Bitcoin News
Daily diary of what's happening with Bitcoin.
Motherboard’s Alec Liu (@sfnuop) interviews Yifu Guo, creator of the Avalon ASIC — one of two reasons Bitcoin mining capacity has been coming online at a faster pace than ever. Excerpts:
“And quietly in the background, a company called Avalon shipped the first ASIC-based bitcoin miners, custom-built rigs with specially-designed chips for efficiently printing the market’s hottest commodity, ushering in what can be considered the internet’s first gold rush. (Someone recently paid $20,000 for a $1,500 miner from batch two on eBay. At the time of this writing, another auction has a batch two Avalon miner going for over $19,000.)”
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“After opening up its third batch of 600 miners for sale yesterday, customers from around the world from countries like Argentina, the UK, and even Egypt (although the majority of orders came from the big three of the U.S., Russia, and China) made sure Avalon’s units sold out in fifteen minutes. We had the chance to sit down with Avalon’s founder, Yifu Guo to talk bitcoin, mining, and the future.”
“If bitcoin is a $1 billion market, and it only takes less than $1 million to secure the network right now, that’s not a lot of money for someone to try and take over the mining scene. The faster the technology progresses, the more secure the network is, because it will be that much harder for a malevolent entity to mess with the system. We want to [improve performance …] The sooner the better so we’ll never again have this scenario where one company like Avalon essentially controls more theoretical computing power than the entire network’s hash rate. This will never happen again.”
- http://bit.ly/14lT6cd
- http://bitcointalk.org/index.php?topic=159125.0 (Further discussion of the article)
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Bitcoin Money blog (@BitcoinMoney) gives a monthly wrapup on Bitcoin for the month of January, 2013. Excerpts:
“The closing price of $20.41 USD was up nearly seven dollars from the 2012 year-end close resulting in more than a 51% increase for the month — Bitcoin’s largest monthly gain since December 2011. The one-year gain, calculated from the January 2012 close of $5.48 is whopping 272%.”
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“The 111,100 bitcoins issued which Bitcoin miners took in during the month is valued at $1.72 million using the average daily valuation for the month of $15.49. Miners had been suffering ever since the block reward subsidy “halving” that occurred in November last year.”
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“A dollar’s worth of ASIC hardware performs hashing at the rate that is nearly two orders of magnitude over what a dollar’s worth of GPU hardware does so we are likely just a couple months (or less) away from seeing the end of any GPU mining that is profitable.”
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“Certainly greater demand occurring due to Bitcoin gaining traction as a payments and money transfer system is partly responsible for a higher valuation but there appeared to be no massive jump that would account for the need for an additional $75 million worth of the currency. Thus a significant portion of the rise can only be attributed to speculative interest.”
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“Most bitcoin market exchanges provide feeds with trading results in real-time and many volume records were broken in January.”
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“Early in January Bitcoin Foundation executive director Peter Vessenes published his Quarterly Update in which he describes an increasing level of interest from investors and shared his prediction that in 2013 there would be Bitcoin ‘liquidity problems’ (price increases).”
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“Bitcoin remains an experimental currency. As the software gets poked and prodded, new vulnerabilities are discovered. Some vulnerabilities will result in funds being lost.”
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“When a SatoshiDICE, BitInstant, CoinBase, or BitPay (all angel- and venture capital-backed Bitcoin-related startups) hits a home run, every person holding a bitcoin likely sees a rising valuation as a result due to increased demand for the currency from that Bitcoin startup’s success story.”
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“Without Wall Street’s participation there are few affordable methods to take a short position or to perform price hedging. Without this relief valve, wild volatility occurs as the market tries to discover Bitcoin’s price.”
- http://www.bitcoinmoney.com/post/42429739154
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The latest from Vitalik Buterin of Bitcoin Magazine (@BitcoinMagazine) covers this significant day for Bitcoin — the day the first ASIC mining rig has been powered up by a consumer. Excerpts:
“Now the Bitcoin community can finally rest easy knowing that the long-awaited ASICs are indeed real.”
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“[Recipient of the first unit, Bitcoin developer Jeff Garzik] followed up with a message on Bitcoin IRC announcing the news that Bitcoin enthusiasts everywhere have all been waiting for: ‘mining!’, soon followed by a statistic: the machine’s average hashrate is 68252.65 MH/s.”
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“Avalon is not releasing its next batch until early March, and Avalon and Butterfly Labs may well be working nonstop for the foreseeable future as more and more customers line up to buy their own. The Bitcoin ASIC revolution, far from nearing its finish line, is now only beginning.”
