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A Trip Through The Bitcoin Mines
Once upon a time, money - in the form of precious metals - used to be literally dug out of the earth. Limitations on the amount that could be mined, and on how much growth could be borrowed from the future (all debt is, is future consumption denied), is why eventually the world's central bankers moved from money backed by precious metals, to "money" backed by "faith and credit", in the process diluting both. It was the unprecedented explosion in credit money creation that resulted once money could be "printed" out of thin air that nearly destroyed the western financial system. Which brings us to Bitcoin, where currency "mining" takes place not in the earth's crust, or in the basement of the Federal Reserve, but inside supercomputers.
It is these supercomputers, that are the laborers of the virtual mines where Bitcoins are unearthed, that the NYT focuses on in a recent expose:
Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.
Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network. The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.
As the following chart shows, in addition to the surge in the price of Bitcoin, another explosion witnessed recently is in the processing power of the Bitcoin network: from non-existent a couple of years ago, the "mining" power dedicated to hashing, or the calculations used to extract new Bitcoins, has risen to nearly 10 quadrillion per second!
So what do these supercomputer-populated mines look like? Below we look at two examples of just that.
* * *
First, we look at Hong Kong, where one of the largest Bitcoin mines in the world is located.
In an industrial backwater near Hong Kong's massive port, one of Asia's largest Bitcoin mines is quietly turning raw computing power into digital currency.
Located about eight miles from the city's finance hub, the entire facility is no larger than a two-bedroom apartment. Aside from a small bathroom, the mine offers no creature comforts.
It is dominated by vertical racks that house hundreds of ASIC chips. Shorthand for application-specific integrated circuits, these chips are custom-built to mine bitcoins.

These racks house hundreds of ASIC chips used to mine bitcoins.
Chinese investors have been enthusiastic early adopters, a trend amplified by a lack of more traditional investment vehicles in the country

The Kwai Chung mining facility is extremely quiet -- except for the whirr of computers
Industrial bitcoin mines devote their massive amounts of computing power to working on the algorithm, and are rewarded with an equivalent share of bitcoins. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes.

A closer look at the towers. Most of the facility is devoted to mining for an investor group in China.
Miners are lured to Hong Kong because of its proximity to chipmakers in China and the city's permissive regulatory environment.

A bubbling liquid produced by 3M cools the ASIC chips.
This mine was purpose-built by Allied Control for clients based in China.
Kar-Wing Lau, Allied Control's vice president of operations, said the mine is cheaper to run and more efficient than many others because it uses a technology called immersion cooling.
Heat sinks and fans are typically used to disperse the heat generated by massed ranks of computer chips, but this Hong Kong mine is liquid-cooled using a product developed by 3M.
The processors used in the mine were build specifically for mining. They have no other function. "These ASIC chips, they can mine bitcoins and do nothing else," Lau said. "Given the pace of advancement, we need them to be constantly upgraded."
These radiators, housed on a balcony outside the mine, help disperse heat produced by the chips.
Immersion cooling allows Allied Control to leave less space between the chips, which saves money that would otherwise be spent on rent.
The technology also cuts down on electricity use -- one of the other major costs associated with Bitcoin mining. Lau wouldn't reveal how much it cost to build the mine, but he said that electricity bills for a fully-operational mine of this size would typically exceed $50,000 per month.
"The real question from a business perspective is how efficiently you can run your mining operation," Lau said.
The inside of the racks used to house the mining chips.
Cooling, however, is only one of the key factors when determining Bitcoin "mine" placement. Another key one: access to cheap electricity, because those massive servers sure soak up a lot of electricity: electricity, whose costs can quickly add up once a parallel processing cluster gets big enough.
* * *
Which brings us to Bitcoin mega-mine #2 in Iceland.
It is here that the NYT goes searching for digital excavators used to procure the digital currency.
On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.
To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.
“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”
Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times.
Iceland's low electric bill and its effective infrastructure, may be a reason why the one country that rebelled against the banker syndicate and jailed some of its bankers, may become the place where the bulk of Bitcoin mining takes place:
The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.
The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. “I thought we’d bring in machines and put bags behind them and the coins would fall into them,” said Mr. Helgason, with a laugh.
No coins, but the cash miners get in exchange for BTC, especially if each Bitcoin continues to trade close to $1000, the mining can be quite lucrative. The flipside, however, is that the business is just as if not more capital intensive than running a gold mine for the same profit.
Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.
“Even if you had hardware earlier this year, that is becoming obsolete,” said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. “You are talking about order-of-magnitude jumps.”
The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifically — and only — for this work. The machines in Iceland are worth about $20,000 each on the open market.
...
In February, Mr. Abiodun used the investors’ money to buy machines from a start-up dedicated solely to manufacturing specialized mining computers. The competition for those computers is so intense that he had to pay for them and wait for delivery.
When the delays became lengthy, however, he went on eBay and paid $130,000 for two high-powered machines, which he set up in June in a data center in Kansas City, Kan.
This was the beginning of Mr. Abiodun’s company, Cloud Hashing, which rents out computing power to people who want to mine without buying computers themselves. The term hashing refers to the repetitive code guessing that miners do.
Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year.
What is the upside of mining?
