Bitcoin

Is bitcoin a waste of electricity?

There has been a lot of interest in cryptocurrency, and I was recently interviewed in the Wall Street Journal and New York Times, so there's my 15 minutes of fame haha. It's interesting to see the contrast in viewpoints on this area. Two things that consistently come up: Is bitcoin wasting electricity? How many jobs does it create? Well, it's complicated.

One of the unfortunate side effects of bitcoin, which was definitely unintended, is the proliferation of large scale, centralized mining. Bitcoin was intended to be highly decentralized, but the rise of ASICS (the specialized computers we use that do only one thing: SHA-256 encryption) created a situation ripe for widespread centralization and industrialization of it. And that's exactly what we're seeing here as more and more people see the virtues in it. But this is just the beginning, cryptocurrency is still in its infancy and there are many more applications that are yet to be discovered for blockchain technology. Personally I believe it has many uses in the healthcare industry and I plan to push for that when I finally become a doctor.

Tom holding a Bitamin Antminer L3 for mining LTC

Courtesy of Jacob Hannah for the New York Times

The New York Times article, while somewhat misinformed (he refers to the machines as "specialized hard drives" for example) brings up a good point. While I don't agree with his assessment that cryptocurrency has anything to do with low productivity, he essentially asks "why mine cryptocurrency when you have manufacturing next door that uses the same amount of electricity and employs hundreds of people?"

Cryptocurrency mining is just not super labor intensive, an entire plant can be ran with a handful of people. But everything is also becoming automated and jobs are largely being lost to this. Look at how cars are made now (especially in Japan) versus how they were made in the '70's. Look at companies like Smartly, which has an MBA program that replaces typical classroom instruction with an app (giving this a try now!). Drones, self driving trucking? I think you get the idea.

As technology advances, more jobs will be lost to automation. And to be clear, what bitcoin automates is banking, more or less, even though I would not exactly consider it a "currency" at the moment, but I hope to be able to at some point. On the issue of electricity usage, comparing bitcoin to a typical manufacturing plant is apples and oranges. It would be more fair to compare it to data centers, which currently consume about 5% of electricity in the US, and probably employs roughly the same number of people per amount of electricity. Or even the plethora of tech companies whose primary product is, in fact, not physical at all. On that note, how much electricity does the internet use? Bitcoin is a network in the early stages, and is, like the internet was, still somewhat unwieldy and looking for a useful purpose. I'm not sure what the future holds, but I do see an opportunity with cryptocurrencies and smart contracts.

Still, I believe the issue of electric usage is a serious concern, especially if it's not coming from renewable sources. Like I talked about in my last post, upstate NY, and most concentrations of bitcoin mining operations in the US, use some sort of renewable energy. Typically hydroelectric. In our case, I believe there is an abundance of latent hydroelectric power that can still be tapped. Could the electricity be used more effectively to create jobs? I'd say yes. But where are those jobs going to come from? Will wages keep up with inflation? Will distribution of wealth become more equitable? Bitcoin is valuable as an asset because it deflates while fiat inflates. And yes, it seeks to take some power from banks and give it to the people. I believe in that aspect of cryptocurrency full heartedly. But now, because it's so profitable, this is not an aspect especially appreciated.

Ryan and Tom working on the miners.

Courtesy of Jacob Hannah for the New York Times

One thing that is often overlooked is that mining supports other areas of development in physical products too and is opening up new industries utilizing the technology. Especially considering the businesses that actually build these ASICS, who can literally sell out of them in minutes! I would love to see one of these operations come in to upstate NY, which would create more jobs than mining. It's also created a many mining "shops" and suppliers that sell replacement parts, machines, and specialized equipment, a lot of which has been adapted or made for mining, which requires labor.

On that note, in Plattsburgh this has led to the development of the Triangle Mining Box, which is an all in one solution for running and cooling the machines in a space efficient manner. This was developed by Greg and Ryan Brienza of Zafra LLC, a local mining hosting company, since current server cases just don't fit the bill for the demands of cryptocurrency mining. They put their experience in building out mining operations and managed to find a better way than just throwing the machines on shelving units. We recently moved our machines into one of these, seen in the image above. They're made right in Plattsburgh, you can learn more about it here

Developments and updates

I've very sorry about the time I've had to shut down mining for a bit. In a nutshell I had to turn off the machines for a bit because our lease expired and the new space I was hoping to be in took a little longer to finish than I'd hoped, so I ended up wiring up in the basement temporarily while we wait. Some other things have happened too. First, I've moved to Grenada to do medical school! I have been a bit busy on that front. But I'm finding time to get Plattsburgh BTC moving in what I think is the right direction. 

