It's Happening .... The secrets of 21 inc revealed, and its what we hoped for.

[RoadStress]

There is no ROI discussion here because the user will not want any ROI for those devices. If they can make it so that the total added cost is minimal (maybe <5$) the user will not care about the added 10W power consumption. That's like 1$/month at 0.10c/kWh. They only need to figure a way to market them and to convince people that their use of the ASIC routers matters.

I am sure that most users would strongly object to spending 1$/month more for the benefit of some company out there.

Either the devices will be a net win for the users (including the hassle of keeping the device connected and collecting the payoff), or forget it. 

One advantage of an ASIC-enabled toaster (or of the Internet of Things in general) is that the cops will know precisely when you are sitting down for breakfast, on the day they come to get you.

They aren't spending 1$/month for the benefit of some company. They are doing it for the benefits of the bitcoin p2p network which I know it will not thrill all the users. (unless 21inc chooses to mine directly to their wallets which would be very retarded). They need to find a way to make it worth it for the user to run these devices.

[1714728092]

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[1714728092]

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[inBitweTrust]

They aren't spending 1$/month for the benefit of some company. They are doing it for the benefit of the bitcoin p2p network which I know it will not thrill all the users. (unless 21inc chooses to mine directly to their wallets which would be very retarded). They need to find a way to make it worth it for the user to run these devices.

We should be more cynical and not assume 21 business proposal can survive based upon the charity of clients alone.

We shouldn't assume that all humans act rationally in their long term best interest either.

It is still possible that 21 can design an appliance that is profitable for both them and their clients if waste heat is recycled. (although a challenging task to do right)

Lets assume that the above isn't Immediately accomplished and these ASIC appliances aren't wise investments and that free router will cost 100 dollars in electricity over 2 years after 25% mining profits are deducted and a similar router can be purchased for 50USD new.

Who will be their demographic of buyers?

1) Individuals who cannot afford 50 dollars but need a router and can afford 4 dollars a month in electricity
2) Individuals who don't pay for electricity themselves (I.E.. renters/kids) or have already a fixed sunk cost on renewable energy solutions with extra watts to spare
3) Individuals who are concerned about privacy and prefer virgin coins and don't want to spend 8% more on localbitcoins
and waste their time(depends upon if virgin coins will be shared by 21 or not and if you can buy ASIC appliance retail )
4) Bitcoin enthusiasts who want to be "miners" or support the network
5) Idiots who cannot do the math and believe it is a wise investment

Those 5 categories constitute a very large demographic.

[Cryddit]

The jokester who made up this toaster thing is probably reading this thread and having a laugh.

There is absolutely no way 21 inc raised $116 million based on the idea of putting miners in appliances that people use ~5 minutes per day. No chance in hell.

I can't believe so many people actually believe this is their business plan.

Can't rule it out, really, but you are probably right.  Remember what Ron Popiel is rumored to have said when someone suggested design improvements to some angling equipment his company was making.

"Yeah, it would be better for catching fish but that's stupid.  The damn thing isn't supposed to catch fish, it's supposed to catch fishermen."

If you think it's the investors who are being ripped off, then similarly, we could be looking at an investment proposal that isn't supposed to produce a profitable company but is supposed to convince investors that it might.

But I happen to think it's the consumers who are being ripped off, and this is -- also similar -- a proposal for a (probably profitable) company which produces devices which are not supposed to make a profit but are supposed to convince consumers that they might. 

[inBitweTrust]

But I happen to think it's the consumers who are being ripped off, and this is -- also similar -- a proposal for a (probably profitable) company which produces devices which are not supposed to make a profit but are supposed to convince consumers that they might. 

Likely possibility as producing a free device that is profitable for both will be a challenge although not impossible. This is akin to all mining in bitcoin where unless you have free electricity, are lucky, or invest over a million you won't turn a greater profit vs just holding onto your BTC. Yet people still buy ASIC's or into cloudmining ponzis over and over.