At the end of each day, the spoils are divided up and sent to Cloud Hashing’s customers. Last Wednesday, for example, the entire operation unlocked 225 Bitcoins, valued at around $160,000 at recent prices. Cloud Hashing keeps about 20 percent of the capacity for its own mining.
To be sure, like any industry in its infancy, there are numerous glitches, and mining for Bitcoins is no different:
Some Cloud Hashing customers have also complained on Internet forums that it can be hard to get a response from the company when something goes wrong. But this has not stopped new contracts from pouring in. Cloud Hashing now has 4,500 customers, up from 1,000 in September.
Mr. Abiodun acknowledges that the company has not been prepared to deal with its rapid growth. He said he had used $4 million raised from two angel investors to add customer service representatives to offices in Austin, Tex., and London. Cloud Hashing is now preparing to open a mining facility in a data center near Dallas, which will hold more than $3 million worth of new machines being produced by CoinTerra, a Texas start-up run by a former Samsung chip designer.
The higher energy costs — and required air-conditioning — in Texas are worth it for Mr. Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location. But he is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine.
Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.
Hopefully Bitcoin will still be around by then.
* * *
The future of Bitcoin mining is uncertain. There are a fixed number of bitcoins available -- and more than half have already been extracted. Kar-Wing Lau of the Hong Kong-based Allied Control, compared the explosion of professional mining operations to an arms race. For now, it appears to be a profitable endeavor. Lau said that Allied Control is currently exploring other mining platforms, including a mine built in a shipping container -- something that could prove useful if regulators crack down on the currency.
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that goddamn clown again?!
For Christ's sake, it's Christmas! Why the fuck did you have to go and bring up HIS name on this of all days?
You know, if it weren't for the fact that it's Christmas I'd down-vote your ass!
All this energy...so many resources direct to the waste heap, for what? Human minds, more computing power than the Federal government, mining air...Beanie Babies, Talking Elmo, Bitcoins. What a fucking waste. The human race should be proud of these accomplishments.
The price of a sound monetary system isnt gunna be cheap!!!
Facebook, Twitter...how high is too high again?
Damn skippy!
Talk about wasted energy. Using your computer (energy) to access the Internet (servers require energy) to bitch about wasting energy. Cry, and cry hard.
<<All this energy...so many resources direct to the waste heap, for what?>>
To protect the network. This network allows anybody with internet connection to send and receive money to anywhere on the planet without delays, premiums, and 'Know Your Customer' shenanigans.
There are governments and bad actors out there who will probably attempt to mount an attack in the future. The mining network has to be strong enough to protect against this. The gamble is this system of distributed miners acting in their own self-interest are more powerful than centralized governments. If you desire a low-risk investment profile, stay away from bitcoin until these battles have been tested.
Then that is THEE most stupid gamble in the history or gambling.
Gotta pay to play, might as well throw some lunch money at it.
Been the best performing asset for 3 years running.
It's like something out of a Neal Stephenson novel.
The machines are solving SETI intercepts; or:
The machines are covertly solving N"ES"A intercepts...
Or, for us oldsters, Philip K. Dick.
All the while I thought it was to cover for the flying-car program....
This is nothing short of insane !!!
PSST! We're WAAY past that point. Catch up (and just go along, won't ya)!
To think, some people think this is money??!!
WTF
It's not even a decent currency.
The
Fallacy
of Bitcoin.
People try to compare bitcoin to gold, because bitcoins need to be "mined" in a manner of speaking. Adherents claim bitcoins are as good as gold, because consumption of real goods is required to make them, and therefore they have as much real value as gold, if not more.
My response: Give me a break!
Bitcoins require effort and power to create.
Bitcoins cannot be converted back into power.
Gold requires effort and power to create.
Gold is useful as is, no conversion required.
The notion that bitcoins and gold are "the same" is utterly preposterous. Bitcoins have no intrinsic value or utility, and cannot be turned back into electricity.
BTW, if bitcoins were stored energy that could be tapped, they would indeed be as good as gold. But alas, they cannot. Which is the major flaw of bitcoins - lack of utility, lack of value.
In gold we trust.
-----
As an aside. Hyper-advanced benevolent alien travelers just passed our solar system in their fleet of hyper-advanced spacecraft. They broadcast a signal asking if any sentient beings exist nearby, offering to advance them to 37th century technology for the asking.
If all the computers mining bitcoins had instead been crunching SETI data, all the problems of mankind would have been permanently solved, and humans could henceforth live in peace and joy for eternity. The last chance for humanity just passed humans by. Game over.
OK, it's like this, the "real test" that is...
I've got a weapon, say a rifle, it's one that many people say is shit and that it's really not good for home defense and all, but anyway... I'm confronted by an intruder, I run out of ammo and commence to beat the indruder with the rifle-cum-baseball-bat. Now, if that rifle didn't exist I could pick up a bar of PM and throw it, and while maybe not making a kill, might be enough to stun the intruder. Now, shit, the boating accident and all being as traumatic as it was, I've decide that "weight" can cause problems, so I opted to run lighter and am now "armed" with Bitcoins... the intruder appears and I, um, well, shout "Bitcoin" and him/her and hope that the magic word works...
The problem here doesn't lie with bitcoins inability to stop an intruder.
It lies with your inability to use a tool correctly to stop the intruder.
How are you going to run out of ammo against AN(singular) intruder??
