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Operation Wants To Mine 10% of All New Bitcoins

Soulskill posted about 9 months ago | from the go-big-or-go-home dept.

Bitcoin 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."

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much industrial (3, Funny)

SublimeCreditor (3566701) | about 9 months ago | (#46590647)

very wow many btc

What about the alternative virtual coins ? (1)

Anonymous Coward | about 9 months ago | (#46590665)

Other than bitcoins, are other virtual coins worthless ?

Re:What about the alternative virtual coins ? (2, Interesting)

lister king of smeg (2481612) | about 9 months ago | (#46590749)

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 ? (4, Informative)

SuricouRaven (1897204) | about 9 months ago | (#46590821)

You'd be limited to SHA256 based coins. Most altcoins are scrypt based.

Re:What about the alternative virtual coins ? (4, Informative)

SuricouRaven (1897204) | about 9 months ago | (#46590819)

Litecoin has just enough credibility to have people trading it for non-trivial amounts of real money. The rest are generally worthless.

They aren't worthless... (0)

Anonymous Coward | about 9 months ago | (#46590905)

...right now.

The question is, as it is with bitcoin, whether they will be worthless (or, worth less) in the future.

Re:They aren't worthless... (2, Insightful)

khallow (566160) | about 9 months ago | (#46591043)

That depends to some degree on what they plan to do with the bitcoins. If they hold them, then they are exposed to more risk than if they sell them as soon as they compute them.

Re:They aren't worthless... (1, Insightful)

ls671 (1122017) | about 9 months ago | (#46591135)

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... (3, Insightful)

Joce640k (829181) | about 9 months ago | (#46591417)

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...)
.

Re:What about the alternative virtual coins ? (3)

gnupun (752725) | about 9 months ago | (#46591303)

Does someone know what a single unencrypted bitcoin looks like? For eg, what is the length of a btc coin, in bits? What are the main components of a bitcoin expressed in the form of a C language struct?

Re:What about the alternative virtual coins ? (1)

fisted (2295862) | about 9 months ago | (#46591387)

Made my day.

Re:What about the alternative virtual coins ? (1)

fisted (2295862) | about 9 months ago | (#46591399)

Oh wait, you're being serious? Bad news: There are no bitcoins; they don't manifest as tokens of data. Transactions do, (ending up in the blockchain)

Re:What about the alternative virtual coins ? (2)

gnupun (752725) | about 9 months ago | (#46591527)

Then what exactly are these so-called mining computers producing after spending millions of dollars in computing power and electricity? Smoke and mirrors?

Re:What about the alternative virtual coins ? (2)

vbraga (228124) | about 9 months ago | (#46591567)

SHA256 hashes. It keeps trying to find a hash that satisfy some boundary conditions.

Re:much industrial (1)

thegreatbob (693104) | about 9 months ago | (#46590667)

I'm going to allow this...

Re:much industrial (1)

mx_mx_mx (1625481) | about 9 months ago | (#46590787)

I would mod you funny, but something inside me cries, as your words are so true.

I admire their spunk, but... (4, Insightful)

SpectreBlofeld (886224) | about 9 months ago | (#46590663)

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... (4, Insightful)

mister_playboy (1474163) | about 9 months ago | (#46590695)

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... (4, Interesting)

LordWabbit2 (2440804) | about 9 months ago | (#46590825)

When I see how much hardware and electricity is wasted digging chunks of hardened carbon [wikipedia.org] out of the ground, I can only shake my head.

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... (5, Insightful)

Jack Griffin (3459907) | about 9 months ago | (#46590857)

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.

Re:I admire their spunk, but... (-1, Flamebait)

tigersha (151319) | about 9 months ago | (#46591045)

So true

It's not about Satan. It's about Pussy!

Re:I admire their spunk, but... (1)

geekmux (1040042) | about 9 months ago | (#46591367)

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".

Re:I admire their spunk, but... (4, Insightful)

inasity_rules (1110095) | about 9 months ago | (#46591071)

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.

Re:I admire their spunk, but... (1)

Jesrad (716567) | about 9 months ago | (#46591511)

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.

