

10,000 Bitcoin Mining ASIC Chips Arrive in Switzerland – 3 TH/s - cgi_man
http://thegenesisblock.com/10000-bitcoin-asic-chips-arrive-in-switzerland-3-ths/

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atte
I'm fairly new to the Bitcoin world, but it seems to me that ultimately (in 10
years or so) one of two things will happen:

1) Bitcoin will gain large-scale adoption. As a result, the value of Bitcoins
will greatly increase from what it is today.

2) Bitcoin will fail due to government regulations, better alternatives, or
other unforeseen reasons. As a result, Bitcoins will become effectively
worthless.

Am I oversimplifying so far? If I'm not, then it seems like investing
substantially in Bitcoins (purchasing coins) now will either make me very rich
in 10 years, or I'll lose my initial investment.

By the same logic, if I earn coins by mining now and hold them, I will either
be rich in 10 years, or I'll lose my mining investments.

I'm not interested in diving into mining to earn a quick 10-20k while the
market fluctuates, so as a long term strategy it sounds like investing is the
more sensible and less time consuming option. Thoughts?

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nullc
A lot of people agree with this thinking.

It's not the only possibility— e.g. Bitcoin could putter around for a long
time basically where it is now, maybe acting as a very mild threat the keep
the alternatives on their toes enough that Bitcoin never gets widespread
adoption.

Right now it's possible to make a decent amount _today_ with mining as a small
/ hobby business, supplying coins to people who don't want to get into the
mining stuff, without engaging in major speculation yourself.

~~~
ams6110
I see this "puttering" as the most likely possibility, since if they do hit
some level of adoption that starts to threaten sovereign currencies, the GP's
option (2) will come into effect.

~~~
mrb
Maybe some non-democratic governments will become hostile to Bitcoin, but
democratic ones will most likely not try to stop it because they eventually do
what the people want.

Case in point: even the US Treasury Department's FinCEN bureau recognized
enthusiastically that Bitcoin offers "potential" and "holds great promise" to
US economy:
[http://www.fincen.gov/news_room/speech/pdf//20130613.pdf](http://www.fincen.gov/news_room/speech/pdf//20130613.pdf)

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fatjokes
Such a waste of electronic computing power.

EDIT: what I meant by a waste of electronic computing power is that it does
nothing for the world beyond pumping out more bitcoins. I guess it's more of
my opinion on bitcoins in general than this particular artile. All the
computational energy is not used to search for a cure for cancer, or aliens,
or crack a code, or used to compute a deep neural net. I guess I would compare
it to high-frequency trading---it makes people (a lot) of money, but doesn't
deliver any net gain for society.

~~~
criley2
It's not a zero sum game.

It's not a "waste" of computing power at all, in my opinion.

\- If BTC did not exist, this computing power would not exist. The demand for
this power is in addition to other forms of demand. This isn't taking away
power from any other field, it's simply new power being added for a new cause.
\- The technology derived from this "arms race" can benefit far more than this
field.

Why wasn't the moonlanding a "waste" of money, talent and science? Because of
the training it provided people and the tools and technologies they developed,
etc.

~~~
fatjokes
> The technology derived from this "arms race" can benefit far more than this
> field.

Sure, I guess...

> Why wasn't the moonlanding a "waste" of money, talent and science?

The moonlanding was a major advance for mankind, independent of all the long-
term benefits that have since arisen. You're comparing that to bitcoins?

~~~
mrb
You seem to not understand the potential benefits of widely adopted
censorship-resistant (decentralized) currency. Try living in Argentina where
the government is inflating your currency, while prohibiting you from moving
your assets to USD. Try living in China where the government will seize your
bank account if you are a business deemed too successful and if they deem they
need a share of your profits. Etc.

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chris_mahan
so, just like in the gold rush of 1849, those getting rich are those selling
equipment to the miners.

~~~
cryowaffle
It's more like "there ARE people getting rich selling equipment". There are
plenty of miners getting rich.

~~~
astrodust
This isn't manufacturing money out of nothing. This isn't generating physical
materials with tangible value.

The only money being generated here is simply being vacuumed out of the
pockets of investors losing money on trades or exchanges.

In that sense it's not unlike online poker.

~~~
jnbiche
If "generating physical materials with tangible value" is your benchmark, what
are your feelings about Internet companies like Google and Facebook? They make
very little in terms of physical goods.

