Gold collapsing. Bitcoin UP.

[smooth]

The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining.

"Tends to approach" is vague.

In the short term, the marginal cost of mining almost exactly equals the price of a Bitcoin (excluding, possibly, some short transition periods when the price of a Bitcoin is just so high and/or increasing so fast that it is hard to catch it), but if you are below marginal cost, then you are more efficient than the marginal miner and you make a operating profit, which may or may not cover your investment. In the long term, that's the time horizon when investments pay off, or don't. Nothing lasts forever.

No, tend to approach is the correct term. There cost will never exactly reflect the price, due to speculative errors from the miners when they decide to expand or contract, therefore the cost will be different also between miners. So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?

Okay sure, but "tends to approach" over what time period?

If you invest something new such as chip that taps into a new, previously underutilized market and/or mining resource, then it may take quite a while for those values to "approach"

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[Peter R]

So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?

People are focusing too much on the cost that these chips will produce bitcoins for.  That's not the play I'm imagining.  The play I'm imagining is to create some hype and then get a bunch of phones out across the world with these chips in them!

Once the phones are out there, they'll start generating bitcoins.  It doesn't matter at that point whether they do so cost-effectively or not (we're only talking a few bucks a year anyways).  As long as 75% (or whatever %) of the coins flow back to 21 Inc and partners, the cost of the electricity used to produce those coins doesn't matter very much to their revenue .  

From the perspective of the end-user, once they've bought the phone, they are going to use it for a few years, and thus mine bitcoins for 21 Inc. and partners.  They're not going to throw out a $100+ phone because it consumes a few extra dollars per year in electricity.

[Erdogan]

The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining.

"Tends to approach" is vague.

In the short term, the marginal cost of mining almost exactly equals the price of a Bitcoin (excluding, possibly, some short transition periods when the price of a Bitcoin is just so high and/or increasing so fast that it is hard to catch it), but if you are below marginal cost, then you are more efficient than the marginal miner and you make a operating profit, which may or may not cover your investment. In the long term, that's the time horizon when investments pay off, or don't. Nothing lasts forever.

No, tend to approach is the correct term. There cost will never exactly reflect the price, due to speculative errors from the miners when they decide to expand or contract, therefore the cost will be different also between miners. So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?

Okay sure, but "tends to approach" over what time period?

If you invest something new such as chip that taps into a new, previously underutilized market and/or mining resource, then it may take quite a while for those values to "approach"

It (the cost) tends to approach, but never quite reaches the price. This is the problem of the evenly running economy, the ERE, a system that can never exist, (because among other things risk disappears and therefore changes the assumptions at the outset), but still everything approaches that state.

[TPTB_need_war]

the only financial plan i've heard of is the 25/75% split btwn the consumer and 21, so the consumer is going to get spending coin.  and that would be business savvy for the companies b/c that allows consumers to purchase other services and features.  yes, the mining and hardware wallet will be on autopilot and already setup which makes it brain dead easy for even guys like you to use so you won't feel so bad for having not bought @ $13.

I can't quite tell but I think you're serious?

The consumer is going to get 25% of jack shit, and a bigger electricity bill. You can't possibly think this is a business model.

These ASICs are going to be nearly obsolete by the time anyone plugs them into a socket. They are not going to mine anything of value, certainly not enough to pay for any real world resources. A few satoshis is below the dust limit and unspendable.

You need to quantify the BTC earned and the cost of the hardware produced. If the former is larger than the latter, and if the electricity is "free" due to the 100% mining efficiency of the heat appliance (because the heat is consumed), then it is a viable economics in theory (assuming the company can pull off the opaque, auto-pilot integration of the mining into the heater appliance). Note smooth's upthread point that cutting edge silicon is not necessary. One could go back to older (e.g. 64nm or greater) lithography to attain the necessary heat and low-cost, and for as long as the BTC generated exceeds the cost of the device and support network, then the business model is in theory viable.

