Bitcoin Mining

 
 

Vocabulary

annual	hacker	I’m on my way
choice	congress	parallel (2)
crypto	anarchist	encryption
private	valuable	employ (2)
likely	draw (3)	currency
bill (3)	store (2)	might as well
wallet	implant	put it away
require	eliminate	transaction
option	antenna	generate
mine	reward	maximum
limit	involve	predefined
earn	pool (2)	incredibly
finite	resource	competition
fierce	acquire	spring (3)
seek	located	feverishly
pioneer	landing	geothermal
attract	precious	power plant
exact	disclose	on purpose
aware	break in	conspicuous
ATM	hangar	straight away
loud	dispense	graphic card
earn	in theory	draw a conclusion
bill (2)	after all	roughly (2)
chilly	reliable	conclusion
steam	uncertain	across (2)
doom	failure	increasingly
invest	consider	advantage

 
 
 
 
 
 
 

Video

 
 
 
 

Transcript

We’re on our way to the annual hackers’ congress in at the Parallel Policy Center in Prague.

It draws crypto-anarchists from across Europe, people who employ encryption technology to keep their internet activity private.

The bitcoin is their currency of choice.

At the Center’s Bitcoin coffee bar, you can’t buy a drink with regular cash or cards; only bitcoins. So I might as well put my bills away again. But right across the way is an ATM which dispenses bitcoins.

First I have to download an app to my cell phone, a digital wallet to store my bitcoins.

Marty Mismaijer explains how easy it is to use the app: just set it to receive, then hold your mobile in front of the ATM. Within seconds, my Czech koruna become 6.51 milibitcoins.

Martin Wismeijer, IT Specialist: “Yes, I use a chip implant I created in 2014; you can see the tiny blue chip half of it is an antenna, and the other half is the chip. So if for example, I want bitcoins out of here, if I want to buy a Red Bull for example there, I can show you. Let’s have a look.”

Martin just holds his hand in front of the machine and out comes his drink. He says this is the future.

Martin Wismeijer, IT Specialist: “You want it again? Anybody wants a Red Bull?”

Martin says bitcoins are more than digital play money: hundreds of thousands of people use them for everyday transactions, eliminating the need for a regular bank account.

Martin Wismeijer, IT Specialist: “I think the banks will always be there; it is just that people will have an option now. For the first time in history, this is the first money issued by the people, and it is owned by the people . . . there is no banker required.

It is like where we are going, there is no banks.”

The bitcoin is a currency that is generated on the internet.

But how?

As I learned here, it’s quite simple: to produce a bitcoin, a computer must process certain transactions. In return for these services, it’s rewarded in bitcoins.

This activity is known as mining. But only a maximum of 1,800 bitcoins can be generated per day.

That’s the predefined limit so the more people are involved in mining for the currency, and the more computers are processing the transactions, the less likely it is that a single computer will be rewarded with bitcoins.

So today, anyone wanting to earn large amounts of bitcoins needs to have huge pools of computers or mines.

Competition is becoming fiercer, as there is only a finite and predefined number of bitcoins which can be mined, so the bitcoin works like a precious resource such as gold.

The more people seek to acquire it, the more valuable it becomes.

Around the world, people are feverishly mining for bitcoins. One of the biggest mines is located in Iceland.

We’re coming in for a landing with bitcoin pioneer, Marco Streng. He was attracted to Iceland mainly because of its geothermal power plants, which produce green electricity from the water of hot springs.

He agreed to show us around his mine, provided we don’t disclose its exact location.

On the drive there, he explains why.

Marco Streng, Bitcoin Entrepreneur: “There’s a lot of money involved, and many different parties would have an interest in breaking into the mining farm or hacking into it.

You can’t be careful enough.”

From the outside, the hangars look grey and inconspicuous — on purpose. Few Icelanders are aware that huge amounts of virtual money are produced here every day.

Inside, it’s incredibly loud.

Journalist: “My god. How many machines are there?”
Marco Streng, Bitcoin Entrepreneur: “There are over ten-thousand graphic cards on this side alone, more than the world’s biggest supercomputer.”
Journalist: “What do you earn here per day?”
Marco Streng: “If I told you that, straight away, all our competitors could draw a conclusion as to how large we are. In theory, that would give them a competitive advantage.”
Journalist: “Roughly.”
Marco Streng: “I really can’t tell you.”

What he will tell me is that the electricity bill for his mine is one million euros a month, most of it on cooling the computer processors. Another advantage of being in Iceland is that the outside air is reliably chilly, so the climate also helps to keep the hangers cool.

In the future, Marco Streng plans to set up new steam-powered mining farms. He believes that in an increasingly uncertain world, the value of the Bitcoin can only go one way: up.

Marco Streng, Bitcoin Entrepreneur: “What makes the Bitcoin special is this independence from the financial world — and that’s almost always the banks.

And of course, we’ve seen in the past that this system is in many places doomed to failure.”

Marco Streng is even considering building his own geothermal power plant; after all, he’s got to invest the money he’s earned somewhere — money earned by producing a lot of hot air.

*     *     *     *     *     *     *

Questions

1. Is the vision or goal of the participants of the annual hackers’ congress to break into bank and governments, or to protect their data and privacy?

2. Their preferred currency are dollars and euros. True or false? Are the bitcoins actual metal coins?

3. Are bitcoin transactions simple or complicated? Why do these people prefer bitcoins to conventional money?

4. Bitcoins are mined from the ground, for example in Iceland. Is this right or wrong?

5. Marco “agreed to show us around his mine, provided we don’t disclose its exact location.” Does he say how much he earns? Why does he want to keep the location secret?

6. How much do they pay for electricity? Why is it so expensive?

7. Is Marco optimistic or pessimistic about the future of bitcoins? Why does he believe it’s use and popularity will increase?

 
 

A. Is bitcoin used in your city? Do you know anyone who uses bitcoins?

B. Do you (fully) understand the workings of bitcoins?

C. Are there problems with conventional money?

D. What will happen in the future? Will bitcoin replace dollars and euros?

E. Do you like the scenario of using bitcoins instead of regular money?