I suppose the side benefit is they may improve bitcoin security... Regardless of this, I won't allow companies to lie or mislead their customers without a fight so 21 better come prepared. Many of us were prepared and warned others about cloudmining ponzis or scam coins so 21 better get ready for a healthy dose of skepticism and pushback if they don't release a decent product.

[RoadStress]

We should be more cynical and not assume 21 business proposal can survive based upon the charity of clients alone.

We shouldn't assume that all humans act rationally in their long term best interest either.

It is still possible that 21 can design an appliance that is profitable for both them and their clients if waste heat is recycled. (although a challenging task to do right)

Lets assume that the above isn't Immediately accomplished and these ASIC appliances aren't wise investments and that free router will cost 100 dollars in electricity over 2 years after 25% mining profits are deducted and a similar router can be purchased for 50USD new.

Who will be their demographic of buyers?

1) Individuals who cannot afford 50 dollars but need a router and can afford 4 dollars a month in electricity
2) Individuals who don't pay for electricity themselves (I.E.. renters/kids) or have already a fixed sunk cost on renewable energy solutions with extra watts to spare
3) Individuals who are concerned about privacy and prefer virgin coins and don't want to spend 8% more on localbitcoins
and waste their time(depends upon if virgin coins will be shared by 21 or not and if you can buy ASIC appliance retail )
4) Bitcoin enthusiasts who want to be "miners" or support the network
5) Idiots who cannot do the math and believe it is a wise investment

Those 5 categories constitute a very large demographic.

Who said anything abut the charity of the clients? There are various way where they can get their money. They can have a deal with TP-LINK for example to integrate the chips into their routers and TP-LINK pays them to do it.

Recycling heat in a consumer appliance seems too complicated. They need to keep it simple for start then move on to complex stuff.

Stop talking about poor piss people. They will pay for that router with the added benefit that they support a p2p payment network that fucks the banks in the ass. Remember that the router will have an energy cost no matter if it has bitcoin mining ASIC chips or not. Who gets a router already knows that he will pay for some power and as stated before for a 10W extra the consumer will pay 32$/year extra in terms of electricity. Nobody checks the power requirements of the routers so I am sure that most will not even notice an added 10W.

Nobody will buy such a router for the mining profits. They will buy if because it is at a discounted price or in a promotion or because they just want to support a free p2p payment network. No need to complicate things.

[Cryddit]

On the other hand, in contexts where the heat produced *IS* the point of the appliance, there is at least a possibility that by using electricity that the consumer would be buying anyway (and using to produce heat) the devices could be profitable. In terms of marginal cost that really is free power.

This gets back to the guy in Minnesota who replaced his electric house heating system with S3's.  Not the most efficient miner any more, but when the thermostat kicks it on, it still makes him more profit than his old electric heater ever did and produces the same amount of heat for the same amount of electricity consumed.

[mercistheman]

All it takes is an over sized breaker at the panel and an extra load on the circuit and you would be looking at potential house fires.

[inBitweTrust]

Remember that the router will have an energy cost no matter if it has bitcoin mining ASIC chips or not. Who gets a router already knows that he will pay for some power and as stated before for a 10W extra the consumer will pay 32$/year extra in terms of electricity. Nobody checks the power requirements of the routers so I am sure that most will not even notice an added 10W.

Pardon for my brashness but you seem to be making a few assumptions without calculating the profitability.

An efficient ASIC has a Power Efficiency of ~ 0.51 J/GH. Thus you are suggesting that these routers will be producing ~ 5GH for 10W. A router will use around ~6watts  and you are suggesting adding another 10 to that with the ASIC .