- http://bitcoinmagazine.com/working-avalon-asic-confirmed
- http://bitcointalk.org/index.php?topic=139704.0 (Further Avalon-ASIC discussion)
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Vitalik Buterin posts on Bitcoin Magazine (@BitcoinMagazine) with an outlook for 2012. Excerpts:
“There are a considerable number of projects scheduled for release this year.”
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“Once [ASIC] devices are released, the Bitcoin network’s hashpower is projected to increase by a factor of ten, making the network extremely robust against attacks from traditional, general-purpose supercomputing networks.”
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“Bitcoin Wireless – This BitInstant project intends to provide a way of buying credits for prepaid cellphone and data plans from over 300 carriers around the world at competitive prices.”
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In November, Marek Palatinus, operator of the Slush mining pool, announced a project to develop a physical Bitcoin wallet device that would take the form of a USB key. The device outputs transactions signed with its internal private key directly.”
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“Multisignature Transactions. The technology also has applications in secure wallets, as one can create 2-of-2 wallets with one key on your machine and the other under the control of a third party, ensuring that anyone wishing to steal your bitcoins must compromise both the provider and your own machine.”
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“Bitcoin Conference – This year’s Bitcoin conference will take place in May in San Jose, California, and will be hosted by the Bitcoin Foundation.”
- http://bitcoinmagazine.com/the-next-year-in-bitcoin-what-2013-has-in-store
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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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Bitcoin Money blog (@BitcoinMoney) gives a monthly wrapup on Bitcoin for the month of June, 2012. Exerpts:
“For the month of June, 2012 the closing price of $6.69 was a dollar and a half above the previous month’s close giving a 28% gain for the month. The first quarter had closed at $4.90 so the closing price for 2Q2012 shows a gain of 36%. For 2012, where the price opened at a $4.72 level, the price rise from January 1st now exceeds 41%.”
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“Unlike previous rallies for Bitcoin, this one occurred without there being a major story or significant level of media attention.”
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“The Bitcoin exchanges offering BTC/EUR trading all saw record monthly trading volume levels and most of the other European currency markets such as the BTC/GBP (British sterling pound) and the BTC/PLN (Polish zloty) broke monthly volume records as well.”
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“The upcoming drop in the block reward (expected to occur in early December) is likely one reason [for the price rise]. When that event occurs, the rate of currency inflation will drop from the 25% per-year level to just 12.5%.”
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“The most significant conversion of funds out of bitcoin occurring today happens to be coming from those who are, ironically, enthusiastically showing their trust in Bitcoin’s future.”
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“Miners took in the 226,750 bitcoins that were issued (also referred to as being “mined”) during the month. Using the average daily valuation of $5.99 the value of these bitcoins issued totals a little over $1.35 million.”
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“A speculator unloading bitcoins generally has one option — to cash out at an exchange, whereas smaller investors and consumers holding bitcoins can cash out by spending their coins on goods and services.”
- http://www.bitcoinmoney.com/post/26295113993
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A post on Bitcoin Miner blog (@BitcoinMiner) describes how landlords are unwittingly becoming an integral part of a mining operation. Excerpts:
“Never before has there been a cottage industry that simply monetizes electricity. Mining consumes power in a manner in which it can nearly directly be converted to cash.”
“There is still a healthy market for this used GPU hardware from those operators whose electric costs are much lower and from those whose power consumption is included in their residential or commercial lease.”
“This in effect transfers much of the cost of mining to the landlords who receive none of the benefit except, perhaps, in the greater likelihood that the mining operator pays the rent on time.”
“While smart meters provide landlords with the technical ability to do utility submetering, rent controls and housing regulations often prohibit the use of submetering.”
“Because Bitcoin mining is a 24/7 operation, it can easily represent half or more of a residence’s power consumption.”
- http://www.bitcoinminer.com/post/25945886269
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A post on Bitcoin Miner (@BitcoinMiner) looks into whether this is the end for the GPU used for mining. Excerpts:
“In less than six months, block 210,000 will be reached and with that event the block reward will drop by half, to the level of just 25 BTC.”
“Mining operators are preparing by either switching over to more efficient mining equipment or are liquidating operations outright — oftentimes due to the higher capital requirements needed to acquire the modern forms of mining hardware.”
“Even though the GPUs from this post’s photo are offered for sale as being used previously for mining (presumably for many months) they still have a relatively high market value compared to the price when they are purchased brand new.”
“There will be a rotation of hashing equipment. GPUs are being decommissioned where power is expensive and those same cards remain a valued commodity to those with access to power that is relatively cheap.”
