
A Bitcoin miner in every hand - zmanian
https://medium.com/@21dotco/a-bitcoin-miner-in-every-device-and-in-every-hand-e315b40f2821
======
wlesieutre
Instead of spending $1 on something, you can burn $5 of electricity! Suppliers
figure you're more likely to waste some energy than you are to type in a
credit card number, so they say go for it.

And as the big ASIC miners get more efficient, your device will generate even
less revenue. In two years, you'll be running at a small fraction of the
chip's original mining rate, but still wasting just as much energy!

[http://media.coindesk.com/2013/09/bitcoin-difficulty-
graph.p...](http://media.coindesk.com/2013/09/bitcoin-difficulty-graph.png)

I'll pass, thanks.

~~~
oska
More like spend 5 _millionths_ of a cent's worth of electricity to receive a
transaction token that trades for 1 millionth of a cent. But that token (1
satoshi) has much more utility than as just a store of value and has been
loaded onto your personal device without you having to do anything. And can be
used by software on your personal device to give you extra functionality
without again you having to do anything. Or even really understanding how it
works or what is going on at the technical level.

People walk around with extra apps on their phones consuming battery life all
the time. If a user was presented with an option to turn on some hardware in
their phone that gave them all sorts of interesting additional functionality
and at the same time were warned that it would decrease the battery life of
their phone by 1 or 2 percent then I think you have a viable proposition.

~~~
monochromatic
Why not have a background app that periodically purchases a satoshi now and
then?

~~~
teekert
I guess an important (not to say THE) feature is that you get paid services
without setting up any payment method like a credit card/paypal etc.

------
silverpikezero
I am extremely glad that most comments here see the inherent craziness of this
idea. I am a hardware designer who participated heavily in mining since Jan
2011, and gave up completely on Bitcoin in summer of 2014.

The big problem that Balaji is completely ignoring is that SHA256 cores
implemented in silicon have extraordinarily high power consumption relative to
their size (mm2). This is due to the incredibly high signal switch rate
inherent to implementing avalanche-style ciphers [1] in hardware. Perversely,
most modern semiconductor processes optimize for static (leakage) power, since
modern silicon designs are more vulnerable to this than to dynamic power. No
rational semiconductor maker will want to include this IP on chip, because it
will drastically complicate the power distribution metal layers. Additionally,
it will require more expensive packaging, since you will need many more power
and ground pins to source/sink the required current. I know this first hand
after building a mining ASIC myself. I would venture a guess that most SoC
chips would cost significantly more due to the extra engineering time and
packaging cost needed to include this IP.

This entire concept is a non-starter for me.

[1] [http://research.neustar.biz/2012/02/02/choosing-a-good-
hash-...](http://research.neustar.biz/2012/02/02/choosing-a-good-hash-
function-part-3/)

~~~
lukifer
Out of curiosity: what made you give up on Bitcoin? (I'm still bullish on
crypto-economies in general, but am concerned that the electricity costs of
PoW creates a downward price pressure that's unsustainable.)

~~~
IkmoIkmo
Why would that be? The maximum PoW can depress the price is the inflation
rate. Nobody will pay $1 for electricity to generate <$1 of bitcoin. And the
inflation rate of bitcoin is set to drop below that of any large currency like
dollars, euros, yen.

In other words, the money supply that causes inflation (downward price
pressure of currencies) is by design lower than fiat currencies. It's one of
the key things supposedly we're not ought to be concerned about with bitcoin,
so far I see no reason to think otherwise.

~~~
ssharp
> Nobody will pay $1 for electricity to generate <$1 of bitcoin.

Hobbyist miners are convincing themselves that <$1 of Bitcoin will be worth
>$1 the future. Major miners seem to have question business models as well,
where they are either losing money or have something shady going on with their
cost of electricity. BTC still seems to be very prone to pump-and-dump
schemes, so major miners may be able to pump the price enough to sell their
coins profitably before the next crash.

~~~
IkmoIkmo
No not really. If you believe $1 of X will be more than $1 in the future, you
buy it for $1, you don't pay more than $1 for the manufacturing or mining of
$1 of X, it makes no sense from a financial perspective, especially considered
the time, effort and substantial risks in purchasing and running mining
hardware.

The argument that you mine to hold to invest, while mining and selling right
away is unprofitable, doesn't really hold when you can just buy and hold
instead for cheaper and less hassle & risk.

The exception is of course when buying coin isn't an option, but buying
electricity & hardware is. Which is why you may see shady operators mine above
cost in China, because purchasing bitcoin in bulk in China can't be done
easily anymore, a substantial premium cost.

But generally speaking, mining expenses approach mining revenues and top out
there, as with virtually every other market. There are some caveats sure but
they're not the rule.

Beyond that though, electricity isn't very relevant. At the end of the day if
you have 1 million bitcoins, and the annual mining rewards are 50k bitcoins,
the most coins that can be sold is 5%. Regardless of electricity prices, the
new supply is 5%. Whether it ends up in the hands of miners or others, that's
the inflation and the amount of downward pressure. It's true if electricity is
expensive and margins are tight, miners sell more quickly. But in the long-
run, the supply on the market is still averaging 5%, there's no magic way to
go above that number. You could see miners sell 0% the first half of the year
and then the entire 5% the second half of the year when margins are tight and
miners sell to get cashflow, but it's still 5% a year, regardless of
electricity prices.

So 5% is just a hypothetical number, but the reality is that by design it's
set to go to 0%, again regardless of whether electricity is cheap or
expensive. Which is why I contest the earlier statement by the guy I replied
to that electricity prices is something to worry about.

