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Bitcoin Mining Startup Gets $500k In Venture Capital 381

Posted by Unknown Lamer
from the coinlab-partners-with-slashdot-to-improve-your-d2-experience dept.
Sabbetus writes "Seattle based Bitcoin startup CoinLab secured a $500,000 investment from various investors such as Silicon Valley firm Draper Associates and angel investor Geoff Entress. CoinLab is an emerging umbrella group for cultivating and launching innovative Bitcoin projects. CEO Vessenes said 'if there is a currency that can trade around the world, it's semi-anonymous, it's instant, it's not controlled by government or bank, what's the total value of that currency? The answer to that is, if it works, it's gotta be in the billions. It just has to be for all the reasons you might want to send money around the world.' This type of talk is common from Bitcoin enthusiasts but apparently seasoned investors are starting to agree. Forbes explains the details of their business plan but in short it has to do with tapping the GPU mining potential of gamers, more specifically gamers of free-to-play games. This would add a new revenue stream for online game companies that are trying to provide free games profitably."
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Bitcoin Mining Startup Gets $500k In Venture Capital

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  • by Anonymous Coward on Wednesday April 25, 2012 @12:23PM (#39796143)

    Shouldn't that be BitCoin mining scam bilks idiots of $500,000?

    • Re: (Score:3, Insightful)

      Yeah, I'm sort of amazed that its on forbes. You'd expect them to do a little research and at least address the built in deflation in a story.

      • by h4rr4r (612664) on Wednesday April 25, 2012 @12:30PM (#39796265)

        Why does this amaze you?
        What are the odds either the writer was paid, Forbes was paid or one of the two have people involved in both?

      • Re: (Score:3, Informative)

        by benjamindees (441808)

        Bitcoin doesn't have "built in deflation." It has built-in monetary inflation, which is currently around 35%, and which decreases over time.

      • by DriedClexler (814907) on Wednesday April 25, 2012 @01:24PM (#39797119)

        Yeah, good point, every story about Bitcoin should re-hash every major and minor criticism anyone has made about it, regardless of how many times they've been made public, or the relevance to the story.

        I mean, while we're at it, be sure to mention how bitcoin uses SHA256 cryptographic hashes for proof of work, as well as the relevant journal articles on SHA-2's potential weaknesses, on double-spend attacks and their countermeasures, etc etc etc.

        That way it'll be sure to be a nice, to-the-point, concise article, pandering to every possible concern. They might even be able to squeeze in a few words about some mining startup and the VC they raised!

    • by DragonTHC (208439)

      think for a second.

      High processing cycles needed to "generate" a bitcoin?

      Something only has value if someone wants it.

      What exactly are bitcoins and why are they so mathematically complex.

      • by Anonymous Coward on Wednesday April 25, 2012 @01:18PM (#39797017)

        think for a second.

        High processing cycles needed to "generate" a bitcoin?

        Something only has value if someone wants it.

        What exactly are bitcoins and why are they so mathematically complex.

        The transfer of funds from one person to another usually relies on a trusted third-party like Paypal, Visa, or the various banks, which prevent double-spending. Bitcoin is an attempt to remove third-parties from transactions altogether. To prevent double-spends, the transactions are instead verified by a peer-to-peer "mining" network. The incentive for miners to verify transactions is that there is a 50 BTC reward every time a block of transactions solved. The math behind it is complex because the entire system requires zero trust by all parties and there is a clever use of economic incentives to keep everything going.

        • Bitcoin is an attempt to remove third-parties from transactions altogether.

          Pardon if this is pedantic, but that overstates it, as you next sentence suggests. Bitcoin doesn't remove third-parties, as the network *is* the third party. Rather, what it removes is the need for a specific third party (the "network in general" serves this function), or a 3rd party that needs to know specific details about you.

    • Determination. (Score:4, Insightful)

      by zAPPzAPP (1207370) on Wednesday April 25, 2012 @04:52PM (#39799851)

      Spending 500k$ just to troll Slashdot hard.

  • When it comes down to it, am I going to be losing performance in their game because they would rather be making money? I hope they state plainly their intentions from the get-go, but we all know that won't happen.
    • by Githaron (2462596)
      They will state their intentions. After you have bought the games and opened the package, It will be in tiny letters in the most vague wording possible somewhere in the multi-page EULA that almost no one reads.
    • by h4rr4r (612664)

      Forget losing performance, think about your GPU running 100% when it only needs to be at 10% and what that will due to your powerbill. My GTX460 eats 150watts and newer cards will be even more.