And where was your dog?!?!?! Cowering?
:p
This guy can help you address your shooting problems and he accepts bitcoin.
or better yet
Print off a couple 3d printed guns and now you have multiple weapons to chuck.
or
This Armory accepts Bitcoin
or
.....
L2Shoot man. Gold is not a weapon. Not even against bankers.
If you like your gold, you can keep it!
Wifey gave a 1/2 oz. Philharmonic for Christmas ;)
The more I learn about bitcoin..........the less I trust it.
All good. Nobody is forcing you to use it, correct? By not participating you are making Bitcoin slightly, slightly less scarce, thereby making them cheaper for me to acquire. 2013 has seen large growth in terms of Bitcoin infrastructure and user base. This dog's got legs now and I'm looking forward to what 2014 will bring. Probably the greatest threat is government choking off liquidity in and out of BTC.
How is that an argument against bitcoin?
I'm not saying that bitcoin is as good as gold, but I don't agree with your logic. Why has gold intrinsic value? Because it is shiny? You can get fake shiny gold bars for a fraction of the gold price. Utility? Well gold has some amazing physical properties, but its price hinder most economic use for industrial production.
The value of gold therefore mostly results from the combination of its physical properties with its rarity (and this combination having been observed for centuries). In this case the physical property is akin to a encyrption key of bitcoin proving that "this is one element from a group of rare things".
On first thought these two "curriencies" share some very similar characteristics and the logic resulting it the value of this currencies should be about the same.
IMO one of the main risks of bitcoin is the fact that you can somehow print very similar stuff to bitcoin out of thin air by just creating another cryptocurrency where mining is very easy at the beginning (i.e. a kind of "printing out of thin air"). What if suddenly someone comes up with another cryptocurrency named "bitcoin2" (or for example "litecoin") that shares the same characteristics as bitcoin? And then "bitcoin3", "bitcoin4"? In the end one would only trust the most trusted "bitcoin xyz" which unfortunately is THE characteristic of fiat currencies...
(And BTW if a guy from out of space were to look at us, he would also find "digging something out of a hole with a lot of energy and put it into another hole while garding it with a lot of energy" very stupid.)
To me bitcoin is even worse than any other FIAT currency. First there is that which bitcoin is THE bitcoin. Second problem is that there is no army, military or people with weapons to back your bitcoins. You can not go any random grocery store and buy milk with your bitcoins.
Physical on the other hand, you have some gold burried on the field near your farm house. Gold is available for everyone, just like bitcoins, tho mining expenses are a bit different. Buying mining equipment and permissions also add value to each coins, whether they are gold coins or bitcoins.
Guy from outer space might want to come down here and give an advice how else to "bank" the work you have done.
Boy, talk about going off topic....
I upped arrowed you for your creative way of outlining the lack of productivity there is in mining fictitious bits with the hope of getting rich with little or no work and wasting the precious little time we have on earth.
Dig a hole, pull out metal, put metal in new hole.
Life well spent.
Any race intelligent enought for interstellar travel is also intelligent enough to avoid the Human race (like the plague!)
"Bitcoins require effort and power to create.
Bitcoins cannot be converted back into power.
Gold requires effort and power to create.
Gold is useful as is, no conversion required."
Don't mind Ann. She's having difficulty concentrating because she's too busy looking for the return of Marshall Applewhite
The Bitcoin Channel
Bitcoins look kinda like Tulip bulbs to me.
I don't believe that they're the same. I believe that this is more of a hard-faught rollout of something that has not had a chance to bubble up to its potential. I appluad, however, that it's at least constrained somewhat, though how absolute proof can be ascertained takes a bit of faith... (yes, I understand the theoretical arguments, but theory tends to really contort when it meet human deception and hubris)
I read this and all I can think is that 40 million credit/debit cards were hacked.
The bitcoin ASICs are just fast SHA256 calculators. But who invented SHA256... the NSA! (no kidding) In the history of the NSA, they have build backdoors in all their crypto algorithms: DES, RSA etc. Do you really think they wont have a backdoor in SHA256 as well? You can bet that the NSA can mine coins as fast as they want. They don't need silly datacenters to calculate billions of SHA's to mine a few bitcoins.
This is why Satoshi used three types of encryption in the bitcoin code. 2 were created by the NSA actually. The third is open source and wasn't created by the NSA.
Also this is how an NSA back door works.
"Recent press coverage has asserted that RSA entered into a 'secret contract' with the NSA to incorporate a known flawed random number generator into its BSAFE encryption libraries. We categorically deny this allegation."
"The amount ($$) described would have been a substantial boost to RSA's revenues – totalling about a third of the revenue for the relevant division in the previous year."
Last I'm gonna bet the NSA CAN NOT mine as many coins as they want. Read up on how difficulty of the block solution is established.
We don't even know the origins of Bitcoin other than we were lied to about it being invented by a fake fella named Satoshi, yet we are supposed to trust it and its NSA backdoors. Half already mined with big blocks going to a few unknowns.
I trust it because its open source and I can audit the code.
In your case either learn to write code or find someone you trust who can.
Definately dont trust a zerohedge reader who has posted his business website where you can find his physical address. You know zerohedge readers are as shady as they come. :)
I believe dochenrollingbearing also know some code although I don't know if he has audited the BTC code.