Re:I admire their spunk, but... (1)

inasity_rules (1110095) | about 9 months ago | (#46591577)

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.

Re:I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46591403)

When I see how much hardware and electricity is wasted digging chunks of hardened carbon [wikipedia.org] out of the ground, I can only shake my head.

You think that's crazy you should look at the energy being used to create these artificially. Much of our modern manufacturing world is based around diamonds due to their hardness properties. They are more than just a shiny thing to wow a lady.

Re: I admire their spunk, but... (1)

AudioEfex (637163) | about 9 months ago | (#46590925)

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 "big business"/corporatiszation and government regulated like the new IRS rules regarding it).

Re: I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46590989)

It's not a "waste" of hardware and electricity. This is the backbone of an infrastructure that validates bitcoin transactions (and obviates double-spending and takeovers).

Re: I admire their spunk, but... (1)

Anonymous Coward | about 9 months ago | (#46591109)

Validiation of Bitcoin is the very definition of a waste of electricity and hardware

Re: I admire their spunk, but... (1)

cmdr_tofu (826352) | about 9 months ago | (#46591315)

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.

Re:I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46591055)

2140. Not that I have any particular stake in it, but it's kind of an easy thing to look up. Chances of Bitcoin still being around then are slim at best.

Re:I admire their spunk, but... (4, Funny)

pantaril (1624521) | about 9 months ago | (#46591161)

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... (0)

Anonymous Coward | about 9 months ago | (#46591289)

They actually don't make much of an effort to secure your account at banks because they've done risk analysis and the potential loss is considered acceptable. I'm not actually joking about this, I have insider knowledge.

Re:I admire their spunk, but... (-1)

Anonymous Coward | about 9 months ago | (#46591277)

When all the coins are mined, an exponential amount more energy will be consumed validating each transaction giving miners additional ways to generate more income. Each time a user makes a transaction, miners help to facilitate that transaction by unlocking coins right now. They charge a very small bitcoin fee right now for the right to make a transaction, but that fee will go up over time. Especially when the coins are all mined. The problem is, energy consumption won't go down, it'll go up after all coins are mined 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. A republican must have designed this cryptocurrency, either that or someone in the power industry. At some point we're going to need fusion reactors or we're not going to be able to light our homes because all energy will be dedicated to cracking virtual currencies. It doesn't help either that now there are a multitude of types of altcoins either. The problem was bad enough with just btc.

Re:I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46591501)

The problem is, energy consumption won't go down, it'll go up after all coins are mined 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

It's not the number of previous transactions which determines the difficulty of "cracking" each block - it's the total amount of computing power dedicated to processing the transactions which determines the difficulty.
If the energy cost of processing the transactions increases beyond the value of the mined bitcoins plus any processing fee, then the number of people mining will decrease, and with it the difficulty, and thereby the cost.

Re:I admire their spunk, but... (4, Interesting)

TeethWhitener (1625259) | about 9 months ago | (#46591473)

This is the main problem I have with Bitcoin. Here we have a brilliant opportunity to harness computing power to solve a socially or scientifically relevant problem, and instead we waste it on solving random meaningless math problems. In my book, an ideal cryptocurrency would use that computing power to solve a protein folding problem, or a plasma physics problem, or any other number of things. You wouldn't need an artificial upper limit like BTC has, because in generating a new block of currency, you'd actually be creating something of value to society. Riecoin [riecoin.org] approaches cryptocurrency from this point of view (albeit still with an asymptotic limit on the number of total currency units, and only applied specifically to computations of potential counterexamples to the Riemann Hypothesis), as does IBM's World Community Grid [worldcommunitygrid.org] to a certain extent (albeit without the ability to easily and securely transfer the virtual cash generated), but I'd really like to see it take off.

Re:I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46591589)

Yeah sure, you get money for providing answers to real world problems. Real awesome idea. Until you realize that people are not interested in providing correct answers but in getting the money.

"Whats the answer to this protein folding problem?" - "42, now give me my money.", that's the first problem you run into with your awesome idea. Hashing is hard to do, easy to verify, thus it works for bitcoin, real world physics problems are not like that

Verifying all the transactions of entire currency securely is a very hard real world problem. And very useful work to do.