Since you appear to be referring to the smartphone device which does not replace consumed heat, then the assumption is the users don't count variability in their electricity bill. The designers will presumably keep the targeted electricity below the normal variability on the typical electric bill (or below the differences that consumers pay attention to), larger battery, larger charger, and thus the user may not notice.

Remember the target market are dumb (ignorant, naive), non-technical users in the developing world.

Any one who claims this target market is going to care that their device has been captured for mining without their active knowledge and participation, has not spent enough time with ladies in the Philippines and their interaction with their mobile phones.

Larry Summers is likely laughing how we want to bring the unbanked into Bitcoin and they will fulfill that goal with captured devices that mine for the cartels which these dumb (ignorant, naive) users operate and supply with electricity. Be careful what you wish for, you might just get it.

Even if that were somehow overcome, do you really think that all the power outlets that people can use today for free, will still be free, once it becomes clear freeloaders will be making real profits by stealing power? Of course not. They're only free today because no one is trying to take advantage of them.

This is pretty much an accurate statement, but irrelevant to the business model. It is an accurate refutation of cypherdoc's Freudian slip.

21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

No you haven't thought it out well. Hope I have helped you above to sort out your mistakes.

[Erdogan]

So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?

People are focusing too much on the cost that these chips will produce bitcoins for.  That's not the play I'm imagining.  The play I'm imagining is to create some hype and then get a bunch of phones out across the world with these chips in them!

Once the phones are out there, they'll start generating bitcoins.  It doesn't matter at that point whether they do so cost-effectively or not (we're only talking a few bucks a year anyways).  As long as 75% (or whatever %) of the coins flow back to 21 Inc and partners, the cost of the electricity used to produce those coins doesn't matter very much to their revenue .  

From the perspective of the end-user, once they've bought the phone, they are going to use it for a few years, and thus mine bitcoins for 21 Inc. and partners.  They're not going to throw out a $100+ phone because it consumes a few extra dollars per year in electricity.

I obviously don't agree to that, it has to be economically viable to exist. Are you suggesting a big con?

[TPTB_need_war]

I obviously don't agree to that, it has to be economically viable to exist. Are you suggesting a big con?

My retort based on on-the-ground experience your armchair lacks:

Since you appear to be referring to the smartphone device which does not replace consumed heat, then the assumption is the users are too dumb to count variability in their electricity bill. The designers will presumably keep the targeted electricity below the normal variability on the typical electric bill (or below the differences that consumers pay attention to), larger battery, larger charger, and thus the user may not notice.

Remember the target market are dumb (ignorant), non-technical users in the developing world.

Any one who claims this target market is going to care that their device has been captured for mining without their active knowledge and participation, has not spent enough time with ladies in the Philippines and their interaction with their mobile phones.

I have relatives in the Philippines who live in a squatter area. I know exactly how these people manage their lives and electric bill — they don't.

In short, they have no discipline whatsoever and run up huge electric bills then pay it off with short-term debts. They are perpetually in debt.

Many of you all apparently have some incorrect fantasies about the developing world. It would help if you actually had experience.

[TPTB_need_war]

I still shudder when I remember trying to navigate your self-referential hyper cross-linked information hell you used to produce  

I can visualize that.

Indeed I remember my posts and then cross-link them to a hell similar to this map of the owners of our financial world (and yet you all claim you know how they are not fooling you  ):

http://www.newscientist.com/article/mg21228354.500-revealed--the-capitalist-network-that-runs-the-world.html

[smooth]

I obviously don't agree to that, it has to be economically viable to exist.

No, no no. A million times no.

e.g. http://en.wikipedia.org/wiki/Pets.com

Are you suggesting a big con?

It could be a good business plan, or a mistake, or a con. You're excluding the middle.

[Peter R]

So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?

People are focusing too much on the cost that these chips will produce bitcoins for.  That's not the play I'm imagining.  The play I'm imagining is to create some hype and then get a bunch of phones out across the world with these chips in them!

Once the phones are out there, they'll start generating bitcoins.  It doesn't matter at that point whether they do so cost-effectively or not (we're only talking a few bucks a year anyways).  As long as 75% (or whatever %) of the coins flow back to 21 Inc and partners, the cost of the electricity used to produce those coins doesn't matter very much to their revenue .  

