has to be hard to do, easy to check. With raytracing both are essentially equal.