      • Forget losing performance, think about your GPU running 100% when it only needs to be at 10% and what that will due to your powerbill. My GTX460 eats 150watts and newer cards will be even more.

        And fan noise as the various fans in your system desperate try to cool things down.

      • Re:Prioritization? (Score:4, Informative)

        by jank1887 (815982) on Wednesday April 25, 2012 @01:04PM (#39796799)

        150W = 0.15kW x 24hrs/day = 3.6kWh/day x $0.10/kWh = $0.36 / day x 30 days/month = $10.80 / month.

        Rescale according to your local electricity cost and actual number of hours per day.

      • by Sir_Sri (199544)

        A 560 and 660 will probably both eat around 150 watts, though the 680's use less power than the 580's. The x80 series use roughly the same form factor and power draw from the 8800 up to the 580 and then a bit less (but not a lot) for the 680.

        Much of GPU design is what you can cram into a given power envelope (between 6 and 8 pin connectors on the side and what you can draw from the mobo). CPU design has been the same way for quite a while with power points of 45 75, 95, 140 W TDP for intel parts. There a

  • by hmmm (115599) on Wednesday April 25, 2012 @12:24PM (#39796171)

    I officially declare Internet Bubble 2 as confirmed!

    • by jank1887 (815982)

      bubble v1 had Flooz with Whoopi Goldberg. who will get the first big Bitcoin sponsorship?

  • by Trepidity (597) <delirium-slashdotNO@SPAMhackish.org> on Wednesday April 25, 2012 @12:24PM (#39796175)

    In the 21st century, humans have invented fake mines to work in, and fake mining companies that mine in them.

    Not fake mines likes the ones in Minecraft that might actually be interesting, of course. And not a side-effect of something else, like WoW's "gold farmers". Fake mines that exist solely and purposely to be tediously mined by fake mining companies! Now that's creating value. Value that's "gotta be in the billions".

    • by SaroDarksbane (1784314) on Wednesday April 25, 2012 @12:35PM (#39796333)

      Now that's creating value.

      I realize this is snark, but having a currency that is semi-anonymous, convenient, and resistant to meddling by central banks would be quite valuable to some.

      The value you place on such a thing is probably not very high, but value is entirely subjective, and can only be shown on an individual basis by what that person is willing to trade to acquire the object (or information) in question.

      • by kiwix (1810960)

        A kind of anonymous money could be useful, but I'd rather use one that doesn't double as a pyramid scam.

        It's easy to make a bitcoin-clone without this property, you just need to adjust the mining rate so that the early adopters don't get half of the total wealth to ever be available.

        • You have to give the initial adopters a reason to pay attention to you.

        • Please do make one with this non-pyramid scam feature and maybe we'll all be talking about kikixcoin in a few months or years. Part of the Bitcoin technology has been an incentive for people not just do adopt it but to want to build services on top of it to increase the value of their investment. It's not unlike learning a new language and then making a great toolkit or framework for it. You want to increase the value of what you havew.

          Perhaps in Bitcoin's case it was too heavily weighted toward early-ado
    • by Dan East (318230) on Wednesday April 25, 2012 @12:38PM (#39796375) Homepage Journal

      The next time you're playing a free solitaire game online, and your CPU fan is going wide open, your gpu fan is wide open, the room feels hot and stuffy all of a sudden, and the lights dim, just seek solace in the fact that you're making someone else fake money.

      • There is nothing about Bitcoin that is fake. It's harder to counterfeit than a gold bar yet instantly assayable by anyone who downloads the software or checks with one of a few blockexplorer.com type servers out there.

        Mind you, people will need to realize that their computers and their electricity may be being used by someone else to make money but if they're getting paid for it in some other way, that can be part of the deal. This announcement is about a way to get vitual in-game items for mining in an
    • by s73v3r (963317)

      Not only that, but the creators of these fake mines have found a way to extract the potential value from the mine without actually paying the miners.

    • by jdavidb (449077)

      Not fake mines likes the ones in Minecraft that might actually be interesting, of course

      Okay, this is entirely subjective. I find bitcoin fascinating even though it has never been of economic value to me. And I've never played Minecraft. I find it somewhat interesting, but many people I know do not. And I find bitcoin much more interesting than Minecraft.

  • If a game is going to use my GPU to mine bitcoins for the other end, they should have to tell me. Because otherwise they're just taking money from me and having my electric utility do the billing for them.

    Note that anyone who is on a pay-per-bandwidth internet plan is in the same boat with ad-supported software. You are paying the maker of the software, just your ISP is doing the billing for them.

