Between predictions of a difficulty drop and the recent legal maelstrom surrounding Butterfly Labs, you might think that it was all bad news in the mining community. However, those who have been active in this market segment for long enough know it would take more these events to stop miners from hashing.
Read on to learn more about some of the latest happenings in the bitcoin mining world.
FTC pleased with Butterfly Labs reopening
The US Federal Trade Commission (FTC) has agreed to allow troubled bitcoin mining hardware company Butterfly Labs to reopen for business, albeit in a limited capacity. The decision will enable shipments to resume and, according to the FTC, set the stage for long-term action against the Missouri-based company.
CoinDesk spoke to FTC lawyer Leah Frazier, who confirmed that a court-appointed receiver remains in control of the company. Further, she explained that Butterfly Labs will take no new orders, and will instead process existing shipment requests.
Frazier told CoinDesk:
“During this time, the company can’t take anymore orders and they are barred from making false representations. Really, they can’t do anything without the receiver. So, from our perspective, we’re very pleased with the outcome.”
Frazier added that the Butterfly Labs leadership could be tasked with providing assistance to the receiver as the representative runs the company, but clarified that the management team will receive no compensation as a result of its work.
When asked about consumer refunds, Frazier said that the company’s assets remain frozen. However, she said that the FTC advocated that Butterfly Labs reopen, in part, to establish channels of communication with customers.
The FTC said its goal going forward is to ensure that everyone who feels they are entitled to a refund can submit a request.
“What we’re trying to do is preserve the status quo so we can achieve the most equitable results for everyone,” Frazier concluded.
Bitcoin mining and power load balancing
Power producers, particularly renewable energy generators, are not unusual in the bitcoin mining sector. Some solar or wind farm owners use excess electricity to power mining ASICS, generate bitcoin and help support the industry as a whole.
A recent post on Bitcoin Talk by author mpfrank suggests that energy producers may benefit from using mining equipment as a load-balancing tool. Theoretically, the user posits, energy producers could use miners to balance the power network.
The post explains that the solution, if implemented correctly, could help solve a pain point for independent energy producers who want to avoid having to pay to either store their excess power or send it elsewhere.
The post reads:
“Renewable power utilities could use their excess power to drive mining hardware, and collect the value of the energy consumed in the process as cryptocurrency. Then, later, when production is lower, and falls below power demand, the saved coins can be used to buy back surplus energy from nearby partners on the grid, or alternatively, to pay for or offset the cost of fuel to produce it locally.”
Subsequent discussion focused on whether the solution would actually make sense from an economic perspective. The author added that the framework makes sense for renewable operators because the variance in day-to-day activity means that electrical output won’t be consistent.
It’s better, they concluded, to find ways to generate income during the process as best one can – with bitcoin being essentially monetized processing power – instead of letting equipment sit idle if the wind is slow or the sky is cloudy.
Mining bitcoins – by hand?
Many hobby miners bemoan how it is becoming increasingly difficult for them to generate bitcoins. Thanks to the rise of industrial-scale mining, veteran miners are likely to agree that things aren’t the way they used to be.
But what if you were trying to mine bitcoins by hand? You probably wouldn’t make even one satoshi per day, according to a recent experiment by technology expert and bitcoin enthusiast Ken Shirriff.
Shirriff’s latest experiment involved hashing SHA-256 calculations using pen and paper – effectively solving bitcoin transactions by hand. As shown by the video embedded below, Shirriff writes out each block and works through the process of solving each round. However, he does concede that pencil-and-paper mining “is not at all practical”.
“Doing one round of SHA-256 by hand took me 16 minutes, 45 seconds. At this rate, hashing a full Bitcoin block (128 rounds) would take 1.49 days, for a hash rate of 0.67 hashes per day (although I would probably get faster with practice).”
Shirriff also calculated that, power wise, he can’t compete with modern ASICs by a wide margin. He said that his energy costs are 67 quadrillion times that of a mining computer, rendering him less energy efficient compared to an ASIC by a factor of 10 quadrillion.
“It’s clear I’m not going to make my fortune off manual mining,” he joked.
The future of bitcoin mining profitability
The falling price of bitcoin – which at press time stood at an average of $327 – has once again raised the question facing miners both great and small: will mining become unprofitable?
The past few days have shown that while $300 could be the hard floor some called at $400, there’s no indication that the price won’t fall further. This circumstance could create headaches for some miners, especially those who have recently acquired ASICs and are looking for an efficient ROI. At the same time, should the network start to see significant outflows of hashing power, it’s not out of the question that the difficulty could fall and give small-scale miners some breathing room.
If and when a time comes that the price affects the ability of miners to remain profitable, such a situation would no doubt adversely impact smaller-scale operations more than larger miners. Industrial-scale companies and independent mines would be able to withstand a dropping price given their likely cheaper access to electricity and ability to generate larger amounts of bitcoins.
A recent discussion on Bitcoin Talk saw some predictably passionate responses to the question of whether or not bitcoin mining will stay profitable. One user took a unique perspective on the matter, saying that it might be worth it for some folks simply for the experience.
The user noted:
“If you weren’t mining anything ever before, the only reason to start mining now is to feel how it is. You would later can tell some of your children or grandchildren that at some point you were bitcoin miner in the past. Other that that standard mining is not that good for individuals.”
Ultimately, even those who drop below the profitability line may continue to mine. As holding bitcoins is a speculative action, there are some that will probably hang onto their BTC in hopes of a long-term price increase.
Images via Shutterstock (Solar power, ), FTC, Ken Shirriff
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Disclaimer: This article should not be viewed as an endorsement of any of the companies mentioned. Please do your own extensive research before considering investing any funds in these products.
Read on to learn more about some of the latest happenings in the bitcoin mining world. FTC pleased with Butterfly Labs reopening
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