There are no big blocks. At first a block reward was 50 btc. Now a block reward is 25 btc.
"I believe dochenrollingbearing also know some code although I don't know if he has audited the BTC code."
No, no, no. DCRB does not know programming, except to hack out a little SQL in my bearing sales database to study patterns in our data...
I certainly cannot say SQUAT about BTC coding, other than it LOOKS sturdy, based on what I (think?) I know about encryption and math.
"There are no big blocks. At first a block reward was 50 btc. Now a block reward is 25 btc."
I read somewhere large amounts of bitcoin were traced to the same unknown entity.
True
We also know there are entities with large holdings of gold.
In the case of Bitcoin we can see how many BTC are held at a public address but we don't know who holds it.
Are you suggesting something is broken because early innovators got their just reward for being early innovators?
In 1949, the local gold vault stored gold. Everyone knew it was there. But no one knew who owned how much of it. The best miners held more at the vault. So gold was broken??
The third is open source and wasn't created by the NSA.
How can we be sure when the NSA has a history of writing open-source code? e.g. open-source Android.
I read litecoin uses SHA-256 for the calculation of merkel roots and also uses elliptic curves for transaction signing.
ZeroCoin was supposed to eliminate trackable linkage in Bitcoin's blockchain, but it too has a backdoor for govt snooping.
http://www.activistpost.com/2013/03/bitcoin-zerocoin-privacy-extension-t...
from the article
"The back door isn't part of Zerocoin. There's absolutely no need for it, and building one in would take significant additional effort. In fact, we only mentioned it as a brief note in the conclusion of our paper, mostly to motivate future research work," Green told the American Banker.
So Green included the idea of a backdoor to "motivate future research work"? In other words, he seems to be seeking public funding to continue creating this backdoor. Obviously, the "authorities" would be the only ones interested in this pursuit which answers the question about who he is trying to motivate. The bigger question is who funded this work?
In an attempt to put the issue to rest, Green claimed that a backdoor was impossible, anyway; "If someone did try to build a back door for any reason, the open source Zerocoin would quickly become Zero-adoption."
Also https://en.wikipedia.org/wiki/RIPEMD160 Go decide for yourself.
Finally here is a link to dochenrollingbearing blog where you can read about what role RIPEMD160 plays in BTC
Don't forget to read "Part Five" where the Bearing Guy gets his gold!
Hate to burst your bubble BUT...
I think RIPEMD160 is already cracked:
http://blog.skullsecurity.org/2012/everything-you-need-to-know-about-has...
Lol you didn't burst my bubble at all.
RIPEMD-160 was used because it produces a shorter hash output. This permits bitcoin addresses to be as short as possible without compromising security. The exact reason why SHA-256 was used in combination with RIPEMD-160 isn't known. The two leading theories are:
1. There was concern that RIPEMD might have some defect. SHA-256 was believed to be more secure. The hope was that the two combined would be stronger than RIPEMD alone.
2. There was a concern about possible weaknesses in the MD structure itself, such as a length extension attack. Two hashes combined result in a composite hash that does not have a Merkle–Damgård structure and so is not vulnerable to these attacks.
http://blog.oleganza.com/post/42523601710/how-to-steal-all-coins
See Robert Mixs blog to see where RIPEMD-160 is used.
I would also point out extension attacks are only possible when the payload is of arbitrary size. Bitcoin blockheaders are fixed sized, exactly 640 bits not a bit more or a bit less. Thus even if you found a payload which has a longer length but generates the same hash it wouldn't be a valid bitcoin blockheader and thus would be rejected by the network.
Wrong. If there are a backdoor in (double) SHA256 then Bitcoin is bust (but not Litecoin etc.).
Is this not " make believe" ? I suppose it could be like digital gold rather than a currency. Currency needs government backing, but gold does not. Can physical gold and bitcoin co-exist? Or bitcoin replaces physical gold?
@ partimer1
"Currency needs government backing"
Why? Care to explain that?
Bitcoin is Bitcoin. It is NOT gold, cannot replace gold, NOT silver cannot replace silver. Money/currency/whatever does not "need" government or "backing" by a government. Knock out the grid here wait a couple weeks and see what things become defacto currency.
SAME AS IT EVER WAS
Talking Heads: Once in a lifetime
http://www.youtube.com/watch?v=kvM6TxUnCDE (3:00)
Food, warmth, shelter?
Ipads?
From one account I read of a bosnian crisis it was bic lighters.
I truly thought ZH readers were smarter than this. To dismiss something like Bitcoin with offhand remarks without any real well thought out commentary or methodical justification puts many of you in the same room as bunch of second graders. The best the Bitcoin doubters can come up with is to point back to how "gold is the best and only form of money".
Anyone who spends ANY amount of time taking a serious look at Bitcoin would NEVER use words like Tulip bulb, make believe, ponzi, or NSA. And the whole Bitcoin/Gold comparison is nonsensical, they are not even in the same category as far as what they are designed to do, their potential in today's reality of techonology, or the point of owning one or the other - one is a bet on an optimistic future for planet earth and humanity while the other is a bet on disaster - take your pick.