~~~
sanswork
>No not really. If you believe $1 of X will be more than $1 in the future, you
buy it for $1, you don't pay more than $1 for the manufacturing or mining of
$1 of X

I know you read /r/bitcoin so I know you know that there are a lot of people
who stupidly don't think about it that way even just in that subreddit. There
are also a lot who think their tiny collection of miners is contributing to
the hash rate and helping the network even if they are losing out.

Also with all the delays in shipping miners there are a lot of people mining
with obsolete hardware just because they don't have to feel completely scammed
so if they mine something they can convince themselves it was worth it.

------
Animats
This makes no sense. This is what a current Bitcoin mining operation looks
like.[1] It looks like a low end data center. Few cables, because the miners
only need to communicate when they find a block or are getting new starting
points. Power and cooling costs are a huge issue in Bitcoin mining. Most
profitable Bitcoin mines are in cold places. This one is in Sweden. There are
bigger ones in China. There's no way a small, low-powered Bitcoin miner can
make money today. That era ended years ago.

The way Bitcoin mining works, you don't get anything unless you win an entire
block. That happens about once every 10 minutes over the whole Bitcoin
ecosystem. If they're talking about "a constant stream of satoshis", they mean
you're a slave of their mining farm, working for them and maybe getting paid
some pittance by them.

Is this thing a hoax? They're on Reddit, Twitter, and Medium. They have a web
site with no useful information. ([https://21.co/](https://21.co/)) They claim
to have a development kit, but have no pictures or specifications. There are
no numbers about this, just PR blithering. It looks like another Bitcoin-
related scam. It's been only few months since the last big one, Paycoin.[2]

[1]
[http://www.datacenterknowledge.com/archives/2014/07/10/massi...](http://www.datacenterknowledge.com/archives/2014/07/10/massive-
bitcoin-mines-spring-up-in-warehouses/) [2]
[https://bitcoinmagazine.com/20050/death-paycoin-employee-
vid...](https://bitcoinmagazine.com/20050/death-paycoin-employee-video-
reveals-internal-chaos/)

~~~
IkmoIkmo
It's not a Hoax, they're the real deal with very solid co founders, top
ranking VC backing and a top of the line board. All mainstream stuff. For
example their CEO, or one of their backers in Andreessen Horowitz.

The whole mining idea is complete rubbish. I have no clue how these two facts
are compatible but they are.

It's very very strange. I can see how a hardware wallet on a dedicated chip is
important, and how blockchain authenticated devices with unique private keys
has use cases. But you don't need mining for that. It's still a mystery to me
what the idea is.

~~~
marincounty
The founders should be here explaining their company? I'm not sure what they
are trying to accomplish; even after looking at the Job posting
qualifications. I have a vague idea, but still confused.

