by Jim_TX 48 Replies latest social current
Cointerra along with KnC and other hardware manufacturers seem to have decided to stop selling ASICs and simply run their own mining operations and sell mining capacity as a service - cloud mining. (as well as stockpiling coins of course)
So in the link posted above the Cointerra box available for immediate delivery has been running in their own datacentre and they are now selling 'as seen' as its end of life for them personally. You decide :-)
my thoughts on a couple of Simons points: (my main request is that people recognize that BTC is more than a currency and stop defining it in their heads in those terms)
1 - "its a waste of electricity which is harmful to the environment and could be doing something more useful instead"
I agree that clean power for the Internet is important. Greenpeace has rightly begun holding large companies feet to the fire on this issue. http://www.greenpeace.org/usa/Global/usa/planet3/PDFs/clickingclean.pdf Facebook seem to be in the lead on this, followed by Google and Apple. In the same way that fossil companies should not be allowed to sell their products with no regard for dumping waste byproducts into the atmosphere, Internet companies should not be free to consume dirty electrical power to the detriment of society at large. The company I am involved with is committed to 100% hydro energy and free air cooling for maximum efficiency - thats why we have built our Bitcoin mine near the Arctic Circle.
Who gets to decide what future technologies may be useful? Nobody really knows how digital currency is going to turn out. History has plenty of examples (eg the car, the PC, the Internet) which were derided as being only for geeks with no clear benefits for the rest of us.
2 - "nobody uses e-wallets"
http://www.coindesk.com/blockchain-passes-2-million-bitcoin-wallets/ 3 companies are claiming over 4m wallets between them. Yes we are in early adopter phase and yes the technology has to become much more seamless. Its not a reason to write it off though. You could have made the same argument about P2P downloads of music files a few years back. (Install Kazaa, find and setup your downloads from multiple peers, wait, save file to PC, transfer to MP3 player..etc - now we watch HD 5.1 content via Netflix on our TV's as easily as watching terrestial TV, but it had to start somewhere) Typically the technology to do cool stuff is really around for years before mass market adoption - it takes investment from large companies and/or VC's to get the ball rolling and that exists for Bitcoin today. Marc Andressen is a prime example http://www.washingtonpost.com/blogs/the-switch/wp/2014/05/21/marc-andreessen-in-20-years-well-talk-about-bitcoin-like-we-talk-about-the-internet-today/
3 - "large retailers are only doing it for show"
Speculation m'lud :-) the large retailers I deal with have no time for show for its own sake. they are intimately concerned with profitability and consumer experience. Some of that experience may be theatrical in nature and yes - some companies do want to appear to be on the cutting edge. Show for shows sake - not in my experience. The Bitcoin halo effect is well reported on where retailers accepting BTC gain new customers who spend more on average. Sensible retailers will both want to offer consumer choice and keep track of potentially significant trends. I don't see a downside to either of those early-stage objectives.
4 - "low cost transaction fees aren't low cost at all, and anyway credit cards can offer a better deal if they are forced to"
If all that BTC achieves is making payment processors offer a better deal then OK no harm done :-) this statement also recognises the rip-off that has been taking place for years. Western Union and Moneygram are charging ~15-20% to allow migrant workers to send money home in the fiat ->WU -> fiat process. If BTC custs those fees in half or more we will have achieved plenty. I agree that the transaction fee-less concept needs mass adoption and for people to start living (at least partly) in a BTC economy. There is not much point in transferring small amounts of fiat into BTC and back again. But today, in practice not theory, I can transfer 0.00000001BTC or 10,000BTC without significant fees to any other BTC wallet in the world.
*Makes note to check back in 5 years.
One of the basic concepts with mining is 'difficulty' - this is an adjusting factor set by the algorithm every 2 weeks to ensure that an even number of bitcoins are mined every 2 weeks irrespective of how much computing power exists in the ecosystem.
This creates an arms race where more and more compute power is deployed until it becomes uneconomical except at scale or with new generation chip designs. (sidepoint - 22nm is the current generation of chips commonly available from Intel etc except certain BTC ASICs are shipping with 20nm chips - to Simon's point of 'doing something more useful' :)
below is an example of how difficulty can bite the miner hard. After 10 weeks at 15% difficulty a 1TH miner will have earned over 50% of what it is ever going to earn, ever. After 6 months it is at 83.5% etc. Diminshing returns and the cost of electricity will determine when you turn it off.
