Bitcoin Mining resembles Gold Mining in lean times? Bloomberg on Bitcoin ASICs, Zerohedge follows, gets AMD right, Litecoin Wrong, veers on newsweeky
Zerohedge got the AMD cards correct, but of course they may soon be surpassed by the Maxwell before pirate islands come around again, passing the “buck” of mining.
They’ve made a fundamental mistake however, in having no basic understanding of scrypt and sha256. Bitcoin ASIC miners cannot be used for mining Litecoins. It makes the subsequent leap of logic almost as “newsweeky”.
Even granting the assumption, and giving him/her magic mining machines, it would be moving your Caterpillar gold mining equipment and facility to silver mining, great job in diluting money metals pool? Such Astute. Much Sparkly.
The mystery writer of this particular zerohedge piece should go back to the cryptocoin 101 floor lol.
Bitcoin Mining Boom Sputters as Prospectors Face Losses
EBay now features more than 1,600 listings for mining computers, many of them used.
“The mining market has evolved from being mostly isolated ventures to more organized entrepreneurial ventures that are still racing to get an edge with increasingly fast equipment and lower electricity costs,” Gil Luria, an analyst at Wedbush Securities Inc., said in an interview. “At this point, the opportunity for individual miners is very small.”
Mining-equipment suppliers are feeling the cool-down firsthand. CoinTerra Inc., a manufacturer of the powerful computers used to crunch numbers for new bitcoins, has seen new sales shrink by 30 percent in the past three weeks from the preceding period, according to CEO Ravi Iyengar.
Mining-equipment suppliers are also detecting early signs of a shift to new virtual currencies. Approximately 250 KnCMiner customers switched their orders from $10,000 computers to similarly priced alternative-currency mining machines in the past three weeks, according to Cole.
Because they are newer, designed differently and currently mined by fewer people, currencies such as Litecoin can be more profitable, according to CoinWarz, which tracks mining activity.
“The new rush right now is Litecoin,” Colin Lusk, a network engineer in Portland, Oregon, said in an interview.
While he once mined only bitcoins, Lusk now uses five of his eight machines to produce Litecoins and other virtual currencies. Created in 2011, Litecoin is similar in design to bitcoin yet requires less computing power. A $3,500 computer can produce $25 worth of Litecoins a day for $3 in electricity, while producing $20 worth of bitcoins would cost $17, Lusk said.
And there is of course AMD, whose Radeon video cards experienced a dramatic surge in popularity as a cheaper alternative to self contained workstations, only to feel the sudden pullback in demand now (and if it hasn’t yet, it will soon).
Spot the irony yet? As the bitcoin bubble bursts, the residual price momentum and “mining” bubbles remain only in those currencies where the “mining” of bitcoin is easier. This explains the shift from bitcoin to litecoin. In other words, where it is easier to create digital currencies out of thin air and where there is still a momentum-based surge in popularity. In yet other words – to permit a faster dilution of the existing currency pool.
But what is it that those who oppose fiar rage against? Why the eagerness and desire of central bankers to dilute said fiat at the first deflationary whim in order to protect their banking “custodians.”
Who would have though that the digital currency crew would so promptly fall for the same “dangling carrot” incentives that all the fiat proponents are so tempted by on a daily basis…
Then again, monetary alchemy is nothing new – after all people were trying to convert lead into gold centuries before the US Dollar was the reserve currency. Luckily, they failed.