I know it's difficult to explain new technology, but just give it a shot?
Maybe they don't know they don't know they are on HN, or I just got conned out
of an email address?

~~~
IkmoIkmo
Yeah it's a bit of a mystery to me.

The blog post goes a long way in hinting here and there, but leaves lots of
unanswered questions. I'll give it a shot for you if you'd like.

The underlying idea is interesting. At its core mining bitcoin represents an
opportunity to earn money for proof of work, and work is done by electricity
going into hardware. If everyone has hardware, then that means you can run a
payment system on electricity. And that's hugely powerful and exciting. Want
to your fridge to stock some Chicken? Well it's plugged into the socket, just
turn electricity into money, and let your IoT fridge order chicken, an Amazon
drone will deliver it, all paid for with bitcoin, automatically, without
humans involved.

It's a slightly crude example but it hints at interesting opportunities. Have
a lightweight computer at home and want to render a 3d model? Simply turn
electricity into digital money, and pay a cloud computer to do it.

Electricity as a payment channel. Anyone you have power, you have access to
internet and financial networks.

But that's kind of where it all breaks down. The economics make very little
sense. You can't have local consumer grade mining hardware mine bitcoin to pay
for cloud computing, without at the same time living in a market in which
these cloud computers can mine the bitcoin themselves, much cheaper, with
industry grade hardware and access to cheap electricity rates and cheap
cooling in places like Iceland.

Mining is a zero sum game. Every 10 minutes 1 person wins the lottery, and the
amount of lottery tickets depends on how big your hardware is, and how
efficient it is in turning electricity dollars into tickets. Because industry
grade hardware is more efficient and electricity is cheaper for industrial
purposes, the professional miners mine at below average costs, the consumers
at above average costs.

It follows then that it's cheaper for a consumer to simply source or license
mining power in the cloud, or indeed, simply purchase bitcoins from
professional miners, for less than it'd cost them to mine them themselves.

And it's no surprise this has been exactly the way of bitcoin for the past few
years since professional mining took over in full.

And if bitcoin is ever to become truly mainstream - if not, this entire
venture of putting chips in millions of devices is irrelevant to discuss -
then purchasing and using bitcoin should be as easier or easier than sending
an email. Making it trivial to finance your IoT devices with bitcoin without
having to mine it, too. Indeed already using Circle you can instantly buy
bitcoins at 0% commission, not much harder than signing up with Gmail.

And this is just one of the various fundamental issues. The other one is that
mining very rapidly increases in scale. If you'd have had a smartphone that
had a mining chip in 2011 that used bitcoins to get service, it'd now be
defunct as its mining output dropped by a factor of a million or some crazy
amount like that. Mining output and difficulty is unpredictable, yet
constantly growing. It's as if you had a smartphone charger that charged 80%
less a year later. It's not practical.

Beyond that, the whole idea of discounting consumer devices to recoup revenues
in mining requires serious technical challenges to be solved. i.e. forcing
devices to mine continuously after purchase, and worse, forcing humans to
charge and turn on their devices long enough to spend their electricity on
paying back the proverbial debt on their discounted purchase. It's a business
model which is not quite a no-brainer.

Lots of unanswered questions. There's genuine IoT potential and it's very
interesting to think about, but so far only in the realm of sci-fi ideas whose
economics make little sense.

Ignoring the mining bit for a moment, you're left with bitcoin wallets on IoT
hardware that happen to not mine, but that can receive and spend money.

And that's hugely exciting. Send your router or PC $10 and it'll automatically
add small pieces of bitcoin to http requests and you could create a different
payment model besides ads and subs. Send your driverless car $100, and it'll
drive to the nearest charging station at night and charge itself, then while
driving on the highway while late for a meeting, pay $1 to any driverless cars
configured for 'not-in-a-hurry- in front of it to move out the way, creating a
real-time market based VIP lane for you that more efficiently dedicates scarce
lane space to priority users. (it has flaws, but it's an enticing example).

I'm hoping they're looking to spearhead this and that the mining bit isn't as
big as it's made out to be.

Examples like that can't be done through traditional banking systems like ACH
or SWIFT. You want digital payments, even creditcards are slow to clear.
Paypal could work, but it's proprietary, similarly we don't like to run the
internet on proprietary protocols and platforms, either. Bitcoin is an open
protocol and can be built on top of with fast or slow transactions, cheap or
expensive etc. It's a unique platform to make global, plug & play, open-2-all
IoT platforms possible.

