By Jason Clenfield and Pavel Alpeyev April 24, 2014
There have been a few get-rich-quick stories among the Bitcoin “miners,” who use stacks of powerful computers to solve complex math problems used to create the virtual currency. The trouble is, crunching those numbers takes a tremendous amount of energy. Fred Trotter, a co-founder of data journal and software company Not Only Dev, estimates that in the five years Bitcoins have existed, machines dedicated to mining them have consumed 150,000 megawatt-hours of electricity—enough to keep the Eiffel Tower lit for more than two and a half centuries.
--- 260
Years the Eiffel Tower could stay lit with the energy used to mine Bitcoins since ’09 ---
To ensure they can turn a profit, Bitcoin miners are scouring the globe for the cheapest power, from sleepy rural towns in America’s Pacific Northwest to the shadows of volcanoes in Iceland, where a few enthusiasts have built one of the world’s largest Bitcoin mining collectives using low-cost geothermal energy. When power costs are high, it becomes a lot tougher to justify mining Bitcoins, says Alex Wilhelm, a miner and software engineer living in Tokyo. “If the electricity price goes up, the math stops working,” he says.
Wilhelm doesn’t keep his modest 30-server mining operation, which he estimates will earn $12,500 this year, in Japan. Instead it’s sitting halfway around the world in the tiny Austrian village of Tattendorf, where Wilhelm grew up. He gets electricity there free from his father’s power plant, a water-driven turbine housed in a two-century-old brick building that has been in the family for at least six generations and once powered the entire village. From Tokyo, Wilhelm manages his Austrian server farm over the Internet, with video cameras that give him a look at the rows of circuit boards hanging like bats from metal racks inside the cavernous stone room where he used to play.
In his Tokyo apartment, Wilhelm pulls up the Bitcoin calculator on the website CoinWarz to show why his server farm isn’t located at home. The setup burns 10 kilowatts, and electricity in Tokyo costs about 25¢ per kilowatt-hour, among the most expensive rates in the world. He estimates that he’d lose about $13 per day on Bitcoin mining there, after the $70 in daily power charges. It’s also nice not to have to deal with the noise: The fans that cool his Bitcoin servers run so loudly that when he switches on his audio feed, the noise from the speakers is a little like standing under a waterfall. “You can imagine if you have something like this at home, your wife won’t be very happy,” Wilhelm says. “It’s just loud, and it’s hot, and it’s expensive.”
Photographs by Yuriko Nakao/Bloomberg; Courtesy of Wilhelm family (2)
Not everyone has a power plant in the family. Robert Van Kirk, who co-founded a company called MyRigSpace.com that hosts other people’s mining gear in an old Portland (Ore.) server farm, is comparison shopping. He and partner Damir Kalinkin aren’t satisfied with paying 5 cents per kilowatt-hour there, even though it’s about half the U.S. average. Van Kirk says they’re planning to move to Moses Lake, Wash., a quiet town with more cows than people and the second-lowest electricity rates in the U.S., after Minot, N.D. Each kilowatt-hour there costs 1.7¢, making Moses Lake a destination for Bitcoin miners. “I called a real estate agent, and I told them we need a location with a lot of electricity,” Van Kirk says. “He said to me, ‘Oh, are you guys involved in Bitcoin?’?”
Bitcoin’s biggest problem lately has been stability. The February disappearance of more than $500 million worth of Bitcoins from Tokyo-based Mount Gox, one of the biggest exchanges, has given the virtual currency a black eye. But power consumption has always been a primary issue, says cryptographer Philipp Gühring, who co-authored a 2011 paper on energy’s role in virtual mining. “Yes, you need the hardware, and you need the software, but electricity is the core thing that drives Bitcoin,” he says. Even some of the technology’s supporters say the focus on bigger, better, power-hungrier mining equipment has become a wasteful arms race. “The network would operate just fine with only 1 percent of the current computing muscle devoted to it,” Trotter says. “It’s consuming resources that should be allocated differently.”
Wilhelm is betting his low-cost mining will pay off. He says he and his father worry they’ll have to close the Tattendorf power plant when energy subsidies run out in 2016. They may be able to keep it open, he says, with a successful Bitcoin operation—if the virtual currency repeats its performance from last year, when it shot from $13 apiece to around $1,100. (As of April 23, the price was hovering around $487.) “It all depends on the value of Bitcoin,” Wilhelm says. “If you’re mining at this stage?…?you’re doing it because you believe it will go up.”
The Bitcoin Debit Card Will Surely Not Go Horribly Wrong
By Dan Seitz / 04.25.14
Xapo
One of the problems of Bitcoin, beyond the fact that exchanges can melt into slag at warp speed .. http://uproxx.com/technology/2014/02/bitcoin-implosion-continues-mt-gox-files-bankruptcy/ , is that it’s actually kind of hard to spend it compared to actual money. This is mostly due to the fact that it’s pretty hard to turn it into actual money. But, of course, a Bitcoin debit card that sounds almost absurdly shady will be perfect and not end in tears!
--- Xapo Debit functions like a traditional debit card and is a big step forward in the development of the bitcoin infrastructure – for the first time, customers have the ability to use bitcoin at any online or offline merchant that accepts debit or credit cards. This makes it easy for users to pay with bitcoins in real-time and makes it seamless for merchants to accept payment. After a customer makes a payment using bitcoin, the merchant will receive the funds in their local currency. ---
This works about how you’d expect: You have a set number of Bitcoin in your digital wallet. You swipe the card, and the bank backing the card sells off the amount of Bitcoin necessary to cover your purchase. One teeny, tiny problem: It turns out Xapo, despite claiming to have cut a deal with MasterCard, turns out to have no relationship with the company .. http://gigaom.com/2014/04/24/a-debit-card-for-bitcoin-xapo-solves-the-payment-problem-with-mastercard-tie-in/ .
