Topic: Decentralization of mining is returning ... thoughts on 21 inc secret plans? (Read 3707 times)

21 Inc's miners only last for 21 days.  After 21 days the devices die.

https://medium.com/@21dotco/a-bitcoin-miner-in-every-device-and-in-every-hand-e315b40f2821

Dunno about that but Guy (CEO@Spondoolies) mentioned in another thread that he was familiar with their plans but couldn't comment because he was under a NDA, other than to say that it wasn't a game changer.

So there are a few important questions about what they're planning to do that we should be able to figure out with our collective knowledge of how bitcoin works etc.

1) What is the likely hash power of a device embedded in a USB hub, router, desk top box or other similar device ?

2) How many are they likely to deploy and what is their likely aggregate hash power ?

3) How much will this increase difficulty and what is the likely impact on bitcoin prices ?

4) If these devices mine at a loss due to the aggregate increase in network hash power and anticipated bitcoin price trends, what other revenue streams could 21 Inc. hope to generate to make the business profitable ?

5) Do 21 Inc or any of their investors currently hold large amounts of bitcoin and could their business plan be to increase the value of these holdings by facilitating more widespread adoption of bitcoin ?

6) If 21 Inc claim that they can get the cost of mining a bitcoin to the ~ USD 7+ range, what does that imply for their cost of goods for adding mining capability to a usb hub, router or other retail device ?

7) what does it imply for the hash power of the device ?

9) what does it imply about their assumptions wrt network growth and bitcoin price trends ?

10) In general, what needs to be true for 21 Inc. plans to succeed ?

Seriously, what kind of specs would this chip need to actually be profitable as a miner in a retail environment at current bitcoin prices and when deployed in quantities of tens of millions, given the obvious effect on difficulty ?

Fair enough.

Has anyone seen anything related to their "USB Charging Hub", mentioned for the first quarter of 2015. I didn't get anywhere with their website, which seemed to require an Email address which I was unwilling to provide.

Well, I think some of you seem to be thinking about this as miners ... how much money can these devices make by mining, and does it make sense in that context whereas 21 inc. seems to be taking a larger context - a combined mining play, adoption play, social networking play and IOT play.

I don't think it helps understand this opportunity if we bring to the analysis the assumption that the 116 Million USD is stupid money or that 21 inc doesn't understand how bitcoin works. Lets give them the benefit of the doubt and try to figure out what needs to happen to actually make it work, because that will give us clues to their plans.

You may well be right. Ignoring the fact that it's Bitcoin, there are a bunch of Venture Capital firms that invest big money (e.g. millions of USD) into a startup, and get back 10 cents on the dollar (if that) when it doesn't work out. The VC firm knows that and relies on a few "home runs" to make up for their "strike outs". The Bitcoin marketplace is littered with folks that "invested" in a Bitcoin miner company (who thought they were customers), that lost big. Big money isn't always smart money.

As LordPaco points out, the automatic difficulty adjustment just destroys the theory of "mining the crap out of Bitcoin" because two weeks later (or less) the difficulty adjusts up by 30% or more, and boom your great big plans go poof.

Of course we'll be able to find out how this plays out in 18-24 months, if that long.

You know when someone says something like that about bitcoin you must take it with a grain of salt because bitcoin:


With magic fairy efficiency asic numbers we can draw that conclusion and hold it as status quo for less than two weeks. As they try to reach the fruit it will grow beyond their reach. If they have a super efficient chip they will not hold a monopoly on it for long, and it would be much more profitable for them to apply it specifically to a bitcoin mining application rather than build it into an appliance as a secondary use.

116 Million Dollars has taken the other side of this bet ~LOL~

"By the time its chips were to be embedded into Internet of Things (IoT) devices, 21 projected its cost to produce 1 BTC could be as low as $7.45."

from http://www.coindesk.com/21-intel-bitcoin-mining-strategy/

I read in more detail the article you referenced. To me the target audience wasn't anybody currently involved with Bitcoin, but rather potential investors in their company. It all looks wonderful on a set of Power Point slides, until somebody starts to ask questions, and then it start to unravel.

While I guess a Router or a game console could accommodate an ASIC, I don't know if either has the built in margin to deal with another ASIC being added. The rest of the infrastructure (e.g. Internet access) is in place, but that's about it. The router is the only one that's likely on 24 hours a day.