Except Bitcoin is a tulip bulb mania. Its only value is in the payment processing. I would never accept Bitcoin for an actual product and hold the Bitcoin. Gold is actually money. I would accept gold for products. Despite what you believe, we have not reached some tipping point in history where things are different this time. Bitcoin will drop all the way back to where it started in the end. It is a cool idea. It is not the next level of finance.
"I truly thought ZH readers were smarter than this"
There's a reason its called Zerohead.
The Bitcoin Channel
When the crazy talk begins, it is time to get out. Gold's use come from the very start of international trade, which is based on the exchange of valuable commodities. No one trusts local government token currencies in other countries. In the end it is gold and PMs that are transfered, one way or the other, from a commodity buyer to a commodity producer. Real things for real things. Bitcoin is an interesting idea. I like it. But don't get crazy.
The Day The Big Fat Junk-Bond Bubble Blew Up
http://www.zerohedge.com/contributed/2013-06-08/day-big-fat-junk-bond-bu...
The problem with all this expensive custom hardware is that it could be made totally obsolete by a change in the software algorithms. It is much easier to change software than hardware, and much easier to re-program general-purpose computers than specialized processors.
Many of the alt coins are shifting to algorithms different from the original Bitcoin algorithms, which cannot be processed on the hardware rigs shown here. The time scales of new experimental coins is months not years. If an alt coin is developed which is clearly better, Bitcoin could become obsolete in a matter of weeks.
This is true to a certain extent.
But I suggest you think of it this way.
Bitcoin code is a living document protected by miners. Alt-coins are experimental playgrounds where concepts are proved, and if sufficiently worthy, are rolled into the bitcoin code.
The algoirthms most of the alt-coins are using, by their very nature, waste even more electricity.
All that computing power wasted to chase after something people place value on because a few people got rich. Hopefully all the equipment can be used for something useful, but the ASIC chips are only designed to compute Bitcoin problems.
I used my PS3 and deskstop workstation to run Folding at Home, since that was for a worthwhile purpose. Imagine if the computing powef of the Bitcoin operations were used for that. Of course, since there is no money in it nobody would do it.
Sad this world is.
"worthwhile purpose" ...yah, sure... :-/ ...whatevs
Well if you can't patent or financially profit from your contribution you may as well mine for altcoins...
And it seems the same argument is often used against gold.
FWIW I used to run a lot of Folding at Home on my several clients and I agree it's a nice way to contribute.
It's a shame no one with the skills has bothered to create a distributed system that allows volunteers to contribute to research, while also getting compensated for it. If Folding@Home paid $1 per day, a lot more people would do it, I'm confident.
You need money to buy stuff, but "money" is what the players say it is. Can be Bitcoins, fiat, gold dust, or big round stones with holes in them.
http://en.wikipedia.org/wiki/Rai_stones
Blashphemy! On this day of christ's birth to boot!
'The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.'
No, bitcoins are programmed to be mined at a constatnt rate, not a progressively slower rate. As more and more hardware is dedicated to bitcoin mining, the difficulty rating of each block will go up and each block mined will require more work such that one block is mined every 10 minutes. If the mining hardware goes off line, the difficulty rating of each block will go down, maintaining the rate of one block every 10 minutes.
Every so often, the number of bitcoins earned per block is cut in half. I think it was March of this year that the block award was cut from 50 bitcoins to 25 bitcoins. I'm not sure when the next cut takes place.
In 2017 the reward will be cut to 12.5 BTC per block.
https://en.bitcoin.it/wiki/Controlled_supply
This is correct. Bitcoins are indeed programmed to be produced at a slower rate over time, but it's a quantized step function, not a linear decay.
It should be noted that bitcoin went from under $10 to over $1000 in the 12 months that followed the last halving of the block reward. It's safe to assume the supply will diminish considerably in the next six years or so, and demand dominates the price equation essentially from 2013 onward.
There are millions of protien folding sequences that need to be discovered. To develop new treatments for both chronic and communicative diseases. Someone should build a currency based on the computing power exerted on that cause. A real charity that actually cures disease instead of worthless, endless, sliding abbucus beads back and forth for zero technological gain. Bitcoin is just another ponzi scheme. I would not wish taxation on anyone, but I hope if they do send the goons out with guns, they tax bitcoin gains a little higher than they do warren buffets.
<<Bitcoin is just another ponzi scheme. >>
Yes yes yes 100x yes. I hope BTC goes underground in 2014 so I can keep stacking at a reasonable price. Oh, wait...
"they tax bitcoin gains a little higher"
^ Statist moron exposes himself for everyone to see. BTW, that federal pension they pay you for surfing porn all day at the SEC, DEA, NSA(pick your own goonsquad here), will go up in a puff of smoke long before the Bitcoin price crosses 10k. Good luck with that.
The Bitcoin Channel
Even without a back door I'm willing to bet the NSA computed all the bitcoins months ago.
Maybe they have a monthly contest on who can do so the fastest, and on the smallest hardware.
I'm willing to take that bet.
Lets wager 5 BTC.
We can either set up the bet over at http://betsofbitco.in/.
Or we can both place 5 btc into an escrow account with 3 parties acting as ref. I ask that seer and dochenrollingbearing be two of the refs. And that unanimous agreement will release the coins to the correct better otherwise they are released back to our personal wallets in 5 years time. That should be sufficient to allow the NSA to admit to your allegation.
