Bitcoin News
Daily diary of what's happening with Bitcoin.
A blog post by David Perry (@KJ6CCZ) gives a thorough explanation of how mining works without any of the specific details that “might scare the non-techies”. Excerpts:
“Core concepts and terms:
“Hash - I tell you that I added two numbers together and the result was 14,862. Given only that number there’s no way you could tell me what two numbers I added to get that total, but it would be easy to reproduce my result if I asked you to add 3,608 and 11,254.
Block - Transactions are bundled up into big chunks of data called blocks. These blocks are linked together in such a way that each one proves that the block before it was valid.
Difficulty - Ensures that [Bitcoin’s] math problems are hard enough that it always takes the combined efforts of all the miners around 10 minutes to solve a block.”
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“The more miners there are, the higher the difficulty goes. The higher the difficulty goes, the harder it is to commit fraud on the Bitcoin network.”
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“Sudden changes in the value of a bitcoin can make or break mining operations. Granted if a drop in price knocks some miners out of the picture, difficulty will decrease to accommodate, but that takes time. Miners follow the market - the market does not follow the miners.”
- http://bit.ly/Q3v5i9
- http://news.ycombinator.com/item?id=4488047 (Additional comments)
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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.”
Available for download on CoinDL (@CoinDL) is a 30-page guide (eBook PDF). Subtitled “A Guide for Gamers, Geeks and Everyone Else”, the eBook explains the background of mining, the tools used, and a few techniques that help get the most for your efforts.
Though the eBook is free, the author, David R. Sterry (founder of CoinDL), is requesting donations, as was stated in his forum post announcement of the eBook. The proceeds will be used towards the purchase of an ISBN so that the additional marketing and sales channels.
- https://www.coindl.com/page/item/201
- http://bitcointalk.org/index.php?topic=82428
A post on the Bitcoin Miner (@BitcoinMiner) blog features a photo from a commercial mining operation which helped to contribute to the latest difficulty adjustment increase. Excerpts:
“The leading GPU farms use economies of scale combined with low power costs to solve blocks at a lower cost than any solo miner paying residential rates could ever hope for.”
“The recent difficulty threshold for generating bitcoins went from 1,508,590 to 1,733,208, representing nearly a 15% increase in just over 12 days.”
“This increase is the biggest, in percentage terms, since June, 2011.”
“The capitulation by the small miners suffering electric utility bill pain is benefiting these commercial operators whose facilities can accommodate further expansion and letting the overhead costs be spread out over a growing number of producing rigs.”
“If hardware costs are amortized much past when the upcoming drop in the block reward is expected to occur (sometime around December), then these commercial operators could be facing a rude awakening.”
A post by Bitcoin Miner describes how hitting the 8.4 million BTC milestone means that 80% of the “Easy” bitcoins (issued 50 BTC per block) and 40% of all bitcoins (out of the total 21 million that will ever be issued) are now behind us. Excerpt:
“There is uncertainty if this drop is already factored into today’s price, or if investors have not yet realized that soon the rate of currency inflation will suddenly drop by half.”
“Miners considering starting up or adding capacity at this point are faced with some long-term challenges. There is now competition from those using FPGAs, they are faced with a flat or declining exchange rate for the bitcoins they produce, and they face the upcoming 50 to 25 BTC drop in the block reward.
The latest post on Bitcoin Miner blog (@BitcoinMiner) computes the revenue to miners for 2011. Excerpts:
“About 2.98 million BTC were issued. With the average daily price (exchange rate) of $5.60, that means Bitcoin mining is roughly a $16.7 million industry when considering just the value of the coins as they were mined”.
“Total investment in mining hardware over the year likely was a multiple of that $16.7m number as [miners replace hardware with more efficient hardware and because some miners retire while others are new to mining]”.
“Even when mining yielded profits, mining may not have been an activity truly as lucrative as was first imagined — particularly when tax consequences are considered”.
A post on Bitcoin Miner blog (@BitcoinMiner) describes how in about a year the quantity of bitcoins issued to miners will drop suddenly by half — something that will impact decisions today. Excerpts:
“For the bitcoin currency itself, that drop has been known since its inception and would already be priced into the exchange rates. To miners, however, that drop will be felt suddenly. One day the income that each Ghash/s earns will be at one level, and the next day that revenue will drop 50%”.
“Anyone evaluating whether or not to buy a mining rig or to add capacity to an existing mining operation today should be keeping this block reward drop in mind in the decision process”.
CoinConnect is running a Bitcoin Mining Rig competition and has a dozen entrants.
Voting is performed using the Poll at the top of the forum post.
A post on Hack A Day features the first commercially available FGPA Bitcoin mining hardware. An excerpt:
“The board requires only 6.8 watts for 100 Mhashes/second, but [li_gangyi]‘s blog says the team expects to hit 150-200 Mhashes with some improvements”.
A post on Bitcoin Miner further shares the details on this development. An excerpt:
“This board just brought FPGA mining one step closer to becoming a significant competitor to GPU mining.”
- http://www.bitcoinminer.com/post/9268040136
- http://bit.ly/qPMvZt (Post on Hack A Day)
