Bitcoin Mining 101

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bitcoinreviews

CoinTerra just announced a PCI-e card promising over 400 GH/s, check it out http://cointerra.com/product/gsxi/

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The Mac

blahhh.....Its a bitcoin (sha256) ASIC. no one GPU mines bitcoin anymore, ASICS are more effcient.

if it was an altcoin ASIC however, then we might actually see some damn AMD cards at normal prices.

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firefox91

Lets think about this for a second. You have a completely unregulated currency with no real world backing. It's electronic therefore it is vulnerable to manipulation and hacking. Finally, where the hell does the value come from? It's just made up out of nothing but electrons and someone saying it is worth something. I'm happy for those that actually made some money off of this but did you factor in cost of mining? Cost of the hardware? How about the power you used to run those systems? Bet you didn't make as much as you think you did. If I ever saw a foolish investment, it is bitcoin. Oh yeah, there there are things like this... http://money.cnn.com/2014/01/27/technology/security/bitcoin-arrest/

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Arcticwolf5150

Very well said.

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vig1lant3

Some people here seem to think that this is a gimmick. I wonder if anyone ever questioned the gold rush? I also wonder why we value gold? Does some government GDP give it value? It is printed on gold nuggets that it must be accepted as legal tender? Why are baseball cards valuable to one person and pointless to another? Why are some people okay with integrated graphics?

The economic principles of supply, demand, and scarcity are not difficult concepts to learn. There are some people on this forum that seem not to have a handle on them. The value of a crypto-currency is whatever the other party is willing to pay. Coins are valuable as long as people want them, much like anything else of value in the world. Not so surprisingly, it does not require government intervention to set a market.

There are hedge funds now specializing in crypto-currency investment. Yes the value is volatile, but all burgeoning markets endure the same volatility. More vendors are accepting Bitcoins for payment everyday. Tiger-Direct is even accepting them now. Come on Newegg and Amazon!! It's still easy to dismiss things that we do not understand.

I minored in economics in college, and when you really look at it, it's easier for me to explain why Bitcoin has value than it is to explain the value base of the dollar from a conceptual standpoint. Truthfully, the value of nationalized currency is very complicated, whereas the value of Bitcoin, and other digital currencies, is purely set by the market principles of supply and demand, and the increasing scarcity that pushes value higher.

My point is, don't just dismiss crypto-currencies as a gimmick. If memory serves I first read about Bitcoin here in the mag several years ago. I've always run high end equipment highlighted by AMD cards. I could have mined plenty before the process was taken over by big-time ASIC farms if I hadn't made the same mistake. I wish I understood economics a little better back then, I'd have a lot more money in my pocket right now...

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maleficarus™

Gold has real world value because every single nation on our planet uses it. This has been used for thousands of years! And it can be used in so many things. Rings, fillings, electronics, art, hell even food. What can you do with a bitcoin? You can't even hold it in your hand! Gold is also one of the hardest to mine. You guys ever watch those reality gold rush TV shows? Some spend a full season and only get 10 ounces of the stuff.

I can tell you right now that if all you had to do was buy a good video card put it into a PC and start mining gold the value of an ounce of gold would drop 99% over night!

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yu119995

I hate to break it to you but there is far less silver in the world than gold and it's a fraction of the price. Silver is used everywhere. From antimicrobial sponges to computer components. The fact of the matter is that both gold and silver's prices are artificially controlled anyway. There's no real world value applied to either considering scarcity for example.

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vrmlbasic

Gold's value is rooted in its real-world usefulness. Bitcoin's value is rooted purely in speculation. I have greater faith in an investment driven by real-world demand than I do in one based upon the whims of capricious speculators.

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vig1lant3

This IS "real world" demand, and the more acceptance that virtual currencies gain, the less speculative and more commoditized they will become. And Bitcoin is not purely speculative, although it is very much so. There is a finite cap...28 million coins I believe? I'm not certain off the top of my head. So far increasing scarcity has driven value up just as economic principles suggest it should.