I will gladly provide a digital signature to a unique wallet address with 5 btc in it. Everyone here will know the wallet belongs to me and I will bust my own anonymity. With that address only. Not such a big deal considering I have billions and billions more personal public addresses. And I will move the winnings thru a mixer and back into a new wallet I control that can't be tracked back to me.
Lets do this!
How interesting!
If you guys do want to go through with that, contact me at dochenrollingbearing /at\ gmail daht com. I would nominate "seek" (as well as "seer") as a judge who knows this stuff WAY BETTER than I do.
I suspect I would be considered biased.
It's also not technically possible to "compute all bitcoins in advance" in a meaningful way; until it's registered on the blockchain it's not a bitcoin, and to do so requires that the double-SHA-256 hash be computed for the current transaction block (plus nonce) that meets the current level of difficulty; anything else will result in peers rejecting the transaction.
The closest metaphor I can think of would be something like kidnappers killing their victim, but collecting the ransom because they had the victim pose with all possible newspaper headlines for the next week/month etc. Bitcoin has an inherrent connection to "now" in the protocol, so it's not possible to compute very much in advance. Peers use the "now" connection to determine who wins the current block being computed, so it's not something that can be trivially worked around.
In a nutshell, with even a minimal working knowledge of bitcoin, "NSA computed all the bitcoins months ago" is simply a nonsensical statement that doesn't comprehend the protocol, even if it were utterly and completely hacked and compromised. I suppose it you made some sort of technological breakthrough statement you could twist it into something sort of close to this claim, something akin akin to "the NSA can trivially reverse SHA-256 hashes twice, so it can claim block rewards at will if it does so on the network." (It's still a multi-part problem, and anything someone does hacking bitcoin means exactly shit until it's in the blockchain.) That's still a far cry from somehow pre-computing all bitcoins, though.
They could compute them all adding to the blockchain as they go, if that's part of the game.
Then they throw it away. Just an exercise.
But if there is a sequentiality like that to it, it does make it harder.
Still, sometimes when you are prepared to map *all* of a space, there turn out to be more efficient ways of doing it than one point at a time, there are some Mandelbrot algorithms that work by tracing isobars ... I never did understand quite why that wins, but people tell me it does.
Maybe somebody can also clarify why the return on mining slows down. I would have figured it had something to do with density of primes, but then that either assumed people would mine them in order, or that it's some kind of fractal pattern filling in gaps or reflecting within a space or something, either way it assumes someone knows a priori what the number can be.
Isn't that contradictory?
Are we betting or not?
I'll take it too, 5 BTC was it?
Use this massive amount of energy to extract gold, silver, platinum through galvinazation (sp?) in Great Salt Lake, Dead Sea, etc.
Use the massive energy supporting the current monetary system. Its orders of magnitude larger than the energy used by efficient ASICs.
The largest mining operation in the world has a monthly electricity bill of $50,000.
That doesn't cover 1/25th of Michelle Obamas entourage bill on her monthly travels supported by the current money system.
You want to re-purpose some wasted energy and resources.... if bitcoin is your solution then I think you're looking at the wrong culprit.
You're a gambler like anyone else here trying to make sense of things. You wanna think of yourself as evolved, so be it. You gamble. Good luck, but the house usually wins....usually.
Life's a gamble. And I'm betting on Bitcoin to squash the federal reserve and usher in financial liberty.
I've been counting the cards and I think the liberty card will be pulled next. I thought this in 2009 when gold was at $975.
I feel this even more strongly now that the Bitcoin card has come thru the deck.
I'm not religious... but this whole Bitcoin thing sends a creepy tingle through my bunghole... is this a cross between the Matrix, Terminator and Biden's high-tech hair plugs??
Liquid-cooled, BTChes
Finally we got growth. A Keynsian's wet dream. And Krugman still thinks it is evil.
Money is whatever someone will take in trade. If people in the future accept bitcoins, then it's money.
Yes, let the people decide. Competing currencies...: let the best one(s) win.
Why are these idiots wasting their time making money out of bitcoins when instead they could be worrying about whether the backdoor boys from the NSgAy are watching. Fools.
Dark Wallet may be something you would be interested in.
Been mining for two weeks now.
Paid for my Jupiter rig. I have the waste heat pumped right into the existing furnace duct. I honestly don't know what the future holds for these things. And frankly I really don't care. I'm banking good money every week and my house is heated without any other inputs until - 15 Celsius, then I turn on the in floor radiant heating.
Switch to some of the more promising altcoins. Many will make 50 fold(fiftybagger) moves once the Chinese money moves in.
Long ALF ASC FLO GLX GME GDC KGC MST NET XNC
The Bitcoin Channel
It seems safer and more reliable to simply mine bitcoins, and buy alt coins with a portion of the proceeds, than to mine alt coins directly.
So far here, I hear Arctic Air is free, but still can't assign a value to the hot air generated in the BTC realm.
I do hear that bullshit was a buck a bale in Oklahoma during the depression, but nobody could buy it 'cause they had no money.
I won't trade the food I produce for an intangible such as bit coin. Nor will I trade the natural gas I produce for a bitcoin either.
But I will trade an ounce of siver for 100 hours of your labour.
You won't be able to spend bitcoin on the things you NEED, just the things you want.