For one, I wasn't sure how I was going to be able to maintain my website and business with me going away to school. I either needed to sell it, hopefully to someone who could dedicate more time to it than I, or I needed to figure out a way to get some others involved. In truth I couldn't bring myself to part with Plattsburgh BTC. It's kind of my baby. 

So I brought my dad and brother on board. My brother started mining script a while ago starting on his laptop, and is studying to be an engineer. I figured this would be a great way to get into script mining, because I'm 100% committed to offering this in the very near future. My dad will be retiring from his job and has tons of experience and shortly, time.

Aside from this, we are partnering with Coin Citadel (CCTL), who will be providing a ton of support to grow our mining business. They've invested a build out of a large mining facility for colocating. We will be moving into their space shortly to host our equipment, which will remove a significant amount of overhead and allow us to buy more machines. In affect, we are now the cloud mining division of CCTL now.

I did manage to give Plattsburgh BTC a minor facelift too! Mining is officially back open now. Thank you for being so patient! 

 

Shared mining!

Hey all! Just wanted to write a short blurb about a slight change in direction here: Plattsburgh BTC is moving away from doing timed mining contracts. This is for a few different reasons, including that sometimes the pools would be sick and not function well, running the miners through a proxy reduces efficiency, and constantly switching pools causes lost time by having to warm up.

By mining through a single pool, at the moment Eligius, I've been able to optimize the mining rig. The performance has already seen about a 2.4% increase in hashing speed without the added proxy in between. As difficulty continues to rise, I wanted to take measures to increase returns for you guys.

So instead of pointing the miners to a pool you chose for X amount of time, earnings for the whole rig are averaged over a weekly "round" to reduce variance a little. Then, payouts are determined by the number of shares you own for the current round. 1 share=1 day of hashing at the rated 19.07 TH. I've also been able to make smaller shares available this way, the smallest being 0.125 shares, or 3 hours of shared mining.

I'm working on making the stats a little better for this. Once the orders are processed you can view how things are going as mining rewards are received by going to the share distribution link at the top. Rounds run from Monday-Sunday, with payouts sent out on Mondays.

This is kind of an experiment at the moment to see how things go. I'd love to hear your thoughts on this, so drop me a line and let me know what you think!

4 New Antminers! and Identity Check :/

Been a little bit since I've written here, finals were a bit intense but I graduated! So theres that, and I have some good news: Rig A has been upgraded from 3.55 TH to 8.15 TH. 4 more Antminer S5's are running now, bringing the total hashrate offering to 19.07 TH. Christmas came early!

So this is super exciting! We're getting closer to the goal of 25 TH. I hope you all enjoy.

Also wanted to thank all of my loyal customers for being amazing. I really value all of you, so I feel bad that I've had to make things a little more stringent, but I will try for this affect my current customers as little as possible.

Recently, fraudulent payments have been getting worse, and this has forced me to pen a more strict policy for first time customers. I've been doing some detective work to sniff these out as much as I can, but its become apparent to me that the best way to do this is to change my policy.

I'm lowering the limit for first time customer purchases to $40/mo. This also gives you a chance to give my services a test drive to see how the performance is (always excellent! :P). After 2 months or by submitting an identity verification, these limits will be lifted. This doesn't apply to current customers. 

I realize that these kinds of things can be intrusive, but I'm trying to make the process as painless as I can. It involves me mailing you a code and you taking a picture of an ID and a credit card you plan on using (covering up all but the last four numbers of course). I just need to verify that it's really you. 

I'll also send a 1 month 5% off coupon with the letter. And don't forget, the anonymity that comes with bitcoin is something I really believe in. Everyone is entitled to their privacy. I really don't want your personal information, but I feel this is the only way to make this safer for both Plattsburgh BTC to operate and for my current customers. Chargebacks keep the prices higher than I'd like them to be for contingency. If I can lower the amount of chargebacks I get, I can lower the prices. 

If you've got any thoughts on this please reach out! I'd love to hear.

I hope you all understand! And of course, this doesn't apply to paying in bitcoin. I hope to continue to grow with you all and make this service available in the future. Happy holidays!

 

Expansion!

So the expansion finally is a thing now! Unfortunately, we had to reel back a little on the amount of hashing power available at first, but there will be more speed and upgrades added on with time. For now, I've added 9 Antminer S5's, and I think I've got enough space/electricity to eventually triple that amount. However, I'm thinking it may be better in the long run to start investing in the new Antminer S7. So I'm definitely  going to be looking into which would be a better option. If you've got some advice, drop it down in the comments! For now, I hope you enjoy the new "rig B" that runs at 10.20 TH. I had actually just gotten this set up this past week, but I wanted to make sure that everything was running smoothly before I opened up for contracts.

