08 ❘ in-depth CONTACT US AT: 8351-9409, [email protected] Tuesday August 15, 2017 BITCOIN has resumed its record run after shaking off concerns about its technical backbone. The cryptocurrency hit all-time highs near US$3,500 per bitcoin Aug. 8 and helped push the global cryptocurrency market to US$120 billion in total assets, according to the cryptocurrency site CoinDesk. Bitcoin has now jumped almost 80 percent from its mid-July lows. At the time, a pending change to the block- chain, or transaction ledger, attached to each bitcoin was causing anxiety among traders. The change, known as the “fork,” happened just last week and split bitcoin into two different cryptocurrencies: bitcoin and bitcoin cash. With two versions, some traders worried that compatibility issues would leave them with useless bitcoins. But those fears have now largely sub- sided due to the smooth implementation of a specific plan for a longer blockchain, called Segregated Witness, on track to go into widespread use by the end of last week without a hitch. The emergence of “SegWit” means the advocates of bitcoins for real commerce have ultimately won the blockchain debate. Still, the vision of real-world transactions in bitcoin — akin to how people use dollars or euros every day — has been an elusive goal for the cur- rency so far. Its dizzying run higher has been fueled more by speculators playing the bitcoin market much as they would Bitcoin is back shares in a hot tech startup. For now, the speculation only seems to be heating up, especially in key over- seas markets like Russia and China. Here are a few key developments in August. A decision at the end of May by three Chinese exchanges to allow bitcoin withdrawals helped spur the country’s bitcoin market this summer. The move helped bring off the sidelines people who were curious but hesitant to trade bitcoins out of uncertainty whether they could get out later. Russian Miner Coin, a startup run by an ally of Vladimir Putin, is raising the equivalent of US$100 million in bitcoin and its chief rival currency, the ether. Part of the proceeds will go toward developing computer chips to help increase Russia’s global market share of bitcoin mining, the sophisticated computing process by which new cryp- tocurrency units are issued. (SD-Agencies) THE early bitcoin mining pioneers are giving way to giant organizations operat- ing on multiple continents. Nearly a decade after an online user named Satoshi Nakamoto published a paper describing how “Bitcoin: A Peer- to-Peer Electronic Cash System” does not need to rely on trusted institutions, individual bitcoin mining is growing more difficult, while large enterprises have emerged. Today, mining bitcoin is “such a spe- cialized activity,” said Jonathan Mohan, founder of an enthusiast group called Bitcoin NYC. He said he’s never actu- ally mined bitcoin himself. “I wouldn’t go about doing that without partners.” “It used to be something that non- specialized hardware could do and non- specialized individuals could do,” Mohan said. “If you’re looking for exposure into bitcoin, it’s more cost effective to buy.” Sometimes called “digital gold,” bitcoin has leaped exponentially from 6 cents seven years ago to a record US$3,025 this June, according to CoinDesk. The meteoric rise in price has not only attracted bitcoin buyers, but also resulted in a surge of interest in digital currency mining. Mining bitcoin requires high computing power to solve a complex mathematical equation, prov- ing that an anonymous miner used the process the network agreed upon to build the blockchain record of transactions. Miners then get bitcoin in reward for successfully completing the equation. Miners used to be able to use ordi- nary video graphics cards to process the computations profitably. But in 2013, a Chinese-based company sold the first application-specific integrated circuits, or asic, computer chip cards that mined bitcoin 50 times faster than traditional video graphics cards. Today, those specialized mining sets can cost anywhere from a few hundred to more than US$1,000. It’s often also more cost-effective for miners to join mining pools and collaborate on solving the equation, often for a small fee. “The fact that graphics card manu- facturers are making special cards, cryptocurrency mining cards, I think it’s a pretty big turning point for the crypto [currency world] in general,” said Roger Ver, an early investor in bitcoin and sometimes outspoken figure in the digital currency community. Ver now heads bitcoin mining hard- ware seller and mining contracts firm Bitcoin.com. “The demand is just incred- ible,” he said. Some models of AMD and Nvidia graphics cards have sold out in the last few months due to high demand from digital currency miners. Through their partners, the companies are now plan- ning to sell cards specifically for mining bitcoin, ethereum and other digital cur- rencies. Advanced Micro Devices topped earn- ings expectations in the second quarter, and AMD raised its sales forecast for the current quarter, implying US$1.5 billion in sales, or about US$100 million more than Wall Street forecast. Bitcoin mining hardware and soft- ware company Bitfury generated nearly US$100 million in revenue for fiscal year 2017, according to a July 24 report from CoinDesk, citing documents it obtained. For Nchinda Nchinda, a graduate student at the Massachusetts Institute of Technology, he said a roughly half- year bitcoin