    • by tlhIngan (30335)

      If a game is going to use my GPU to mine bitcoins for the other end, they should have to tell me. Because otherwise they're just taking money from me and having my electric utility do the billing for them.

      Note that anyone who is on a pay-per-bandwidth internet plan is in the same boat with ad-supported software. You are paying the maker of the software, just your ISP is doing the billing for them.

      I don't see that happening. I mean, if I write a game so inefficiently that it takes 100% CPU when I only really

    • by asdf7890 (1518587)

      Because otherwise they're just taking money from me and having my electric utility do the billing for them.

      Exactly. That, and your GPU will be running at 100% potentially for long periods of time when it would otherwise be near idle - so you might need to replace it sooner. You'll certainly have extra noise from the fans if your card is not passively cooled.

  • LOL (Score:3, Funny)

    by wervr (712696) on Wednesday April 25, 2012 @12:26PM (#39796203)

    I am going to laugh so hard the first time I see and hear someone playing farmtown while their video card is at 90 decibel turbo speed.

  • by OzPeter (195038) on Wednesday April 25, 2012 @12:28PM (#39796239)

    'if there is a currency that can trade around the world, it's semi-anonymous, it's instant, it's not controlled by government or bank, what's the total value of that currency? The answer to that is, if it works, it's gotta be in the billions. It just has to be for all the reasons you might want to send money around the world.'

    It's also going to be top of the list of every law enforcement agency across the globe. Governments tend not to like their citizens taking part in transactions that don't have a paper trail.

    • by Wonko the Sane (25252) * on Wednesday April 25, 2012 @12:31PM (#39796291) Journal

      Governments tend not to like their citizens taking part in transactions that don't have a paper trail.

      That is true, however politicians and bureaucrats really like having a way to receive bribes that don't leave a paper trail. Which impulse will win out in the end?

    • Governments tend not to like their citizens taking part in transactions that don't have a paper trail.

      Yes, but what a government likes or not is immaterial; There are plenty of legitimate things and reasons for anonymous purchases, not the least of which is economic stability; If money cannot be exchanged anonymously, then that means that all transactions can (and will) be taxed. That means that the barter system will come back into play for any number of purchases, as well as complex tax shelters and evasion methods where goods trade hands instead of cash, or instruments are created that are "like" cash, b

    • by Jeremi (14640)

      Governments tend not to like their citizens taking part in transactions that don't have a paper trail.

      On the other hand, every Bitcoin transaction does have a very public "paper trail" that is quickly available to everyone, including law enforcement. The only challenge is matching account IDs to actual people. I wouldn't be surprised if law enforcement is able to find ways to do that, in which case they might prefer that criminals use Bitcoins rather than cash.

  • there's a new dot-com bubble

    congratulations on the investors here on seeding the hype to attract the rubes

    just remember to step off the merry go round before things tank

    i'd give it a few years

    any VC want to fund my innovative paradigm shifter? i call it flooz. whoopi goldberg is going to help me spread the good word

    • by perpenso (1613749)

      there's a new dot-com bubble

      Maybe, maybe not. Its not like instagram raised a billon from the market. The Wall Street Journal reported that the decision was largely made by one person.

  • Trojan (Score:5, Insightful)

    by girlintraining (1395911) on Wednesday April 25, 2012 @12:30PM (#39796273)

    Forbes explains the details of their business plan but in short it has to do with tapping the GPU mining potential of gamers,

    So 'in short', they're going to trojan a video game and turn a bunch of PCs into a botnet to generate bitcoins. But because it's a business doing this, and not some teenager in his mom's basement, they're going to make billions instead of go to jail? That sound about right?

    If any other kind of software you ran was doing something in the background other than what you wanted to do, it would be called malware.

  • Bitcoin haters (Score:5, Insightful)

    by Anonymous Coward on Wednesday April 25, 2012 @12:32PM (#39796299)

    never seem to understand the advantages of it is a form of exchange and yet they will cry and moan every time the government takes another one of their freedoms, another step into their privacy, another step towards authoritarianism.

    Bitcoin is an incredible idea: decentralized exchange, totally anonymous, no central body to print it out of existence, no government to track who your exchanging with and for what, a limited stable inflation on the money supply with no one to dictate that "the crisis would end if we just gave the banks more money".

    Would I want to store all of my wealth in bitcoin? No. Do I like the idea of being able to convert my money into an exchange medium that is untraceable? Of course.