Recall that Bitcoin allows people to send money around the world in an
extremely simple fashion, and at almost zero cost. Banks typically charge
$15-$20 for international wire transfers _on both ends of the transaction_. I
grant you that there a huge amount of speculation, but surely the ability to
transmit value around the world, securely and very cheaply, is worth
something?

~~~
astrodust
The thing is, Google and Facebook both produce something with actual value, be
it content, or databases, or user data, or people's photos with their
intrinsic value. Bitcoin is literally just numbers. It's not even pieces of
paper. That's why it's better compared to virtual poker chips.

Also, the transaction fees for Bitcoin are surprisingly steep, especially if
you want to convert it back to cash. You'll easily pay $30 per transaction for
$1000 worth of BTC just to cash out.

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vehementi
Am I missing jargon or are they saying terahertz per second?

~~~
chmodd
It's terahash where hash means double sha256 that is used in the bitcoin
proof-of-work protocol

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pontifier
So... I agree that Bitcoin has some advantages, but it's disadvantages are
quite high as well.

It seems to me that all the money going into Bitcoin mining equipment, and all
the power being used to run it is essentially an indirect tax on Bitcoin
usage... I wonder what the total value of Bitcoin transactions in USD compared
to the cost of electricity to keep the block chain up is.

The true value that Bitcoin mining provides must be some low percentage of the
total Bitcoin transaction volume... or am I missing something?

~~~
dragontamer
It is _impossible_ for Bitcoin transactions to take place without miners. BTC
miners provide cryptographic integrity, proving that transactions took place
at a certain time between certain people.

Bitcoin is purely held up by the community of miners. The integrity of BTC
becomes greater and greater the more trusted miners enter the system.

~~~
pontifier
Couldn't this be achieved in some sort of other way? One that does not require
hundreds of thousands of dollars worth of equipment and electricity? Couldn't
a regular PKI message digest on the transaction list work?

I suppose there's something I'm not getting about this.

~~~
dragontamer
Bitcoin is a voting-based protocol. The "vote" with 51% of the computational
power of the system wins.

By performing very very hard math problems with every PKI digest (ie, the
"proof of work"), with a "difficulty level" such that it'd take the _entire_
BTC network approximately 10 minutes to find a solution... then it becomes
extremely extremely difficult for someone to enter the BTC system and screw up
the public ledger.

You see, BTC is a distributed database, cryptographically signed by the BTC
miners every 10 minutes. The difficulty of _performing_ the signature is
automatically adjusted to take a ridiculous amount of time.

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oh_sigh
What happens when all 21 million bitcoins are mined? How will transactions be
archived if no one is putting in the effort to mine bitcoins?

~~~
nadaviv
Transaction fees are expected to replace the block reward by the time that
happens.

~~~
chmodd
Which is year 2140 or so

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dragontamer
This basically will signal an end to the typical BTC pools. At .1 BTC (~$10)
per chip, it is now possible to beat a $400 AMD 7970 with just $20 worth of
chips.

~~~
cryowaffle
This doesn't change the pools at all (pools don't change if everyone uses
ASIC). This does probably signal the end of GPU mining though.

~~~
tomjen3
Fuck bitcoin, if custom chips are that much cheaper the GPU power in cracking
hashes then most key streching algorithms are worthless.

~~~
tomjen3
Apparently people downvote me. I don't hate bitcoin, but if the relative power
is true then this is so much bigger than bitcoin.

~~~
dragontamer
Lol. You made a good comment, I dunno why you got downvoted.

One thing to note: key stretching is a good idea nonetheless. hashing ASICs
will be millions of times slower _regardless_. They may be hundreds of times
faster than a computer, and hundreds of times cheaper... but the effect
doesn't get you what a good Bcrypt-difficulty 12 gets you (ie: key-stretching
with ~4million hashes)

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nerdo
What is this in current $/hr?

~~~
jnbiche
If my off-the-cuff calculations are right, then a little under $10/hr for the
whole batch of 10,000 chips that just arrived(i.e., each chip will generate
about $0.01/hr), which seems pretty low until you realize that each chip costs
only about $10. Break even point is about 40 days, right? Not bad at all.
Unfortunately, difficulty will probably spike, so these rates are not
sustainable. And who knows what the price will do.

Unless you're a very shrewd businessman and want to do this full-time, you're
far better off just buying Bitcoins if you're interested in speculating on
them. Just remember that Bitcoin prices will inevitably plummet, go sky high a
few months, and then re-plummet. It's just what Bitcoins do.

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laserbrain
[http://i.imgur.com/zAMkNCV.gif](http://i.imgur.com/zAMkNCV.gif)