I also noticed the $7.45 cost to produce a Bitcoin. I'd swear I read an article that suggest that the price of a Bitcoin will gravitate towards it's cost of production. Think about that for a moment.

I am completely unimpressed.

I have my doubts about what they have actually done with Intel. If they have done something, obviously they aren't actually deploying hash in any significant way at the present time. The network wide hash rate has been essentially flat for two months. I guess if they had a significant amount of hash at the end of 2014, they could be quietly replacing it with more power efficient chips, but that's it. You can't just secretly mine without being visible to the rest of the Bitcoin universe (at any significant scale). Maybe they have some really super-duper chips, but they most assuredly haven't deployed them in large numbers except possibly in replacement of something else.

There are so many other opportunities that Intel has passed on in terms of fabbing chips, this just doesn't seem like it's all that "real". I just don't see Bitcoin being big enough for Intel to care about Bitcoin ASiC production.

I agree more in the thread it will be people making their own devices.  Such a heaters, water heaters, etc.

The big companies will not spend the extra money to get an asic.   Just not enough people know BTC yet.   If someone goes to walmart and sees a cheap space heater, and then one that is a higher cost asic space heater.  I sadly think most of America will spend the less.  I don't think btc has been around long enough to get lots of market share.

Re 21 plans: it would be routers, PCs, etc.
They are seriously hooked up with Intel
While we were mocking around at 0.5-0.7w/GH, they were already for AGES (at least since 2014) on 0.22w/Gh

See:
http://www.coindesk.com/21-intel-bitcoin-mining-strategy/

To put it succinctly: their strategy=famous/infamous AOL CDs

If you want to sell an "ASIC based" 500 Watt heater, it can't cost 3x the $39.95 non-ASIC version, or it will never sell. I also would be surprised if it ever ran more than a few hours straight. Most people don't buy a space heater in order to run 24 hours a day. I expect they will also wonder why their "heater" wants to access the WiFi in their house, if they even have WiFi.

I think a specialty niche "ASIC based" heater might appeal to a few folks, but it won't have mass adoption, nor will it pay back much if anything to the manufacturer if it only gets run 10-20 hours in a month (like many small space heaters do).

That's 6000 individuals, it's meaningless.  Unless you think, for some reason, people would give that hash away and allow 21 to have it all for themselves.  Well that's just silly, no one in their right mind would run a miner for someone else's gain, no matter what other function that miner is performing.

you just have to apply math to your suggestion.
say, 0.1GH/w-very possible with 14-16nm tech
not sure about toasters-they are used very infrequently
space heater is typically 500w, so one space heater=5Th
hence, just 6000 space heaters are your 30ph
You don't think that someone can place 6000 space heaters in the whole world or even US alone or 10X that or even 100X times that?

instead of assuming if mining is returning, Id say its staying the same.

most of us are not willing to fork a pretty penny, since we cant valuate the future value nor anyone can else.

but id be worried on the core itself, what happens after all the transactions bitcoin have been found. do we wait for 1 transactions to take 2 days or more? whats considered a fair fee for any transaction.

and theres no good way to automatically calculate whats a fair fee..

Some items make perfect sense.  Such as hot water heater, space heaters, basically appliances that use large amounts of heat and electricity. 

It will be people doing "custom" versions of things such as this.  I do agree a chip in every device makes less sense then going for the higher powered items.

None of this makes any sense.  How many toasters does it take to compete with a 30PH/s mining farm?  These ideas would have been cool a couple years ago, but they seem 100% pointless to me today.

What good could possibly come from a toaster "that communicates with the bitcoin block chain?" Why is something like that useful?
   

They are mining internally right now.

I've said before that I don't think they're putting a bitcoin miner in your toaster or your light bulb. If they are, they're going to be bankrupt very quickly. That idea doesn't make sense and consumers would know they were losing on the deal since they get stuck with the electric bill that is higher than the returns on mining.

Here's what I think they're doing: 21 Inc is intending to partner with consumer products companies to create an "internet of things" system where your fridge, dishwasher, car and everything else is signed on the bitcoin blockchain. A minimum fee would be exchanged to register the item on the network, and which coins are kept by the user registering the item.

21 Inc needs to mine as well (for themselves) because for this to work you need a significant amount of the network (1 or 2%) to find a block every day to initially register devices without a transaction fee. (Or in such a manner that there is a transaction fee, but to keep the network happy 21 Inc pays and then collects that said transaction fee internally.) Once registered, the wallet address can simply sign, rather than actually use the blockchain again, to prove ownership.

