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Bitcoin The Almighty Buck

Bitcoin Mining Reward About To Halve 600

Posted by samzenpus
from the wage-reduction dept.
First time accepted submitter ASDFnz writes "The reward for successfully completing a block (also called mining) is about to halve from 50 bitcoins to 25. From the article: 'Bitcoin is built so that this reward is halved every 210,000 blocks solved. The idea is as bitcoin grows the transaction fees become the main part of the reward and the introduction of new bitcoins slows down to a trickle. This also means that there will only ever be 21,000,000 bitcoins in circulation.' You can watch the countdown here."
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Bitcoin Mining Reward About To Halve

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  • by Anonymous Coward on Sunday November 25, 2012 @07:21PM (#42089897)

    My parents won't let me mooch off their electricty forever.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      You can get them for free at http://www.bitvisitor.com

      Online advertising is just one of many industries that bitcoin is disrupting. (Bitcoin is perfect for such micro-transactions).

      • by Goaway (82658)

        Actually, Bitcoin is not at all good for microtransactions, due to blocksize limits and the necessity of transfer fees.

    • by cultiv8 (1660093) on Sunday November 25, 2012 @08:14PM (#42090177) Homepage
      So rent an apartment where electricity is included; most rental agreements don't have anything that specifically forbids bitcoin mining.
  • Austrian economics (Score:5, Interesting)

    by dytin (517293) on Sunday November 25, 2012 @07:23PM (#42089913) Homepage
    Bitcoin is the greatest real-world experiment in Austrian economics [wikipedia.org]. For once we'll get to actually see if a "deflationary spiral" will actually occur when the rate of money creation slows, or if the Keyensians were just full of it. Whether bitcoin actually succeeds or not, we'll at least get some really good data.
    • by Dast (10275) on Sunday November 25, 2012 @07:44PM (#42090011)

      Sounds questionable to me. Going by the definition on wikipedia:

      "A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price.

      If nobody is really pricing goods in bitcoins and nobody is getting paid in bitcoins, how could the feedback cycle that would normally cause a deflationary spiral exist? Even if bitcoins deflate massively, I don't think that necessarily proves the Keyensians right.

    • Additionally (Score:5, Interesting)

      by betterunixthanunix (980855) on Sunday November 25, 2012 @07:54PM (#42090075)
      Bitcoin will let us see if money is something that can truly exist without government, or if the anarchists were full of it. Bitcoin's success or failure will almost certainly tell us more about this than about deflationary spirals.
      • Re: (Score:3, Interesting)

        by Wonko the Sane (25252) *

        I think it will tell us that even in the most optimistic scenerio where Bitcoin achieves 100% market penetration, some people will go to their graves insisting that it won't work, isn't really money, and is all just a ponzi scheme.

        • Re:Additionally (Score:5, Insightful)

          by PCM2 (4486) on Sunday November 25, 2012 @08:34PM (#42090273) Homepage

          I think it will tell us that even in the most optimistic scenerio where Bitcoin achieves 100% market penetration, some people will go to their graves insisting that it won't work, isn't really money, and is all just a ponzi scheme.

          Conversely, if Bitcoin is around for 100 years and nobody but a handful of extreme-right libertarians thinks it's worth so much as a wooden nickel, we will have learned empirically that some people will always go to their graves still wishing for a pony.

    • by Alomex (148003)

      Actually bitcoin claims that they are not a good test case for a deflationary spiral. Have a look at what they have to say about it/a>. [bitcoin.it]

    • If you believe the mhash/s speeds of (yet to be released) ASIC hardware [bitcoin.it], as well as decentralized P2Pool mining [bitcoin.it], then you'll need to factor in the effect of disruptive technologies on "deflationary spirals". Bitcoin mining was something I was recently evaluating and decided against after researching [bitcoinx.com] and factoring in the effects of profitability decline per year on revenue, especially if ASIC hardware delivers as specced.
    • by jdavidb (449077)

      From what I understand, most Austrian economists dismiss bitcoin because according to Austrian economics, currency must arise from something that is originally useful in the market for purposes besides money. And Austrian economists don't teach that deflationary spirals don't occur; instead what I've heard is that they believe that deflation is not a bad thing.

