Bitcoin Forum

http://www.bizjournals.com/washington/blog/techflash/2015/04/this-d-c-bitcoin-company-raised-2-3-million-to.html

Bullish sign that hedge funds and likely wealthy individual investors are investing in local mining operations. Just another chink in btc's armor.

What is the vulnerability referred to?

It's a fairly interesting idea if they can mine more than cost.
Add hash to a secure network and raise the difficulty without adding much value to the network besides the miners, is the whole point of the company.
Keep control through their mining presence and get some coins.

In this sense, the system is self-perpetuating. Each transaction of bitcoins must be verified and added to the ledger by bitcoin miners, who are then rewarded for each successful verification. With more bitcoins.

I love to see some hedge funds interested to make bitcoin related company as part of their investment portfolio.
It means bitcoin have good response from financial expert out there :) also some individual investor there mean rich people
and that company use 2.3 million to mine bitcoin :)
Good to see this comment in that article :
Bitcoin is a virtual currency, yes, but what makes it special is that it's not really a currency in the traditional sense. There are no entities "printing" bitcoins anywhere. It's not linked to any single institution, meaning it is totally decentralized, one of the defining and most alluring characteristics of this bizarre monetary system.
If they invested heavily using USD fiat which can printed everyday by Fed, why they won't invest on non printable currency like bitcoin? :D

This is my bullish factor so it's best that yall get with it or stay home.

I am surprised that a company in America can mine at a profit, and at such a profit that it is worth investors while to invest.
I wonder if they have some special mining equiptment, or if they have a renewable energy source that means they basically get free electricity.

Otherwise as far as I am aware, ROI is either luck or improbable!

What are these guys supposed to be, more cloud mining stuff? Another web wallet? Whatever they're doing, someone has really hope they aren't some kind of ponzi/pyramid... Let's see where this goes. Not really convinced...

Huge investment! Makes you confident in BTC's future.
I wonder where there will be based, as electricity costs can vary a lot from state to state.

Well, they have rather ambitious plans:


http://www.bitcoinshop.us/index.php#mining

They also provide few other services: shopping engine, storage (multisig wallet), ATMs and are building own 'Universal Digital Currency Platform'.

All looks promising, but I have doubts whether they'll hit ROI on mining operations, unless they'll be selling hashpower as cloud mining.
 

So it's true VC give money for all kinds of stupid stuff?

I don't see how they're not going to setup a cloudmining service. These investors need to know they'll get their money back + profits in almost no time, and I don't see how can they do that just by mining for themselves.

Also, they're trying to kill to many rabbits with one stone only. This seriously does not sound good, at last for me.

Just to be clearer. They are not mining more bitcoins they are competing for the bitcoins that will be mined by someone.

What do you mean by that? Are you referring to them running multiple type of services? If so, what's wrong with that? It's a very good way to see which activities are profitable (and focus on those) and which ones are waste of time. Plus, it's a good way to maximise utilisation of their skills/equipment/facilities effectively reducing the costs.

As the weak hands get off bitcoin, strong hands will get in. This is how long term trading works everywhere.

I was reading the other day about new revolutionary mining system which would basically consist of an underwater (or some sort of cooling liquid) mining cave, that would keep the machines cold 24/7 and running at maximum capacity. Anyone has the link for this?

never heard about underwater mining cave cooling, it's too risky in my opinion. Because many organism live on that cave which possibly bother your mining process.
maybe this one?
http://www.theverge.com/2013/12/2/5165428/bitcoin-mine-in-hong-kong-uses-jelly-to-keep-cool
Open bath immersion cools computer components by submersing them in liquid with a particularly low boiling point.

Is the "Bitcoin Shop Inc" for real or just some scam company boasting about how much money their mining ponzi took in while trying to bring in more marks?

I see on their website (www.btcs.com) they're also into ATMs, another Bitcoin ponzi space (so I've heard) where customers/investors are getting it up the poop chute.

The management team looks like a banker and two NASA henchmen...