This will allow all the devices to be securely registered to a home network and offer all the cool things that internet of things will allow. (Like being in your car and pulling up your fridge's recommended list of groceries, and your car being able to know that "this is your fridge")

The block chain allows for a decentralized system, so that anyone can make a product that works within this internet of things.

Just my guess. My second guess is this is a massively over funded miner manufacturer. But they raised way more money then they need for that.

You know that most of those "few satoshi" will end up at 21 Inc because they were never claimed or because they are under the minimum "dust" amount.
And the totals may be quite big.

Au contraire, mon ami. They already manage to install and operate an electrical appliance in most homes in the modern world - the electricity meter. And who can buy electricity cheaper than the power company ? So … you have scale, operational competence and efficiency ...


With respect to adoption rate, I agree. But ask yourself, what would encourage widespread adoption better than providing everyone on the planet with a few satoshi every day ?

The capital needed to engineer and manufacture a very low cost ~10 watt device in quantities of hundreds of millions is not insignificant.

One key to the answer to the OP's question is the fact that 21.co seems to have raised 116 million USD. More likely to follow.
This is the kind of money you need to build out a +very+ large scale distributed network of ~ 10 watt devices.

Look at the investor lineup: http://blogs.wsj.com/digits/2015/03/10/secretive-bitcoin-startup-21-reveals-record-funds-hints-at-mass-consumer-play/

Ahhh ok yea I completly agree on Hacktivist type homeowners doing it their self.   More advanced ways to use heat.  

Water cooling has hardly been touched as far as what people can do with it.   Lots of mods right there.

I guess if we look at it this way instead of big companies making it, nothing stops a lot of them from happening now.  Thanks for post it did get me to think different  way for this to go.

Who says a BIG fabricator is going to do this?

Again you have to think about the how you can build cheap accessible mining that is fully integrated into consumer products potentially or serves a real human need. It could be retrofits to existing consumer products. Hacktivist type stuff right?

Heating.

Cooking.

This has to be open source. It has to be local not international in scope.

But do you honestly think any of the big manufactures will do this? Justify even if it was a dollar per x item. I think until more acceptance its a pipedream.  

I would love it though really would.  Just don't expect it soon.

Coffee warmer.
Hot water warmers built into water coolers.
USB miner with Bitcoin Core node.

Something that is cheap / zero cost as an addition to existing products. Also looking at integrating the Bitcoin Core into these devices might be a great opportunity to secure the network.

It has to be lower power, cheap and accessible / needed by millions. The small or home miner needs to be MICRO and then P2Pool collectivized to push very very hard on the Farms to make them unprofitable. Cut their throats make it impossible to grow bigger.

1 or 2 chip miners with Bitcoin Core Node sub $20 units then you have something that could be viable. The only way to beat the farms is make mining so cheap that it is everywhere.

In general Bitcoin mining is the complete antithesis of what electric companies are doing these days. I still think "We also have to hit a point where BTC is at a higher adoption rate.   Chances are most items it is put in would be higher then one without a miner.   So we really need a point where majority of people know about crypto currency and want it before it would ever be put in a widespread made appliance."

Most likely we will see people using them as space heaters as done before.  And some special things with water cooling.   But were a while out from buying a standard device that has a miner inside of it.

Of course cat5/6 is better than EoP, but its not necessary to support a 10 watt miner in the electricity meter, set top box, heater, router or pick your favorite appliance. The existing power distribution wiring will do just fine.

It can be done.  But in my experience running some cat5 cable is better.  I did a lot of lan over electric and it worked with a few.  To many it seemed like it was hurting my wireless.

It could have been just me or bad luck.  But I still prefer cat5 cable after my expirence.

ethernet over the existing power distribution wiring.

In these early days of bitcoin adoption we think of mining as a private economic activity and by necessity concern ourselves with difficulty, bitcoin prices, technology trends and all the things associated with the profitability of the activity. But the time will come when maintenance of the bitcoin network will be considered a public good and responsibility for it will be assumed by governments and/or public utilities which will be subsidized by taxes or assessments on your electricity bill. And the implementation will be very low cost widely distributed mining devices of ~10 watts or less.

