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Re: Bitcoin And The Electronic Frontier Foundation

Coderman sent this to me, and I'm a little upset because the extra $60.00/month for 0 bitcoins is very annoying.  I have since stopped trying to generate bitcoins, because it's just wasting electricity.  More comment inline below debating this point.

For those who are wondering if it's worth trying to generate bitcoins, here is something to think about.
I've had a single Quad-Core (2.6GHz/core, 12MB L2 cache) server crunching on bitcoins for about 6 months now.  About 2-3 months ago, it stopped generating bitcoins.
Someone is out there with a lot of GPU's, crunching away at the bitcoin network and is hording/generating all the bitcoins.  I say this because the amount of chatter on the bitcoin forums in regards to GPUs vs CPUs has exploded, and new GPU clients are being released.

---------- Forwarded message ----------
From: Jeffrey Paul <sneak@xxxxxxxxxxxx>
Date: Mon, Nov 15, 2010 at 11:22 AM
Subject: Re: Bitcoin And The Electronic Frontier Foundation
To: coderman <coderman@xxxxxxxxx>
Cc: Sarad AV <jtrjtrjtr2001@xxxxxxxxx>, Eugen Leitl <eugen@xxxxxxxxx>,

Hash: SHA256

On 15 Nov, 2010, at 19:19 , coderman wrote:

> the cuda cards are killing bitcoin, why bother?
>   (i suppose it is an interesting footnote...)

Nothing could be further from the truth.  Mining/Minting operations
have little/nothing to do with the viability of the network itself.

That's correct, it has to do with the number of operations per second you CPU/GPU can do.  The network is based on the number of supporters.  Apple's and oranges. 
It's a novel way of dealing with inflation, but, if anything, the easy
availability of cheap and fast GPUs is accelerating adoption.

You're twisting facts together here, again apple's and orange's.  
Inflation aside, GPUs will generate bitcoins much, much faster than a CPU. 

Opportunists will quickly drive the profit from generating down to
almost exactly that of the power costs, but that's to be expected.

No, the value of bitcoins starts to be cut in half as the more bitcoins are generated.

"The number of blocks times the coin value of a block. The coin value is 50 bc per block for the first 210,000 blocks, 25 bc for the next 210,000 blocks, then 12.5 bc, 6.25 bc and so on." -- http://www.bitcoin.org/faq#What-s_the_current_total_amount_of_Bitcoins_in_existence

So when the value of BTC's starts to be cut in half, and with INFLATION now at a record high, the cost of electricity is NOT GOING DOWN.
Hence, the chance of you generating bitcoins will go down because a CPU can not compete with someone else's GPU, more power/electricity is being used to generate (or not generate) bitcoins, and after the last six month's of running bitcoin, I haven't generated a single block in over two months because someone has already cornered this market with GPU's.

They are also the driving force behind a free market.  Or do you think
they are killing those, too? :)

Of course someone quotes the "free market" when they have a large corner of it.  Free market's always FAIL when someone is hording all the (bit)coins, and while it may support free market's, it certainly is not a fair market today.  If 2,000,000 bitcoins are spread about a few thousand people, and 19,000,000 coins are held by 1 person, your "Free Market" goes down the drain because one person could out-buy anyone else.

One last point; by looking @ the #bitcoin channel on IRC, it shows that about 600 people are wasting their CPU cycles because someone has most likely has a cluster of GPU's working away at this.  This is the wasted cost of TRYING to generate a bitcoin.  If only one person can generate the block (ie, 50 Bitcoins right now), then 599 people are wasting their electricity and time.  So the ~$60 a month (increase in my electric bill) * 599 = $35,940.  Even if we decide to be really conservative (not realistic in this case) and cut this cost down by a tenth, it's still ~$3,594 being wasted per month while someone else get's the coins.  How "green" or "eco-friendly" is that?

Now I ask the community, If your chance of generating a bitcoin block for yourself is slim-to-none,  would you want to waste your time and money trying to generate bitcoins?

Don't get me wrong, I hate what is happening to the USD, and love the idea of crypto currency, but I see some serious flaws with bitcoin.  
He who has the biggest cluster will win the day, and leaves the rest of us with next to nothing.

- Kyle