Hehe thats really not a neutral view on the subject. The path from bitcoin to real money is short, although you dont know how much money you will get from day to day.
You may argue that selling these machines gives you a more predictable income, but that hardly holds water as the demand surely will follow exchange rate.
The only valid argument left seems to be the timeline of wich the money comes in. If they sell a lot of machines early, they certainly will get the money back slightly faster, so for the buyer, its a highly speculative trade.
The key reason the ASIC miner companies can't keep the machines for them selves is they rely on pre-order capital to manufacture the units, arguably there are "delays" on these units getting to the customer. If you was to have 50 units "testing" for a number of days before shipping you could as a miner merchant make a fair few Bitcoins, note that I say could as this has not been proven and these units do make a big difference to the network once connected especially the 600gh/s units on pre order now.
>> There's plenty of media hype surrounding the currency but nobody really tells you the whole story.
It is not just hype. There is a feeling that Internet needs its own type of currency and Bitcoin offers a platform for a true universal currency. The concept of net neutrality should apply to currency as nations cannot suddenly devalue their currency to hurt anyone. Bitcoin offers freedom from govt and that is the fun.
Sure, you can always use of the shelf microprocessor or even FPGA...but it is much more efficient to use custom made ASIC for this application specifically...I think jury is out...if bitcoin maintains its popularity and appeals to every Joe, and that is a big IF...and if the US goverment doesn't kill all digital currency as they would threaten the US dollar., and that is a small if (they likely try)..then bitcoin CPU actually makes sense, you have to be able to run these encryption operations very quickly if you are paying for coffee or parking with these bitcoins...Kris
>>I guess in this case risk is high...but payoff is huge...what if the whole world adopts BitCoin?
That will not happen because the most effective tool for any economic strategy is the monetrary policy. That is one reason why currency union suffers. If you owe $30b to companies in your local currency, you have the power as government to devaalue your currency to get more money in the central bank to pay that off. When you lose that power, you are in trouble. I do not see why government will lose that tool to Bitcoin which they cannot manipulate.
>> EU united their currency from several individual ones and they are doing great...more countries are thinking about adopting Euro which rivals US dollars now
I am not sure EU is doing great when Switzerland has voted to limit freedom of movement of other EU nations into the country. There are few that will think EU is doing fine at this point based on the currency unification. Without EURO, Greece would have avoided its problems. They will simply devalue their currency. But with none, no instrument to play.
It seems that the market appeal of these parallel processors & custom ASICs is similar to the appeal of ever faster network connections to the high frequency traders on Wall Street -- the race to get there microseconds before the other guy. Someone will always come forward with a faster machine, so the "miners" need to make their money quickly, before their hardware becomes obsolete.
But it remains to be seen whether Bitcoin can go mainstream. Meanwhile, it does bear a certain resemblance to a Ponzi scheme.
"The ASIC guys will do well while the people putting money in Bitcoin will wake up one day and it is all gone."
Maybe. And then again, maybe not. Also it would be good to keep in mind that Bitcoin is much more than just a new asset class/commodity for speculation. It offers promise as a new alternative global currency and/or virtually "frictionless" payment system available to anyone worldwide.
If Bitcoin continues to become more widely established and accepted we would expect to see more stable and reliable associated businesses emerge as it matures, as well as decreased volatility in its value. In this particular case, this company - the Mt. Gox bitcoin exchange - has had such issues before, and as a result has been losing market share to competitors for a while.
There is a very good reward if you can mine. Say you have a machine that can crack the mine, you get about 30 bitcoins. It is a tough race as anyone that has a very good machine can actually make good money for the 30 bitcoins that are given every now and then.
If they bring certainty by recognizing Bitcoin, this mining issue will go. Qualcomm and Intel will enter the game and provide tools that can win the game. I am not sure we have firms of great quality in the mining space at the moment owing to legal issues surrounding Bitcoin
"Bitcoin is like the housing market before the bubble. It is irrational exuberance at the best"
Indeed, the recent peak in the market value of bitcoins and subsequent "crash" is typical of such a boom/bust cycle. Keep in mind that this has happened at least twice before (in mid 2011 and again early last year), both times starting from much lower levels. For those who were speculating on the market value of bitcoins, those proved to be good buying opportunities.
Who would have thought that the internet would have anything in common with mining at this point in time....it seems the ponzi scheme keeps reinventing itsle ffo rnew generations and new technologies...this is just the last iteration but ti will keep being there as long as people's aspirations can be used to sell them on goods they don't necessarily need.
As one of the reader commented, Bitcoin entered an amazing race of computing-power but as well very challenging situation for all designers, from ASIC/Processors to board power designers, without mentioning the high expertize required to cool those massive computing machines! Powering, energy efficiently, such multi-computers on-chip is a real challenge as such but; considering time-to-market business critical, board power designers have no room for complexity. Here comes "digital power" which in few clicks is able to manage complex power schemes, optimizing energy utilization, lowering ripple and fully under control. In that respect, powering "Bitcoin" processor with digital POL is boosting that technology, proving that it is possible to shorten Time-To-Market while highly, and energy efficiently performing!
Considering what has been presented at the summit and comments posted by readers, I found the following information interesting to share: "Global Bitcoin mining equipment company KnC Miner is currently in full progress setting up a 10 MW datacenter in The Node Pole region, near the Arctic Circle in Sweden. The operations are to be run from Boden – a town in close vicinity to Facebook's European datacenter - in a facility previously used as a helicopter hangar for the Swedish armed forces. The datacenter is to be used for cloud services and for hosting of specialized Bitcoin mining hardware to a global client-base (source Global Security Mag)"
thank you Patrick...very intriguing info...so our future digital currency will be run by Swedes somewhere close to North Pole...cool...would you be interested to give a talk about this topic at emerging technologies conference in Vancouver in 2015? program at www.cmosetr.com, Kris (firstname.lastname@example.org)
Thanks for adding this info to the post. Yes, Nordic is a great place to locate data centers and benefit from natural cooling. Much better than having datacenters power hungry machine in Arizona :-) In addition to that low energy consumption benefits to Bitcoins mining. It will be interesting to see which next will be placed in Alaska!