| Difficulty | 15% | ||||
| GH | 2 week period | GH to earn 0.1BTC per day | BTC earned | Running Total BTC | % of total |
| 1000 | 1 | 7000.00 | 0.20 | 0.20 | 13.4% |
| 1000 | 2 | 8050.00 | 0.17 | 0.37 | 25.0% |
| 1000 | 3 | 9257.50 | 0.15 | 0.53 | 35.2% |
| 1000 | 4 | 10646.13 | 0.13 | 0.66 | 44.0% |
| 1000 | 5 | 12243.04 | 0.11 | 0.77 | 51.6% |
| 1000 | 6 | 14079.50 | 0.10 | 0.87 | 58.3% |
| 1000 | 7 | 16191.43 | 0.09 | 0.96 | 64.1% |
| 1000 | 8 | 18620.14 | 0.08 | 1.03 | 69.1% |
| 1000 | 9 | 21413.16 | 0.07 | 1.10 | 73.5% |
| 1000 | 10 | 24625.13 | 0.06 | 1.15 | 77.3% |
| 1000 | 11 | 28318.90 | 0.05 | 1.20 | 80.6% |
| 1000 | 12 | 32566.74 | 0.04 | 1.25 | 83.5% |
| 1000 | 13 | 37451.75 | 0.04 | 1.28 | 86.0% |
| 1000 | 14 | 43069.51 | 0.03 | 1.32 | 88.2% |
| 1000 | 15 | 49529.94 | 0.03 | 1.34 | 90.1% |
| 1000 | 16 | 56959.43 | 0.02 | 1.37 | 91.7% |
| 1000 | 17 | 65503.35 | 0.02 | 1.39 | 93.2% |
| 1000 | 18 | 75328.85 | 0.02 | 1.41 | 94.4% |
| 1000 | 19 | 86628.18 | 0.02 | 1.43 | 95.5% |
| 1000 | 20 | 99622.40 | 0.01 | 1.44 | 96.4% |
| 1000 | 21 | 114565.76 | 0.01 | 1.45 | 97.3% |
| 1000 | 22 | 131750.63 | 0.01 | 1.46 | 98.0% |
| 1000 | 23 | 151513.22 | 0.01 | 1.47 | 98.6% |
| 1000 | 24 | 174240.20 | 0.01 | 1.48 | 99.1% |
| 1000 | 25 | 200376.23 | 0.01 | 1.49 | 99.6% |
| 1000 | 26 | 230432.67 | 0.01 | 1.49 | 100.0% |
I should say in the table above BTC returns neatly adds up to 100% after 12 months which off course is not the case - it gets to 100% when you turn off the miner.
Until then you would have a longer and longer row of 9's.
If you build your own spreadsheet or use the calculator at https://bitcoinwisdom.com/bitcoin/calculator you can make a more informed decision based on your hardware, electricity costs etc.
Interesting analysis about what the price of BitCoin would / should be without the speculative hoarding:
https://coinreport.net/bitcoin-low-can-go/
tl;dr - it's $23
This I think is one of the problems that BitCoin has. It won't be successful as a currency unless people use it to spend ... but most people want to hold coins in the hope that they will rocket in value and noe exchange them for 'now' money ... which is a bubble. The miners and merchants want the fiat money as soon as possible which puts downward pressure on prices ... and then people don't want to sell them for less than they 'were' worth.
Most people don't think of currency that way. You spend the $20 in your pocket unaware of the fluctuations on value on currency exchanges which take a long time to ripple through the economy and into your pocket. Your $20 always buys the same coffee and donuts that it did the day before and you're not afraid to spend it in case it suddenly shoots up.
The company I am involved with is committed to 100% hydro energy and free air cooling for maximum efficiency - thats why we have built our Bitcoin mine near the Arctic Circle.
Good to hear :) Maybe I should mine in Winter only ...
Actually I'm surprised that this aspect hasn't gotten as much attention. In years to come will people look back at the wated energy to 'discover' some numbers and shake their heads?
Simon - Actually I'm surprised that this aspect hasn't gotten as much attention. In years to come will people look back at the wated energy to 'discover' some numbers and shake their heads?
Good point. Data centers use huge amounts of energy for the servers, and then for air conditioners. There must be more efficient energy recovery systems to harvest energy from server heat to cool the room, similar to how hybrid cars can harvest heat to charge their batteries.
Besti - the underlying technology could be used for many things where validating identity without a 3rd party middleman would be useful. Examples include the exchange of contracts and voting systems.
Can you explain how that would work. I'm showing my ignorance here, but what does bitcoin technology have to do with identity validation?
@Simon - I agree with you that people need to spend BTC ,not just speculate and hoard. But then you can't also criticize retailers efforts to help them do that, as you did earlier :-) In terms of 'wasted energy' I think people will look back and say - gosh how did we live before the car the Pc the Internet the mobile phone the bitcoin protocol?
@jwfacts - the Bitcoin protocol electronically and reliably solves an old problem for the first time. "How can two strangers trust each other without a middleman acting as broker?" Paper money solves this problem nicely - we dont need to know each other to exchange a £20 note and we both understand and agree on the value of it. (you could argue the issuing bank acts as a middleman guarantor) Once you can establish trust between unknown people without a middleman all sorts of innovation becomes possible https://bitcoin.org/en/innovation
@simon - The $20 does change in value - just slowly enough so you don't care, and thats in the West. In the developing world its not always that slow.
https://bitcoin.org/en/innovation is interesting. It seems Bitcoin suffers from an identity crisis. Bitcoin has the reputation of being a valueless, speculative geek currency, or maybe a 20th century barter card. Yet the article shows that it incorporates a means of securely transfering payments. Maybe that aspect needs a new identity such as Bittorrent, no that's taken, Bittransfer or Bitpay. Can the transactional side be separated from the currency, or is the currency required for the payments to take affect?