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vrmlbasic

Assuming that there actually is that arbitrary and artificially-imposed scarcity, which is pretty speculative in itself.

...I certainly wouldn't label this as real world demand.

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tylerderden

the modern day flat earthers have spoken!

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pastorbob

Hey all of you people who think this is a wonderful idea, I've got a bridge in Brooklyn to sell ya. Or better yet some ocean-front property in Arizona.

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yu119995

No thanks bob. Just keep using USD that just happen to be based on nothing...not even gold. Nice hypocrisy.

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pastorbob

"No thanks bob. Just keep using USD that just happen to be based on nothing...not even gold. Nice hypocrisy."

Well my friend, it may be hypocritical (maybe you should look up the definition?) but I got those USD's by working for them, not sitting on my ass following some fly-by-night, pie in the sky scheme that is nothing more than a poorly disguised rip-off. And I can actually use USD's to buy things at ANY store I choose to buy from. I can pay my utilities, house payment, insurance premiums, car payment, PC components for my builds, buy food, etc, etc, etc. Don't see that ever happening with rip-coins.

So I guess I'll just keep on being, as you say, "hypocritical".

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vrmlbasic

Thank FDR and Nixon for that. Ugh.

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Rift2

Bitcoins were designed to subdue people from going outside.
It's working I have a Nvidia card so I'm not sure how to mine except for that Cuda miner program which I can't figure out how to run.

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tylerderden

and by the way, one bitcoin is worth around $900, I know people with hundreds of them. Waste of computers? I would say best use ever, bordering on goddamn brilliant. What's going to happen in the future..who knows, i may be going to hell in a bucket, but at least i'm enjoying the ride!

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Arcticwolf5150

China's law to ban the use of crypto currency goes into effect January 31st. With that China has the world's biggest Bitcoin exchange, to the point where just the mention of Cryptocurrency becoming illegal dropped the value almost 50%. You might want to advise your friends to cash in their 100's of bitcoins now because the value is going to take another hit in a few days. If I am wrong and the "The rise and risks associated with increasing bitcoin usage" hearing in New York starting today is positive, then I will jump on board and build a new rig for Litecoin mining. If I'm right, I'm glad you enjoyed the ride.

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tylerderden

You guys are morons plain and simple. I have mined several altcoins in the last few months that allowed me to get not one but 3 of the sweetest graphics cards around for nothing. keep hating and being morons, we will be over here cranking out coins so we dont have to spend our hard earned cash on our high end computer parts. you guys are just more people pissed off because you missed the train..quit being so closed minded and go get some doge's...you might just enjoy our kind hearted and generous community that just donated enough to get the jamaican bobsled team to Sochi. I'm not trying to be a dick, it's just that you guys gotta let go of all that fear and confusion and get moving...just let go...

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maleficarus™

"I have mined several altcoins in the last few months that allowed me to get not one but 3 of the sweetest graphics cards around for nothing."

That you are most likely using only for mining and not playing games with right? LOL So then who cares?

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tylerderden

nah man, i'v e been a gamer since the goddamn atari, i am a single dad (full time not every other weekend half ass piece of shit)of 2 boys, one is type 1 diabetic and mining a few coins allowed me to build 3 nice rigs for us to fuck shit up on starcraft 2 and battlefield 3 because diabetic medication takes all of my goddamn "fun money". you don't know shit about shit so who fucking cares what you think honestly?

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vrmlbasic

I'm not seeing donating enough to get the Jamacians to Sochi as a positive. Honestly, I would have thought that _Cool Runnings_ would have financed their way for eons ;)

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Pie Eater

Most people avoid BitCoins because of the instability of the BitCoin. With nothing to back it up, the BitCoin could be worth a few hundred dollars today and a few cents tommorrow. We are not "morons" for not mining BitCoins, we simply choose something else to invest in. Also, most of us non-mining, "closed minded morons" are frustrated with miners buying PC parts like crazy for mining (example: R9 290X) while leaving nothing for anyone else.

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rsaotome

All you're doing is ringing the dinner bell, it's feeding time.