mining stint at home was “definitely not profitable.” Now he helps run his university’s bitcoin club, which he said bought mining equipment for about US$9,000 and works with the school data center to mine bitcoin. That operation at least breaks even, he said, while “at home, I was like losing everything.” The biggest mistake new bitcoin miners make when calculating costs is using the current price of bitcoin to estimate returns, Nchinda said. “Instead of mining hardware, you should have just bought bitcoin,” he said. “If we just used that US$9K and bought bitcoin, we would have had more.” D espite the emergence of bigger players in bitcoin mining, some regions of the world still provide an edge for individual miners. Since the process is very energy intensive, low or essentially free electric- ity in China and Venezuela make the two countries relatively attractive places to mine bitcoin today. Political turmoil and soaring inflation in Venezuela also give locals more incen- tive to mine bitcoin, which has more than doubled in value against the U.S. dollar this year. Chinese bitcoin miners dominate the bitcoin network. The top six mining pools by global processing power are Chinese, and make up more than half of all hash- rate, according to blockchain.info. Sichuan in Southwest China is trans- forming into a global bitcoin mining capital primarily due to its cheap elec- tricity, low population density and cold climate. According to major local publica- tions, including the China Money Net- work, more than 20 mining companies and 10,000 bitcoin miners are located within Sichuan’s Mabian Yi Autonomous County, a cold and mountainous region with just over 215,000 residents, and Kangding. One of the major reasons behind the rapid growth of mining companies within Sichuan Province is the decreas- ing electricity costs, as mentioned by various respected bitcoin experts includ- ing Andreas Antonopoulos and Chandler Guo in the past. Another major issue which miners and mining facilities struggle to deal with is noise resulting from high intensity and performance mining equipment. A manager of Mabian Tianjia Network Technology, a Chinese mining company, stated that mining facilities are migrat- ing to remote regions with a limited number of residents so that they won’t have to deal with noise complaints. (SD-Agencies) Bitcoin ‘mining’ goes from enthusiasts to giant enterprises • Bitcoin mining has become a more specialized activity. • One factor is the invention of faster bitcoin mining cards. • At least one bitcoin mining hardware and software firm is reportedly making nearly US$100 million. A man stands in front of the mining equipment in a bitcoin mining company in Sichuan Province. SD-Agencies
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08 x in-depthCONTACT US AT: 8351-9409, [email protected]
Tuesday August 15, 2017
BITCOIN has resumed its record run after shaking off concerns about its technical backbone.
The cryptocurrency hit all-time highs near US$3,500 per bitcoin Aug. 8 and helped push the global cryptocurrency market to US$120 billion in total assets, according to the cryptocurrency site CoinDesk.
Bitcoin has now jumped almost 80 percent from its mid-July lows. At the time, a pending change to the block-chain, or transaction ledger, attached to each bitcoin was causing anxiety among traders. The change, known as the “fork,” happened just last week and split bitcoin into two different cryptocurrencies: bitcoin and bitcoin cash. With two versions, some traders worried that compatibility issues would leave them with useless bitcoins.
But those fears have now largely sub-sided due to the smooth implementation of a specifi c plan for a longer blockchain, called Segregated Witness, on track to go into widespread use by the end of last week without a hitch.
The emergence of “SegWit” means the advocates of bitcoins for real commerce have ultimately won the blockchain debate. Still, the vision of real-world transactions in bitcoin — akin to how people use dollars or euros every day — has been an elusive goal for the cur-rency so far. Its dizzying run higher has been fueled more by speculators playing the bitcoin market much as they would
Bitcoin is backshares in a hot tech startup.
For now, the speculation only seems to be heating up, especially in key over-seas markets like Russia and China.
Here are a few key developments in August. A decision at the end of May by three Chinese exchanges to allow bitcoin withdrawals helped spur the country’s
bitcoin market this summer. The move helped bring off the sidelines people who were curious but hesitant to trade bitcoins out of uncertainty whether they could get out later.
Russian Miner Coin, a startup run by an ally of Vladimir Putin, is raising the equivalent of US$100 million in bitcoin
and its chief rival currency, the ether. Part of the proceeds will go toward developing computer chips to help increase Russia’s global market share of bitcoin mining, the sophisticated computing process by which new cryp-tocurrency units are issued.
(SD-Agencies)
THE early bitcoin mining pioneers are giving way to giant organizations operat-ing on multiple continents.
Nearly a decade after an online user named Satoshi Nakamoto published a paper describing how “Bitcoin: A Peer-to-Peer Electronic Cash System” does not need to rely on trusted institutions, individual bitcoin mining is growing more diffi cult, while large enterprises have emerged.
