Bitcoin is intangible money, but that doesn't mean you won't see it at CES, the nation's premier electronics trade show. There's currently an arms race in Bitcoin mining, the intense computing required to generate new units of the increasingly popular virtual currency that approximates cash on the internet. And now the companies that produce high-end equipment for generating Bitcoin are here in Vegas, pitching their wares on the convention floor.
Perhaps the best-known source of high-end mining equipment is Butterfly Labs, which came out with some of the first chips that were custom-built for "mining" Bitcoin. The company has teamed up with BitPay, a payments processor, and BlockChain, which runs a Bitcoin wallet service, to set up a Bitcoin-themed booth in the South Hall of the convention. Butterfly Labs is presenting the prototype of the Monarch, its fastest and most efficient Bitcoin-mining card yet. The new cards will retail for $2,196.
A robust market has increased the interest in Bitcoin and Bitcoin mining
Bitcoin has been on a tear lately, with the price at $972.74 apiece as of this writing. That robust market has increased the interest in Bitcoin and Bitcoin mining. But because of the way Bitcoin was designed, mining produces diminishing returns as time goes on. The simple mining rig Butterfly Labs had set up at their booth, using a 250 gigahash per second miner, was producing just .02 Bitcoin per day, or $16.90.
"Mining is a treadmill," said Dave McClain, account manager at Butterfly Labs. "You've got to be reinvesting money into more hardware and the latest hardware. It's like the lottery; the more tickets you buy, the better your chances."
Bitcoin has spawned a secondary economy of goods, services, companies, financial infrastructure, and peer-to-peer transactions, along with the extensive efforts put into mining.
Butterfly Labs says it has shipped more than 45,000 miners, and it's just one of many companies now producing custom chips. KnCMiner, a competitor, is also at CES showing its latest hardware, and claims its customers generate 70 percent of new bitcoins. Another competitor, HashFast, claims to have started shipping its ultra-fast Baby Jet rigs in late December (although customers say the company is past due on its shipments).
The technology is now progressing by leaps and bounds, with second generation chips nearly doubling efficiency of the first generation. Since the chips can't be used for anything else, these advancements only apply to Bitcoin mining. That gives weight to critics who say Bitcoin wastes energy. But mining does more than produce new bitcoins — that computing power is also what's used to process Bitcoin transactions and record them in the public record. If Bitcoin sticks around the technology will continue to be useful. If the currency fails, this miniature industry that sprang up so fast will disappear with it.
Bitcoin may be a weird fit for CES, but it's yet another sign that the currency is moving into the mainstream. Over at the Bitcoin booth, CES visitors stopped by with tales of their own mining efforts, or the friend who bought 16 cards and started spinning them up in the basement. Most people, however, were intrigued but clueless. One man wandered up to squint at the display, and started to stumble through a question. "Don't ask me what Bitcoin is," one of the guys manning the booth joked. Then he paused. "Wait, was that actually your question?"
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