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!
I'll pass, thanks.
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.
This play only makes sense if someone is extracting the actual currency value of a Bitcoin somewhere along the line.
If that value is going to me as the consumer, it's a terrible trade because it's taking the electricity that's gone through the most conversion losses from me in the place where it's most valuable. I might as well buy Bitcoin elsewhere. If some of that value is going to the chipset manufacturer or a middleman like 21, it's a straight up scam where somebody is stealing the electricity I put into my phone.
An HSM for Bitcoin wallets in a phone makes a small degree of sense to me, a mining ASIC makes none whatsoever.
I would think that's the very point. And it's not like there wasn't a precedence in the physical world already.
I still remember when stamps were occasionally used as a fractional currency. You could order small things over mail and send payment as stamps.
This phenomonenon was even used by Terry Pratchess as a minor plot detail in Going Postal, and subsequently in Making Money. The idea was dead simple: stamps had real value. Eventually, someone would need to spend it to actually mail things, but until then people could use them as a form of microcurrency. So a single unit might be "spent" several times in unofficial transactions before getting used for its intended purpose. The stamps weren't any more valuable as such, but their added utility made them useful in a wider setting.
There's some talk about the history in , and slightly better researched in .
EDIT: one more, this time something recent and still practiced - pre-paid call time as currency: http://www.economist.com/news/finance-and-economics/21569744...
Without you having to do anything but pay for and power a dedicated chip. If the utility of having a tiny amount of BTC on device is so high, and the cost so low, why not just have the device manufacturer pre-load a lifetime supply on the device (purchased or mined in a giant wind powered data center)? Seems the cost of this buying this chip is much higher than just buying the BTC outright for the user.
I'm not sure I see the value proposition in paying 5 times over the odds for the smallest possible amount of bitcoin....
It's ridiculous. I'm curious about the bigger picture because they have a stellar team, backing, board and bank account right now.
Seems more cost effective than to buy, run, and cool depreciating mining hardware.
And if 21 is successful (I hope not...), they'll continue to drive it up further than it would have gone otherwise.
I think that the period where plain bitcoin was seen as a mere store of value is about to end. We are entering a more exciting period which is the "bitcoin as protocol" stage, where sub-currencies (like Colored Coins, BitShares, etc) will be more valuable than bitcoin itself. And for this, tiny amounts of btc suffice.
This is why I think that Balaji and his team are taking the right direction. The goal is trying to make the system as much autonomous and frictionless as possible.
The first key here is autonomy: IBM has already forked Ethereum for its IoT with SmartContracts (ADEPT) , where for instance fridges could detect when you're running low of X and place an order for you. Generating your own tokens gives you greater autonomy and makes you relatively independent of the big mining operations/pools.
The second key here is friction: the current state of UX in bitcoin-world (and crypto in general) is extremely horrible and preventing the big adoption everybody in the space is aiming for. So building and integrating a chip that generates tokens w/o the user intervention is one way of bypassing this huge UX flaw. Maybe is not the most efficient way but it's the first serious take we've seen.
Why should a user have to configure an account so your browser can generate/read http requests/responses? The same way, it makes sense being able to generate/read crypto tokens. The value of those tokens are not in the current (or future) stock valuation of bitcoin, but in the valuation of the objects that the tokens will be associated with: financial tools, real estate, legal contracts, etc
PS: btw I think Ethereum and distributed PoW/PoS is a more efficient use of the blockchain tech.
Did anybody tell 21 that pure proof-of-work hashing was just an experiment and could go the way of the dinosaur?
Ethereum, Nxt and other cryptocurrencies are already using proof-of-stake or some other hybrid process...
Not that this makes any difference to your point, of course.
And a blog entry from half a year ago that describes their plans: https://blog.ethereum.org/2014/12/17/ethereum-dξv/
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  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.
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.
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.
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.
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.
If electricity wasn't too bad, and/or the price was significantly hire per BTC the pressure to liquidate and pay bills wouldn't be there as much, leading to less (immediate) downward pressure on the markets/price.
Say there's $100 today, and the max you can mine is $1 worth of coin per year. Even if it cost you a billion to mine that $1 coin, the worst that could happen is that you sell the $1 immediately to recoup your costs (as you said).
Alright fine so the max extra supply is just $1. That doesn't depress the price much, it's just 1% inflation.
And if you look at bitcoin, by design, those numbers are such that inflation goes to 0% over time, and drops below currencies like the dollar or euro or any other fiat one really, not far from now.
In other words, there's no real worry of price depression linked to electricity.