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maleficarus™

I remember when this first started. I was reading up on it one day while surfing the internet. I was trying to figure out how much my WW2 coin was worth online and came across Bitcoin instead. I came to the conclusion that this is going to be the next big hype for the internet but that it will most likely crash and burn due to no regulation and the fact that your money is as only good as the internet allows. Now seeing as there is no real legit regulation your bit coin that one day was worth say $100 the next day could be worth zero! I would rather take $100 cash and run to my bank and out it in a high interest savings account and call it a day! That or take that one hundred and go play some slots. The amount of money invested in hardware and extra hydro costs destroyed this fade before it really could make a long term mark imo...

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yu119995

What the hell are you talking about?

My startup capital expenditures were $2500 (CDN). Hydro is about $3/day. I'm mining - with current market values - about $60 US/day or about $67 CDN/day (about $24k / year with the same hardware). I just started 3 weeks ago, which means it will be completely paid for in about 2 weeks. At that point, I'll probably grab a few more 7950's or 280x's increasing my hashrate considerably.

By the way, you need to look up altcoins. You can mine those at a profit ratio ranging from 5000%-8000% over Bitcoin. THAT'S where the real money is. Do some research.

You might want to reasses your $100 investment comment and stop bashing something you know nothing about out of fear.

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vrmlbasic

If only there were high interest savings accounts today.

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iheartpcs

This has to be the dumbest thing computers have ever been used for.

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tekknyne

I'm kind of with you. What are people mining, what is it for?

I mean, when it comes down to it, the US dollar can be tied to real world value like people, goods, economies, but what is a bitcoin tied to? And if all of the goods, people, resources on the planet that are participating in bitcoincs are already represented by dollars/yen/francs/pounds etc, w/e, what good is a bitcoin? You solve math problems but for who? Who gains from this?

You can't have a currency where it's only value is to itself.

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yu119995

"You solve math problems but for who? Who gains from this? "

Wikipedia's entry:

"Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Bitcoin mining is so called because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground."

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Arcticwolf5150

In today's market there is little value to actually be made in Bitcoin mining. First you are looking at the cost of equipment and electricity to run your mining system. You will not have a return on your money for well over two years. Depending on the system you build it might take longer. When Bitcoin mining first started it was easy to mine coins, but now it is harder so it is rare to locate one. There is only a few more years of mining left before all of the Bitcoins are located. You'll find a better return on your investment buying Bitcoins now and ride the wave as popularity make them more valuable.

Then Bitcoin's value is completely volatile. It might be tempting now, but tomorrow they can be only worth 50% of today's value. That is what happened when India and China (Being the former biggest Bitcoin bank) said that they will not see Bitcoin as a currency. Which brings me to my last point. In a matter of a month Bitcoin completely lost value to 2 billion people because of counties stepping in to stop the risk it poses on their citizens. Bitcoin is not regulated so anyone can hack your account and steal your coins and nothing can be done about it. That is why criminals use them for money laundering. It is an untraceable and unregulated currency. If the US Senate starts pushing the other direction, your Bitcoins will only be useful in Canada. The choice is yours.

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maleficarus™

Love the Canada dig at the end. lol

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yu119995

Looks like US pesos are on the rise. Oh wait. $3000 homes. Never mind.

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tekknyne

How do bitcoins represent real world value? I understand you are completing math problems, but for who? What do they gain by this?

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Bullwinkle J Moose

Lots of news for Bitcoin's Today

Winklevoss-Funded Bitcoin Startup's CEO Arrested for money Laundering in Silk Road Case

Another Bitcoin Startup absconds with over $10 Million Dollars of other peoples Bitcoins

Just go to Google news and Type: Bitcoin

With all the malware now using other people computers to mine Bitcoins, I wonder how long it will take users who think they are legitimately mining Bitcoins to find out that their mining software only tallies a portion of what they make with the remaining processing cycles going to parties unknown?