Re:I admire their spunk, but... (5, Interesting)

IamTheRealMike (537420) | about 9 months ago | (#46591531)

When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.

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.

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 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... (0)

Anonymous Coward | about 9 months ago | (#46591545)

I hope your head doesn't fall off your shoulders from all the shaking when you find out how much hardware, electricity, real estate and human resources it takes to manage ledgers of conventional currency in this world.

Re:I admire their spunk, but... (3, Insightful)

phantomfive (622387) | about 9 months ago | (#46590731)

I know it's a hard concept to understand, but gold only has its value based on consensus as well.

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.

Re:I admire their spunk, but... (1)

mwvdlee (775178) | about 9 months ago | (#46590779)

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?

Re:I admire their spunk, but... (2)

phantomfive (622387) | about 9 months ago | (#46590807)

Regular currency is not linked to the supply and demand of gold, and hasn't been for ~80 years in the case of the US dollar.

Bitcoin has its own supply and demand curve, like every other currency in the world.

Re:I admire their spunk, but... (1)

fox171171 (1425329) | about 9 months ago | (#46590851)

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.

Re:I admire their spunk, but... (0)

Hategrin (3579025) | about 9 months ago | (#46590943)

Very useful indeed. It's one of the only "super" conductors that doesn't have to be frozen to absolute zero to work it's chemistry. It's also extremely rare, historically it was the first ever used currency. Bitcoin on the other hand is more resembling of "Diablo Gold" (lmao), except that it's not tied to a game. Other than that it's created the exact same way, algorithmically. It's main property is that in the hands of a competent computer user it can't be traced online, so it's often used to buy drugs or hire hit-men w/o creating a record. Without the "silk road" appeal it wouldn't be worth shit.

Re:I admire their spunk, but... (3, Informative)

delt0r (999393) | about 9 months ago | (#46591007)

Gold is not a superconductor at any temperature. Its not even a great conductor. It is soft and makes good "push" connections, hence its use in connectors.

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... (4, Insightful)

TheRaven64 (641858) | about 9 months ago | (#46591517)

If the value of gold were tied solely to its utility, it would be about 10-20% of what it is today. If the value of Bitcoin were tied solely to its utility, it would be 0% of what it is today.

You forgot (4, Interesting)

justthinkit (954982) | about 9 months ago | (#46591525)

You forgot to mention gold's inertness. Yes, copper and silver conduct better than gold but both of them corrode like fiends. To combat this you have to alloy, or coat. You don't need this with gold, and combined with its "softness" (better described as extreme ductility), you can lay down a very thin layer indeed. "Atoms" thick, vs "fractions of an inch" thick. Ask someone designing a satellite which is more valuable. Or a jeweler. Or a circuit board maker.

Re:You forgot (1)

delt0r (999393) | about 9 months ago | (#46591587)

This is true. In fact if gold was cheaper.. It would probably find a lot more uses that it currently does.

Re:I admire their spunk, but... (1)

Joce640k (829181) | about 9 months ago | (#46591319)

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.

Re:I admire their spunk, but... (1)

giorgist (1208992) | about 9 months ago | (#46590743)

Same goes for bitcoin. There is so much of it to go around ... just like Gold, although we know how many bitcoins there are. There are miners and there are non miners. You are a non-miner.

Go DogeCoin! (0)

Anonymous Coward | about 9 months ago | (#46590751)

I've got the spare desktop in my lab keeping one CPU busy mining Dogecoins. It's *research*! It's for *Science*!

It wouldn't be appropriate to use my employer's electricity and resources to mine Bitcoin or even Litecoin at work, and the older Intel mobo GPU doesn't support any of the serious GPU clients, but I figure the US$0.25 or so I've made mining Dogecoin doesn't really count as conflict of interest here. I've tipped a few people on Reddit, and triggered the local botnet detection system (which thinks port 22556, the Dogecoin blockchain pool, is probably a botnet, and in some sense I suppose they're correct.)

