
Chip designers see dollar signs in Bitcoin miners - diycoin
http://www.reuters.com/article/2013/11/03/us-technology-bitcoins-idUSBRE9A209P20131103
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mamcx
If this site have it right, is not profitable at all

[http://mining.thegenesisblock.com/a/b0c353b122](http://mining.thegenesisblock.com/a/b0c353b122)

However, is it? Is possible to invest in this and get some dollars per month
as passive income? (Or maybe with
[https://cex.io/promo/](https://cex.io/promo/) or
[https://products.butterflylabs.com/homepage-new-
products/1-g...](https://products.butterflylabs.com/homepage-new-
products/1-gh-cloud-hosted-bitcoin-hashing-power.html) ?)

~~~
ye
First of all, it's based on the current price of bitcoin.

Second, if you have access to free electricity (e.g. solar), it is profitable
at almost any price.

~~~
TomGullen
> First of all, it's based on the current price of bitcoin.

Can you describe a realistic scenario where the price of Bitcoin rises and
owning a miner produces more profit than simply just investing that starting
cash in Bitcoin itself?

> Second, if you have access to free electricity (e.g. solar), it is
> profitable at almost any price.

This is false. Diminishing returns from difficulty increase makes it entirely
plausible that you will never realise the initial starting capital you
invested, and even if it does there is no situation I can think of where
investing that starting capital in mining HW beats the profit on just buying
Bitcoin in the first place.

~~~
a1k0n
I calculated this out a couple days ago. The hash rate has been rising pretty
steadily exponentially with all the new ASICs coming online, and can be
expected to double again within 25-30 days. The current break-even price for 1
GH/s is about 0.03-0.04 bitcoins -- that is, if you bring 1GH/s online right
now, over the next 6 months you will mine a total about 0.035 bitcoins and at
that time you will be minting at less than 1% of the rate you started with.

You can buy 1GH/s for about 0.12 bitcoins on cex.io right now, if you are a
sucker.

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DigitalJack
Maybe I'm wrong, but unless you are ready to bring a chip to market, it seems
to me this ship has sailed.

That said, I'm a chip designer with ASIC experience. I think it would be
pretty fun to work with a couple software oriented folks to design and build
something here.

ASIC design software tools would probably require funding, but FPGA
prototyping can be done at very low cost.

~~~
yuhong
I wonder if anyone have designed chips to crack DES to actually sell. I am
thinking of MS-CHAPv2 in particular.

~~~
zxcvgm
For crypto applications there isn't a strong enough financial incentive to
design an ASIC specifically to do that. Maybe a GPU-based solution like
oclHashcat[1] can be extended to do that.

[1] [http://hashcat.net/](http://hashcat.net/)

~~~
schoen
There might be a financial incentive to make hardware to crack crypto to sell
to governments, which could use the hardware to spy on people. In other
contexts government contractors do make surveillance hardware, like IMSI
catchers. Because the crypto involved is so easy to attack, it's possible to
imagine someone building a passive cell phone monitoring box with ASICs in it.

I haven't looked through the relevant stuff in the Spy Files (vendor
presentations from the ISS World surveillance conference), but that might be
one place to look to find people making crypto-cracking ASICs for a profit.

[http://wikileaks.org/the-spyfiles.html](http://wikileaks.org/the-
spyfiles.html)

They only have documents through 2011, although the conference is still
happening frequently.

~~~
zhemao
How do you know government intelligence agencies don't have that sort of
hardware already?

------
jellicle
I myself have been thinking of starting a business selling pickaxes, gold
panning sluices, and tulip bulb display cases. Am I too late?

~~~
victorf
Yes. But you're not too late to make strawman comparisons to perishable
commodities with low inherent value. That market is still quite strong.

------
knodi
Bitcoin right now as it stands is a cash cow for everyone but the miners.

~~~
pcrh
I don't really understand how bitcoin works.. however is there a point where
generating the new coins or doing the computations required is no longer
profitable. At that point, how would the bitcoin system survive if no one is
willing to provide the necessary computational power?

~~~
kbaker
There is a fixed curve that determines the rate that new Bitcoins come into
the Bitcoin economy. Right now, that adds 25 BTC per block (or about 3600 BTC
per day, or $720,000 USD/day). The number of coins added per block halves
about every 4 years, and has halved once already. This is the primary method
of introducing a sort of 'inflation' to the economy to help bootstrap the
Bitcoin economy and the miner network. [1]

The other method of rewarding miners to perform block hashing proof-of-work
computation is through transaction fees; even now some (most?) miners do not
accept transactions without a small fee attached, currently an equivalent of a
few USD cents per transaction.