This is a Pyramid scheme pure and simple
Those who start the Bitcoin craze get the most profit and the greatest number of coins for the least amount of work and those who participate later on spend ever increasing sums of cash of their own for less and less profit over time

As far as Bitcoin Value goes, all I have heard so far is Hype

The only real value for this scheme seems to be in money laudering as the news would seem to imply

Prove me wrong!
I'm here to learn

The question I have is where does the actual currency come from to fund this scheme?

You can exchange Bitcoin's for real money but why would anyone invest real money to give someone else's Bitcoin Value?

But is I had a Billion dollars cash from illegal drug sales and I needed to launder it without drawing suspicion, I could just invent a virtual currency and keep 1/2 of all available Bitcoin's before going public

That way, I could use the Billion in cash to provide actual cash value to those people who wish to exchange the coins they mine for real money and keep the rest for myself in laundered money

As more and more people jump on the bandwagon, I could spend more and more laundered cash and just say I got rich in the Bitcoin craze which is half true because I would need to spend a lot of that drug money giving others a false hope that they are not a party to that conspiracy

WHERE DOES THE MONEY COME FROM TO GIVE A BITCOIN ITS EXCHANGE VALUE?

No Hype please!
Just a simple explanation

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carage

There is speculation that Satoshi, the dude who started the whole Bitcoin project, held 1 million Bitcoins in reserve for himself.
At current prices that would make him an instant billionaire, on paper at least.

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tylerderden

obviously a total moron like all the rest of us turning GPU cycles into cash instead of fucking folding at home in our mom's basement...

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CobblerSalad

"As far as Bitcoin Value goes, all I have heard so far is Hype"

Alright, I'll try and answer this as best I can since I haven't seen any posts address this. Bitcoin's value is derived from its utility. At this moment in time, I'd consider Bitcoin a little overpriced and I think it's at this high because people are expecting that utility to have even more value in the future.

What can Bitcoin be used for besides money laundering and anonymous drug purchases? I'll list a few of the main ones.

1. Almost non-existent transaction fees

This is a huge plus for business, where credit card companies take anywhere from 2-5% in fees for each purchase. I worked for a local computer shop where we made maybe 3-4% on parts we sold in the store. Now take away the credit card companies cut and you're left with almost nothing (I would say a good 80% of customer purchases were with credit cards). Say a small store has 15000 in credit card sales in a week. Thats $300 taken in fees that week, 15600 that year, and thats on a very small scale. Think about how much Amazon, Newegg, or Tiger Direct does in sales...the amount they pay in fees is huge. Most bitcoin transactions I've ever seen are 7 cents or less to send, no matter the amount. This alone is a big reason for retailers to accept payment in Bitcoin...it's only a win for them.

*And before anybody makes the argument about volitility, almost every retailer that accepts Bitcoin uses a payment processor such as BitPay that instantly converts Bitcoins to the curency of their choice at the time of sale, so market fluctuations play no part in it.

2. Security.
When you swipe a card, do you know how much information you're giving? Name, billing address, full card number. Sure, it's encrypted and stored on "secure" servers, but is it really safe? Just ask Target about that. The only information stored in the Bitcoin blockchain is the sending address, receiving address, and amount. Also, retailers dont have to worry about chargebacks as each transaction is final and cannot be reversed (anybody ever get burned by paypal?).

3. Instantaneous payments.
As it stands currently, anytime you want to send a payment somewhere, wether it's to a store you're purchasing something from, sending money to a friend in another state, or transfering money to family overseas, you're going to be waiting at least a few days for it to clear the bank and be "final." Bitcoin transfers are instantaneous and cannot be held up by a third party. And, if we look back at the fees part of the post, wire transfers are expensive and time consuming (usually at least $30 and a few days to clear). I've send bitcoins from Japan (where MTGox exchange is located) to my house here in the states and it takes just seconds.

Sorry for the long post, but I feel people just see stuff like these drug arrests and other bad news and instantly label Bitcoin a scam or pyramid scheme without recognizing the great potential it has as a technology.