~~~
marincounty
Thanks! I found out a little bit about the founder(I think)--forget his name,
but he seems legit. He's a founder of vagabond.something, and was a player in
Skype. I listened to his podcast, and he was pretty grounded in reality. I
heard he was given 5 million a few years ago to get this thing started; which
doesn't seems like enough to manufacture your own chip? After every job
posting, the company is offering a Mac book pro retina as an incentive to join
the company. For some reason I started to laugh, but you need a laptop to
work, and why not a Mac book pro retina? What I got out of the podcast is the
TV show Silicon Valley just might be a documentary. I guess I didn't realize
just how important Silicon Valley has become, and seems akin to an amusement
park in some ways. No wonder rents in the Bay Area are beyond staggering. The
podcast I watched was about vagabond.someting--not this company.

~~~
IkmoIkmo
Never heard of Vagabond before. If you want to know his background a little
bit, this is a good start:

[http://www.technologyreview.com/video/521121/innovators-
unde...](http://www.technologyreview.com/video/521121/innovators-
under-35-balaji-srinivasan-cofounder-counsyl/)

As for Skype... the company is backed by VCs like Andreessen Horowitz and
Peter Thiel who all invested in Skype. Don't know any other connection to this
company.

As for your comments about Silicon Valley, yeah it's pretty crazy. The basic
idea is that companies like Google, Apple or Facebook have millions or even
billions of customers/users and are some of the biggest companies in the
world. Meanwhile they have very few employees because their product is mostly
software, and 1 guy can code a program that a billion people use, unlike say a
barbershop where 1 person can only cut a few thousand people's hair. Which
means that the potential reward for the very best programmers (a small team of
whom can build products used by millions) can go through the roof in a free
market.

Which is why you get wages of $100-200k for solid programmers. And something
like a free Macbook Pro then is not a big deal. It costs $1500, it's used for
3 years, so the cost is $40 a month, peanuts for someone whose wage is already
$10k a month. It makes sense to spend an extra 0.4% for one of the best
laptops available allowing your employees to be productive anywhere anytime
they want.

And if a $50 gym membership & free lunch makes people happier, more productive
and absent due to illness, to the extent they're only 5% more productive, you
get an additional 5% of $10k of 'work', or $500, so it makes sense to give
employees free gym memberships that cost you $50.

If you run a private bus service with wifi for employees and pay $500 for a
private bus driver for a day moving around 100 employees who don't have to
take a crappy bus, and those 100 employees are 5% more productive because they
can get to work sooner (or leave home later and more rested), and work on the
bus because it has wifi and is spacious etc, or because they can have
breakfast on the bus, that 5% productivity gain nets $50k in total for the 100
employees, and costs a fraction of that.

etc etc. That's the kind of reasoning going into making it an amusement park.
It makes a lot of economic sense to spend a lot of money to make employees a
bit happier, more productive, less absent and reduce employee turnover, when
these employees already cost $200k and in small teams build large software
products. It also makes sure talent is attracted to work at your company
specifically, and is less inclined to leave once they get there.

All of which can make for some amazing working environments, and also very
silly outcomes (as well as friction in communities where people live that
don't have any of those benefits but work just as hard, and have to see things
like awesome private buses for some citizens, while they have to take shittier
public transport, for example. There's been quite a bit of controversy in
Silicon Valley about stuff like this the past few years)

------
paulbaumgart
From what I gather, the Bitcoin mining is really just a way to incentivize
device and chip makers to include 21's tech, in the short term.

I can think of two longer term benefits that only kick in once they actually
get their tech widely distributed:

1) A low-power hardware wallet in your smartphone, smartwatch, etc, allowing
people to make Bitcoin transactions from anywhere to anyone without needing to
go through a middleman. Finally, true digital cash.

2) A Bitcoin private key on every Internet of Things device, which means that
you'll be able to use some sort of fancy multisig side-chain algorithm (I'm no
expert here) to verify ownership of all of your "stuff." This will
disincentivize theft in a big way.

It's worth noting that, to make mining a viable way to bootstrap this whole
thing, they need to be at the cutting edge of Bitcoin ASIC tech for multiple
iterations of Moore's Law. Which is probably why they raised so much money.

~~~
zwtaylor
I hope you're right, there _must_ be other components to their business model
to warrant $116m in investment capital. At face value this all appears beyond
foolish, though I'm rooting for them to make me eat my words down the road.

"21 Inc., formerly 21e6, announced it had raised US$116m in venture capital,
the largest investment yet accumulated by a startup in the digital currency
industry. 21 Inc.'s lead backers include American Andreessen Horowitz and RRE
Venture, Chinese Yuan Capital, as well as strategic investor and chipmaker
Qualcomm Inc."

[http://cointelegraph.com/news/113668/bitcoin-
startup-21-inc-...](http://cointelegraph.com/news/113668/bitcoin-
startup-21-inc-reveals-industry-record-funding-of-116-million-dollars)

~~~
jboggan
I'd wager a decent fraction of their $116m is being held in Bitcoin. If
Bitcoin could magically go to mass adoption that would stimulate a price in
the range of $10-50k/BTC. Holding a few million $ of Bitcoin now and "doing
stuff" that makes the Bitcoin more valuable has a higher expectation than
trying to build sustainable business model around the Bitcoin ecosystem.

------
drcode
I by no means would call myself an expert on Bitcoin, but I did coauthor a
book about Bitcoin.

All I do when reading stories about 21 Inc is parse every sentence very slowly
saying to myself "What is it I'm missing that turns this from a terrible idea
into a good one?"

I have yet to discover such a sentence... I hope I'm wrong and will still read
it at some point.