Re:Go DogeCoin! (1)

davidhoude (1868300) | about 9 months ago | (#46591275)

I was able to make $2,000 off dogecoin in the first 24 hours, it was amazing. Talk about the right place at the right time, I don't even own a decent video card.

Re:I admire their spunk, but... (1)

Afty0r (263037) | about 9 months ago | (#46590823)

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 understand how currency works...

Re:I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46590863)

Gold will never be worthless to us humans (and probably will never be worthless to any intelligent species). Being a good conducting material is worth a lot. Also what makes it worth what it's worth is that it doesn't corrode easily, same reason why platinum is worth a lot.

Being good for making jewelry is just a bonus, but it's good for making jewelry precisely for the same reason why it's an excellent conductor...

Bitcoin on the other hand... meh, no intrinsic value what so ever.

In the end though, things are only worth something if we all agree that they are worth something, I'm pretty sure we will all agree that gold is worth something far longer than bit coin.

Jewelry (0)

Anonymous Coward | about 9 months ago | (#46590919)

"Being good for making jewelry is just a bonus, but it's good for making jewelry precisely for the same reason why it's an excellent conductor"

No, it's good for making jewelry because it's seen as precious. By your logic, silver jewelry should not exist (it's a pain to keep shiny) and aluminium jewelry would be all the rage.

Actually... (1)

justthinkit (954982) | about 9 months ago | (#46591555)

Actually, aluminum corrodes (i.e. oxidizes) very readily. It just so happens that the coating -- a mix of Al & O atoms -- takes up the same space as pure Al atoms. So the surface Al oxidizes to Al2O3, and once the surface is covered with the oxide, O can not get through to react with the Al. End of "corrosion" but very much an oxide surface. Oxide surface = not attractive in jewelry (just like what happens to silver). Also, absorbing Al through the skin contact is not a good idea.

Re:I admire their spunk, but... (1)

SuricouRaven (1897204) | about 9 months ago | (#46591507)

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.

Re:I admire their spunk, but... (1)

Hategrin (3579025) | about 9 months ago | (#46590977)

I dunno, maybe because Gold is what sparked the idea for currency based trade, and since the dawn of civilization it has withstood the test of time whereas other forms of currency far more creditable in their time than bit-coin haven't? At the end of the day you can always say "you never know what tomorrow may bring", but have some common sense / verisimilitude, or maybe we should all start investing in embalmed foreskins because hey they might become a major currency some day? YOU NEVER KNOW MAN!

Re:I admire their spunk, but... (1)

jandersen (462034) | about 9 months ago | (#46590933)

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 could wipe them out completely today, and the world would be no poorer in real terms.

Re:I admire their spunk, but... (0)

Anonymous Coward | about 9 months ago | (#46591539)

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 could wipe them out completely today, and the world would be no poorer in real terms.

And exactly the same could be said about USD. No intrinsic value, and the world would be no poorer in real terms without it. In fact, we could recover all those resources wasted printing, protecting, distributing and verifying, not to mention all the little pieces of cloth themselves.

Re:I admire their spunk, but... (1)

Rich0 (548339) | about 9 months ago | (#46590985)

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 will be far more useful as a currency.

Thanks for your input (0)

Anonymous Coward | about 9 months ago | (#46591095)

> I'm not serious

Says it all.

Re:I admire their spunk, but... (1)

pr100 (653298) | about 9 months ago | (#46591197)

A lot of the value of gold is simply because people want gold. In that sense it's no different from bitcoins.

Of course additionally it has practical uses in industry, but if that was all there was to it then it wouldn't be stockpiled as a store of wealth the way it is now; and its value would be less.

It's not clear that there is a limited supply... depends on whether you believe the universe to be finite. I'm not being entirely facetious - we could well see commercial asteroid mining operations in our lifetimes.

how (2)

phantomfive (622387) | about 9 months ago | (#46590671)

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?

Current value of Bitcoin (4, Insightful)

billstewart (78916) | about 9 months ago | (#46590737)

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.

Re:Current value of Bitcoin (1)

phantomfive (622387) | about 9 months ago | (#46590809)

What's the point of keeping any of it if you can mine it that easily?

