Sounds like 10 years of lock-in to me. The manufacturer will be getting coins until it breaks down or is replaced. Nice revenue stream.
Was than a rebuttal? Any factual points? A consumer is going to sign a 10 year lockin on insignificant NAV gain  There's no signing anything. If you buy a product that lasts 10 years, you won't replace it for 10 years. You have bought 10 years worth of utility in advance. Do I have to repeat my NAV point? You are losing the multiple variables now. |
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There is another reason this idea of manufacturer taking all the coins can't possibly work. The consumer will demand the heater works even when connectivity is down.
No one wants a heater that only works when the internet is online.
Thus what incentive does the consumer have to maintain connectivity if they aren't getting some of the coins and paying taxes on them?
Look you are envisioning a product that the consumer maintains as a miner, I'm not. It might have a prepaid cellular data chip in it (one of the Bitcoin hardware wallet companies are doing this). The manufacturer might offer free monitoring and service maintenance or some other incentive if you hook it up to your WiFi (which had better be easy, or people won't do it, but it could possibly be made easy using a mobile app or something). I don't know how the business model will work in practice. I do know there is an enormous amount of electric heating that can be harnessed for mining. Some clever business people will figure out how to do that, sooner or later (assuming PoW mining continues to be done), even if not 21. Offering services to miners is not fungible to offering appliances to consumers. Different level of profit, NAV expectation, portability expectation, specialization, acumen of the customer, and B2B. |
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Sounds like 10 years of lock-in to me. The manufacturer will be getting coins until it breaks down or is replaced. Nice revenue stream.
Was than a rebuttal? Any factual points? A consumer is going to sign a 10 year lockin on insignificant NAV gain ASIC mining has only been around for 18 months or so.
2013 seems like 10 years ago to me I guess. It could have been done with GPUs before that. Miners were very resourceful. They didn't find a market demand. Bitcoin's market isn't that large yet. Heating is not fungible with mining. There is another reason you idea can't possibly work. The consumer will demand the heater works even when connectivity is down That's easy to do. Just mine and burn the hashes. The business case for the subsidy is that the manufacturer will mine a lot of BTC, not that uptime will be 100%. You miss the point. The consumer has no incentive to ever connect then. Sorry heating and mining are not fungible. The overlap where it will work is small and especially tiny in a tiny Bitcoin adoption market. Solar water heating is 90% cost reduction. What percentage of the population uses it? And it doesn't have to maintain connectivity. What happens when I move? My heater's subsidized connectivity moves too? (That was Eric Raymond's famous snark question to the IETF when they were proposing only .country domain TLDs and why we have .com now) I think we've established in this thread who is pragmatic and who is pie-in-the-sky. |
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There is another reason this idea of manufacturer taking all the coins can't possibly work. The consumer will demand the heater works even when connectivity is down.
No one wants a heater that only works when the internet is online.
Thus what incentive does the consumer have to maintain connectivity if they aren't getting some of the coins and paying taxes on them?
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My point is that if the home user is not paying the tax on mined coins, they are not getting (any mined coins and thus not) a discount on their monthly electric bill, thus what incentive do they have to keep the miner running always?
Warm water or air (or toast, possibly) I thought these were going to be sold very cheaply nearly free since the electricity cost is the major cost. Otherwise what incentive do I have to buy one. Cheaper product cost. It's the subsidized- handset heater business model. It is not very compelling. A heater is a major home appliance that lasts for 10 years or more. A cell phone is a device you need to replace every 2 years or so, gets lost, gets stolen, gets dropped, etc. The NAV of a heater is already very low compared to the much higher monthly expenditure. The barriers to entry to this space heater market were not $116 million. It hasn't been done because it isn't that compelling. Bitcoin needs to reach at least 10% adoption before it makes much sense. A free toaster that requires me to maintain internet access is not free. A free toaster that requires me to troubleshoot connectivity issues is not free. Etc.. Also the heater will need to be replaced more frequently than 10 years due to Moore's law.Not if the manufacturer is receiving all the mined coins revenue but the incentive for the manufacturer to continue customer support to keep the device connected and running declines. |
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My point is that if the home user is not paying the tax on mined coins, they are not getting (any mined coins and thus not) a discount on their monthly electric bill, thus what incentive do they have to keep the miner running always?