      I'd like to see bitcoin adapted to represent trading units of gold or something else, issued by multiple competing sources and redeemable from the o

  • Oh no, the bitcoin ponzi schemes will have to double their reward in order to be viable!

    Apart from silk road, bitcoins have practically zero value in the vast majority of financial transactions, so why do we care about this?

    • by msauve (701917)

      bitcoins have practically zero value in the vast majority of financial transactions

      Gold has practically no value in the vast majority of transactions (try paying for goods at Target with a chunk of gold). Ditto oil, corn, FCOJ, pork bellies or many other things with recognized value. That's why currencies developed, to serve as a proxy for value. Whether bitcoins will become widely recognized is yet to be see, but they can be traded for hard currency just like the items mentioned above, so they do have reco

      • by AK Marc (707885)
        If you walked up to the checkout at Target with 10 lbs of gold you wished to trade for 10 lbs of chocolate, I imagine you'd be successful. Now if you tried with $1,000,000,000 worth of bitcoin, I imagine that you'd be unsucccessful.
    • Re:who cares? (Score:5, Interesting)

      by Teppy (105859) on Sunday November 25, 2012 @07:53PM (#42090071) Homepage
      They're being used quite a bit for online gambling because they allow for instant deposits, instant withdrawals, zero risk of charge-back, and for some online casinos, provably fair wagering.
      • Re:who cares? (Score:5, Interesting)

        by Wonko the Sane (25252) * on Sunday November 25, 2012 @07:55PM (#42090085) Journal

        There are also a few VPS and VPN providers who accept bitcoins for the same reasons, and because now they can sell their services to customers anywhere in the world without being limtited by the legacy banking system's inability to process payments from certain places.

      • The reality is that all these sites are using Bitcoin for is a transaction mechanism. They are not keeping their rake in bitcoins, they are exchanging it for cash because that is what the real world operates in. Similarly, the people making the wagers are exchanging their cash for bitcoins in order to play the game. In essence bitcoins are just being used as a payment processor for these sites.

        Also, people who think bitcoins are not under government control are woefully mistaken. Aside from the pittance of

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      Apart from silk road, bitcoins have practically zero value in the vast majority of financial transactions

      "Apart from the types of situations that it's useful in, it's not useful in any situations."

  • by Enry (630)

    I think I mined part of a bitcoin then lost the files I used to generate them. Does that mean they're permanently out of circulation? How do they handle such a situation?

  • I'm a Happy Camper (Score:5, Interesting)

    by johnnysmith2012 (2781279) on Sunday November 25, 2012 @08:09PM (#42090139)
    Since now they girls doing video clips for bitcoins! http://www.videos4btc.info/ [videos4btc.info]
  • I wonder... (Score:5, Interesting)

    by fuzzyfuzzyfungus (1223518) on Sunday November 25, 2012 @08:10PM (#42090145) Journal

    I'm no crypto expert; but it was my layman's understanding that the bitcoin setup is(barring presently unknown attacks) unforgeable; but that there is nothing particularly special about the "Genesis block" [bitcoin.it] at the beginning of the bitcoin block chain, aside from mutual acceptance of it.

    Given that, while it is not possible to forge a bitcoin or to produce more than 21,000,000 of them, it should be possible for anybody who feels like it to simply define a new Genesis block and go hashing merrily away. The products of this block chain will be distinguishable from the products of any other block chain; but user convention could assign them value in exactly the same way as it did the old ones(or, more probably, they would trade at a discount against the 'original' bitcoins).

    Any speculation on whether the people-who-care-about-bitcoins of the world are sufficiently rabid about some sort of deflationary theory of currency to prevent that, or will we start seeing N different distinct block chains trading between one another as well as select real world commodities?

    • There are already several alternate blockchains, but almost nobody uses them.

      Given the choice between holding currency that does not artificially devalue, and holding currency that does artificially devalue, who is going to choose the latter?

  • by Anonymous Coward on Sunday November 25, 2012 @08:29PM (#42090251)

    I used to be big on the BTC mining thing. These days, however, it just doesn't matter anymore.