From the perspective of the end-user, once they've bought the phone, they are going to use it for a few years, and thus mine bitcoins for 21 Inc. and partners.  They're not going to throw out a $100+ phone because it consumes a few extra dollars per year in electricity.

I obviously don't agree to that, it has to be economically viable to exist. Are you suggesting a big con?

I'm not suggesting that the phones will necessarily consume more $ in energy than $ in bitcoins they produce.  I just saying that even if the do mine inefficiently (e.g., once the network hash rates grows), that 21 Inc and partners will still earn revenue as long as the phones are out there.  

The next question is then:  Can 21 Inc and partners get a bunch of phones out in the field?  It's an interesting marketing problem, for sure, but imagine that during the next bitcoin bull run all this excitement gets created for the new "Samsung Mining" phone.  What would happen?  I think a bunch of people might think it's a really cool idea!  Especially if there's a chance they'll mine bitcoins that appreciate in price.  In fact, I wouldn't be surprised if phones with a bitcoin mining/wallet chip inside sell for a premium.  Heck, I'd pay an extra $100 for a phone with a secure mining/wallet chip factory installed!  I don't care that $2 per year of my electricity goes back to 21 Inc.  That's negligible to bank fees that can run $20 per month.    

[cypherdoc]

The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining.

"Tends to approach" is vague.

In the short term, the marginal cost of mining almost exactly equals the price of a Bitcoin (excluding, possibly, some short transition periods when the price of a Bitcoin is just so high and/or increasing so fast that it is hard to catch it), but if you are below marginal cost, then you are more efficient than the marginal miner and you make a operating profit, which may or may not cover your investment. In the long term, that's the time horizon when investments pay off, or don't. Nothing lasts forever.

No, tend to approach is the correct term. There cost will never exactly reflect the price, due to speculative errors from the miners when they decide to expand or contract, therefore the cost will be different also between miners. So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?


Edit: You can never know in advance, but I would guess that if the chip is good in a random small scale device, it is even better if you pack a few hundred in a dedicated device with proportionally designed power supply, fans the rest of the stuff that is needed. Is it possible to construct a chip that is better than current mining, and at the same time can not be used large scale?

You can not rely on persons with experience in funding. Stranger projects have been started, a company with million dollar donut cars, selling for 100K per car and losing 900K per car comes to mind.

from what i've read, 21 is not new to mining.  apparently they've been at it for at least 2 yrs with pretty impressive BTC yields.  can't remember the specifics.

with that experience, they've designed a new chip for small devices like smartphones.  you'd think they've done extensive R&D before taking this leap.

[TPTB_need_war]

So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?

People are focusing too much on the cost that these chips will produce bitcoins for.  That's not the play I'm imagining.  The play I'm imagining is to create some hype and then get a bunch of phones out across the world with these chips in them!

Once the phones are out there, they'll start generating bitcoins.  It doesn't matter at that point whether they do so cost-effectively or not (we're only talking a few bucks a year anyways).  As long as 75% (or whatever %) of the coins flow back to 21 Inc and partners, the cost of the electricity used to produce those coins doesn't matter very much to their revenue .  

From the perspective of the end-user, once they've bought the phone, they are going to use it for a few years, and thus mine bitcoins for 21 Inc. and partners.  They're not going to throw out a $100+ phone because it consumes a few extra dollars per year in electricity.

I obviously don't agree to that, it has to be economically viable to exist. Are you suggesting a big con?

I'm not suggesting that the phones will necessarily consume more $ in energy than $ in bitcoins they produce.  I just saying that even if the do mine inefficiently (e.g., once the network hash rates grows), that 21 Inc and partners will still earn revenue as long as the phones are out there.  