~~~
waterlesscloud
That's what I was thinking. I've been pretty into cryptocurrency for a good
while now, out on some pretty distant frontiers at times. And the mining
aspect of this makes no sense at all to me. I don't get it.

~~~
davidgerard
I think that's the bit where they're selling snake oil to the lower quartile
of VCs. You and I know it's completely ridiculous, but they don't.

------
stephengillie
My comment for a similar thread about Intel manufacturing Bitcoin mining chips
([https://news.ycombinator.com/item?id=9537691](https://news.ycombinator.com/item?id=9537691)):

 _I think you just landed on the "Free" version of future electronic devices.
Imagine a terrible reality, not unlike today's videogame market, where every
device, charger, lamp, TV, and box fan comes in "Free" and "Pay" versions -
most manufacturers will have a mail back program, so you can return a broken
"Free" item for a brand-new "Free" item. The "Free" items will mine Bitcoins
and return all profit to the manufacturer._

 _Meanwhile "Pay" items will still be widely available from numerous online
vendors. These devices will require you to enter your personal Bitcoin
address, so they can credit you with their mining._

 _And thus the world will continue to be dominated by Whales, so named for the
size of their bank accounts. The rich will be able to keep the entirety of
their revenue, while the poor must subsist not only on the charity of the
State, but also the charity of the Corporation._

------
RaphiePS
I don't want to be overly dismissive -- I'm sure this is a huge engineering
achievement -- but I just don't get it. A mobile phone, where battery life is
precious and a big differentiating factor between devices, seems like the
absolute last place you'd want to mine bitcoin. Manufacturers have spent years
optimizing for battery life - why would they want to shoot themselves in the
foot? What consumer in their right mind would buy a phone advertised as, "your
battery will die much sooner, but hey, you don't have to use your credit card
as much"?

Perhaps I'm wrong, and I'd love to be corrected. But I don't see the point.

~~~
hatu
This is absolutely insane. You're basically getting $0.00000001 USD for
cutting your phone battery life significantly.

------
kens
I can't see how this make sense. Even if you assume that it's useful for a
device to have some bitcoins available, it seems much more efficient to either
supply them when the device is created or download them on demand. The cost of
building a mining chip into the device plus the expensive power consumption
plus the difficulty of maintaining a network connection to access the mining
pool seems way more than the cost of just providing the device with bitcoins.

A key point from the article is: "Crucial to this is the idea that bitcoin
generated by embedded mining is more convenient — and hence more valuable —
than bitcoin bought at market price and manually moved over to the site of
utility." I just don't see that, especially if you assume bitcoins mined on
the device are going to be much more expensive (because of less efficient
mining and because of 21's overhead.)

------
URSpider94
I would love to see an analysis of how much BTC a user could generate in a day
on his/her cell phone with only a 10% impact to battery life. I'm imagining
that it's pitifully small today, and it will only be 10% of that number a year
from now. Any more than that, and I don't see users accepting the trade-off.

~~~
steckerbrett
An iPhone 5 battery is about 5 watt hours, ten percent of this is 0.5 watt
hour. [0]

The most efficient mining chip I could find information about is the BM1384,
which consumes 2.058W at the lowest power bracket. [1]

We would exhaust our 10% allotment in 15 minutes.

In those fifteen minutes our speed would be 8.25 gigahash per second, which
would produce 0.000003542 BTC per day [2].

Our total income for 15 minutes of mining would be 0.00000003689583 BTC.
[3][4]

At $237.7/BTC our 10% iPhone 5 battery life has been exchanged for
$0.000008770 USD.

Assuming 0.17 USD power cost in the United States, the power cost would be
0.000085 USD. [5]

[0]:
[https://en.wikipedia.org/wiki/IPhone_5](https://en.wikipedia.org/wiki/IPhone_5)

[1]:
[https://www.bitmaintech.com/files/download/BM1384_Datasheet_...](https://www.bitmaintech.com/files/download/BM1384_Datasheet_v2.0.pdf)

[2]:
[https://bitcoinwisdom.com/bitcoin/difficulty](https://bitcoinwisdom.com/bitcoin/difficulty)

[3]: This number isn't even representable in Bitcoin, which maxes out at 8
decimal places of precision.

[4]: The reward halves in 62 weeks though.

[5]:
[https://en.wikipedia.org/wiki/Electricity_pricing#Price_comp...](https://en.wikipedia.org/wiki/Electricity_pricing#Price_comparison)

~~~
bduerst
Following your example of using the most efficient miner available and
ignoring heat, size, etc. restrictions:

Average cost of electricity for U.S. households is $0.12/kWh [0]

0.05 Wh = $0.000006 average cost

Net Profit = $0.0000008801 - $0.000006 = -$0.000005120

Net profit margin = -581.7%

[0]
[http://www.npr.org/sections/money/2011/10/27/141766341/the-p...](http://www.npr.org/sections/money/2011/10/27/141766341/the-
price-of-electricity-in-your-state)

~~~
aakilfernandes
The author states in the article he's more interested in expanding the use of
the blockchain as a ledger (as opposed to a store of value).