We're already at the point where individual mining is marginal/unprofitable, and it won't be long before it won't be profitable for small private enterprises like KNC or Bitfury or Bitmain.

You laugh but this is actually something I wish they would have done at my house.  I have ran wires myself.... what fun that is.

If you are building a new house have them run cat5 and put it in rooms for you.  You will thank me.  Holding a long as heck rod "fishing" for a cable with someone up top moving it around is not a whole lot of fun.

And one almost no one does think about running a HDMI cable.  You can get them for decent from monoprice.  On some rooms it's nice to have it on opposite side of room depending on configuration.

Enough of my rant about wiring though

Am I going to need to rewire my house to put cat5 next to all the outlets including the kitchen or will it be a wifi storm of dropping connections?

**Cat picture removed by MiningBuddy**

It wouldn't be decentralization if 21.co controls 75% of all the hashes and I would assume they would control 100% of it and just return 25% of the earned btc.
We are just one step away from a camera or mic being inserted into one of these devices as well, after all the toaster needs to see and hear you coming.
Do they run software that can pull their own updates? I see security nightmares.
Software, network config, or dongle that redirects all mining to specified address or blocks it entirely will be standard issue for hat wearers.

What happens when the efficiency is such that it is an obvious mining loss for the entity running the device, and the price point is not competitive because of the extra complexity of the device? You could say the price point will be subsidized but what if the profits/efficiency is low enough any subsidy is like throwing good money after bad?

The subsidy in turn would be the 'cost of the miners' and there easily could be a scenairo where that could outstrip any returns. The problem here being low powered miners that do not initially make much by themselves, but require an overhead of every device to include a network interface card, operating system, a way to configure and diagnose. A large help desk would be needed to field all the inevitable troubleshooting and that sure wouldn't be free.

Somewhat like having one USB miner on a stick connected to a RasPi in stupid mass vs a purpose built miner machine with many chips in parallel and only one interface. It is obvious to see the cost in manufacturing will be a whole magnitude lower for purpose built miners without the redundancy or trouble of the multiple interfaces required for connectivity.

If they manage to produce a chip that works great for this application, I see no reason why it wouldn't also work in a purpose built miner at an efficiency so much greater it makes the first application moot. Of course you could argue they keep it for themselves, and only for that application, but you could not depend on that being the status quo for very long in this bitcoin world.

RoadStress, you are a gentleman and a scholar ! Will we see bitcoin mining lightbulbs in the year 2020 ?

We also have to hit a point where BTC is at a higher adoption rate.   Chances are most items it is put in would be higher then one without a miner.   So we really need a point where majority of people know about crypto currency and want it before it would ever be put in a widespread made appliance.

If they did have water heater I just can imagine the sales person trying to explain BTC and a water heater that makes money.  Most people at this point I don't think are aware and would say they will take the cheaper one without the miner.

And the company that does this will be looking at bottom line.  They will look at a miner as sunk cost, unless there is a higher adoption rate and people seek out these appliances.

~10w per appliance is my bet too. Nothing to hurt the consumer financially and good enough to maintain a decent mining rate.

generally agree.  It is why I think products burning the power already are what can be adapted.

All the heating items I mention already are burning power.

Oh here is one more a crock pot. 6-12 hours  run time  use a few chips to produce that heat and boom cook for free.

I will dig mine up to see how much power it pulls.

I just can't make any of this discussion mesh with the realities I see from my electric company here in the US (MN in particular). They are working hard to get people to REDUCE their electric usage. I regularly am told that I can get a rebate from the electric company for every CFL or LED light bulb I buy. As I read things here, they are pushing every thing they can in order to avoid building another power plant and get it approved by their various regulatory bodies? How many power plants are required for that 2500 megawatts that was mentioned? Natural Gas or Coal, since Nuclear is essentially dead in the USA.

In general Bitcoin mining is the complete antithesis of what electric companies are doing these days.

i still don't like that they retain the 75%, it have been fairer if it was 50% for them and 50% for us, i hope that at least those new appliances come with a cheaper price...

thinking about this, it could increase the purchase of those appliances(when they will be ready of course) if this news will spread enough

it would go go with 4k monitors, demand would rise more for sure

A great opportunity for appliance makers, now that HDTV's  are all sold, time for lots of appliances with one year lifespans.

My C1s are heating water to around seventy degrees.  I'd love to send that water to warm my kitchen or bathroom floor in winter or to a preheating tank for my water heater year-round.