0.07 kWh = Immediate loss of 0.0289 USD a week.
0.16 kWh =  Immediate loss of 0.1801 USD a week
Free Electricity = Total gross profit of 5.48 USD after 3.3 years = 1.37 usd in btc issued to consumer in 3.3 years and 4.11 USD in 3.3 years  going to 21 inc (assuming extremely conservative difficulty increase of 3% month)

So no... it will not just be a paltry 10w  ... as no one in their right mind will offer a discounted router for 4 dollars over 3.3 years in potential gross profit. This means in order for them to have a chance of profiting with free electricity these routers will be probably using at least 200-500 watts ... they will be little mini space heaters essentially that will have a noticeable impact upon ones electrical bill of between 10 dollars(200w @ 0.07 kWh) to 58 dollars (500w @ 0.16 kWh) more a month.

[RoadStress]

Pardon for my brashness but you seem to be making a few assumptions without calculating the profitability.

An efficient ASIC has a Power Efficiency of ~ 0.51 J/GH. Thus you are suggesting that these routers will be producing ~ 5GH for 10W. A router will use around ~6watts  and you are suggesting adding another 10 to that with the ASIC .

0.07 kWh = Immediate loss of 0.0289 USD a week.
0.16 kWh =  Immediate loss of 0.1801 USD a week
Free Electricity = Total gross profit of 5.48 USD after 3.3 years = 1.37 usd in btc issued to consumer in 3.3 years and 4.11 USD in 3.3 years  going to 21 inc (assuming extremely conservative difficulty increase of 3% month)

So no... it will not just be a paltry 10w  ... as no one in their right mind will offer a discounted router for 4 dollars over 3.3 years in potential gross profit. This means in order for them to have a chance of profiting with free electricity these routers will be probably using at least 200-500 watts ... they will be little mini space heaters essentially that will have a noticeable impact upon ones electrical bill of between 10 dollars(200w @ 0.07 kWh) to 58 dollars (500w @ 0.16 kWh) more a month.

I'm starting to feel that we have different visions about this and we are getting nowhere with this discussion.

Don't compare current ASICs with what 21inc is trying to do. They are totally different things. They plan to have a 14nm/16nm chip. Here you can see an estimate closer to reality: https://bitcointalk.org/index.php?topic=1053412.msg11324501#msg11324501 While I remain conservative about that power consumption I do believe that Qualcom knows a thing or two about low powered chips. If KnC (a company that exists since 2013) announced 0.07W/GH then Qualcom must do better considering their experience.

I don't understand why are you making ROI calculations. I find that 10W extra per month will not bother anyone. I keep my router plugged 24/7 and it produces nothing. Why should that change if it had a bitcoin mining chip in it? Do you keep the router online all the time? The extra added cost is less than 1 coffee/1 coke bottle/etc. It's 1 dollar per month. It's nothing!

Why do you suddenly expect a ROI from something that was never supposed to bring any ROI?

[inBitweTrust]

Why do you suddenly expect a ROI from something that was never supposed to bring any ROI?

My comments indicate the need for a ROI only from the perspective of the investors and owners of 21 Inc and the consumers making the miscalculation. I am thus making the assumption most users will make the irrational decision and mine btc on these units even though they will never see a ROI just like they are doing so now with other forms of mining.

Don't compare current ASICs with what 21inc is trying to do. They are totally different things. They plan to have a 14nm/16nm chip. Here you can see an estimate closer to reality: https://bitcointalk.org/index.php?topic=1053412.msg11324501#msg11324501 While I remain conservative about that power consumption I do believe that Qualcom knows a thing or two about low powered chips. If KnC (a company that exists since 2013) announced 0.07W/GH then Qualcom must do better considering their experience.