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Jimisawesome

Yeah great for business but what about the consumer? Me the consumer would rather have slightly higher prices and pay by credit card then with bitcoins. Why? Because the credit card has some insurance to cover me. Yes I could go to target but my credit card protects me against the losses if my card is used by thieves. If there is a good thing to come out of the Target, Michaels, Neiman Marcus thefts its we will soon have smart credit cards like much of the rest of the world that makes this kind of theft nearly impossible.

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CobblerSalad

You're right, the first point is mainly an advantage for businesses. It COULD benefit consumers if companies pass the savings along to the consumer (a possibility, but small chance) and it also could help keep small businesses from going under (which helps the economy and us in the long run). But the remaining points are a benefit for everyone. I'm not here to say Bitcoin is poised to replace all fiat currencies and other forms of payments. That's just unrealistic. But as it matures and gains acceptance like it has been doing it can definitely take a big slice of the payment processing pie.

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Bullwinkle J Moose

Hey CobblerSalad, that's just more hype for the money laundering scheme

By the way...
I just created a Virtual Government to oversee all the laws and regulations I create for Virtual monies, goods and services anywhere

Anyone dealing in Bitcoins owes me 65% of the Bitcoin value in Taxes every year

My newest law makes these taxes retroactive to the beginning of time

Pay up Bitches!

YES, I see the great Utility of the idea!

Why just a few minutes ago, the tax I imposed on Virtual currencies was 50% and now it's up to 65%

I am expecting the personal utility of my Virtual Goverment to have even more value in the future

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The Mac

TigerDrirect now accepts bitcoins as do quite a few smaller retailers.

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Hey.That_Dude

I've been told by people how are very good at what they do, that it bitcoin mining looks very similar to breaking several different encryption standards. So the profit comes from breaking into peoples stuff... I'd almost laugh if it turned out this was all the NSA's plan to crack highly encrypted files from other countries/terrorists.

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pastorbob

"No Hype please!
Just a simple explanation"

B.J., This is one of those rare occasions where I find myself in agreement with you. It seems to be another one of those schemes that appeals to humanity's greed pure and simple.

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yu119995

No more greedy than stock and currency trading (look up arbitrage).

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Dr_Dave

I provide parts for the Bitcoin / Litecoin community. As a provider for this equipment there are tons of miners that are taking it to the next level. And since the China thing the miners are hard at it to position their efforts into cutting costs in the assembly and configuring of the hardware. Some very creative approaches have come forth in hardware and I as a supplier can not keep up with the demand. So there is more activity in this one area that has surely kept me way to **** busy.(Not complaining!) Go miners!

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vrmlbasic

So, you're doing the "Levi Strauss" thing and getting money by selling to the miners?

So why aren't you just using the parts that you sell to mine your own cryptocurrency? In essence, you have the mining equipment, miners and access to the gold mine and yet you're selling all of that to others instead of using it yourself. o_0

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rsaotome

Nothing personal, but f**k cryptocurrency in every form & fashion.

Like many, my graphic card broke down back in early December, so I thought, no problem, I'll just buy a 280x or 290, but oh no... that just didn't happen, and I'm sure we all know why.

After over a decade of being a desktop ATI enthusiast (I do use Nvidia for my notebooks), I've gone with an Nvidia card & I think it'll stay that way for the foreseeable future, no matter the higher cost.

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vrmlbasic

You went over to the green side? Nooooooooo. lol

Oh well, either way BGE gets its $.

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Ghost XFX

"I provide parts for the Bitcoin / Litecoin community."

I stopped reading right there. "Dr. Dave", I hate your flipping guts!!!! *,..,* And I'm pretty sure every PC gamer out there knows exactly what I'm talking about.

Go to hell and all of your minion miners too! You guys are killing the market for entertainment online, amongst us gamers. Items once affordable are costing us all an arm and a leg, because of your greed for a virtual currency that may not even have a flipping future.

"CEO of a bitcoin exchange has been arrested on charges of selling bitcoins to be used to buy and sell illegal drugs anonymously."

Hopefully, this is the beginning of the end for Bitcoin mining. I'll be wishing for a rapid death of Bitcoin. And I say this lightly, may your collective futures rapidly fall into the deepest chasm filled with used cat litter!