I guess if you grew up using the left, right, up, down, shoot buttons then your needs and wants are likely a
little confused, along with your sense of reality.
Stack On
<<an ounce of siver for 100 hours of your labour>>
No Thanks! Good luck with that.
The free market is 7billion competing needs and wants and will sort itself out.
Ok, How about 10 hours of labour for an ounce of Ag. Maybe I was a little optimistic.
There is no free market, except maybe a farm auction. I'm sure that I can find a Bangladeshi to work for me for 31.1035 grams of silver/day. Or a Somalian, maybe a Syrian, or maybe even a Venezuelan. I could prolly find an American to work for a new pair of blue shoes. The only free market is the deal between you and me. And if we can make the deal exclude the taxman then I'm all for it.
Stack On
Once upon a time I made 2.5 BTC for 7 hrs of work. True story -- one to tell my grandkids some day.
Did you trade those 2.5 BTC for anything?
Stack On
http://money.cnn.com/2013/12/20/technology/innovation/overstock-bitcoin/
And to think, I gave my wife bedsheets as a Christmas present! I could have paid bitcoin.
I will agree bitcoin has utility, you've proven it to me. Bit I won't save.
I also gave her an eighteen gram necklace and a seven gram bracelet, twenty two carat hallmark.
Stack On
1oz ? for 100 hours?
Maybe 1oz for 10 hours....but 100 hours? lil nuts.
The hell with bitcoins, Doge Coins is where its at.
Sold 1000$ worth of Doge Coins this week. (mined them for fun) and I guess people bought them up for Xmas as gifts....drove price up pretty nice.
The publicly available mining hardware is garbage.
The stuff coming out of butterfly labs is held together with duct tape and bubble gum shoe strings ;P
In order to actually make any "real money" in crypto land, you need to dump 50,000~100,000$ USD into hardware.
And then spend another 10,000 trying to keep it from catching fire.
so alt
wow profit
I find my Butterfly Labs Jalapeno works great, a little over-engineered, but once you take the case off and use a quiet 120 mm fan in place of the noisy stock 60 mm, it has been running reliably since August. It has probably earned 10 times what it cost, and is still running at a small profit.
As far as "real money", I suspect there are real diminishing returns; up to a point, the waste heat can be useful. Once you go beyond a certain size, unless you are getting really steep discounts on the hardware, the additional costs of a specialized building, security guards, IT staff, air conditioning, etc lowers the margins.
Notice that both the Iceland and the Taxes grids are self-contained from the rest of the country. Interesting.
The WA (Washington State) operation is no doubt supplied by hydro-electric power from one of the (famous) dams, and thus not dependent on external energy (coal, oil, Uranium). If it's in Central WA, it should see plenty of sunshine (Solar Power) or Wind Power.
Makes me think of Yellowstone. Enough access-able heat energy to last North America forever. I wonder how many turbines could generate at Yellowstone? The energy is free.
Stack On
Bitcoin haters must be governmetn and Fed supporters. Because if you have a choice to use bitcoins or FRNs, and you choose FRNs, then you actively "vote" for FRNs to continue. I'd use dog shit before FRNs if I could, but the goldbugs would be complaining about the smell.
And gold and silver? The government fucked that up decades ago. Face it, there's no going back to that unless the ancient aliens return.
Wake Up. There is another WORLD other than that in which you live.
Most of us on earth don't use FRNs for our daily business. Your government fucked up, not mine.
Stack On
"Wake Up. There is another WORLD other your mom's basement in which you live."
FIFY
Ok I'll bite.
What paper currency do you use that isn't inflated by a central bank and used solely because of Legal Tender laws?
His point is valid wherever you are.
Use central bank monopoly money, or use math money.
Don't know why the big argument over bitcoin. If it survives all the tests and becomes a stable form then good on it, just another means hopefully to get around the system.
Color me extremely skeptical about anything mined by binary data over the Interwebs that gobbles up electricity to "mine" elusive bits of data dependent upon the same.
Sounds too much like "A chicken in every pot" and "If you like you health insurance plan, you can keep your insurance plan."
Tread with caution dear friends, this "gold" and this "mine" is intangible and dependent upon the machinations of TPTB.
The longer they pump this balloon, the longer we wait for the big bang, the more we are going to see blatant in your face corruption from the banks and TPTB, just to keep the balls in the air.
Holding wealth in things besides cash becomes a must. Yeh the stock market will be desperately made to climb against all reality...and may go into hyper spikes as the system starts to have moments of lost control..swerving back and forth across the road...down hill, toward that brick wall.
But a market rising quickly is going to make you shit your pants...as it will be the old sign of a blow off - crash. Too slowly and people will become worried and head toward the exits. TPTB have to balance their pump into markets just right from now on....as people are eyeing off those trillions in debt and deficit...and China struggling to control its implosion of debt. Yep holdings stocks that do business in the world will be a good strategy, especially inflated on the Bernanke's balloon.
But as quick as a balloon bursts will be the time frame you will have to get your act together and get out of risk assets. Reckon you can do it?
We all know the games palyed...see Ireland, Cyprus, Spain, Greece....
And the real value of gold and how long can they keep the paper game going? Leveraged at 92:1
Well the West might be whistling past the cemetry, but Asia is grabbing anything they can get their hands on...like gold, silver
There comes a time where manipulating gold and silver become the least of their worries and let loose because they need to deal with other even more massive issues..... IN fact in the end play valuing gold at $multiples of $2k may work to their advantage....