~~~
bduerst
Which is strange given their cost-savings examples using bitcoin mining.

This might work for authentication, but they shouldn't sell it as "bitcoin-
subsidizing devices for the developing world".

------
pistle
After the gold rushes were long gone, people still offered to let people rent
a shovel, a pan, and buy a map to go try to find their treasure by panning in
a river where most everybody knew there was absolutely no balance to the
time+effort:value ratio. But, come they did.

------
ForHackernews
> Bitcoin-subsidized devices for the developing world.

Let's take advantage of vulnerable people by ripping them off with hidden
energy charges! Viva Bitcoin!

~~~
URSpider94
... and energy in the developing world is much more expensive and dirty than
it is in developed nations, making it doubly dicey.

~~~
ForHackernews
The Internet of Things-That-Are-Secretly-Robbing-You

------
rdudek
This sounds like a really evil item. Are the devices going to be labled as
"subsidized by Bitcoin" or is Qualcom going to secretly include it with every
SoC? Are we going to be able to turn that thing off?

I really don't like the direction technology is going. It all looks scary and
downright depressing.

------
javert
> Towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has
> built not just a chip, but a full technology stack around the chip —
> including reference devices, datasheets, a cloud backend, and software
> protocols.

This is pure marketing fluff. They should be embarassed by this.

Plus, there are tons and tons of capable PhDs and non-PhDs from lots of other
schools.

Moreover, as others are saying, it doesn't make sense to waste electricity to
mine bitcoins in small quantities.

edit: Given that it doesn't make sense, does anybody know what they are
_really_ doing?

~~~
mikekchar
Looking at their admittedly bad website, I am thinking the following:

Let's assume that the next big thing is not centralized services, but
distributed ones. We've already gone through periodic waves of P2P mania. Even
Bittorrent got a fair amount of VC. I think it is not unreasonable to gamble
that in the next 10 years distributed systems and protocols will dominate and
client/server will fall into disuse.

Of course it might not happen, but if it did, where would you need to position
yourself in order to be able to profit massively from it? There are several
major problems with P2P applications. For example, you need coordination,
authentication and resistance to bad players.

Bitcoin has a reputation for having solved many of these problems for its
domain. Although it might not be the _best_ way to solve all of these problems
(specifically proof of work may not be optimal for many problems), imagine
that you are trying to sell your idea to a VC company. Can you come up with a
convincing story about how this technology can be used to solve most of these
problems? Even on HN there are a large number of people who think that the
Bitcoin implementation of a block chain is the solution to practically every
distributed authentication/coordination problem.

Now imagine building a chip that would enable the use of this technology in
every day equipment. You could look at it as the modern day equivalent to the
FPU or GPU. It is distributed authentication/coordination hardware
acceleration. As such, if the world _does_ go to a distributed model of
communication/computation, it will practically be _required_. As the defacto
standard, every single device on the planet will need to include your chip.

Are they really thinking to mine bitcoins? There are some potential
applications, perhaps. For example back in the day Microsoft proposed that
there be a "postage fee" for email. This would make it expensive for people to
spam freely. Imagine a "postage fee" for distributed services, like
authentication, whatever. The fee needn't be large and the idea is that the
device could mine enough BTC to pay for average usage. Anybody who wanted more
would have to pay for it. But Bitcoin _does_ provide a convenient method for
doing these kinds of really micro payments.

Note: I think it's an absolutely stupid idea that can't work due to the nature
of service fees once new BTC runs out, but I can well imagine a VC company
completely overlooking this detail.

In any case, I can totally see the potential for $100 million or so
investment. I think the web page may intentionally have a lot of fluff --
things that are really improbably or impossible but are there because some key
stakeholders expect to see it there. I think the challenge for them is that
they are walking into an arena _very_ early where there is a total vacuum of
applications that are currently being used. What they will need to do is not
only build the hardware infrastructure but also convince a lot of people to
write applications of the infrastructure so that everybody wants it. Probably
this is one of those instances where you are better off being second or third
to the market (like, for example, the Apple Newton).

~~~
javert
Thanks for your thoughts.