I'm using real life numbers instead of speculating for a reason. The reason is because with PoW improvements in efficiency only leads to short term profits as difficulty re-adjusts. Thus if I speculate with you and assume that 0.07W/GH can be realized than those efficiency gains will be quickly lost by a change in difficulty. You have to keep in mind that those coffee warmers and ASIC routers will be competing with 14nm chips in industrial ASICs in a warehouse where power and ventilation is cheap and plentiful. There are multiple ASIC companies in this space all competing for more efficient chips and 21 doesn't exist in a vacuum. So sure , we can assume 10w @ 200  GH/s... heck , lets lets fantasize of 5w @ 400 GH/s.... you do understand that the ROI is largely dependent upon the total share of the hashing power and not the amount of  GH/s? With those new chips that router will need a much higher GH/s to get a decent share of the block reward and tx fees . Thus in order to get an appropriate hashing share that router will need to be an energy hog to make any business sense from 21 eyes.  

Don't get me wrong, I want this to happen and hope 21 is successful. I am just not going to let them do it by misleading their customers. I would rather motivate them to produce a product which was genuinely innovative by reusing waste heat and thus benefited everyone.

[RoadStress]

My comments indicate the need for a ROI only from the perspective of the investors and owners of 21 Inc and the consumers making the miscalculation. I am thus making the assumption most users will make the irrational decision and mine btc on these units even though they will never see a ROI just like they are doing so now with other forms of mining.

Now you totally lost me. In your previous post you are showing some ROI calculations from the consumer perspective. Now you are talking about 21 Inc perspective. Make up your mind or at least separate them more visible. Let's make it easy.

Consumer ROI: From my perspective this doesn't exist because this shouldn't be the main reason of buying 21 Inc products. I see it just like a device that uses more power. Period. Because if TP-LINK suddenly has an increase of 5W power consumption nobody would notice. As I said before nobody is buying a router (or any alike equipment) based on its power consumption. Also anyone that has enough money to buy a router and to keep it 24/7 plugged in can very easily support an added cost of 1$/month (a maximum approximate) because this also implies that they can also pay for an internet subscription and for a device that can surf on the internet. A 1$/month for this type of consumer isn't noticeable.

Company ROI: There are various methods of them getting ROI. The profit from selling these types of devices must be the last method of them doing that. You need to be creative. They can sell the company to someone else, they can deploy hashpower before selling consumer devices, they can have some patents and B2B partnerships etc.

I'm using real life numbers instead of speculating for a reason. The reason is because with PoW improvements in efficiency only leads to short term profits as difficulty re-adjusts. Thus if I speculate with you and assume that 0.07W/GH can be realized than those efficiency gains will be quickly lost by a change in difficulty. You have to keep in mind that those coffee warmers and ASIC routers will be competing with 14nm chips in industrial ASICs in a warehouse where power and ventilation is cheap and plentiful. There are multiple ASIC companies in this space all competing for more efficient chips and 21 doesn't exist in a vacuum. So sure , we can assume 10w @ 200  GH/s... heck , lets lets fantasize of 5w @ 400 GH/s.... you do understand that the ROI is largely dependent upon the total share of the hashing power and not the amount of  GH/s? With those new chips that router will need a much higher GH/s to get a decent share of the block reward and tx fees . Thus in order to get an appropriate hashing share that router will need to be an energy hog to make any business sense from 21 eyes. 

Don't get me wrong, I want this to happen and hope 21 is successful. I am just not going to let them do it be misleading their customers. I would rather motivate them to produce a product which was genuinely innovative by reusing waste heat and thus benefited everyone.

You are using real life numbers from chips with a bigger node than what 21 Inc plans. So from start you have the wrong data to start the comparison.

Excuse me? ASIC routers will be competing with industrial ASICs? Read this post again please: https://bitcointalk.org/index.php?topic=1053412.msg11324501#msg11324501 We are talking about 50 Eh/s. I will let you explain how can someone deploy more than 1Eh/s industrially in a warehouse because it is your statement.

Again you are talking about a ROI for a router. That doesn't exist. It is explained above. You simply don't understand or you refuse to accept it.

[inBitweTrust]

You are using real life numbers from chips with a bigger node than what 21 Inc plans. So from start you have the wrong data to start the comparison.

