Succeeding in the cryptocurrency mining industry over the long term may require thinking outside of the box.
It takes creativity to rise above the rest and survive in such a fast-moving industry.
New ideas such as permacoin, which uses proof of work to store archival data, could be an example of this.
The recent Chapter 11 bankruptcy filing from San Francisco-based hardware designer HashFast is also significant. It's clear that major investment like the BitFury funding round or key partnerships like the creation of PeerNova are needed in order to ensure viability.
With that said, let’s look at what has been going on since our last roundup.
The Wall Street Journal recently published a video of a CoinTerra mining datacenter located in Utah.
The Austin-based designer of miners has a facility filled with thousands of its 1.6TH/s units hashing away. And with so many miners, the sound of them whirring away is almost deafening on the video.
The report indicated that the facility rarely requires air conditioning, saying “the facility uses the ambient, dry cool air of the Utah desert to cool down the rigs”.
That may be true at night, but Utah is in a high desert where it's hot during the day in summer. There are very few datacenters that don’t need to utilize air conditioning, and this massive CoinTerra rig is likely not one of them.
Alpha Technology 'still working with Dexcel'
Manchester, UK-based Alpha Technology, which plans to bring a powerful scrypt miner to market, says that it still has a key partnership with Dexcel Designs in place.
Mohammed Akram, Director of Alpha Technology, told CoinDesk:
“Our partnership with Dexcel is fine. We have actually completed most of our design work, all work now is from the foundry and our manufacturing partners.”
Rumors of a possible breakdown in relations between Alpha and Dexcel had caused some turmoil. Some customers who preordered mining units had been requesting refunds, though Akram said this had been "minimal" over the past month.
One issue of concern had been that Alpha removed its partner's details from its website. However, this decision was made because Dexcel was not able to handle customer support queries directly, he explained.
The company says it is still on schedule to begin shipping units in July. Alpha currently lists two different Viper models on its website: a base model, specced at 50MH/s of hashing power at 375W (£1,350), and a more powerful version with 250MH/s at 1,875W (£5,450).
Better Business Bureau warns on mining
Cryptocurrency mining is now drawing the scrutiny of the Better Business Bureau (BBB), an independent consumer advocacy group – and it seems CoinTerra is the mining company drawing the most attention.
A BBB warning on "bitcoin mining computers" states:
“Complaints about [CoinTerra] are coming in not only from U.S. customers, but from those in other countries as well, including the United Kingdom and Australia.”
According to the BBB, it closed 11 complaints about the company in March and April. However, another 39 have since been opened, which led to the warning about the company.
The BBB offers a number of tips for people interested in acquiring mining equipment to better protect themselves. This includes using a credit card for payment, maintaining all order documentation and reviewing the BBB’s website for information regarding specific companies prior to making a purchase.
Following the news that Stockholm, Sweden-based KNCMiner will be taping out its 400MH/s Titan scrypt miner, the company has made another production run ready for pre-order online, with two versions available.
There’s no exact timeline for this second batch of preorders, but they are slated to arrive one month after Batch 1 Titans.
Looking down the road, KNCMiner also offered an update on its 20nm node. The designs, or wafers, have been sent to a fabrication plant to be turned into chips. Specs will likely be released when these units come back and are placed on boards.
Mining unknown altcoins
According to Coinmarketcap, there are 33 cryptocurrencies with a market capitalization over $1m. So is there potential in mining coins that most people don’t know about?
Wired has a short piece examining this very subject, profiling a miner that uses a home rig of USB units to mine a variety of scrypt-based coins. Mining relative unknowns such as infinitecoin and zetacoin could be profitable, but is essentially a bet on the long-term success of altcoins.
There is risk, however, that some people will simply trade in these coins for more established digital currencies like bitcoin.
Nevertheless, mining protects a network. If a community of miners gets behind a coin, that can safeguard it and thus increase its value if it offers something to the community. Litecoin creator Charlie Lee is quoted saying: “Having ASICs come out to mine litecoin means that it’s really gotten to a point where it’s succeeded.”
Block withholding attacks
The Eligius pool has discovered that it was the victim of a 'block withholding attack', losing at least 300 bitcoins over the past few months.
In such an attack, a miner submits low-difficulty shares, but not block solutions. In effect, the scam fools the pool into thinking miners are participating when they aren't really.
Eligius, one of the oldest pools in existence, says it has now identified the source of the attack and blocked the individual(s) from participating.
With the potential profits from bitcoin mining so high, it is no surprise bad actors are attempting to attack or trick pools, who need to be vigilant about such attacks.
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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.