If there is some advantage to devices having a few satoshis, it would be easy
to just send them a few satoshis. (Or install a private key that lets them
draw a few satoshis from an account you set up for that purpose.)

In other words, you don't need the device itself to do the mining.

And it's always going to be cheaper to produce satoshis in massive mining
farms than to do it in tiny chips in embedded devices---so you would always
economically prefer to give satoshis to devices, not make them mine the
satoshis themselves.

------
danbruc
How do you get people to invest in such an idea and write such excited
statements? Almost nothing they say makes sense. Mining on battery powered
devices. Abusing the block chain as a database. Making other people pay for
you.

------
tomasien
These comments remind me of the crapping-on uBeam took on HN after a few
people decided, upon a cursory glance, that it was theoretically impossible
and ridiculous.

[https://news.ycombinator.com/item?id=8542091](https://news.ycombinator.com/item?id=8542091)

We still can't be 100% sure if it's ridiculous or not, but all signs are
pointing to not. So assuming Balaji et al are acting in good faith and aren't
scamming their investors (one of whom Balaji is a partner in so that would be
weird) this is cool and I can't wait to see what it does and where it goes.

~~~
notahacker
These comments reminded me of the crapping-on Colour took on HN, not even on
the grounds of theoretical impossibility of the product but simply the
buzzword-laden me-too nature of their pitch. Turns out the naysayers were
right: whilst the team weren't intentionally scamming the VCs that backed
their remarkably large pre-product fundraising efforts, the world's first
stealth social network might as well have been a scam for all the traction it
achieved.

I'm having to hedge my scepticism on the basis that I know I know barely any
more about bitcoin mining technology than the average layman, and VCs can
bring in highly skilled specialists for their due diligence, especially for
investments of this magnitude. But when a press release fails to acknowledge
the level of technical breakthrough they'd need to have achieved for their
product to be viable, and instead launches straight into a series of
theoretical monetisation strategies of varying degrees of plausibility, I
think the cynicism is entirely warranted.

If they _actually_ have a team of engineers that could develop chips with far
more computational power in relation to their size and energy requirements
than anything else on the market, you'd have to wonder why they'd think
persuading consumers to put Bitcoin miners in their pocket was the most
promising avenue to monetise.

~~~
NeutronBoy
> If they actually have a team of engineers that could develop chips with far
> more computational power in relation to their size and energy requirements
> than anything else on the market, you'd have to wonder why they'd think
> persuading consumers to put Bitcoin miners in their pocket was the most
> promising avenue to monetise.

Basically, if they've got the tech to do this, they could get rich just by
selling that tech, and not screwing around with Bitcoin

------
wmf
None of their bullet points seem to make sense. I guess their "secret" is
"Crucial to this is the idea that bitcoin generated by embedded mining is more
convenient — and hence more valuable — than bitcoin bought at market price and
manually moved over to the site of utility." I don't know whether that will
turn out to be true.

~~~
lechuga
A somewhat more thorough asking of the same good question:
[http://www.reddit.com/r/Bitcoin/comments/36e8by/21dotco_a_bi...](http://www.reddit.com/r/Bitcoin/comments/36e8by/21dotco_a_bitcoin_miner_in_every_device_and_in/crd7b3h)

I'd like to see this answered in some forum. It's very hard to get a more
concrete sense of the vision without it being answered.

~~~
wmf
I don't know if it's even possible to answer such questions concretely.
Everything hinges on transaction fees, and future fees depend on both the rate
of transactions (which they propose to increase greatly) and the block size
(which is being hotly debated right now). The case where their chip doesn't
even mine enough satoshis to pay its own transaction fees isn't out of the
question.

------
ssharp
Related discussion from last week:

[https://news.ycombinator.com/item?id=9537691](https://news.ycombinator.com/item?id=9537691)

Maybe we can have "smart" electrical outlets that steals back any Bitcoins you
mine off of someone else's electricity.

------
listic
I can't believe they actually believe in the 'device that pays for itself'
type of scenarios. Are they that stupid or outright lying?

------
zck
>This means any vendor can take a chip performing a normal function (say video
decoding or networking), add 21’s BitShare technology, and thereby enable the
chip to continuously generate revenue simply by being connected to power and
internet.

I'd be interested in any estimates they have for how much this would generate
if, say, included in a wireless router, or nest thermostat.

