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Why would anyone agree to pay for 100% of the power consumption for an ASIC that only offers 25% of the returns? Consumers may not know anything about crypto-cu

Why would anyone agree to pay for 100% of the power consumption for an ASIC that only offers 25% of the returns? Consumers may not know anything about crypto-currencies but they understand basic math. When consumers are offered 5 dollars worth of bitcoin as compensation for a 20 dollar increase on their power bill they'll simply conclude "i guess that bitcoin thing really is a scam"

mikeash 11y ago
Surely the idea is that the return is more than 4x the cost of the power consumed, so that it's still a net gain for the buyer? It seems unlikely to me that this would actually work out in the long term, but wouldn't that be what they're going for?
- vectorpush 11y ago
  Then why wouldn't 21 just run the ASICs themselves and take 100% of the returns?
  - mikeash 11y ago
    That's a good question. For normal miners there's a similar question that's answered by a lack of unlimited capital. That wouldn't seem to apply here, since they're paying for the hardware themselves up-front and trying to recoup costs later. I can't figure out the answer here.
    - ikeboy 11y ago
      It doesn't make sense. There's no answer to figure out. If you have efficient miners, you either run them or sell them.
  - s73v3r 11y ago
    Then they have to pay for 100% of the power.
    - vectorpush 11y ago
      Minus the cost of marketing, distribution, product engineering, customer support, security engineering and lawyers (e.g. for dealing with the legal and security implications of managing customer wallets). Additionally, I estimate that it's much more pragmatic for 21 to build a centralized ASIC farm at a location where power is relatively cheap with predictable costs as opposed to a geographically distributed ASIC network that will be subject to regional utility price variance. Why bother with all that when you could literally just mint money at your leisure?
- TeMPOraL 11y ago
  I think they're betting on typical consumer being unaware of their electricity use. If their chargers and a router suddenly start using 4x the power, they won't notice because it still will be dwarfed by the fridge and washing machine, but scaled up this could bring some amount of money to the company. I'm not sure if that amount of money will be big enough to bother though.
  - mikeash 11y ago
    Sounds like a weird variant on a penny shaving scam in that case. Scam a few cents each from a lot of people.... It's also interesting to consider the fact that the efficiency of these devices varies a lot anyway, often because manufacturers try to save money. You might have charger A which wastes 0.1W and charger B which wastes 1W but costs a few cents less to manufacture. Is there a moral difference between charger B and a hypothetical charger C which wastes 0.1W and consumes 0.9W to mine bitcoins?
    - TeMPOraL 11y ago
      > Scam a few cents each from a lot of people.... And the whole thing about customers collecting some of the currency for micropayments seems like a trick to incentivize gullible to prefer devices with this "feature". RE morality of waste, I must say, you have me here. I need to give it some serious thought. But it feels to me that: - if you can avoid waste, you should (that would make producers intentionally making wasteful but cheaper products shady, but I do think consumer market is basically flooded by crap and we could use some higher-quality stuff) - the whole concept of that bitcoin-mining device is malicious, explicitly designed to be taking money from users behind their back, and I think the intent makes this evil
    - fragmede 11y ago
      Just because you don't notice that I'm stealing hundredths of a cent from you doesn't make it not stealing. Charger C is just a different circuit board with different chips on it. It's the marketing framing it as being free, however, that's makes it a dishonest proposition.

mikeash 11y ago

Surely the idea is that the return is more than 4x the cost of the power consumed, so that it's still a net gain for the buyer? It seems unlikely to me that this would actually work out in the long term, but wouldn't that be what they're going for?

vectorpush 11y ago
Then why wouldn't 21 just run the ASICs themselves and take 100% of the returns?
- mikeash 11y ago
  That's a good question. For normal miners there's a similar question that's answered by a lack of unlimited capital. That wouldn't seem to apply here, since they're paying for the hardware themselves up-front and trying to recoup costs later. I can't figure out the answer here.
  - ikeboy 11y ago
    It doesn't make sense. There's no answer to figure out. If you have efficient miners, you either run them or sell them.
- s73v3r 11y ago
  Then they have to pay for 100% of the power.
  - vectorpush 11y ago
    Minus the cost of marketing, distribution, product engineering, customer support, security engineering and lawyers (e.g. for dealing with the legal and security implications of managing customer wallets). Additionally, I estimate that it's much more pragmatic for 21 to build a centralized ASIC farm at a location where power is relatively cheap with predictable costs as opposed to a geographically distributed ASIC network that will be subject to regional utility price variance. Why bother with all that when you could literally just mint money at your leisure?
TeMPOraL 11y ago
I think they're betting on typical consumer being unaware of their electricity use. If their chargers and a router suddenly start using 4x the power, they won't notice because it still will be dwarfed by the fridge and washing machine, but scaled up this could bring some amount of money to the company. I'm not sure if that amount of money will be big enough to bother though.
- mikeash 11y ago
  Sounds like a weird variant on a penny shaving scam in that case. Scam a few cents each from a lot of people.... It's also interesting to consider the fact that the efficiency of these devices varies a lot anyway, often because manufacturers try to save money. You might have charger A which wastes 0.1W and charger B which wastes 1W but costs a few cents less to manufacture. Is there a moral difference between charger B and a hypothetical charger C which wastes 0.1W and consumes 0.9W to mine bitcoins?
  - TeMPOraL 11y ago
    > Scam a few cents each from a lot of people.... And the whole thing about customers collecting some of the currency for micropayments seems like a trick to incentivize gullible to prefer devices with this "feature". RE morality of waste, I must say, you have me here. I need to give it some serious thought. But it feels to me that: - if you can avoid waste, you should (that would make producers intentionally making wasteful but cheaper products shady, but I do think consumer market is basically flooded by crap and we could use some higher-quality stuff) - the whole concept of that bitcoin-mining device is malicious, explicitly designed to be taking money from users behind their back, and I think the intent makes this evil
  - fragmede 11y ago
    Just because you don't notice that I'm stealing hundredths of a cent from you doesn't make it not stealing. Charger C is just a different circuit board with different chips on it. It's the marketing framing it as being free, however, that's makes it a dishonest proposition.