Excuse me? ASIC routers will be competing with industrial ASICs? Read this post again please: https://bitcointalk.org/index.php?topic=1053412.msg11324501#msg11324501 We are talking about 50 Eh/s. I will let you explain how can someone deploy more than 1Eh/s industrially in a warehouse because it is your statement.

Again you are talking about a ROI for a router. That doesn't exist. It is explained above. You simply don't understand or you refuse to accept it.

Ok, I stand corrected and understand what you are suggesting. Thank you for schooling me.  

I'm beginning to understand your and s1gs3gv arguments to indicate that if 21 can secure a license contract with a major manufacturer and immediately sell at scale routers with embedded ASIC chips in the board that uses an extra 10w and produce  200GH/s each for a very nominal cost of raising the router unit price up a couple dollars it could work .  The reason that this would succeed and why Commercial ASICs would fail is because adding an ASIC chip within a router is much easier and cheaper than building a standalone Commercial ASIC unit and thus they could pass those savings onto the consumers. Additionally, the whole mining setup, maintenance, troubleshooting ,security, liability, and power concerns would be eliminated thus further adding efficiencies that commercial miners couldn't compete with. 21 would only need to make 1-3 dollars per router to be profitable because the costs are so small.

This is all based upon the assumption that 21 has already or can secure a royalty or license contract with a major manufacturer and start deploying 100ks to millions of these products.  

If I were a ASIC manufacturer not contracted with 21 I would immediately start trying to secure my own royalty deals.  If I was a ASIC miner working out of a hot warehouse I would be horrified and immediately start preparing for a transition.

I myself hope that enough ASIC manufactures secure enough of these deals with independent manufacturers (I.E... Cisco/Lynksys with 21/ , GE with Antminer, TPlink with spondoolies, ect... so there isn't one large 21 Inc pool controlling the hashrate.

[LiteCoinGuy]

my toaster should be a full node too please 

[inBitweTrust]

my toaster should be a full node too please 

...as long as it can have its own wallet as a DAC/DAO and spend its own BTC mined from its own ASIC chip to order and buy its own bread to make me toast in the morning first. 

[JorgeStolfi]

I don't understand why are you making ROI calculations. I find that 10W extra per month will not bother anyone. I keep my router plugged 24/7 and it produces nothing. Why should that change if it had a bitcoin mining chip in it? Do you keep the router online all the time? The extra added cost is less than 1 coffee/1 coke bottle/etc. It's 1 dollar per month. It's nothing!

Why do you suddenly expect a ROI from something that was never supposed to bring any ROI?

Because the issue is not you wasting 10 W; it is someone else using 10 W of your power to his benefit.

Would you not mind if your neighbor pulled a cable from your home to feed his front porch light, even if it was just 10W -- for no other reason that he does not want to pay for those 10W?  If he did that without you being aware of it?

"You need a router? Well, we have this router A that costs $43 and consumes 15 W, and this other one B that does exactly the same thing but costs $51 and consumes 25 W; the difference being that B also does a certain computation for some company that does not want to pay for those 10W itself, and thinks that you will not mind paying for it.  If you buy B, you can fill a form at their site and every month they will mail you a check for 23 cents. You may opt to get that in bitcoin instead."

[JorgeStolfi]

I'm beginning to understand your and s1gs3gv arguments to indicate that if 21 can secure a license contract with a major manufacturer and immediately sell at scale routers with embedded ASIC chips in the board that uses an extra 10w and produce  200GH/s each for a very nominal cost of raising the router unit price up a couple dollars it could work .  The reason that this would succeed and why Commercial ASICs would fail is because adding an ASIC chip within a router is much easier and cheaper than building a standalone Commercial ASIC unit and thus they could pass those savings onto the consumers. Additionally, the whole mining setup, maintenance, troubleshooting , liability, and power concerns would be eliminated thus further adding efficiencies that commercial miners couldn't compete with. 21 would only need to make 1-3 dollars per router to be profitable because the costs are so small.

