Topic: Gold collapsing. Bitcoin UP. - page 329. (Read 2032265 times)

Offering services to miners is not fungible to offering appliances to consumers.

Different level of profit, NAV expectation, portability expectation, specialization, acumen of the customer, and B2B.

Efficiency is very important in this context (although it doesn't seem like you're using the word efficiency the same way I am).

When you're talking about embedding chips in a wide range of consumer devices from larger household items to mobile devices and even their chargers, you need to do so in a way that is going to be seen as a benefit to the hardware manufacturers who will incorporate the chips into their devices -- and at the same time have it either be invisible to the end user, or be seen as a benefit to them. 

In in most cases this will be a lot more difficult to do if the devices generate noticeably more heat and use a lot more electricity, so anything that can improve this will make it an easier sell.

Yes, you can manufacture more efficient ASIC hardware for SHA-256, but you could also use the same manufacturing techniques to make ASICs designed for a more efficient algorythm and get the same hashrates, but for much less electricity/battery use and at a lower temperature.

A competing startup could potentially challenge 21 just by using a different algo and win more manufacturing partners who don't want to lower the Energy Star ratings of their appliances; or partners who want to sell super light, thin, and quiet (no fan) laptops with long battery life; phone & tablet manufacturers; etc.

There may be more efficient algos than Blake-256 - I'm using it as an example because I've mined a little with it and the white paper mentions the design being specifically suited for lightweight environments.

Here's the white paper:  https://131002.net/blake/blake.pdf

Look you are envisioning a product that the consumer maintains as a miner, I'm not. It might have a prepaid cellular data chip in it (one of the Bitcoin hardware wallet companies are doing this). The manufacturer might offer free monitoring and service maintenance or some other incentive if you hook it up to your WiFi (which had better be easy, or people won't do it, but it could possibly be made easy using a mobile app or something).

I don't know how the business model will work in practice. I do know there is an enormous amount of electric heating that can be harnessed for mining. Some clever business people will figure out how to do that, sooner or later (assuming PoW mining continues to be done), even if not 21.

Was than a rebuttal? Any factual points? A consumer is going to sign a 10 year lockin on insignificant NAV gain  


2013 seems like 10 years ago to me I guess. It could have been done with GPUs before that. Miners were very resourceful. They didn't find a market demand. Bitcoin's market isn't that large yet.

Heating is not fungible with mining.


You miss the point. The consumer has no incentive to ever connect then.

Sorry heating and mining are not fungible. The overlap where it will work is small and especially tiny in a tiny Bitcoin adoption market.

Solar water heating is 90% cost reduction. What percentage of the population uses it? And it doesn't have to maintain connectivity.

What happens when I move? My heater's subsidized connectivity moves too? (That was Eric Raymond's famous snark question to the IETF when they were proposing only .country domain TLDs and why we have .com now)

I think we've established in this thread who is pragmatic and who is pie-in-the-sky.

Sounds like 10 years of lock-in to me. The manufacturer will be getting coins until it breaks down or is replaced. Nice revenue stream.


The monthly expenditure is the same whether you mine or not, so it is effectively zero here.


I don't know about the $116 million. As I said I have essentially zero confidence that because VC's invested in something it is actually a good idea or a good business.

But as far as it not being done before I think you just don't understand the mining or silicon IP markets very well. ASIC mining has only been around for 18 months or so. 21 has been funded and working on their embeddable mining (and whatever else) technology for a good portion of that time.


Sure, so in that case the $100 million is a long shot bet on what at that point might be an owner of embeddable silicon IP worth many billions if and when BTC adoption is 10%.


That's easy to do. Just mine and burn the hashes. The business case for the subsidy is that the manufacturer will mine a lot of BTC, not that uptime will be 100%.

There is another reason this idea of manufacturer taking all the coins can't possibly work. The consumer will demand the heater works even when connectivity is down.

No one wants a heater that only works when the internet is online.

Thus what incentive does the consumer have to maintain connectivity if they aren't getting some of the coins and paying taxes on them?

It is not very compelling. A heater is a major home appliance that lasts for 10 years or more. A cell phone is a device you need to replace every 2 years or so, gets lost, gets stolen, gets dropped, etc.

The NAV of a heater is already very low compared to the much higher monthly expenditure.

The barriers to entry to this space heater market were not $116 million. It hasn't been done because it isn't that compelling.

Bitcoin needs to reach at least 10% adoption before it makes much sense.

A free toaster that requires me to maintain internet access is not free. A free toaster that requires me to troubleshoot connectivity issues is not free. Etc..

Also the heater will need to be replaced more frequently than 10 years due to Moore's law.Not if the manufacturer is receiving all the mined coins revenue but the incentive for the manufacturer to continue customer support to keep the device connected and running declines.

Cheaper product cost. It's the subsidized-handset heater business model.

I thought these were going to be sold very cheaply nearly free since the electricity cost is the major cost.

Otherwise what incentive do I have to buy one.

Thus when it stops working, I don't have a strong incentive to hassle with it. I might get tired of the tsuris and just want a heater that works.

My point is that a discount on the space heater is not very compelling. A discount on the ongoing electric bill more so, but then taxes have to be dealt with.

Warm water or air (or toast, possibly)

I guess it won't require effort to keep it running (or the product will likely fail, which is very possible).


There's no shell game here. Mining income is taxed the essentially the same as product revenue. If you sell a product for $100 instead of $200 and get $100 worth of mined coins, then you pay tax on $200, just the same as if you had sold the product for $200. If you sell it for $100 instead of $200 and get $200 worth of mined coins, you in fact sold the product for $300 and pay tax on $300 (but have a higher profit margin).

The consumer gets no tax deduction for heating his water/air, in either case.

The barriers to entry aren't incredibly low, for the product itself, but being integrated into products distributed through a supply chain is a reasonably effective form of lock in by bundling. Walmart probably only carries a few lines of space heaters, etc. Altcoins won't have access to the hash rate unless they can convince the manufacturer.