Bitcoin’s breakthrough from a rather stagnant price has certainly made miners happy as of late.
It might even entice the masses to splurge on a mining unit or two. Such an occurrence would certainly help the network as a whole.
The recent meeting of minds between Chinese mining hardware suppliers brings back to the fore just how centralized mining continues to be.
And while closed-door events like this are happening, the public must contend with the possibility that personal computers can be afflicted with mining malware – that’s not positive for the cryptocurrency industry.
With that in mind, here is what has been going on in the mining sector since our last roundup.
Cloud contracts for altcoins
A number of companies see the futility of the miner hardware game and are moving into hosted mining, or cloud mining. The problem is it’s really hard to differentiate most of the services. There isn’t much to offer customers other than straight-up hashing power for some money-making transaction confirmations in the cloud.
Except for one thing: altcoins. While for the time being most hosted mining contracts only allow users bitcoin mining, Genesis Mining also offers a number of scrypt-based options.
CoinDesk was given a free account with 1 MH/s and mined $1.19 of litecoin in a 24-hour period. If anything, Genesis-Mining can be a supplement or a temperature gauge for buying scrypt-based mining hardware – or both.
Walmart selling bitcoin miners
Perhaps trying to stay true to its slogan allowing people to ‘save money, live better’, Walmart is now selling bitcoin miners. In what appears to be a partnership with TigerDirect, the mega-retailer’s customers can now shop online for a little piece of the bitcoin network to call their own.
Currently in stock is the Butterfly Labs Jalapeno. “Get effective bitcoining with the Butterfly Labs Bitcoin Miner,” the item description states. The Jalapeno model, which was released last summer, is 10GH/s and sells for $299 plus $5.70 shipping.
That’s actually $50 more than what Butterfly Labs charges for the same model on its website.
10GH/s of SHA-256 mining power isn’t what it used to be anyway. In fact, someone buying one of these units will probably never make that purchase price back in subsequent rewards.
BFGMiner software update
A popular client used with bitcoin mining hardware, BFGMiner updated its software to version 4.0. Some of the new features include hotplugging, proxies and scrypt support.
The client has also been updated with support for newer hardware from Gridseed, Butterfly Labs and Hex Fury. BFGMiner is available for Windows, Mac and Linux, making it versatile for whatever client equipment a miner decides to use.
The underlying software has been around for some time, dating back to the days when FPGAs were good enough to crank out block rewards.
According to the official release of the new version, its developers plan to build features into future releases promising alternative proof-of-work, decentralization and concurrent mining capabilities.
It’s entirely possible that future bitcoin mining rigs will only be able to run if provided with arbitrage opportunities in electrical costs. That means powering these miners might become a major issue for the security of the bitcoin network as more hashing comes online.
A cryptocurrency launched last year called gridcoin exists to solve this problem. The coin rewards miners who participate in projects that help the Berkeley Open Infrastructure for Network Computing (BOINC) initiative.
According to its website, BOINC’s grid computing projects are scientific research for curing disease, global warming issues and solving mathematical problems.
Anyone can download the software to help contribute to BOINC projects. However, hashing power provided through the gridcoin incentive could prove to be much more efficient than simply solving SHA-256 proof-of-work someday.
Hydro-only hosted mining
A UK-based company called MegaMine sells hosted mining contracts in the 10GH/s to 10TH/s range. Many other enterprising folks with datacenter access sell mining contracts, but MegaMine might offer a strategic advantage over others.
The company only sources power from water, or hydro, based sources, so it is able to pass the savings from lower electricity bills onto customers.
With increased network power, more electricity will be needed to power the next generation of miners. Even though smaller nodes means less consumption, the sheer scale of some datacenters necessitates competitive advantage.
European electricity is expensive, especially in countries like Germany, France and Spain. Miners there may find that MegaMine offers an alternative source of cheap hosting and energy.
Tracking hashrate getting harder
It appears as though increased centralization for bitcoin mining translates into less transparency. The Neighbourhood Pool Watch blog has a post exploring this. Some of the biggest mining pools do not provide hashrate per miner data. This makes it difficult to know just how many miners are hashing away.
There could be a number of reasons for this. For one, some of these pools may not want rivals to know what kind of equipment they use.
It’s entirely possible that custom-made rigs with numerous ASICs on one board are used now, as opposed to a huge number of single miners.
What’s evident is there will be consolidation in the industry – both in the number of mining units and companies. The merging of Cloud Hashing and HighBitcoin to form Peernova, as well as BitFury’s $20m funding round led credence to one of many problematic issues for BTC: further centralization of confirmations on the bitcoin network.
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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.