I haven't heard of them until I came across this thread. I'm not an expert but their accounts doesn't look very healthy (and frankly a little bit strange):

http://investors.btcs.com/xbrl/btcs-20141231/

Note the total revenue for the year (2014) of only $38k and 'general and administrative costs' of... $14 million, resulting in net loss of nearly $15m.
They'll be in trouble if they don't start to generate profits soon. Unless their goal is to raise as much of VC capital as possible, pay themselves nice salaries and dissolve.

We probably don't have the full picture though, so lets just wait and see.

I think the company is not telling us everything. Mining is not that profitable anymore, not enough to validate a $2.3 million investment. They must be expanding into another market niche.

They could be selling the block reward halving pitch and investors are buying it. Do the investors know how much bitcoin they can buy with $2.3 million? How much profit they can make buy just sitting on them without the mining equipment costs and electricity?

Sounds like a HYIP type operation with early investors banking on Bitcoin blowing up.

Sorta like a "Legit" Ponzi scheme, if there is such a thing.  If Bitcoin goes to zero, these guys are going tits up for sure.

No one that gets on the Bitcoin ecosystem believes "bitcoin will go to zero". When you get into this you have real reasons to do so. It's reasonable to think Bitcoin is not going to zero during our lifetime.

Still waiting for a time when whole wallets can be encrypted is such a way that they can be transferred to another person, and the first person will not be able to use any of the addresses therein, and the second person will have control of the addresses to use as his. In addition, nobody else will be able to transfer a wallet he happens to find, unless he has the right PGP address for that wallet.

When this happens, Bitcoin will be deemed so strong and anonymous that investors will flock to mining.

Authorities will realize that they don't have any control anymore, so they will start shutting the big mining operations down. After this is done, they will start going door-to-door after all the bitcoins they can arrest people for holding.

:)

I agree with you, unless the chips are incredible or the electricty costs are very competitive, there is not much ROI at present in the mining sphere
It could translate to profits if the price shifts upward but as we are currently still in a downtrend for Bitcoin prices it seems like a business model and risk hedge that will just bleed.

That said if they were speculating for a Bitcoin Halving in a year this is a good time to enter and mine till that date passes, as it could keep them in a good position for that point in time.

Or it could just be some nut giving away his money cause he's so old he doesn't know what to do with it. You guys act like Morgan Stanley invested in BTC.

Face it, Bitcoin died a year ago. Use it to gamble, buy your drugs or move on. There's nothing to be seen here anymore.

And yet you're still here, spamming with your sig to earn something that 'died'...

Good to see that happening. Usually it really doesn't make any sense buying Bitcoins in order to buy new mining equipment. You take quite a risk and in the end may end up with less BTC than you invested. If you do it on this scale, though it might just work!

From reading the article, I got the impression that they're a private mining firm:



You shouldn't assume that they are profitable just because they managed to get investors on board. It's actually pretty common for VC investors to pour money into non-profitable companies, especially in the tech space. There was another story a while ago involving an exchange called Buttercoin which raised (and promptly burnt through) $1.3 million of funding despite never turning a profit:


Link: http://www.coindesk.com/bitcoin-marketplace-buttercoin-folds-despite-1-3-million-investment/


Even if they predict the price to increase, it would probably make more sense to buy the bitcoins directly than go through the extra step of setting up miners in order to generate bitcoins. If they had access to cutting-edge ASICs then they might be profitable although I'm not sure if this would still be the case once manufacturing and R&D costs are taken into account. Cheap electricity is another factor that could make a mining more profitable, but virtually all large-scale mining firms (which would be their main competitors) already have access to cheap electricity rates anyway and given the current conditions, we already know that mining isn't currently very profitable for even them.

Let's hope whatever business operation they are into it will be long enough to pay back to the investors with a profit. Somehow at current mining difficulty I suppose they must be looking to invest and based their operations where production cost is cheap. Else whatever investment or fund put in by right it will give lower return as time pass by and just wondering how they are going to maintain that.

In mining, lots of costs can be deducted as company expense/investment, while the bitcoin income can disappear into cyberspace, maybe it is this aspect attracts lots of industry miners  ;D

Good point. But still, to pull that off, the official, recorded income would have to be higher (at least slightly) to justify such operations.