The idea is that at some point, transaction fees will have to take over from
the block reward as motivation for mining.

Regardless of the costs involved, since the work factor corrects for the
amount of mining activity, even a single interested person mining is enough to
keep the Bitcoin network going (though that invites some bad scenarios - a
group of people is much better...) As things are going and with ASIC mining
becoming commonplace there will definitely be enough interest to keep things
going on the technical side for the far future. [2]

[1]
[https://en.bitcoin.it/wiki/Controlled_Currency_Supply](https://en.bitcoin.it/wiki/Controlled_Currency_Supply)
[2] [https://en.bitcoin.it/wiki/Mining](https://en.bitcoin.it/wiki/Mining)

also, the FAQ:

[https://en.bitcoin.it/wiki/FAQ#How_does_the_halving_work_whe...](https://en.bitcoin.it/wiki/FAQ#How_does_the_halving_work_when_the_number_gets_really_small.3F)

------
TomGullen
I just steer well clear of mining hardware companies. Business model makes
absolutely no sense and still haven't seen a good explanation as to how it
ever could.

If you're selling the promise to make $x and selling it at <$x someone at some
point in the chain is a mug.

~~~
ridruejo
It is not if you get the cash upfront and can reinvest to produce more
machines.

~~~
TomGullen
Good point. Skeptical if that sole reason represents all of their business
models though?

------
XorNot
Stories like this should remind BitCoin advocates to look into the history of
the gold rushes and who got rich. Hint: not the gold miners.

~~~
FLUX-YOU
Well, early adoption also really paid off (whether you bought or mined),
unlike the gold rush.

I wonder if it's now worth it to quickly adopt all new crypto currencies for a
disposable amount, even if 90% of them fail.

~~~
nwh
> I wonder if it's now worth it to quickly adopt all new crypto currencies for
> a disposable amount, even if 90% of them fail.

Nope. They're all get-rich schemes by the creators, and nothing more than just
Bitcoin with the name and some variables changed. Ask yourself, why would
HackerNewsCoin be any better than Bitcoin?

~~~
TomGullen
First to market advantage is huge. Maybe Bitcoin wasn't first to market in the
strictest sense but they were first to gain notable traction which is the same
thing in essence.

------
hristov
I would never invest in one of these companies. It seems like the ultimate bad
business -- the difficulty will keep increasing while the payout will keep
decreasing until it all ends some time in the non-too-distant future.

~~~
DigitalJack
On top of that, this seems a little bit too abstract. If bitcoin flops, all of
this effort will have been expended for no net benefit to society.

Unless this hardware can be repurposed.

~~~
TomGullen
That's not a fair criticism. Do failing startups offer no net benefit to
society? If so, who cares? Let's try new things.

~~~
DigitalJack
If you think it's unfair, I'd appreciate you saying why.

~~~
TomGullen
> If bitcoin flops, all of this effort will have been expended for no net
> benefit to society.

That's not fair, Bitcoin has the potential to offer vast benefits to society
on a world wide level. Why are we worried about repurposing hardware in this
context if it fails? At the moment it hangs in the balance, if it does fail
it's not been all for nothing, it's got people thinking talking and acting on
big issues. If the cost of this is some usless computers then so be it, a very
small cost to pay.

It would suck if it this stuff can't be repurposed but in the wider context
it's totally irrelevant. Failure and no benefit to society is not a strong
relationship.

------
johncole
"Silicon is Perishable": With all of the computing power perishing, I wonder
if outdated hardware could be bought on the cheap and used for some non-
financial projects. Could this become a boon for malaria research, SETI, or
some of the other non-profit research programs out there?

~~~
schoen
Bitcoin ASICs aren't reprogrammable to perform other computations -- the
hardware (at least the really fast part of it) isn't Turing-complete.

People have speculated about whether other kinds of computational problems can
be represented as Bitcoin hash searches but I think the answer is pretty
clearly no, because the computations involved are so specialized.

~~~
lovemenot
OK, so pre-existing general computational problems likely cannot benefit. But
if someone were to design a new system with carte-blanche, what constraints on
that system's design would still allow them to exploit all this mining
hardware? Put another way, what designs are to be avoided, lest an army of re-
purposed hardware be launched against them? For instance, is SHA256 slightly
weakened because brute-force is orders of magnitude less difficult now, than
it would have been sans specialised BTC hardware?

------
AJ007
If I lease a miner from a third party
[http://www.hashtrade.com/](http://www.hashtrade.com/) am I engaging in a
currency transaction?

