2012-04-23 Bitcoin startup CoinLab lands funding from Tim Draper and others, aim

[jimbobway]

http://www.geekwire.com/2012/bitcoin-startup-coinlab-lands-funding-tim-draper-monetize-games/

[1714148471]

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[hazek]

This is doomed to fail from the start:

Under the plan, game makers will offer their users a chance to voluntarily install a program that makes their idle computing resources available for use by CoinLab, in exchange for in-game virtual goods and points.
CoinLab then plans to sell that spare computing time to the Bitcoin network, for use in Bitcoin “mining” — using computer processing to generate units of the virtual currency. The startup will pay game companies for the computing resources made available by their customers.

As soon as those who will volunteer their idle CPU resources get their first next bill for electricity they'll realize what is really going on and they'll stop volunteering. And that will be that.

[giszmo]

Uhm ... I see that differently. If the project would be ready to market by 12 months ago, I guess it would work .. somehow .. as the kids playing don't necessarily pay the electricity bill

Starting this now is simply too late as within months, FPGA-mining will rule the market, so the return per kWh will go down massively for GPU-mining. Same as CPU-mining was defunct in the client centuries ago, GPU-mining is a dying dinosaur now. The gamers missed their wave of bitcoin.

[Dusty]

Bringing bitcoins to games is totally awesome, while trying to use their graphic card to mine is probably a waste by the time this kind of project will operative...

[SgtSpike]

This is doomed to fail from the start:

Under the plan, game makers will offer their users a chance to voluntarily install a program that makes their idle computing resources available for use by CoinLab, in exchange for in-game virtual goods and points.
CoinLab then plans to sell that spare computing time to the Bitcoin network, for use in Bitcoin “mining” — using computer processing to generate units of the virtual currency. The startup will pay game companies for the computing resources made available by their customers.

As soon as those who will volunteer their idle CPU resources get their first next bill for electricity they'll realize what is really going on and they'll stop volunteering. And that will be that.

I disagree.  You forget how desperate penniless gamers can be, especially those still living with their parents.  And a single rig isn't necessarily going to take up THAT much electricity to be immediately noticeable on the next electric bill.  Especially if the player opts to only mine while in-game (which is what the Forbes article seemed to allude to happening by default).  Even a constant 300w draw would only equate to $20 or so per month increase in the average electric bill.

And many people are clueless enough to think that a computer takes up the same amount of electricity when it is on, regardless of load.

JMO.

[unclescrooge]

I hardly see how another mining tool add any value to the bitcoin economy...

Why not focus on the SMS-payment service instead?

[Stephen Gornick]

I hardly see how another mining tool add any value to the bitcoin economy...

Why not focus on the SMS-payment service instead?

Intel invests in software companies that use lots of CPU cycles, increasing demand for its chips.
Google invests in companies that do lots of big data computations, thus increasing demand for its cloud services.
etc.

So there may be the incentive for CoinLab to help get Bitcoin more widely accepted so that there is more demand for mined coins.

Additionally, the article says that they will be hedging coins.  I presume this is because as each days worth of bitcoins are earned they they give credit to the players in terms of USDs.  So instead of selling daily, the can hedge -- like maybe sell PUT options, or perhaps enter an agreement where there is a payoff if future difficulty rises.  This is a type of financial activity that adds to the bitcoin ecosystem.

[matonis]

I hardly see how another mining tool add any value to the bitcoin economy...

Why not focus on the SMS-payment service instead?

I was told that the SMS-payment service encountered regulatory issues which is why they put it on hold for the moment.

[HorseRider]

As soon as those who will volunteer their idle CPU resources get their first next bill for electricity they'll realize what is really going on and they'll stop volunteering. And that will be that.

I don't think so. Many game player would like to pay 100 USD per month to obtain better "weapons" in the game.

[HorseRider]

More independent mining operations are running, more secure the bitcoin network is. I think Coinlab does add value to the society. And lots of companies outside the bitcoin community will be more familiar with bitcoin, and this add value to bitcoin network, too.

And the game who adopt the systme given by Coinlab will become interesting. some of the players are volunteered to do the mining job but some other refused. and some of vlounteered one mining at faster speed but someone else slower. If the game players are start to competing with each other, will they start to "buy" mining power from GPUmax? Will the game company start to sell the mining shares to the game players?

[Stephen Gornick]

some of the players are volunteered to do the mining job but some other refused. and some of vlounteered one mining at faster speed but someone else slower. If the game players are start to competing with each other, will they start to "buy" mining power from GPUmax?

These are games that charge for subscriptions and in-game currency already.  So this is just another option of how to buy them.  In addition to being able to buy using PayPal and other methods, they can now pay for purchases with bitcoin-powered credits through CoinLab.

[hazek]

some of the players are volunteered to do the mining job but some other refused. and some of vlounteered one mining at faster speed but someone else slower. If the game players are start to competing with each other, will they start to "buy" mining power from GPUmax?

These are games that charge for subscriptions and in-game currency already.  So this is just another option of how to buy them.  In addition to being able to buy using PayPal and other methods, they can now pay for purchases with bitcoin-powered credits through CoinLab.

If coinlab is upfront about the potential higher electricity bill that comes with it then this could actually work. I wasn't trying to dish this investment, I actually want it to succeed because I think it would grow Bitcoin but it was just that reading the article I got the feeling they weren't going to be upfront about the electricity costs and are going pretend that idle gpu resources is all a player needs to offer to get those credits which if it is the case is going to be a huge turnoff once discovered IMO. I could be wrong tho.

[SgtSpike]

some of the players are volunteered to do the mining job but some other refused. and some of vlounteered one mining at faster speed but someone else slower. If the game players are start to competing with each other, will they start to "buy" mining power from GPUmax?

These are games that charge for subscriptions and in-game currency already.  So this is just another option of how to buy them.  In addition to being able to buy using PayPal and other methods, they can now pay for purchases with bitcoin-powered credits through CoinLab.

If coinlab is upfront about the potential higher electricity bill that comes with it then this could actually work. I wasn't trying to dish this investment, I actually want it to succeed because I think it would grow Bitcoin but it was just that reading the article I got the feeling they weren't going to be upfront about the electricity costs and are going pretend that idle gpu resources is all a player needs to offer to get those credits which if it is the case is going to be a huge turnoff once discovered IMO. I could be wrong tho.

I still disagree.

Does WoW have a disclaimer about your computer using more electricity while the game is running?  Does League of Legends?  Does any game, for that matter?

For anyone who knows that a computer uses more electricity under load, they would know that running this particular game would act in a similar manner.  For anyone who doesn't know, they probably won't leave the game running long enough to find out.  Or, if they do, and notice the increase, they'll think, "well gee, I probably shouldn't leave my computer on that long again."  I can't see very many people blaming the game developer for it.

[hazek]

Hmmm good point. I think after that argument it's less and less likely my argument is valid.

[Piper67]

Hmmm good point. I think after that argument it's less and less likely my argument is valid.

I feel like standing up and applauding... how often does one hear words like these? Nicely done.