Bitcoin News

Adrianne Jeffries (@ADRJeffries), writer for TheVerge, provides a summary of the one-two punch facing Bitcoin miners.  Excerpts:

“O’Shea’s backyard [Bitcoin mining] operation brings in about $3,000 a month, he estimates, although the take is always changing because the price of Bitcoin is extremely volatile. He’s spent more than $60,000 on equipment, and his electricity costs run between $2,200 and $2,400 a month. He’s defrayed his cost significantly but has yet to break even.”
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“There is money to be made. Last year, miners generated $16.7 million worth of Bitcoins, using the price at the time the coins were created. But miners’ margins are getting thin.”
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“I’d say that the majority of miners, especially large-scale ones that I know, including myself, are not paid off,” said Jeff Brandt, who makes about $2,000 a month mining Bitcoin on the $40,000 worth of equipment he keeps in an 1,800-square-foot barn.”
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“The mining industry is about to be thrown into turmoil due to two major changes expected to hit, entirely coincidentally, around the same time. One is the introduction of application-specific integrated circuits, or “ASICs,” designed specifically to mine Bitcoins up to 1,000 times faster than current technology. The other is a deadline hard-coded into the Bitcoin software. When the total number of Bitcoins reaches 10.5 million in about one week, the block reward will suddenly be cut in half.”
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“Most miners are in it for profit, but many don’t know how tough it is to make money, Guo said. ‘A lot of them are uninformed,’ he said. ‘If you don’t have cheap power, don’t go into mining long-term.’  When the new chips come online, he expects miners will have to go pro or go home. ‘A lot of people are going to stop mining,’ he said.”
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“[Bitcoin startup CoinLab] pivoted to a new model which matches Bitcoin miners with universities and other entities that need distributed computing power. CoinLab also runs a mining pool of more than 1,000 miners.”
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“‘The amount of growth we’ve seen in the last year just in the Bitcoin market as a whole, then in the mining market, is staggering. I can compare it to the beginning of the dot-com era,’ said Josh Zerlan, COO at Butterfly Labs.”

 - http://vrge.co/T5sDbP
 - http://bitcointalk.org/index.php?topic=125494.0 (Further discussion of the article)

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