Today, mining bitcoin is “such a spe-cialized activity,” said Jonathan Mohan, founder of an enthusiast group called Bitcoin NYC. He said he’s never actu-ally mined bitcoin himself. “I wouldn’t go about doing that without partners.”
“It used to be something that non-specialized hardware could do and non-specialized individuals could do,” Mohan said. “If you’re looking for exposure into bitcoin, it’s more cost effective to buy.”
Sometimes called “digital gold,” bitcoin has leaped exponentially from 6 cents seven years ago to a record US$3,025 this June, according to CoinDesk.
The meteoric rise in price has not only attracted bitcoin buyers, but also resulted in a surge of interest in digital currency mining. Mining bitcoin requires high computing power to solve a complex mathematical equation, prov-ing that an anonymous miner used the process the network agreed upon to build the blockchain record of transactions. Miners then get bitcoin in reward for successfully completing the equation.
Miners used to be able to use ordi-nary video graphics cards to process the computations profi tably. But in 2013, a Chinese-based company sold the fi rst application-specifi c integrated circuits,
or asic, computer chip cards that mined bitcoin 50 times faster than traditional video graphics cards.
Today, those specialized mining sets can cost anywhere from a few hundred to more than US$1,000. It’s often also more cost-effective for miners to join mining pools and collaborate on solving the equation, often for a small fee.
“The fact that graphics card manu-facturers are making special cards, cryptocurrency mining cards, I think it’s a pretty big turning point for the crypto [currency world] in general,” said Roger Ver, an early investor in bitcoin and sometimes outspoken fi gure in the digital currency community.
Ver now heads bitcoin mining hard-ware seller and mining contracts fi rm Bitcoin.com. “The demand is just incred-ible,” he said.
Some models of AMD and Nvidia graphics cards have sold out in the last few months due to high demand from digital currency miners. Through their partners, the companies are now plan-ning to sell cards specifi cally for mining bitcoin, ethereum and other digital cur-rencies.
Advanced Micro Devices topped earn-ings expectations in the second quarter, and AMD raised its sales forecast for the current quarter, implying US$1.5 billion in sales, or about US$100 million more than Wall Street forecast.
Bitcoin mining hardware and soft-ware company Bitfury generated nearly US$100 million in revenue for fi scal year 2017, according to a July 24 report from CoinDesk, citing documents it obtained.
For Nchinda Nchinda, a graduate
student at the Massachusetts Institute of Technology, he said a roughly half-year bitcoin mining stint at home was “defi nitely not profi table.”
Now he helps run his university’s bitcoin club, which he said bought mining equipment for about US$9,000 and works with the school data center to mine bitcoin. That operation at least breaks even, he said, while “at home, I was like losing everything.”
The biggest mistake new bitcoin miners make when calculating costs is using the current price of bitcoin to estimate returns, Nchinda said. “Instead of mining hardware, you should have just bought bitcoin,” he said. “If we just used that US$9K and bought bitcoin, we would have had more.”
Despite the emergence of bigger players in bitcoin mining, some regions of the world still provide an edge for individual
miners. Since the process is very energy intensive, low or essentially free electric-ity in China and Venezuela make the two countries relatively attractive places to
mine bitcoin today.Political turmoil and soaring infl ation
in Venezuela also give locals more incen-tive to mine bitcoin, which has more than doubled in value against the U.S. dollar this year.
Chinese bitcoin miners dominate the bitcoin network. The top six mining pools by global processing power are Chinese, and make up more than half of all hash-rate, according to blockchain.info.
Sichuan in Southwest China is trans-forming into a global bitcoin mining capital primarily due to its cheap elec-tricity, low population density and cold climate.
According to major local publica-tions, including the China Money Net-work, more than 20 mining companies and 10,000 bitcoin miners are located within Sichuan’s Mabian Yi Autonomous County, a cold and mountainous region with just over 215,000 residents, and Kangding.
One of the major reasons behind the rapid growth of mining companies within Sichuan Province is the decreas-ing electricity costs, as mentioned by various respected bitcoin experts includ-ing Andreas Antonopoulos and Chandler Guo in the past.
Another major issue which miners and mining facilities struggle to deal with is noise resulting from high intensity and performance mining equipment. A manager of Mabian Tianjia Network Technology, a Chinese mining company, stated that mining facilities are migrat-ing to remote regions with a limited number of residents so that they won’t have to deal with noise complaints.
(SD-Agencies)
Bitcoin ‘mining’ goes from enthusiasts to giant enterprises • Bitcoin mining has become a more specialized activity.• One factor is the invention of faster bitcoin mining cards.• At least one bitcoin mining hardware and software fi rm is reportedly making nearly US$100 million.
A man stands in front of the mining equipment in a bitcoin mining company in Sichuan Province.
SD-Agencies
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