Even so... a standalone mining rig would use dozens or hundreds of those ASICS and consume hundreds of watts, 24/7.  If you divide those "extra costs" of the rig (cabinet, PSU, maintenace, etc.) by its hashpower, the rig would probably still be more cost-effective than "parasitic" ASICs in other consumer equipment.

I still cannot see how this hypothetical plan can make economic sense.  They may be into mining, but I suspect that appliance-embedded chips is not their plan.

[nakaone]

please let this stuff not be the idea that raised 116 million bucks.

there is a post here from prophetx who explains why vc until now failed to monetize bitcoin - if this stuff raises 116 million, the ideas you can derive from that post will probably be worth much more.

[inBitweTrust]

Even so... a standalone mining rig would use dozens or hundreds of those ASICS and consume hundreds of watts, 24/7.  If you divide those "extra costs" of the rig (cabinet, PSU, maintenace, etc.) by its hashpower, the rig would probably still be more cost-effective than "parasitic" ASICs in other consumer equipment.

I still cannot see how this hypothetical plan can make economic sense.  They may be into mining, but I suspect that appliance-embedded chips is not their plan.

Dividing many chips with a commercial miner with the enclosure/PSU/control board can certainly lower costs but not as low as adding a 10w ASIC chip to a router where it can piggy back off of those items(this must be balanced right as an extra 10w and the extra heat could raise the costs of the router itself with a more powerful transformer and better cooling).

This isn't where the true efficiency gains are realized though. You completely ignored the most important part of gains in efficiency.

Additionally, the whole mining setup, maintenance, troubleshooting, security , liability, and power concerns would be eliminated thus further adding efficiencies that commercial miners couldn't compete with.

Those all amount to sizable costs mostly eliminated by distributing the hashing power to millions of routers and appliances.

Because the issue is not you wasting 10 W; it is someone else using 10 W of your power to his benefit.

I think we mostly agree that using an ASIC for anything but recycling waste heat has a net negative investment from the consumers standpoint compared to them spending those funds directly on bitcoin rather than electricity to mine bitcoin.

The consumer might get a free router (valued at 40 usd), spend twice as much on electricity or an extra 100 USD over 3 years and their 25% share mined would amount to 20-30 dollars of BTC for a net investment loss. This doesn't take into account the value a fairer "rent to own" contract than is currently being offered and doesn't take into account hobbyists that want to support the network, and doesn't take into account the fact that the BTC mined will likely go up in value thus the free router will be profitable for the consumer as long as they don't immediately spend their mined bitcoins.

The bottom line is yes, from an investment perspective it is better to immediately buy bitcoin and a buy a regular router rather than rent to own this one.....but it could definitely become a better investment than buying a regular router and not buying BTC. Thus those regular consumers could still be making a better decision by using this free router than buying a regular one, they just won't be making the best decision.

I would prefer Appliances that used waste heat as there are some real benefits for everyone to be realized there.

[inBitweTrust]

We should be honest with ourselves and our non-bitcoin peers and openly discuss the numbers when these products begin to be released even if it means that we need to speak negatively about a bitcoin company and tarnish its reputation and miss a valuable opportunity to bring in new users. I don't want to adopt or bring in new bitcoin users by marketing gimmicks or false hopes.

[JorgeStolfi]

Well, it seems that their plan is indeed to insert ASIC mining chips into appliances and steal use free electricity from the consumers:

http://www.coinspeaker.com/2015/05/10/startup-21-inc-wants-to-put-bitcoin-miner-in-toaster-9190/

(Unless the author of that article tooks that "fact" from this forum...)

In another forum, someone mentioned the CueCat story:

http://en.wikipedia.org/wiki/CueCat

I still don't understand why they would use such a complicated method to take money from gullible bitcoiners, instead of the simplest method that I devised about a year ago:



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