The next question is then:  Can 21 Inc and partners get a bunch of phones out in the field?  It's an interesting marketing problem, for sure, but imagine that during the next bitcoin bull run all this excitement gets created for the new "Samsung Mining" phone.  What would happen?  I think a bunch of people might think it's a really cool idea!  Especially if there's a chance they'll mine bitcoins that appreciate in price.  In fact, I wouldn't be surprised if phones with a bitcoin mining/wallet chip inside sell for a premium.  Heck, I'd pay an extra $100 for a phone with a secure mining/wallet chip factory installed!  I don't care that $2 per year of my electricity goes back to 21 Inc.  That's negligible to bank fees that can run $20 per month.    

That is the way more sophisticated users of such a mining phone can view the economic proposition. The vast majority of naive mobile phone users in the developing world (especially females) won't even need that level of sophisticated analysis (women don't typically analyse anything). Rather for them it is simple. They get a discount on the device and/or they get these cute ringtones and other walled garden upsells for these "bitcoiny" things the phone gives them. And it is "free", uncomplicated to use (all automated), they won't have to "pay" anything for this. Thus it is a no brainer for them.

[TPTB_need_war]

Edit: You can never know in advance, but I would guess that if the chip is good in a random small scale device, it is even better if you pack a few hundred in a dedicated device with proportionally designed power supply, fans the rest of the stuff that is needed. Is it possible to construct a chip that is better than current mining, and at the same time can not be used large scale?

Probably irrelevant. The users won't care nor notice the electricity used. No one here in the Philippines studies their electric bill to see how much their smartphone charging was.

NO ONE. NO ONE. NO ONE.

Capice?!

Now, my phone gets pretty warm when it's charging so the new mining chip can't draw that much more power.  But then again, a lot of times my phone is plugged in and already fully charged, and so the mining chip might as well be running.  So let's say that 21 Inc. can boost the yearly energy consumption of the typical smart phone from $0.50 to $3.00 before people start to complain about "hot phones."  $2.50 goes to mining bitcoins…

Thankfully there are some rational engineers on this board.

[smooth]

Edit: You can never know in advance, but I would guess that if the chip is good in a random small scale device, it is even better if you pack a few hundred in a dedicated device with proportionally designed power supply, fans the rest of the stuff that is needed. Is it possible to construct a chip that is better than current mining, and at the same time can not be used large scale?

I think it's fair to assume, given competent designers, it will be essentially equivalent to what is otherwise available, with the difference being that it is specialized. For example 21 is promising a design that can be incorporated into existing chips. That could possibly fit in dark silicon and mine only when the thermal envelope of the rest of the chip is low enough, among other potential synergies.

cypherdoc, "experience with mining" is not a guarantee of anything.

The CEO of pets.com (which was backed by amazon.com, who also knew a thing or two about e-commerce): "At this time she had almost 20 years of experience with software, technology and consumer-product industries"

Bad investments happen. I don't know if 21 is a bad investment. Experience is no guarantee it isn't.

[TPTB_need_war]

brilliant analysis peter. didnt realise that their plan would be that lucrative. would these chips not reduce the battery life of phones though?

Increase the battery size slightly.

Phones are too thin now. Female users here don't care that much about slight increases in thickness as evident by the phone case monstrosities they wrap onto their mobile phones. Do not forget those monstrosities that females cart around a.k.a. purses or shoulder bags. They obviously have different innate priorities than we men do, namely carting around a baby on their shoulder.

[Peter R]

That is the way more sophisticated users of such a mining phone can view the economic proposition. The...majority of...mobile phone users...won't even need that level of sophisticated analysis... Rather for them it is simple. They get a discount on the device and/or they get these cute ringtones and other...upsells for these "bitcoiny" things the phone gives them. And it is "free", uncomplicated to use (all automated), they won't have to "pay" anything for this. Thus it is a no brainer for them.

That's a good point.  

[TPTB_need_war]

The analyzis is flawed, in that it does not take into account all cost. The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining. If you suppose the chip is free, the design is free, the electricity is free and the management of the device for the mining purpose is free, then it can compete. But none of those things are free.

For the heating appliances then using older lithography makes the mining hardware component of the device nearly free relatively speaking, and the electricity is indeed free because the heat is being consumed.