Warm water or air (or toast, possibly) I thought these were going to be sold very cheaply nearly free since the electricity cost is the major cost. Otherwise what incentive do I have to buy one. Thus when it stops working, I don't have a strong incentive to hassle with it. I might get tired of the tsuris and just want a heater that works. My point is that a discount on the space heater is not very compelling. A discount on the ongoing electric bill more so, but then taxes have to be dealt with. |
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21 apparently wants to scale out appliance and device mining to the mass market. That hasn't happened because no one has done it yet. The mass market isn't interested in (perhaps less than optimally efficient) mining rigs as heating units, but they'll be happy with an integrated plug-in unit that costs them less because it mines for the manufacturer.
So you are asserting that selling space heaters to individuals didn't work because no one made an integrated plug-n-play process? And the retailers of appliances can make it so resolving connectivity and operational issues I'm asserting that no one has tried to sell Bitcoin miners as space heaters because it's been too small and too new of a market and no one has developed the technology for embeddable mining. Selling products at consumer price points is very different from selling mining rigs to be used in big farms and data centers. You don't $116 million to launch that over the internet, unless the point is you need to have it in all retailers and with name brand names on the products.
Meh, there is a lot of VC money flying around these days, probable an indirect consequence of QE. So you might be surprised at the crap business plans that get funded. But I would guess yes, their appliances may show up with brand names in retailers at some point. They aren't really even launched yet, the only thing they've done at this point is recently reveled some of their plans/technology. Also, there no real tax burden to the manufacturer, mining revenue is taxed essentially the same as product or service revenue, especially if converted to fiat right away.
You are saying the manufacturer will sell the device at a lower price (taking all the mined coins) but the consumer will pay the same electric bill, then bother to keep the miner running well I guess it won't require effort to keep it running (or the product will likely fail, which is very possible). Any shell games on who pays the utility bill don't resolve the tax culpability (at least in the USA).
There's no shell game here. Mining income is taxed the essentially the same as product revenue. If you sell a product for $100 instead of $200 and get $100 worth of mined coins, then you pay tax on $200, just the same as if you had sold the product for $200. If you sell it for $100 instead of $200 and get $200 worth of mined coins, you in fact sold the product for $300 and pay tax on $300 (but have a higher profit margin). The consumer gets no tax deduction for heating his water/air, in either case. The barriers to entry aren't incredibly low, for the product itself, but being integrated into products distributed through a supply chain is a reasonably effective form of lock in by bundling. Walmart probably only carries a few lines of space heaters, etc. Altcoins won't have access to the hash rate unless they can convince the manufacturer. My implied point was that if the home user is not paying the tax on mined coins, they are not getting (any mined coins and thus not) a discount on their monthly electric bill, thus what incentive do they have to keep the miner running always? You are saying the manufacturer will sell the device at a lower price (taking all the mined coins) but the consumer will pay the same electric bill, then bother to keep the miner running well Any shell games on who pays the utility bill don't resolve the tax culpability (at least in the USA). |
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One more point. The extent to which space heated mining is developed could be good for altcoins too and thus is not a lockin, because the barriers to entry are low. You have a CPU-hash focused coin, okay turn on your computer and mine to warm your room. Plug-n-play with temperature control can be Kickstarted.
The smartphone target market is the attempted lockin, but I think it not very economically compelling on a wide scale in terms of BTC micropayments. Might work a bit on subsidizing smartphone adoption without the micropayments network efforts. That isn't really a big threat of lockin then.
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With space heating, we don't need 21 Inc. Anyone in the market for space heating with Bitcoin mining, can go buy a used miner on ebay now. Thus if that was a big mass movement market, why hasn't it happened already?
