Tag: mining

Microsoft’s New Ethereum Blockchain Product Gets Rid of Mining

Software giant Microsoft has debuted a new Blockchain as a Service (BaaS) product that allows businesses across industry verticals to deploy a flexible instance of Ethereum tailored specifically for enterprise environments.

Announced on Tuesday, Ethereum Proof-of-Authority on Azure allows enterprises to build applications on an Ethereum blockchain that is not secured by a Proof-of-Work (PoW) consensus algorithm and consequently does not require mining — features that are better suited for networks in which participants do not trust one another.

PoW “works great in anonymous, open networks where cryptocurrency promotes security on the network,” said Azure Global software engineer Cody Born. “However, in private/consortium networks the underlying ether has no value.”

Born explained that, since all participants on an enterprise blockchain network are known and reputable, governance can be separated from network operation.

microsoft azure ethereum

 

Proof-of-Authority allows network administrators to engage in on-chain voting | Source: Microsoft Azure

To this end, the Proof-of-Authority product features a built-in decentralized application (DApp or dApp) called the “Governance DApp” that provides consortium members with the authority to govern the network or delegate their voting power to others. Network participants can also delegate other nodes to vote on their behalf in the event that their primary nodes go offline, ensuring that all members maintain continual consensus participation.

Network administrators, in turn, can use on-chain voting to vote on and alter network authorities in a transparent and auditable manner.

Along with Azure’s original, PoW-based Ethereum product, blockchains using this new consensus model can be deployed in as little as five minutes, providing enterprises with a “single-click” DLT solution.

To further increase the product’s usability, Microsoft integrated support for smart contracts built using Parity’s WebAssembly (Wasm) toolkit, enabling developers to write smart contracts in familiar programming languages such as C, C++, and Rust in lieu of learning Solidity, Ethereum’s primary programming language.

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Canaan to Launch Biggest Bitcoin IPO Ever

Canaan Inc. has announced it will launch an IPO in July with the goal to raise $2 billion in funds in what would be the largest Bitcoin-related IPO to date.

Bejing based Canaan inc., the worlds second largest Bitcoin mining hardware supplier increased its overall profits seven times in 2017 during the soaring Bitcoin price craze selling its products under the AvalonMiner brand. Since those halcyon days, the profitability of mining Bitcoin has steadily declined. Today Bitcoin is worth less than half of what it was in December 2017 and mining them is 60% less profitable.

This begs the question, why is this Bitcoin mining rig maker launching an IPO with a $2 billion goal when the profits of and demands for its products are in little demand? According to inside sources who spoke to Reuters about the move Canaan will present itself as a chip designer which focuses on artificial intelligence and blockchain technology development instead of a Bitcoin mining company.

Their customers happen to be bitcoin miners. But they are a chip company, not a bitcoin company,” Said one of the unnamed sources Reuters spoke to.

Canaan produces what are known as ASIC chips designed for the singular purpose of mining Bitcoin. Its customers have historically been large-scale mining operations incorporating thousands of machines working twenty-four hours a day.

Ironically increasing competition since the development of ASIC mining rigs has hit the profit margins of mining outfits hard. Experts estimate that mining revenue in 2018 is just 37% of what it was in 2017. This downshift in mining profits led the worlds largest manufacturer of chips, Taiwan Semiconductor Manufacturing Corporation (TSMC), to cut it’s full-year sales target, citing uncertainty in the cryptocurrency market as its reason.

In a Mining Boom Sell Shovels

These same factors could be the reasons investors will buy into an IPO by Canaan, as the old adage goes the best way to make money in a gold rush is to sell shovels. A sentiment iterated by Jehan Chu, managing partner at Kenetic Capital, a Hong Kong-based blockchain and cryptocurrency investment firm who told Reuters,

“Investors are always looking for crypto ‘picks and shovels’, and that’s what this is,”

Though crypto mining has been under serious regulatory pressure by the Chinese government and earlier rumors of Canaan’s proposed IPO had the chip maker looking to Hong Kong or Singapore it seems they have gotten approval to go ahead in the country. Last month when China Securities Regulatory Commission vice-chairman Jiang Yang visited their factory and said publicly,  “no matter what the chip is used for, fundamentally you’re still a chip company, and I hope you list in China,”

 

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Why Cryptocurrency Miners Are Trading Bitcoin Futures

Bitcoin futures, which failed to generate the investor interest some had hoped for when CME Group Inc. and CBOE Global Markets Inc. first offered them in December, are finding support from an unlikely quarter – cryptocurrency miners, according to MarketWatch. Miners are using futures to hedge their bests amidst the rising cost of mining bitcoin.

Miners are slowly hedging their bets and reducing their exposure, said Bob Fitzsimmons, managing director and head of Wedbush Futures, a financial services firm that publishes reports on cryptocurrencies.