For the phones, smooth's point has been the chipset makers might be able to fit this onto excess or underutilitized silicon. The electricity is "free" because the users don't count such small portions of their electric bill (and they charge at relatives' and friends' houses too, everything is open house and more shared in the developing world).

The design and mgmt cost can be amortized over this huge scale of billions of unbanked users in the developed world who are eager to have a smartphone.

The competition will be essentially nil, because of the economies-of-scale and cartel level relationships (e.g. Samsung, telcoms in every nation so the device can always send mining shares with no user interaction) required to pull this off in an opaque device that just works on auto-pilot. Once you have eliminated the other miners, you can raise txn fees to any level you want that the market will bear (return of the credit card companies!) and even adjust difficulty to your desired level without a fork by modulating the number of devices you sell into the market
(think it out).

Thus the valuation looks fine to me.

[TPTB_need_war]

Not sure if game players want to pick an unnecessary fight with the government.

Sometimes I feel you should have some acid to relieve yourself of the irrational fear of government (it helps).

I have personally recommended acid to him many months ago. He could finally have a chance to see through his ego and perhaps give him real insight into all the things he now only thinks he understands. I think he is too old and scared anyway and really thinks he doesn't need it, lol.

I for a free market in drugs on the internet, but I am strictly anti-drug in my life and local community. I approve of the death penalty for repeat drug pushers who refuse (after multiple warnings) to reform or leave our local community of Davao City, Mindanao and our vigillante mayor who makes it so we have the safest city in the Philippines. I am for free markets. The drug pushers are welcome to go form their own communities else where. I am welcome to avoid their communities if I so choose.

[PenguinFire]

Question: When gold "collapses" how long is it usually for?  Weeks to months?  I have not been trading long and was just curious.

[TPTB_need_war]

Users mining in algorithm where pools are impossible is positive for decentralization of mining.

This is an interesting question. I've seen the counterargument that preventing pools increases the incentive for large farms (including, I suppose, the distributed sort of farms that involve devices in disparate locations but centrally controlled). That might be negative for decentralization of mining broadly, since at least with pools as they mostly exist today, the actual miners can switch pools (often cypherdoc makes this argument). I'm not sure.

I have in mind a cryptographic means of preventing pools. One of the fundamental design errors for PoW mining has been the simultaneity requirement that leads to orphans. It is essentially an aliasing error on consensus. That will give you a big hint as to what the big breakthrough in my design solution is. And it turns out I can retrofit it to a non-PoW algorithm that doesn't suffer from PoS's weaknesses, thus our recent discussion on 21 Inc has proven to be very lucrative for me. As usual I (and the community) benefit greatly from discussions with you. How will I repay you?

PoW is now a dead-end (due to the 21 Inc economics) except it has value in attaining the widest spread initial distribution for a coin.

Thus Bitcoin (and apologetically Monero) are dead ends in terms of a decentralized future. I will fork the community and bring in a somewhat orthogonal userbase of the most intelligent Libertarians. My plan is now solidified.

I am preparing to go silent. Any questions or comments?

[kazuki49]

I have in mind a cryptographic means of preventing pools. One of the fundamental design errors for PoW mining has been the simultaneity requirement that leads to orphans. It is essentially an aliasing error on consensus. That will give you a big hint as to what the big breakthrough in my design solution is. And it turns out I can retrofit it to a non-PoW algorithm that doesn't suffer from PoS's weaknesses, thus your recently discussion on 21 Inc has proven to be very lucrative for me. As usual I (and the community) benefit greatly from discussions with you. How will I repay you?

PoW is now a dead-end (due to the 21 Inc economics) except it has value in attaining the widest spread initial distribution for a coin.

Thus Bitcoin (and apologetically Monero) are dead ends in terms of a decentralized future. I will fork the community and bring in a somewhat orthogonal userbase of the most intelligent Libertarians. My plan is now solidified.

I am preparing to go silent. Any questions or comments?

I'm looking forward, dont keep us all in the dark!