It has. Poke around the mining forums and you see people mentioning constantly that keeping their home warm is part of the value proposition of mining for them. I know that. No mass movement. 21 apparently wants to scale out appliance and device mining to the mass market. That hasn't happened because no one has done it yet. The mass market isn't interested in (perhaps less than optimally efficient) mining rigs as heating units, but they'll be happy with an integrated plug-in unit that costs them less because it mines for the manufacturer.
So you are asserting that selling space heaters to individuals didn't work because no one made an integrated plug-n-play process? And the retailers of appliances can make it so resolving connectivity and operational issues You don't $116 million to launch that over the internet, unless the point is you need to have it in all retailers and with name brand names on the products. The only really viable market is space heating thus limited to winter months and cold climates. The other appliance markets are not viable because too small of a ROI for the hassle of installation/maintenance and/or have superior replacements. Also, there no real tax burden to the manufacturer, mining revenue is taxed essentially the same as product or service revenue, especially if converted to fiat right away.
You are saying the manufacturer will sell the device at a lower price (taking all the mined coins) but the consumer will pay the same electric bill, then bother to keep the miner running well Any shell games on who pays the utility bill don't resolve the tax culpability (at least in the USA). Some people will do it for space heating in cold enough climates. Most people won't, at least not a quick ramp up in the West and third world. China would be the largest market I bet, because of their combination of frugal mindset, engineering and math acumen, I think no income tax, authorities can get top-down things done that align with their global Technocracy goals (Smart electric meters, etc), and developing youthful demographics economy. Again these are likely sales to cash and limited network effects. The other big target market are the smartphones in developing markets, but again the economics are not very compelling. |
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If I recall correctly, the Bitcoin dev team was really excited about Zerocoin, until they saw that computational overhead which rightfully scared them away.
Now a zerocoin sidechain that is merged mined with Bitcoin and only lives off of it's own transaction fees, would enable people to fully clean any coin they have for a modest fee.
I vaguely remember the problem you mentioned and the shared secret needed in the bootstrapping step as the main causes why zerocoin wasn't merged, but I could be wrong. Now both of them are solved in zerocash, though a merge now is highly improbable for economical, political and technical reasons. You are confusing the coin and the cash. Zerocoin had severe scaling issues but less of a threat of unknown money supply (coins can be minted if key compromised but all coins coming out the accumulator are countable). Zerocash reduced scaling issues (but arguably not enough to scale) but added an uncountable money supply along with greater anonymity of every aspect of the transaction including the payment amounts. Afaik, there was an attempt to fix the process of selecting the master key in Zerocash which is argued to be secure, but afaik there are still detractors who question if that process is secure. Bottom line is you can't count the money supply in Zerocash thus you can not prove whether it was secure or not in the real world. Also I was worried about how reverted transactions would work in Zerocash with orphaned chains if there was attempt to avoid selfish mining using my math to merge blockchains and pay proportion coinbase (minted coins on) all orphaned chains. Have there been developments since that? |
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UBS pays $545m to settle foreign exchange probe BBC - UBS FINEUS and UK authorities are expected to hand out penalties to major banks totalling about $5bn related to the foreign exchange investigation. Just remind me again, what's the yearly quantity of money that got manipulated in the global Forex markets??? Let's slap each other's wrist while we are copulating under the table with our other hands. But really can't you see we are smilingsneering (it so vigorous ya) and thus reforming. |
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Apparently space heating is 63% of electricity costs in cold climates compared to 17% for water heating: https://www.nrcan.gc.ca/energy/products/categories/water-heaters/13735Water heating cost can in many cases be reduced by 90% with a solar water heater assuming especially so in warmer climates. This is a more permanent option than Bitcoin mining, doesn't require periodic upgrading, doesn't require tax reporting. Consider also the losses due to taxes on minted coins. With space heating, we don't need 21 Inc. Anyone in the market for space heating with Bitcoin mining, can go buy a used miner on ebay now. Thus if that was a big mass movement market, why hasn't it happened already?Either the economics or the market awareness are not conducive. Can 21 Inc do something to change that? |
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You don't agree that some (probably most) people in the market for a water heater don't have incentive for the tsuris of figuring out all the details with getting a mining device running, connected to the internet, etc.?