All that they are doing on the Comex now is buying and selling air.
"the day before TPTB globally would have been putting in various capital controls"
How does that work with Bitcoin?
The Bitcoin Channel
Jesus, I must have an evil eye for crypto currency.
I wrote a tongue in cheek post here lauding Dogecoin before Xmas as an amusing sub to Bitgroin and look what happened to it : Large Dogecoin Christmas Theft - Business Insider
Maybe I should write moar on lauding the FED !
Please do :)
Anything to help bring down the Fed at this point is worth a try.
"We're incredibly sorry to all users who lost funds from the attack. Please use offline wallets as online wallets are meant for new users who aren't using them as a storage of coins. Offline wallets are more safe and secure than any online wallet due to possible attacks that can originate from anyone, anywhere."
THIS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
To deal with bitcoin they would just extend existing legislation (in Australia anyway) re anti corruption, money laundering etc.... in that any transaction of $10,000 must be reported with ID etc.
They would simply extend the regulation that any transaction involving Bitcoin must be reported along with ID of the purchaser, with a suitable fine or criminal offence for failure to do so. They would make it law that each transaction of a good of sold with a value of $5000 or more must have proof of type of payment received. They could then tax Bitcoin transactions at a higher rate.
Bitcoin soon $ 1000 again...
Realtime quotes
http://btcpost.net/index.php
If you wanted to build a world dominating super computer for free, you could pump up a crypto currency so that it becomes lucrative for others to mine that currency by purpose building servers and connecting them to the issuer network. This computing power would be scattered all over the world and surrounded by security. Well done Bitcoin. Terminator 5 here we come.
SkyNet, powered entirely on SHA-256 hashes. I wonder if you could make a nueral net inside a blockchain ...
Anyone who has spent much time involved in the economies of mmorpg knows how the bitcoin thing will play out. I believe Everquest was the first virtual economy of considerable size. Numerous specialized web sites sprung up to capitalize on the intangible Everquest economy. Millions of dollars were made by a number of clever individuals who got in early. I personally made well over $10,000 one year in my spare time. However, just like any trade, once the masses become aware of the easy money being made, things go haywire very, very quickly. I do not think bitcoin will be any different. Sure, some people will get rich, but most will get burnt. Many novices to the intangible asset market completely fail to recognize the legal wasteland they are choosing to operate in. Laws are written for the real world and usually simply do not apply or go completely unenforced in the intangible asset market. It is very wild wild west like. Try calling the cops and reporting a bitcoin theft. But which cops to call? Good luck with that.
Posted without with a comment as I am agnostic, but have questions, on all that concerns PMs and Crypto future :
Gold's safe-haven role is over: Societe Generale - The Tell - MarketWatch
And this as trends into 2014, notably star gazing at bitcoin to save Opec :
6 market surprises for 2014 - Matthew Lynn's London Eye - MarketWatch
I somehow have a problem with equating Bitgroin with Oil payments; its like saying the emperor wants to be paid in olives; just doesn't make sense. Oilves go well with home cooking but with an Emperor's needs?
How can he accept a monthly variation of olive price that could be +/- 50% 'cos there is no one the size of the oil king to run the olive market and there is no central clearing house to ensure price stability, nor quality of Olive/bitgroin; aka avoid scamming by money mafias.
...how complex can stupidity get?
Th focus on real or percieved wealth...hmm, like Fuckushima, this can't possibly "meltdown" can it?
What a waste of fucking resources.
All these pro bitchcoin jerkoffs talking shit last month...got their ass kicked & here they are coming back.
Fucking dummies never learn...
good! Keep buying shitcoin & devoting limited resources for "nothing-ness" & drive more effort into vapor & smoke.
See you in the bargain bin 3 years from now, like Pogs, cabage patch dolls & Pokemon cards.
When the "lights go out" it's last man standing...no bitchcoins welcome on the street then. Some maniac will take your laptop & shove it up your ass when you offer him shitcoin not to kick your ass instead of food.
http://www.youtube.com/watch?v=0hUrcGCQV1g
Techno-delusion is as powerful as psychodelic drugs. Electrons are not subject of ownership.
Law and Natural Justice requires that to attain indefeasible Ownership Title in things, that which is traded in their acquisition must have roughly equal Ownership Title inherent in them. The true essence of exchange, is for the parties to mutually convey Ownership Titles in the items, not merely the things in themselves.
No different than with banknotes, 'crypto-currency', though provenance is recorded for all 'possessors', are assigned 'possession' which doesn't constitute any Title of Ownership beyond such sheer assignment, nor is there any concievable objectively derived rational equality of worth discernable in them, juxtaposed to physical things.
So, all these transitional forms of claim are nothing more than 'Trade Facilitation Instruments' that never liquidate debt in real, substantial terms.
Outstanding indebtedness, whether or not it has interest attached or is pursued by the creditor, is nevertheless a fact resulting from such exchanges, which is susseptible of legal 'deferment' by statute ... inculcating a taxable 'benefit' conferred by governments and compensatory 'rents' payable to the ultimate holder of the Title of Ownership in the things conditionally possessed.