Chinese Bitcoin farms: From scuzzy to sci-fi Somewhere in very rural northeast China lies a dusty and dirty factory where the deafening roar of machinery leaks from an armada of Bitcoin mining rigs. Inside a secret north china bitcoin mine. Copyright Jacob Smith (Bitsmith) @ The Coinsman - used with permission Inside the secret north China Bitcoin mine. Copyright Jacob …
exactly the sort of thing that could bring BitCoin down??
When nearly all the mining is done by a small number of professional outfits and average Joe looses interest in it all because there's nothing really in it for him anymore.
If people loose interest in the coins then it's price is going to start to fall.
Hi. I'm average Joe. I don't mine bitcoins. I don't hold them or speculate with them I just use them to pay for stuff.
As long as I can use them to pay for stuff my interest won't drop.
I don't care what the miners are up to. So for me I don't see how failure to mine them will bring a bitcoin downfall.
What's the benefit to you to using it to pay for stuff? How is it better than credit cards, debit cards or cash? If it is because it is (supposedly) "untraceable", why is that something that appeals to you?
If you're using them to pay for stuff, you're a speculator of some type simply by holding them for weeks/months, unless you're buying the bitcoins shortly before using them.
I know you were being tongue in cheek, but gold has a few major advantages over bitcoins. Besides the obvious fact that it has been used as money for thousands of years, it has uses beyond that for jewelry (it looks nice) and industry (it doesn't tarnish and is a very good conductor) It is easier for average people to deal with since it is something you can touch and don't have to worry about your wallet being corrupted or mysteriously disappearing like those using MtGox.
Gold will still be around and still have value in a decade, and in a century. Even bitcoin's biggest proponents can't say the same about it with any degree of certainty. There will most likely be something like bitcoins in a century, but I think it is quite likely actual "bitcoin" will be a footnote in history by that point.
Why build such things in places like Hong Kong (which is just south of the Tropic of Cancer), when you probably don't need a great internet connection but heat is a problem?
I'd suggest Svalbard or Franz Josef Land. You aren't going to draw any attention to yourself out there, and can use satellite connections. Power might be more difficult, but you could use generators. It's not like the noise is going to disturb anyone.
Or at least somewhere where there is power but it's really cold, like Siberia, Alaska or Yorkshire (kidding!). Building something like that in a warm climate is insane.
And cheap power from cheap coal from cheap labour. That's what those lovely shiny bitcoins actually cost - people mining dirty fossil fuels burnt without environmental regard. I suppose they're reusable until they get lost or fashions change and people realise they're just long numbers, but preachy people take note
Do you think printing dollar bills has no environmental impact? Or forging pound coins? The cost of mining Bitcoin does not depend on how much it is used or how many new coins are created, so the current costs are about as bad as it gets, even as it scales to supplant other currencies which are less environmentally sound.
Yeah but the problem is, some Japanese guy made them up years ago just for fun. Anybody could do that. It takes years and thousands of people to catch on and adopt and accept the concept. Kind of like fashion fads and slang terms but not quite as long. The latter can pop up again from 20 years ago too. I had about 200 bitcoins a few years ago before my online wallet got corrupted. I didn't really care at the time because they were only worth 5 bucks back then. But um.....yeah it sucks now.
Even in a cooler area, you still can't depend on ambient cooling, you still need the fans and chillers and evaporation stacks. (As much as my customers with 5 broken fans expect my datacenter to cool their chips for them in a locked box in a locked up rack).
A largest factor is cost of power. And where power is cheap is high-density low-income areas. Not out in the hinterlands. High-density areas are typically in the hotter areas.
They've done the math for both in and out, they would go wherever they get the most return.
there was a way to combine bitcoin mining with solving useful (as in more widely useful: e.g. scientific or something) computational problems.
Ah, never mind: but why not read this interesting article about bitcoin and bubbles instead?
http://arxiv.org/abs/1408.1494
The digital traces of bubbles: feedback cycles between socio-economic signals in the Bitcoin economy.
David Garcia, Claudio Juan Tessone, Pavlin Mavrodiev, Nicolas Perony
What is the role of social interactions in the creation of price bubbles? Answering this question requires obtaining collective behavioural traces generated by the activity of a large number of actors. Digital currencies offer a unique possibility to measure socio-economic signals from such digital traces. Here, we focus on Bitcoin, the most popular cryptocurrency. Bitcoin has experienced periods of rapid increase in exchange rates (price) followed by sharp decline; we hypothesise that these fluctuations are largely driven by the interplay between different social phenomena. We thus quantify four socio-economic signals about Bitcoin from large data sets: price on on-line exchanges, volume of word-of-mouth communication in on-line social media, volume of information search, and user base growth. By using vector autoregression, we identify two positive feedback loops that lead to price bubbles in the absence of exogenous stimuli: one driven by word of mouth, and the other by new Bitcoin adopters. We also observe that spikes in information search, presumably linked to external events, precede drastic price declines. Understanding the interplay between the socio-economic signals we measured can lead to applications beyond cryptocurrencies to other phenomena which leave digital footprints, such as on-line social network usage.
"The price has been pretty stable for the last six months."
But in a non-transparent market and potentially illiquid market it is at risk of massive volatility. And that could come from any one of a number of causes:
Crims decide that Bitcoin transactions don't give anonymity in an NSA world
Big institutions find Bitcoins not worth the work after compliance and capital reserve needs
Somebody comes up with a better way of mining coins, and supply expands
etc
Bitcoin will remain a boom and bust economy whilst it remains part of the shadow financial system.
It seems you may not have entirely grasped Bitcoin yet.
I agree, the exchanges are not very transparent and potentially illiquid, however:
Bitcoin isn't supposed to be anonymous, who cares about the few small-time criminals that abuse the system. Legitimate transactions far outnumber (and outweigh) those of criminals.
Bitcoin requires almost no work for compliance if you go with a payment processor like BitPay or Coinbase for the time being (which also solves the capital reserve needs btw)
Nobody can come up with a better way of mining. First there was CPU mining, someone came up with a better way: GPU mining, supply stayed the same because the network automatically adjusted itself, then someone came up with FPGA mining, supply stayed the same again, because the network automatically adjusted itself, now there is ASIC mining, the supply is still on the correct trajectory because again, the network automatically ajdusted itself. Even if you were to start chipping away at bitcoin mining with Quantum Computers which far exceed ASIC capabilities, the network would quickly adjust and the supply will go back to normal.
Funny how no one has mentioned Flourinert yet? ANOTHER liquid from 3M created several years ago. Used in Cray Supercomputers. I guess if you can overclock the chips (especially custom made boards or perhaphs some ATI Radeon ones) yes you can have some fun with breaking encryption and making a few bucks off bitcoins or at least that realized savings in energy costs can be put back into your company budget. I remember I had 6 ATI Radeon's litterally POUNDING away 24/7 in a data center I did some work for like 4 years ago (FREE electricity!). Got up to about 200 bitcoins and didn't really think much of it because they were only worth about $5 bucks at the time and I just did it for fun. Then my online wallet got corrupted somehow so I just gave up the hobby and used the video cards to crack WPA instead and lost interest in the coins. Well, turns out that was a $200,000 mistake. Oh well.
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