I don't know. Depends how the device is designed. If it simply mines for the manufacturer and subsidizes the cost of the purchase, and if configuration is simple or nonexistent (perhaps a built-in cellular data chip with prepaid access), then I can see that working absolutely, and even possibly driving non-mining heaters off the market altogether. Many purchases are made without thinking past the up front cost. Cellular providers are not fungible every where. You are consistently attempting to erase the non-fungible characteristics in your analysis. I can't find a BTC miner with that wattage consumption for less than perhaps $20,000. I just briefly checked and only saw a 1250W one for $10,200. I don't believe that is remotely applicable because you are paying for cutting edge power efficiency, for the case where that matters (high density deployments in data centers and mining farms), not the case where power is effectively free. If you can find them, you can buy older, less power-efficient miners for next to nothing. Can you show me any example? If we choose 10X less efficient technology, thus 10X less Bitcoins for the same wattage, thus my maximum of $50 (probably less) water portion of the electric bills gets subsidized by $5 per month. And for what additional cost and tsuris? Work some specific numbers and I challenge you to find it to be viable. Is all the cost of BTC miners in the exclusivity (limited supply) of the latest (Intellectual Property) designs and virtually no hardware fabrication cost at all? Surely more firms would have entered to drive down prices in that case. I do understand that if you produce a dedicated chip instead of ASIC, then costs decline significantly with volume. But efficiency also declines with age of the design. If you don't replace your miner every 18 months, then you subsidy declines by half according to Moore's law. Are Bitcoin miners following Moore's law. |
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The markets are not insignificant. The water heater market is approximately 100 million units per year. The largest markets are currently Brazil and China, I guess due to rapid urbanization and development. Of current deliveries, electric-powered units are a large share, possibly >50% (Brazil appears to lack gas distribution or has some other reason to favor electric, because almost all of the market there is electric.)
You mean potential market. But you need to quantify what % of that market can be realistically captured. I don't really understand what notion of "total efficiency" you are using other than what it is people in the market choose to buy. People seem to want to buy electric heating devices. There is little question that eventually these electric heating applications will migrate to some sort of mining-integrated solution, assuming mining continues to be a thing.
You don't agree that some (probably most) people in the market for a water heater don't have incentive for the tsuris of figuring out all the details with getting a mining device running, connected to the internet, integrate into their tax return, operational issues with wallets, etc.? Hey I am at the hardware store and my gf is begging me to hurry up because we need to get to her mother's birthday by 2pm. I don't have time for this Bitcoin complication. Sell me a water heater please. Naive non-marketers think "I want a water heater", "mining device makes heat free", "thus I want water heater + mining device". This is myopic because it doesn't factor in that the + operator is not a zero cost operation in the marketing context. Upsells are lossy especially if only 0.1% of the population is in the market for your upsell. But there was an easier way to refute this point that had escaped both of us (only because I was too sleepy last night when I signed off). A water heater requires 4000W of power (in order to provide rapid heatup function that most consumers demand). I can't find a BTC miner with that wattage consumption for less than perhaps $20,000. I just briefly checked and only saw a 1250W one for $10,200. Who is going to pay $10,000+ (or even $1000) extra for a water heater? The entire energy efficiency deal is a ruse and coverup for the real goal which is to shoehorn mining into smartphones for a market segment that has no knowledge nor use for it. If excess heat were a viable business model, the miners would have long ago adopted it as major movement. It doesn't take $116 million in capital to figure out how to retrofit mining hardware onto an insulated water tank. This is yet another example of how the TPTB are top-down misallocating resources (because the free market always does it better) and destroying the global economy into their NWO death paradigm. |
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Room heaters, water heaters, etc. are much better.