Re:Current value of Bitcoin (2)

SuricouRaven (1897204) | about 9 months ago | (#46590837)

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.

Re:how (2)

pantaril (1624521) | about 9 months ago | (#46591179)

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? (5, Funny)

Hognoxious (631665) | about 9 months ago | (#46590691)

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 ? (2)

Taco Cowboy (5327) | about 9 months ago | (#46590717)

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".

Re:First step of a virtual central bank ? (1)

phantomfive (622387) | about 9 months ago | (#46590739)

What benefit would a central bank provide? (other than for itself)

Re:First step of a virtual central bank ? (0)

Anonymous Coward | about 9 months ago | (#46591383)

The traditional functions of banks would be investing the money of account holders, offering loans, and managing payments between accounts.

The payments bit is already covered by the bitcoin protocol, though I guess you could add some value to the process by acting as an escrow service.

Offering loans in bitcoin.... I believe the term "ahahahahaha yeah right" is appropriate. Nobody sane would try it.

That leaves investment. You could perhaps set up a system for people to invest in stocks and commodities via bitcoin payment, if you were willing to wade through a nightmarish tangle of laws. It might draw some attention. You might even get some people willing to set up a traditional bank account with their bitcoins, the poor trusting suckers.

Re:Why? (0)

Anonymous Coward | about 9 months ago | (#46590725)

Yup. If the post is to be believed, $15.3-25.5 million buys ALL the bitcoins (51%).

Bitcoins looks troublesome.... (-1)

Anonymous Coward | about 9 months ago | (#46590733)

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it is all right (0)

deatypoo (1837038) | about 9 months ago | (#46590761)

They've said it before, I'm saying it again: It's all right to take money from suckers

Re:it is all right (1)

tigersha (151319) | about 9 months ago | (#46591079)

It is immoral to let a sucker keep his money

Fantastic ROI (0)

Anonymous Coward | about 9 months ago | (#46590765)

Investing $3-5 million to garner $4 million a month is a fantastic return on investment. Roughly 1200% per annum.

That's ignoring power and maintenance costs but still, it is pretty good.

Of course, once other people figure this out the entire scheme will flop.

Re:Fantastic ROI (1)

phantomfive (622387) | about 9 months ago | (#46590793)

When he tries to convert that $4million to cash his 'investment' will flop.

Re:Fantastic ROI (0)

Anonymous Coward | about 9 months ago | (#46590813)

That's why his plan is to covert it all to bars of Xanax.

Re:Fantastic ROI (1)

Frobnicator (565869) | about 9 months ago | (#46590917)

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.

Re:Fantastic ROI (1)

JaredOfEuropa (526365) | about 9 months ago | (#46591035)

Out of interest, has anyone tried to cash in amounts like these after the recent hype died down? During the hype I remember people finding some old BTC behind the sofa as it were, and cashing them in the $100k and even $1M ranges. What is the BTC to $ trading volume these days?

Re:Fantastic ROI (1)

Rick in China (2934527) | about 9 months ago | (#46590799)

You're also ignoring the fact that as more coins flow into the BitCoin economy - ignoring the fact it's already lost a ton of confidence due to a series of community upsets, etc - the more liquidity/supply to meet a questionable demand. Will the demand increase to meet the faster incoming supply? I'm betting no. I know also though that the cost of the power/cooling/maintenance/etc is ENORMOUS for this type of operation, and you're also ignoring the fact that the exponentially harder mining calculations will slow their production immensely the faster they mine, so jumping to a "1200% per annum" ROI is ludicrous and missing so many important factors. It's going to bomb. Be surprised if this guy ends up with anything but massive loss at the end of the day - especially if exchanges continue to implode and people continue to abandon the currency.

Re:Fantastic ROI (0)

Anonymous Coward | about 9 months ago | (#46591057)

That's ignoring power and maintenance costs but still, it is pretty good.

