01 Jan 2014 – ExtremeTech – A group of Bitcoin miners that bought into the hype surrounding one particular manufacturer, HashFast, are reportedly examining legal options after the company repeatedly failed to deliver on its hardware and is only now beginning to ship products promised in October (and refusing to give full refunds). The problems illustrate many of the teething problems within the Bitcoin network, as well as the fundamental difficulty of making money by mining the cryptocurrency.
The Bitcoin mining network fundamentally transformed in two key ways in 2013. First, the difficulty of mining Bitcoins exploded in the back half of the year, driving profits through the floor in terms of earnings per megahash. Second, the value of a BTC has skyrocketed, crashed, and then continued towards recovery. These two events are logically connected — a huge jump in mining difficulty should increase the value of one BTC, if the currency is to hold any value whatsoever.
As we’ve previously stated, howver, the value of one BTC hasn’t grown nearly enough to balance the increase in mining difficulty. One BTC may currently sell for around $730, but the cryptocurrency would need to hit five-digit valuations to actually return to the profitability ratios of earlier this year. That means would-be miners have just one option — throw huge amounts of mining horsepower at the problem, and pay a premium for doing so….. Read more