Also notably missing from this Utopian ideal is what fees you’re going to pay, because there’s no way in hell Xapo and whichever bank it winds up working with isn’t going to make users pay for the convenience. Similarly, considering the tendency of Bitcoin to whipsaw wildly in value .. http://uproxx.com/technology/2013/04/bitcoin-surprises-nobody-by-being-insanely-volatile/ , there’s a very real chance that you might not be able to cover some purchases.
All that said, though, this isn’t the worst idea. In particular, anybody who’s been overseas and struggled with currency conversion can see the value in buying some Bitcoins and just using this as a sort of prepaid debit card. Still, Xapo is going to have to cough up some more details before this makes any sense.
The Dark Web’s Top Drug Market, Evolution, Just Vanished
Andy Greenberg Security 03.18.15 12:48 am
Josh Valcarcel/WIRED
In the 18 months since the Silk Road online black market for narcotics was taken down by a swarm of three-letter agencies, a site known as Evolution has taken its place at the top of the dark web drug trade. Now Evolution, too, has suddenly dropped off the face of the internet. But unlike its Silk Road predecessor, there’s no indication that law enforcement took down the newer black market. Instead, it’s simply, mysteriously vanished—with rumors swirling that its own administrators may have run off with many millions of dollars of its users’ drug money.
Over the past weekend, the massive anonymous market known as Evolution halted withdrawals of bitcoin from its website, telling users that it was dealing with technical difficulties. Then on Tuesday evening, both its market and user forum went offline, with no opportunity for drug buyers and sellers to pull out the funds they had stored in their Evolution accounts. The result has been a wave of panic that’s shaken the online black market economy as much as any of the law enforcement drug busts of the last two years.
Late Tuesday, a Reddit user named NSWGreat who had earlier self-described as an Evolution drug dealer and “public relations” staffer —he or she had even hosted an “ask me anything” session about the job days earlier .. http://www.reddit.com/r/AMA/comments/2ywo35/commercial_drug_trafficker_and_face_of_an_darknet/ —wrote a post to Reddit’s darknet markets forum .. http://www.reddit.com/r/DarkNetMarkets/comments/2zeuxo/complaintwarning_evolution_admins_exit_scamming/ .. that claimed to confirm Evolution’s administrators had in fact shut down the site’s back end too, and escaped with users’ money; NSWGreat described confronting Evolution’s two pseudonymous owners, Verto and Kimble, who he or she says then admitted they were closing the market and stealing its funds. “I am so sorry, but Verto and Kimble have f–ked us all. I have over $20,000 in escrow myself from sales,” NSWGreat wrote. “I’m sorry for everyone’s loses, I’m gutted and speechless. I feel so betrayed.”
“Don’t do this to us Evo staff please,” another user pleaded in a response on Reddit. “I owe money and I can’t pay if this is true. My lifes in danger. Please don’t be true please.”
If Evolution’s owners did in fact steal their users’ funds stored on the site—a theory that’s still not confirmed—it’s not clear just how much they would have profited. But given the size of Evolution’s market, with nearly 20,000 drug product listings as well as thousands more items ranging from weapons to stolen credit cards, the sum could easily be millions or even tens of millions of dollars worth of bitcoin. For comparison, the FBI seized $3.6 million worth of bitcoin from the original Silk Road at the time of its October 2013 takedown, when the site was still significantly smaller than Evolution.
For other dark web markets, technical glitches and long downtime would be routine, rather than a sign of a major scam. But since it first appeared online just over a year ago, Evolution had developed a reputation for professionalism and reliability. According to the site Dark Net Stats, the site had a 97% uptime rate .. https://dnstats.net/market-comparison , far higher than competing markets like Agora or the now-defunct Silk Road 2. The site gained users’ trust by offering a feature known as “multi-signature transactions,” designed to prevent exactly the sort of bitcoin theft its administrators are now accused of. (That system, would require at least two out of three parties in a transaction—the buyer, the seller, and Evolution’s administrators—to sign off on a deal. But due to its complexity, buyers rarely used the feature.) That relative sophistication, along with the seizure of several smaller competitors in a string of law enforcement busts late last year .. http://www.wired.com/2014/11/the-evolution-of-evolution-after-silk-road/ , contributed to Evolution’s rising position over the last year as the go-to online black market.
But Evolution also distinguished itself from other markets by its far looser sense of morality .. http://www.wired.com/2014/09/dark-web-evolution/ . While other sites followed the original Silk Road’s ethos of selling only victimless contraband, Evolution also trafficked in stolen identity information. Its founder known as Verto had previously run a site known as the Tor Carder Forum, another invite-only dark web site devoted exclusively to credit card fraud. Given that criminal mindset, it may be no surprise that the site’s owners might have eventually become willing to steal from their own users, too. As one user wrote on Reddit’s dark net market forum, “[I’m] really… surprised Evo went out like this, but I mean from former carders and fraudsters; would you expect anything less?”
Others pointed out that competing black markets like Agora, which briefly held the top spot as the most popular dark web market before Evolution, will likely absorb the refugees from Evolution’s vanished market. But even so, the Evolution staffers’ theft of millions of dollars from their users—if it’s confirmed—would put a temporary but serious dent in the internet’s underground drug economy. “I am guessing [Evolution’s owners] have new identities and a nice remote beachside mansion all lined up, probably there already,” one user wrote .. http://www.reddit.com/r/DarkNetMarkets/comments/2zeuxo/complaintwarning_evolution_admins_exit_scamming/cpicdke .. on Reddit. “Damn, sounds like a movie, except real people lost real money.”
News 
Market Data 
Discover 
