Watch Wired Get Rich Quick With A Sleek Bitcoin Miner
wired.com
wired.com
I hope you're engaging in Poe's Law here. Wasting an amount of electricity comparable to leaving a single incandescent light bulb turned on is like flushing money down the toilet while sick orphans watch? Okaaaay then.
Your opinion that 'throwing money away hurts nobody' must mean that you disagree with the statement that 'all that is necessary for evil to prevail is for good men to do nothing.' That is essentially what is happening if we take currency/commodity and throw it away. They could have donated it to any charity and escaped the ethical issues. Instead they passed on that ability, there IS value in the money. This isn't some purist Economics debate, this is real life application. Same principle behind the whole idea of 'every dollar spent on war machines is a dollar not spent to clothe and feed the masses.'
I anticipate objections to the above on the grounds that "deflationary currencies are bad". The most chartitable interpretation of, "deflationary currencies are bad," is "the downward stickiness of the price of labor": during a recession, unemployment tends to go up in part because most employees are irrationally averse to taking a pay cut when times get rough, and enlightened monetary policy can sometimes negate or ameliorate that particular irrational reaction by employees by inflating the currency, which has the effect of fooling the employees into thinking that their "real" compensation has not decreased. But that is a minor effect compared to the basic "invariant" described above -- especially since almost no employees are being paid in BTC.
There are basically two uses of bitcoin: a medium of exchange and a store of value. My "invariant" above can be rephrased to say that the total value of all bitcoin is approximately equal to the total amount of value people ("investors") want to store in it. (Entities, e.g., Silk Road, that use BTC as a medium of exchange can immediately convert the BTC they receive from their customers into dollars if they do not want to hold BTC.) So, if an investor has $10,000 he wants to store in bitcoin, it is almost completely immaterial to that investor whether he can buy 100 BTC or 10 BTC with that $10,000; all he really cares about is how well his $10,000 investment will hold its value, which is sort of independent of the current price, since for example the fact that 1 BTC costs about $100 today is pretty good evidence that they will cost about $100 a month from now -- and if 1 BTC cost $1000 today, that would be pretty good evidence that they will cost about $1000 a month from now.
The point is that withholding BTC from sale increases the price of BTC whether or not the reason for the withholding is so that one can sell them a month from now or because one has destroyed them (i.e., destroyed the relevant private key).
That is an example of the "Fundamental law of microeconomics," which says that in an efficient market, the price is determined by supply and demand -- "supply" meaning the number of BTC for sale today, not the total number of BTC in existence.
Thought experiment: how would the price of BTC be determined if no one knew how many BTC are in existence? Would people just give up on trying to buy or sell BTC because that figure is unknown?
P.S. Comments like these where I answer a technical question tend to stay at score 1. Since I am making an effort to increase my average comment score (currently 2.0) I plan to stop answering technical questions in comment threads unless this comment gets upvoted at least to 2 or 3.
The solution of effectively destroying the earned money is pretty funny, given that that's an occasionally expressed concern.
I wonder if the typo was intentional.
Hyping a BFL's product with no mention of the number of outstanding orders that haven't been delivered, nor of competitor products. Also, failing to disclose that he was mining on a BFL employee's mining pool (Eclipse Mining Consortium) is connected to BFL-Josh completely destroys any credibility that otherwise might have been. I'm less impressed than ever WRT Robert McMillan's journalistic ethics.
More people made money selling shovels. The people that got the richest owned the mines.
[1] http://arstechnica.com/gadgets/2013/05/weve-got-a-butterfly-...
[2] http://codinginmysleep.com/bfl-jalapeno-unboxing-and-demo/ (see 7:33)
[EDIT] They linked to the wrong one. The one they are using does cost $274. Not bad ROI.
my point was that these businesses that produce products with short life cycles are process oriented; can be very rewarding... VC won't come knocking, but that isn't always a bad thing.
What kind of propitiatory knowledge do they have that there are these long waiting lines for the machine?
What is they key issue that makes these boxes so hard to replicate?
ICs are blazingly fast, because they have only one purpose - to compute SHA2 / to mine bitcoins. There is no overhead that processors & GPUs had.
A production of the IC costs high hundreds of thousands of dollars, and requires a ton of domain-specific knowledge. But once they're produced, each batch is quite inexpensive, and is capable of quite fast.
Of course there could be other startups doing the same thing, but you'd need an around a million dollar budget. Not easy.
Marketing (for example, BFL equipment is much prettier than Avalon).
What kind of proprietary knowledge do they have, that there are these long waiting lines for the machine?
None. But they do have capital, which they got by having a fairly good reputation from making cheap FPGA miners which they could do because they found a way to buy obsolete Altera FPGAs really cheap.
What is they key issue that makes these boxes so hard to replicate?
People who know what they're doing don't design Bitcoin mining equipment. There are probably a lot of different reasons why, mostly due to very high financial risk. The only people designing this stuff are incompetent noobs, with predictable results.
Why? Is it not profitable enough?
The capital they have is from taking pre-orders and not delivering. They've also burned a lot of that capital spamming the internet with ads to sell more pre-orders. If they ever had a good reputation they have squandered it by letting their loud-mouthed-pompous-ass spokesperson loose on the forums.
It seems that if these devices can be produced at scale, the marginal cost of mining 1 BTC will be only about $0.30 for now, thereby possibly pushing down the market price for BTC significantly.
What will happen is that the 0.29 BTC / day will go down as more people plug in their asic miners.
>So in just two weeks, those lucky enough to have snagged one of these rigs will have paid off the initial investment. Everything after that is gravy.
That's the biggest joke ever. The difficulty will go up substantially once thousands of people get their ASIC miners. It will take a lot longer than two weeks to pay itself off.
> Meanwhile, with more and more computers joining the network, mining difficulty is quickly getting harder. So the amount of money these machines can make per day is slowly declining.
As for why they sold them at all, I'd assume they didn't have the capital to build them on their own.
Ask Barrick Gold or Newmont etc. It's very context dependent. Barrick is worth $20 billion, and have made $8.5 billion in profit the last three years (the gold market tends to produce wild swings of prosperity and poverty years).
If you have little startup capital and can't buy a great mine and can't afford to prospect for one (or don't want to roll that dice)... then maybe sell shovels.
2. Other miners would reject their blocks if they "51%-attacked" the network. (Nobody would trust Bitcoin if one entity could control the blockchain.)