Also, the deal is either: you pay extra for a router that also mines you
bitcoin, or you pay less for a router that mines bitcoin for someone else. In
the first case, you have to then sell the bitcoin -- causing a lot of friction
for a not-so-technical person to get a few bucks. In the second case, your
device isn't your own -- you have a section you're not allowed to access.

~~~
cmdrfred
make it like a mail in rebate, I bet something like half of those never get
sent in so people who got the 'paid' version but don't claim the coins after X
days have them sent off to the company anyway.

------
drazvan
What if they actually planned this and fine tuned their ASICs so that they
would never be able to actually generate enough satoshis to go above the dust
limit? They could tell their users: you've generated 1 satoshi this month,
just 5459 more to go ... that's only 454 years :). "Honestly, we want to pay
you your share, but the Bitcoin network won't allow it because it's below the
dust limit ... trust us, you'll get paid in 454 years".

So they can make them mine fast enough to make a difference in terms of hash
rate but slow enough to never actually reach the payout limit - so they could
constantly owe their users very small (unpayable) amounts.

If the idea is to mine slowly, it can be done on a CPU. Most smartphones also
have a GPU on board, so they could mine faster than a CPU. And the chips are
already in there, you wouldn't have to buy a new phone/chip for this.

Finally, people seem to misunderstand how mining works ... you can't mine a
single satoshi, you either find a block or you don't, so you either get the 25
BTC (currently) reward + transaction fees or you don't. The pool distributes
the load and the reward, so there would still be a "funding" transaction from
the pool to the user - it's not like their ASIC can generate 1 satoshi on
board, it can lend its hashing power to the pool and receive 1 satoshi
(actually 5460+ satoshis, see above) for their effort from the pool.

------
yifuguo
It's rather annoying that the mining conversation always gear towards profits.

mining centralization/decentralization is the importance here.

What I rather worry about is will you be able to control which pools these
chips will be allowed to be pointed to, do the users have control over these
matters?

personally I rather have 1b+ small chips all over the place in devices than a
few $10m mining farms spread around the world.

------
LandoCalrissian
Basically what I'm reading is it probably would have been more prudent just to
light the 116 million dollar investment on fire and not waste everyone's time.

These are terrible ideas.

~~~
super-serial
No don't burn it, we should piss it away...

You see my idea is to install hydro turbines inside men's urinals at major
corporations. Then everyone will piss on them generating free electricity...
that electricity powers work computers during non-office hours to mine
bitcoin.

It's sort of like the enterprise version of this idea. Maybe I should start
talking to VCs to raise $200 million? B2B startups are hotter than consumer-
facing ones right now - so I should ask for more.

------
jacquesm
This would require a significant overlap between 'smartphone' owners and
'people not so good at math'. They may be on to something.

------
jackgavigan
It's be interesting if, instead of Bitcoin, 21 planned for these chips to be
used to create a new cryptocurrency.

~~~
poslathian
Perhaps to provide an authentication a security layer for IoT...this sounds
like a story you could raise 100M with. See also Vernor Vinge and the SHE

~~~
brasky
That is the only part that makes sense. The mining makes zero sense but having
a secure wallet in everything sounds like a good idea.

~~~
poslathian
Here is some rumor I found that rings true but is really disappointing (if
real)

[http://bitsndollars.blogspot.com/2015/05/inside-21s-plans-
to...](http://bitsndollars.blogspot.com/2015/05/inside-21s-plans-to-bring-
bitcoin-to.html?m=1)

The tldr is that Balaji and 21e6 have done nothing more interesting than use
millions of dollars of opm to build a huge mining pool out of custom silicon
that performs so well the 70M it took to build it just makes financial sense
on its own, netting in the low eight figures currently.

Now the followup strategy is to give away free mining chips for embedded
systems to 1) mine more coins using other people's power (21 keeps 75%) and 2)
stabilize the long the term value of their massive BT holdings by promoting
consumer adoption of bitcoin (by bribing people with free coins mined by their
own gadgets)

------
WayneS
Reading this I really didn't get the impression the chips would be generating
actual bitcoins. Just currency-like tokens for doing resource management and
proving that something occurred.

~~~
wmf
If you're going to create custom hardware but not going to mine actual BTC it
seems like it would be much easier and more energy-efficient to use something
like trusted-computing-based proof of existence.

------
larzang
And the end-users's motivation for ever purchasing anything with is... off-
setting short term costs with long term costs that make payday loans look like
a fair deal?

------
comrade1
I would like to remind everyone of hn's policy against negativity and by
extension of negative posts. Or does that only apply to YC related posts?

~~~
lotharbot
HN's policy is against _" gratuitous negativity"_.

It's OK to be critical of an inefficient idea.

------
juliangregorian
I really find the phrase "embarrassingly parallel" obnoxious; nice to find out
(on the Wiki link) that I'm not alone.

------
andrewstuart
Is bitcoin relevant any more? The hype level seems to have crashed from former
heights.

