Bitcoin News

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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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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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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