    I got into BTC fairly early, back when it was profitable to run the mining software on a single workstation to suck up unused cycles. At that time, it was actually profitable to invest in dedicated hardware to mine coins- so I (and a lot of other people) eventually did. My first dedicated rig was a HP ML350 G5, which set me back about $4000. It ran two 8 core processors and basically sat around all day mining bitcoins.

    Later on when the GPU accelerated mining took off, I bought and built four systems from off the shelf components, and the ML350 was rededicated to running ESXi with a bunch of VMs for mining and managing the four slaves. Each slave had 3x ATI GPUs, later those were swapped out for NVidia GPUs for other various software reasons.

    Then the FPGA (and later ASIC) players came into the game. It started with development boards (FPGA boards purchased direct from the chip manufacture), but later spiralled into custom FPGA boards in nice cases that you could stack or keep around on a metal shelving system easily enough. Now, the custom FPGA boxes for BTC mining basically put the GPU miners out of business- the introduction of FPGA hardware increased the BTC mining difficulty to the point that it was pointless wasting the power mining with anything other then.

    The problem was that by the time the FPGA market exploded, it was *barely* worth investing in the hardware to get in that late in the game. Previously, buying a few PCs and loading them with GPUs was a cheap way to make some extra cash. FPGAs however cost a hell of a lot more and the difficulty of mining BTCs had increased so much that you would barely break even, and you'd be bloody lucky if you actually made any money in the end.

    But FPGAs weren't good enough. People started thinking that they could build silicon to do things even faster, and thus the ASIC market started to emerge and take off. The problem here is that while an ASIC kicks the shit out of an FPGA (and anything that came before the FPGAs)- they're so expensive and the BTC difficulty has been bumped up so much by the initial ASIC wave and the FPGAs before it... That... Wait for it...

    Investing in ANY form of ASICs to make **any** kind of reasonable money... Means that you'll never actually break even.

    That's right, the ASICs they've got out there are so powerful and the BTC chain is becoming so difficult to mine, that if you invested $10K+ (which is what you'd have to spend) for a reasonable ASIC setup- you would never actually make any money. If your ASIC box is profitable, it won't be for long since the more ASIC miners join in on the party- the more difficult it becomes to mine BTCs.

    So the whole system has kind of spiralled into nothing. Mining isn't profitable anymore. Even if you invest in serious hardware. It just doesn't matter anymore, and now that the "reward" for mining BTCs is about to halve- it's even more of a waste of time then it was before. You could have made money in the beginning if you were there, but if you weren't- it's not worth investing even a dollar into hardware to mine BTCs anymore. That train has long since departed.

    BTC is basically just a currency now. Mining is vastly irrelevant and always will be, now that we've got FPGAs and ASICs flying around.

    -AC

    • by BlueBlade (123303) <<moc.liamg> <ta> <reitrofam>> on Sunday November 25, 2012 @09:48PM (#42090623)

      I don't know, at least for me, bitcoin mining is still paying part of my electricity bill. I live in Quebec and, like 90% of Quebecers, I use electricity to heat my house. That means that in winter, 100% of the heat generated by the card to compute bitcoins is used to heat the house. With the mining running, the house electric heaters need to start less often, so the mining is essentially free for me.

      I'm using my 3 years old ATI 5870 card to mine the bitcoins, and I get about 4 bitcoins per month, which is roughly $45 at the current rates. I bought the card for gaming originally, and that's what it's still mainly used for. I only mine during the 6 months which require heating (november to april), so essentially, the bitcoin mining is free money. I made about $600 last year and I'll probably make $300 this year. For cases like mine, bitcoin mining is pure profit with no downsides at all.

  • by slashkitty (21637) on Sunday November 25, 2012 @10:37PM (#42090849) Homepage
    Does anyone have a good estimate as to how much wasted electricty is going to "creating" bitcoins?
  • by Captain_Chaos (103843) on Monday November 26, 2012 @05:10AM (#42092313)
    So how stable is the bitcoin exchange rate these days? Can I start using it seriously yet for receiving as payment for services?

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