It would depend on what they design but electric meter would allow lot's of electricity possibly.  I don't see it ever happening though.

I know my meter is a "smart" meter personally I miss the old metal spinner watching it whip around if i was using a lot of power.  For me watching a "-" fly across screen is not near as exciting.

0.5-1kw is just a power range that I would have an interest in. 10w-frankly, i wouldn't care for myself.
cable box-33-55w
router 2-20W
electrical space heater 600w
refrigerator 57-160 w average

for numbers see http://michaelbluejay.com/electricity/howmuch.html
on the right side of the page

Q: I wonder if 21 box can be positioned between a powerbox and appliances and once some major appliance kicks in (like dryer or A/c), the 21 box becomes active and draws the power as well. This way although more power will be used, it will be used at the same time as other appliances draw electricity. Alternatively, the box might get active only during the night when there is less consumption by A/C, oven, dryer and washing machine plus perhaps lower rates.

Where do those numbers come from ?

How about 10 watts times 250 million households == 2500 megawatts of hashing power on a 14-16 nm device node, and
as infrastructure gets built out in the developing world, many many times more than this.

So, if KNC's chip design partner Alchip is getting .07w/ghs from 16nm 3d finfet technology:

http://ww3.sinaimg.cn/large/7c2c00e3jw1ervfedx421j20t412ttbd.jpg

I'm sure Qualcom can do better, lets say .05w/ghs. So, ten watts would be 200ghs per meter and 250 million electricity meters would be get you, umm … 50 ehs (exa-hashes/second). That is approximately 150 times the total hashpower of the existing network. Think about what it would do to difficulty and the effect it would have on existing mining businesses like KNC

Who gets power cheaper than the electrical utility companies ?

theoretically, maybe, but electricity meter that is using 0.5-1kw?

The electricity meter is a much better candidate than any of these.

i think the main candidates for double use devices are:

1. electrical heaters (as philip had posted) with a limitation of seasonality
2. routers
3. cable boxes
4. TV streaming devices (such as Roku or Apple TV)

most people I know don't unplug their TV cable boxes even when they are not in use and obviously use some electricity.
same for routers, so clear choices for a dual use hashing device will be routers and cable/TV streaming boxes.
This way (routers and cable boxes) 21 would really only need to make deals with large cable companies (comcast, TW, cablevision), and not even bother with individuals.
They could kick 25% to consumers, 15-20% to large distributors and keep 55-60% to themselves.

Indeed, there are many ways that mining in household appliances is not that much energy stealing.
Indeed, the toaster is a rather poor example.
But the problem is that the only real way that these .. miners earn something is to mine in pools. And that's the best way 21 will also get its share.
Just then you can say bye-bye to decentralization.

  I think it could make for a few big pools  which may be a problem ,but a toaster is not the item to do it with.

People in the USA have electric hot water heaters .  
A complete no brainer since the power is already being spent all year round.




People in the USA have electric baseboard radiator heat.
Once again a no brainer. Since the power is being spent.




People all over the world use spot electric  oil radiators another no brainer.

As I said here, this has a huge chance to actually bring even more centralization.
Do you really think that your toaster will have an ASIC powerful enough to ever find a block?

Personally I don't think it will happen large scale.  I think a dedicated miner is better then these "secret" miners.

Just most likely will not happen on integrating into regular items.

The electricity meter has to be the most ubiquitous powered gadget in the world with a network interface.

Cannot it be both? A IoT toaster needs to communicate with a network anyways.

In all honesty I think the toaster idea is a nonstarter(ASICs degassing and other problems ) and while the overview of 21 Inc plans is correct the products they mention are meant to mask or hide their yet to be revealed products which could be viable.

My two cents: These guesses are wrong. They're not spending $100 million dollars to turn your toaster into a money losing miner. It doesn't make sense.

Now, are they creating an "internet of things" capable toaster? That would make more sense. But that isn't a miner. That's a toaster that communicates with the bitcoin block chain.

How does everyone feel about free ASIC coffee makers and toasters that share some of the mining profits with the users?

http://www.theregister.co.uk/2015/05/06/bubblicious_bitcoin_bonkers_business_bods/

http://ftalphaville.ft.com/2015/04/30/2127543/meet-the-company-that-wants-to-put-a-bitcoin-miner-in-your-toaster/

What are the implications besides decentralizing mining more?