TFA:

I figure I spent about $1 million building the existing facility and racking and deployment of the mining hardware, and then we probably spent in the range of $2 million to $3 million on the hardware itself," he said. Rent is another $8,000 a month, power $40,000 a month. "I think we spent probably $3 to $5 million dollars total on the operation. It's paid itself off [in bitcoins] many times over already."

Re:Fantastic ROI (2, Insightful)

deroby (568773) | about 9 months ago | (#46591365)

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 itself already indicates how 'worthwhile' running the setup really is.

(if only they would/could recuperate some of the heath being produced I'd be less sad about it.. right now all I see is 3MW of energy being wasted by a ton of PCB's that will end up in a landfill somewhere in the next years... and apparently this is only 5.6 percent of what is being 'mined' around the world, the proverbial tip of the iceberg... humanity deserves to die...)

Re:Fantastic ROI (1)

gnasher719 (869701) | about 9 months ago | (#46591579)

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?

Re: Fantastic ROI (0)

Anonymous Coward | about 9 months ago | (#46591069)

You can't ignore power, rental of the space etc.

Then the difficulty goes up to compensate and within a few months you're not even in profit any more..

wow you chimps are out of control (0)

Anonymous Coward | about 9 months ago | (#46590769)

you're effectively asking to get butt hurt by the NWO.
Mining nothing and wasting energy, and devaluing society in one swoop.

Johnny-come-lately jerks spoil everything fun (0)

Anonymous Coward | about 9 months ago | (#46590791)

Next thing you know, they'll screw up dogecoin, too.

Dorks.

Not even one of the biggest (4, Informative)

Animats (122034) | about 9 months ago | (#46590841)

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.

Re:Not even one of the biggest (2)

TCM (130219) | about 9 months ago | (#46591167)

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.

Re:Not even one of the biggest (1)

geekmux (1040042) | about 9 months ago | (#46591393)

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.

raytracing coins (0)

Anonymous Coward | about 9 months ago | (#46591001)

Can the raytracing equations be used as a proof of work? The BTC chips are useful only for mining BTC and when they are not any longer powerful enough because of the raising difficulty they can be only thrown away. I think that if the effort put to generating SHA256 in silicon would be put to harware solving ray-polygon intersections, the computer games and lots of ther stuff would be at a completely different level now. And the obsolete harware could be used for other purposes.

What a waste... (0)

Anonymous Coward | about 9 months ago | (#46591195)

It'll be funny to see this bubble burst...

I realize this is nothing next to HFT, but (4, Insightful)

Truth_Quark (219407) | about 9 months ago | (#46591291)

what a wonderful way to utilise $3-5M to the advancement of society, produce a valuable commodity and generally bolster the economy in these times of decreasing worth.

Re:I realize this is nothing next to HFT, but (0)

geekmux (1040042) | about 9 months ago | (#46591407)

what a wonderful way to utilise $3-5M to the advancement of society, produce a valuable commodity and generally bolster the economy in these times of decreasing worth.

If this is "nothing" compared to HFT, then realize just how much of an impact it has by comparison.

In other words, Bitcoin is a single drop in the financial ocean of corruption. And the only thing our society is interested in is the advancement of wealth.

WWot Fp (-1, Offtopic)

Anonymous Coward | about 9 months ago | (#46591323)

News? (0)

rebelwarlock (1319465) | about 9 months ago | (#46591433)

Some random tool wants to do something. Is he doing it? No? Get back to us when it's not a non-event.

Only the wealthy can really do it now (0)

Anonymous Coward | about 9 months ago | (#46591439)

Bitcoin has become yet another juicy prize for the already-wealthy, since it is nearly impossible to generate any bitcoin unless you have the capital to be the first to obtain the latest ASIC, and in large quantities.

How many hopeful miners pour $1000 to "pre-order" (and pre-pay for) the next miner only to wait a year for it, while the people they paid $1000 to for it use it to build their industrial mining racks?

The whole thing is rife with fraud and deception, and as usual the 1% get all the spoils.

What if (1)

StripedCow (776465) | about 9 months ago | (#46591549)

What if 10 other people also decide to mine 10% of all bitcoins?

Current rates (5, Funny)

symes (835608) | about 9 months ago | (#46591559)

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...

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