My only caveat is that the space is kind of small so it's super loud. Like you need to wear earplugs and my neighbors are probably going to hate me. I'll figure that out soon..

Additionally, I do want to quickly point out that I've been having a small problem with PayPal and fraud. I had a few chargebacks that set me back a bit, which was one of the reasons I decided to stop accepting PayPal through here. I really hope that isn't too much of an inconvenience, but the good news is that I've increased the discount on bitcoin purchases to 2.5% now. 

Thank you all and happy mining!

Bitcoin accepted here! and expansion updates

Finally!

It wouldn't make a whole lot of sense for Plattsburgh BTC not to accept bitcoin. I've gotten a few requests about this, and I'm happy to say that we can accept bitcoin now. Initially, I was afraid that doing so would go against bitlicense legislation, since the wording is kind of vague in some parts. However, interpretation seems to be that this would be fine. After finding this out, I've just been waiting for verification since that can take a little bit, and everything should be working smoothly now. And because of the lower transaction fees, prices are 1.5% less when you pay with bitcoin!

If your wondering, I decided to use Coinbase instead of Bitpay to process transactions. I really like their setup, and the checkout process seems to be really simple and straightforward. It gives a 15 minute window to pay to the address given, and once it's sent through it's instant. Just make sure that after the payment is processed you click "Return to Plattsburgh BTC," as this will allow you to input your mining pool details. 

Expansion?

I haven't commented on the expansion project in a little bit. Don't worry, it's still in progress, I've just hit a few snags along the way. Plattsburgh is a small town, and few people here have heard of bitcoin. Trying to explain how this works to local businesses I need to work with has been a bit of an uphill battle. And the owners of the space I'm looking to lease have unfortunately had a death in the family. Lastly, there's been some unexpected costs, so I've had to lower the initial expansion to about 10.35 TH for the time being.

But aside from this, some good news! Nearly all of the equipment has arrived safely and is ready to go. The shipping gods have (mostly) been good to me. The lease is just waiting for the family to review things. So at this point I'm just waiting to sign the lease and get everything set up. Hopefully soon!

Cold storage: Ledger Wallet Nano

So cold storage is important-bitcoins essentially act like cash at that point: If you lose access to your private key, access to your bitcoins is lost forever. Theres plenty of options out there for cold storage, including printing your own paper wallets. Paper wallets are certainly secure if done right, but personally, I wanted to have something a little more robust. 

As far as cold storage goes, the Ledger Wallet does a great job. The Trezor wallet may have more functionality, but that was a little more than I was willing to pay. It comes with a recovery sheet, a security card, a lanyard, and a leather pouch to put the security card in. And although it looks like a regular USB drive, it does have a few tricks up it sleeve: it's higher grade construction than typical NAND, staying useful for 500,000 read/write cycles (about 30 years), and utilizes a smart card for extra security.

Setup was surprisingly easy. During setup, the app (that's actually a Google chrome app) displays some words that you need to write in your recovery card to be used if you lose your drive. Then you use the security card, which has a randomized code unique to that card, to link your wallet to the account. This security card code is required to sign transactions on untrusted computers, which acts as a kind of "private key." Then, on your trusted home computer, you can set up a pin in order to log in easily (3-failed attempts blanks the drive).

Theres also an option to require the use of two ledger wallets in order to gain access, and you can enable two-factor security using a linked smartphone. Personally, I haven't gone as far to get two of them to do this (you can buy them in pairs for still half the price of the Trezor) but I have done the two-factor method on my phone-I haven't had any problems with that.

The whole process actually works really well. I've used this to store coins mined from my hot wallet, and I haven't had any issues with it for the past two months or so that I've been using it. I really appreciate the security and knowing that I can recover my bitcoins if I lose the flash drive. Can't do that with a paper wallet!

There are a few downsides I've found along the way. First, the app, while being very nice-looking and smooth, has limited functionality. Recently, there have been some upgrades with this, but it's still lacking a little. Then there's the fact that the setup process needs to be done on a computer that you can trust 100%. Aside from this, the biggest downside from a security standpoint is a little contradictory. I've read that because the program signs the transaction using part of the code from the security card, if a hacker gained access to your home computer he could reconstruct the security code over time. So apparently, it's actually safer to use a public, malware infected computer than to repetitively use a trusted computer. To mitigate this issue, they recommend that you avoid frequent micropayments (anything less than 25 mBTC).

Click here to check it out on their website.

Pros:

  • Cheap! (~$35)
  • Software works great, can be used on public computers
  • USB drive is made well
  • Security card comes with leather jacket
  • Really easy to use
  • Secure

Cons:

  • Setup needs to be done on trustworthy computer
  • micropayments should be avoided on own computer
  • Software lacking some features