    How many stories have we read of governments steering us towards a cashless society where all forms of exchange are withing their monitoring (not to moention all forms of communication.)

    To me bitcoin is the currency equivalent of TOR and shouldn't be hated on.

  • by sl4shd0rk (755837) on Wednesday April 25, 2012 @12:34PM (#39796317)

    Control the 'net and you control bitcoin. Do you think pippa/acta / cispa and variants are limited to the riaa and mpaa agenda only?

  • In 10 years, someone is going to look very stupid, and it will either be Bitcoin's shrill proponents, or its shrill detractors.

    The suspense is killing me.
  • Duplicate (Score:5, Funny)

    by Compaqt (1758360) on Wednesday April 25, 2012 @12:41PM (#39796429) Homepage

    Don't the editors read what they post?

    We just had an article about billionaires funding a crazy mining scheme [slashdot.org] a few days ago.

  • Well a lot of people are concerned about the security of the BTC notion. I'd like to bring up something that a lot of Slashdoters are familiar with.

    That is that as an individual trader you are at the low end of the reliability spectrum when it comes to trading and finances. If your bank goes bust you will probably not receive your money. If there is a sudden drop in markets, your trades won't be processed for hours or days. Probably not an issue unless there's a war or some other kind of major event, like
  • I'm surprises it doesn't already happen with web based adverts. OK so even with modern JS engines you'll not get much mining done per minute per user, but if your ads are spread widely enough you could potentially make a bit on it.

    The other option I've not heard happen (which is considerably more practical) is for a miner to be included in malware. Given malware tends to disable task manager and related things that could report the extra CPU use, and many users would not think to look anyway, this could
  • Say I'm writing drivers for these GPU's and I want to give my customers the ability to block this. In theory, the calculations required to mine a bitcoin follow a particular and repetitive pattern, which means I could probably identify the pattern of instructions being sent to my GPU. Could I code a driver to render the functions that draw the screen for the game normally but just return '0' every time I'm asked to mine a bitcoin?

    I feel like I would invest in a graphics card that offered such a featur

  • Bitcoin mining is barely profitable now. Bitcoin "difficulty" self-adjusts so that the number of new Bitcoins created per unit time remains constant. Currently, that number is about 6*50*24*30 = 216K bitcoins per month, worth about $900K/month. Every few years, the number of coins created per unit time drops, so that eventually there will be a fixed number of coins, 21 million. Around the end of 2012, half of all Bitcoins that will ever be created will have been created, and the production rate drops in h

  • by repapetilto (1219852) on Wednesday April 25, 2012 @01:36PM (#39797249)

    It is becoming more and more obvious who is on which side of the bitcoin "debate". This thread honestly isn't even worth reading, everyone who knows what they are talking about is spending all their time explaining the most basic info to idiots. Admittedly there are a few lazy, but intelligent sounding posters mixed in, but this is mostly just troll FUD. 95% of normal people either think it is interesting or just don't care.

  • by mathimus1863 (1120437) on Wednesday April 25, 2012 @01:49PM (#39797419)
    Yes, there's a lot of people who are in Bitcoin because of become-a-billionaire-overnight fantasies. Yes, they are silly. But you remove all that and you're left with a really fascinating system that should appeal to everyone on Slashdot. It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics -- most of us here dig that stuff.

    Get over the hype and take Bitcoin for what it really is: a fascinating experiment that has, so far, withstood the amazing barrage of publicity, hacking attempted, legal uncertainties, and remains valuable for reasons completely contrary to everyone that says it's worthless. It may become worthless one day, but consider the possibility that Bitcoin is disproving all your wildly oversimplified assumptions about what makes something valuable. It is completely different, and there's plenty of reasons to believe that it could succeed as much as it could fail.

    I like to think of Bitcoin like gold. Nothing is backing gold. It's a material for which there is a limited supply in the world, and which is universally regarded as value because of various properties it has: perhaps beauty, fungibility, density, etc. Bitcoin is really the same, with a limited global supply, except that it has different properties, mainly ease of transfer over the internet, fungibility, storage efficiency, near-anonymity and built-in escrow.

    I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value. And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use gold, cash or paypal, which all require me to remember log-in creditials, give away information and/or a bunch of third party fees. There's plenty of value in being able to pay people across the world, instantaneously, without sacrificing your privacy, and without paying any fees. Why is that not valuable? Seriously... quit focusing on the get-rich-quick kids, and start appreciating Bitcoin for it's unique properties and philosophy.

The two most common things in the Universe are hydrogen and stupidity. -- Harlan Ellison

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