The reason I mentioned it is because if we assume you can gain $1, we must assume that people will spend up to $1 to make it. Even if you could make $1 of bitcoin with 1 penny of electricity today, over time competition would drive that to $1. It's totally expected and part of bitcoin's design. Saying 'if electricity wasn't too bad' like you do, implies that its price has anything to do with anything. It doesn't. Miners compete in a zero sum game, so they'll expend as much energy up to the price of a single bitcoin. (some foolish miners go a bit above, as in any market where poorly informed actors make bad buying decisions, but the market in general is expected to go up to the price of bitcoin in hardware+electricity expenses).
Beyond that, even if electricity prices are 0 or 1 billion, we expect miners to sell. At least in general, in a rational market. After all, if miners hold on to coin because they expect a price increase, they would do so regardless of whether they mined the coin, or simply bought it. Holding coin as an investment is a decision that is mostly (though not completely) separate from mining. It's true there is more pressure to sell if cashflow is tight due to tight margins, but this doesn't magically increase average long-term supply beyond the inflation rate of bitcoin, which is fixed, only whether there are spikes in supply in the short term from a buildup of unsold mined supply (of which you could say, would've been bought and held anyway if this particular miner was interested in holding as an investment).
Which adds to the argument that electricity costs don't play a huge role in whether the price gets depressed or not on average over the long term, it simply always does, up to the point of the money supply, which is fixed by design and designed to go to 0%.
The most electricity prices can do is direct the moment that new supply that's already been created is unleashed on the market. But unleashed it will, anyway, it's already in the market and in the hands of people who may choose to keep it as opposed to sell it. But as any market, especially relatively efficient ones like a global bitcoin trade, mining costs will approach mining revenues, leading most miners to sell immediately, which leads to relatively stable downward pressure at the rate of inflation of the money supply which again, is set to go to 0%. it's actually relatively high today (like 10%ish), but when talking about bitcoin in a longer term context, is set to disappear essentially.
At the end of the day miners do not control supply with electricity prices. They're simply the first 'buyer' of bitcoin's fixed supply (fixed, whatever electricity prices are) and buy this coin with electricity-dollars. When or how much of this they sell later, then, has very little to do with downward pressure. The downard pressure originates from the fixed supply of bitcoin whether electricity is cheap or expensive, it doesn't matter.
Nobody would willingly, deliberately do so. There are plenty of cases of cryptocurrency mining software being installed on unsuspecting users' machines, causing them to spend a large amount of energy generating a tiny amount of Bitcoin/Litecoin/whatever that gets sent to the attackers.
Notably, this has happened to a number of EC2 customers. If you accidentally leak your AWS secret key (by unwisely checking it into version control, or through a buggy deployment process, for example) then more likely than not, you'll very quickly find your account being used to spin up a bunch of expensive GPU instances.
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/) 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.
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.
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?
2. VC MONEY!!!!11!!
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.
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)
Sure it'll be cheaper to preload with bitcoin but at least you can always burn your battery to get access to whatever site you want.
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.
"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."
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.
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.
Perhaps I'm wrong, and I'd love to be corrected. But I don't see the point.
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.)
The most efficient mining chip I could find information about is the BM1384, which consumes 2.058W at the lowest power bracket. 
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 .
Our total income for 15 minutes of mining would be 0.00000003689583 BTC. 
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. 
: This number isn't even representable in Bitcoin, which maxes out at 8 decimal places of precision.
: The reward halves in 62 weeks though.
Average cost of electricity for U.S. households is $0.12/kWh 
0.05 Wh = $0.000006 average cost
Net Profit = $0.0000008801 - $0.000006 = -$0.000005120
Net profit margin = -581.7%
This might work for authentication, but they shouldn't sell it as "bitcoin-subsidizing devices for the developing world".
"we are less concerned with bitcoin as a financial instrument and more interested in bitcoin as a protocol"
>For example, one could build an internet-connected device that shared some portion of mined bitcoin between the user, the retailer, the handset maker, and the carrier — thereby reducing costs and/or increasing margins throughout the entire supply chain.
Let's take advantage of vulnerable people by ripping them off with hidden energy charges! Viva Bitcoin!
I really don't like the direction technology is going. It all looks scary and downright depressing.
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?
I'm guessing they're chasing after the vague idea that money, energy, and computation are all somewhat interchangable and building chips that offer low-level features to trade between these, so that a device can exchange any of these three for the others, i.e. "I'll do this computation for you for 0.0001 bitcoins" or "I'll give you 5 watts of power if you calculate this for me" etc etc.
Still not a very convincing idea.
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).
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.
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.
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.
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
For that to work at all, they'd have to have some technology that revolutionized bitcoin mining at the most fundamental of levels, and they haven't indicated that they do.
That's what's so weird about this.
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.
Maybe we can have "smart" electrical outlets that steals back any Bitcoins you mine off of someone else's electricity.
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.
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.
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.
These are terrible ideas.
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.
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)
It's OK to be critical of an inefficient idea.