In what way if any is my upthread argument against these being a wide-scale target market not correct? Or are you still just arguing about (I assert irrelevant) energy efficiency without respect to (I assert relevant) overall efficiency? Edit: I wasn't trying to make it appear you erred on the points about energy efficiency. I am concerned with what is relevant and didn't think I was attempting to make it appear you made an error. I am urging you to raise the debate to relevant factors because I am most interested in a conclusion so I can move on. |
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Wanted to hear of your opinion of why billionaire VC's only claim to hold a few coins in public and invest millions into BTC companies.
Is this their way of taking a bet and hedging against Bitcoins failure? Wont their ROI be better just owning BTC.
Is there more money to be made building services around Bitcoin than the store of value property of BTC.
Venture capitalists make most of their money on fees (including performance fees), which they get for providing the service of investing other people's money into startup companies. That's what they're paid to do, so that's what they do. Thank you. I sensed there was a good reason for me to avoid that morass, but I had never tried. I remember reading about for example how Bill Gross's ideaLab required the startup to take on this shared overhead that the ideaLab provides to its incubated companies. Last thing I need is some bean counter or premature optimization of marketing wasting my time while innovating. |
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also, i don't think these companies would have invested in 21 w/o some larger plans:
“We think 21’s technology has the potential to span across a wide variety of industries and look forward to working with Balaji and the team.”
— Nagraj Kashyap, Senior Vice President, Qualcomm Ventures
“Bitcoin could be the internet’s next great protocol. With the blockchain’s distributed ledger and micro-transaction capabilities, it has the potential to become an enabling technology that expands well beyond digital payments. We’re delighted to be an investor in 21 and to work closely with Balaji and Ben.”
— Padmasree Warrior, Chief Technology & Strategy Officer, Cisco
Their current business models need expanding markets. The smartphone markets are becoming saturated in the West. Their need obscures their objectivity, because their main goal is to sell the growth projections to shareholders. People like me in their company that raise our hand, are fired. Groupthink. Western companies trying to understand developing markets from their armchairs and lack of hands on experience. I've lived in the developing world 1990, 1991, 1996 - 1999, 2003 - present. They did better being suppliers to Samsung and manufacturers in Asia than top-down dictating the paradigm. |
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the device makers will have the incentive to form their own mining pools to collect BTC which i am sure they'll do. this will further decentralize mining.
or it may concentrate it. we shall find out. i don't see how taking today's mining pools and adding dozens of phone maker, router maker, and other device making mining pools with their millions of users can result in centralization. It isn't clear those parties will create their own mining pools. They may outsource. But we don't know at this point, everyone is guessing, including whether this who concept gets any traction at all. We don't need to guess about the inexorable trend to the maximum-division-of-labor. |
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I agree the idea of a hardware wallet combined with mining in a small device makes a lot of sense.
If you desire BTC and micropayments. The target market desires only the smartphone. Shoehorning through deception rarely creates mass movements. Somebody at 21 Inc flunked Marketing 101. The elite are trying so hard to get the developing world onto the electronic currency in an accelerated timeline but they can't erase the natural inertia of the developing world. It takes me numerous instances of repetitive teaching just to get people here to understand what message forwarding does. They don't even know how to enter a URL in the browser, they search the url in google! They don't easily adapt to a new site with a similar paradigm of sign up, sign in, send message. If the UI is slightly different than Facebook, they get confused. In my site they are not asked to input an email address on signup/in and instead their mobile. This confuses the hell out of them. The adopters of crypto are in the developed world. We are the movers and shakers. Sorry Dirty Larry. |
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all of which may or may not contribute to the centralization of the network, which was the original point.
Hardware will decentralizes, profits may or may not. Control will depend on the education level of the market. Which is non-existent on both economics and Bitcoin amongst the target market segment. And you don't have a shred of hope of educating them in a premature acceleration. I've tried and realized it was futile. |
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