CBOE Global Markets recorded its largest daily volume on March 26. May contracts are nearing 19,000, eclipsing the 15,500 traded on Jan. 17 when investors flooded to cover losses the day after bitcoin fell by as much as 27%.

Mining Costs Rise

The amount of energy required to mine bitcoin blocks has increased as the community nears the maximum 21 million bitcoins. About 17 million bitcoins have been mined so far, according to CoinMarketcap.com.

Mining became highly profitable when the bitcoin price approached $20,000 in December. Miners started to mine as many bitcoins as possible even as mining costs were rising.

When the bitcoin price plunged six weeks later by more than 65% to below $6,000, mining revenue, based on rewards and fees, dropped by $40 million per day, forcing some miners to exit the market while others rushed to find less expensive sources of energy.

Fundstrat Advisors, a Wall Street strategy firm that publishes reports on bitcoin, pinpointed the break-even price to mine a bitcoin at $8,038. On March 15, bitcoin’s price was still below that amount.

Bitcoin Recover Revives Mining

As bitcoin’s price has recovered a bit, reaching $10,000, mining activity has revived.

Thomas Flake, founder and chief marketing officer at because LLC, a mining facility based in Virginia, said the company will continue to build capacity at both of its locations and is “fully subscribed” through September.

The improved interest in bitcoin futures also reflects a level of commitment by investors sticking with their positions, Fitzsimmons said. He noted there was an uptick April 25 with people rolling rather than closing out their positions.

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How Developers Like Ken Shirriff Are Making the Most Out of Old Electronics for Bitcoin Mining

Whether you’re a talented developer who is new to bitcoin mining or an experienced miner looking to try something new, bitcoin mining on old computers can be a cool way to earn cryptocurrency. Ken Shirriff is one miner who has created some of the coolest

While it’s basically impossible to use old electronics to mine at a rate comparable with modern GPU, CPU, and ASIC mining equipment or to start a highly profitable cryptocurrency mining business solely using older hardware, it’s still very interesting to see the various possibilities of mining.

Here are some cool examples of what Shiriff has done to creatively repurpose old electronics for bitcoin mining.

Possibilities of Mining with Old Computers

 

Ken Shirriff is well-known within the bitcoin mining community for turning old-school computers and gaming systems into mining rigs. Shirriff is a true tech wizard that can even write SHA-256 algorithms using only pencil and paper. In 2017, Shirriff turned a Xerox Alto into a mining rig. This is an amazing feat considering that this computer was released in 1973 and was the first computer to ever have an operating system based on a GUI.

What’s so impressive about this project? Shirriff actually coded the hash algorithm using BCPL, a programming language which is now basically obsolete, for the specific purpose of being able to mine crypto using the Xerox Alto. 

Shirriff has also converted older computers like the IBM 1401 mainframe (introduced in 1959) and even old gaming systems like the 1985 Nintendo Entertainment System (NES) to cryptocurrency mining rigs. Although hashing algorithms like SHA-256 use a lot of 32-bit operations, even 8-bit systems like the one used by NES can work, albeit at much lower rates.

Hash Rate Comparison: Old Rigs vs. New Rigs

While skilled developers have proven that it is possible to mine cryptocurrency using ultra-old hardware, this shouldn’t be considered a good mining strategy. However, if you are a technical wizard who enjoy challenging projects and retro electronics, this can be a cool hobby to start. If you’re only focused on mining as a business, you should consider newer rigs first.

Regardless of whether you decide to pick up mining as a hobby or not, the results of Shirriff’s work are fascinating, to say the least. From his efforts, we can see that Moore’s Law is actually an understatement on the ability of computers chips to improve over time.

What’s the difference in computing power between retrofitted rigs and new mining gear? Although Shirriff admits that it might be possible to improve on the mining capabilities of his own retrofitted mining rigs, there is no denying that there is a tremendously large gap in performance compared to newer rigs. For instance, Xerox Alto only reaches 1.5 hashes per second. Meanwhile, ASIC mining rigs can reach trillions of hashes per second, making them the clear front-runner for BTC mining.

Even with the rise of anti-ASIC Proof-of-Work consensus algorithms, the highest performing GPU graphics cards like the MSI GeForce GTX 1080 Ti GAMING X 11G Graphics Card can help miners reach over 31 million hashes per second.

Taking Mining Creativity to the Next Level

While there isn’t a precise instruction guide for modifying old-school computers and gaming systems for bitcoin mining, tech-savvy cryptocurrency enthusiasts can definitely give this type of mining a try.

Thanks to Ken Shirriff’s ingenuity, the sky is truly the limit for talented developers who have the time, energy, and passion to create unique mining rigs.

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