The day has finally come to stop mining bitcoins.
I bought my first Radeon 5830 about a year ago after a friend walked randomly into my office to spread the gospel about bitcoins. He said they were going to change the way the world uses money. I installed the bitcoin client, downloaded the blockchain, and received the bitcoin he sent my way. I was hooked.
It took a while to really understand how the technology behind bitcoin works. I’ve tried to explain it to non-technical people without much success. But the technology isn’t the best part about bitcoin. It’s the potential for real transactions over the internet with no central banking or government authority holding the reigns that has kept me interested for the last year.
There’s a growing sense these days that banks has gained far too much power and control over the people and governments of the world. That’s what the Occupy Wall Street movement is all about. Interestingly enough, the friend that introduced me to bitcoin changed his focus to the Occupy Movement once it began to gain momentum. Protesting is a much more direct response to the growing power of the banks. Protesting raises awareness but it doesn’t actually change anything. It creates a growing understanding that something has got to change, but the change it demands is left to others to carry out. Protest is supposed to shine the light of truth on corruption and force governments to take action. But governments and banks are bound so tightly together that one will never betray the other. That is how banks became “too big to fail”.
If government won’t reign in the banks as the Occupy protesters demand, what options are left? Peaceful protest can turn into armed rebellion. We’ve seen that recently with the Arab Spring uprisings throughout the Middle East. I hope that will not be America’s future.
There is a peaceful alternative to rebellion. Instead of attacking the banks we can starve them. We need to break our addiction to borrowing and credit. As long as we’re hooked on credit cards we’ll forever be enriching the banks through endless interest and fees. As long as everyone has a 30 year mortgage but spends an average of 7 years in a home those mortgages will never be paid off. The banks would like us to believe that credit is good because it lets us buy the things we want even if we can’t afford them right now. But those banks don’t want us to pay our debts back. They want the interest payments to keep flowing forever. And if they do happen to overextend and loan out too much money, they can count on a taxpayer-funded government bailout.
How do we starve the banks? We stop using them. That’s where bitcoin comes in. Bitcoin lets us buy, sell, and transfer goods without a bank or government stepping in to approve the deal and take their cut. Bitcoin uses the technology of the internet to do what has been privileged only to banks and governments in the past. It lets us control our own money.
The last year has been a rocky ride. Banks are supposed to make us feel safe – they allow us to contest fraudulent charges and ask for justice. Bitcoin does not have those safeguards. Transactions are untraceable and irreversible. As a result, there have been numerous cases of fraud and theft in the bitcoin community. There are computer viruses that steal bitcoin wallets. The largest online bitcoin exchange was hacked and robbed. One of the largest online bitcoin wallet providers was hacked and cleaned out. Many people in the community lost faith and cashed out.
Many people kept mining and trading. Plenty of bitcoin-based businesses are still up and running. And at long last it appears the BTC/USD exchange rate has stabilized at around $5/bitcoin. It seems as is bitcoin may be with us for the long haul.
So – why did I stop mining bitcoins? It’s simple – the electricity I expend mining them costs more than the value of the bitcoins I’m able to produce. My operating margin is too low. And I’m not the only one. Now my mining rigs are turned off, and there’s a good chance that they’ll never mine again. Instead, I’m using my bitcoins to buy and sell the things that I want online and in my community. And I’ve got a few locked away in storage for the future. Just in case the rest of the world catches on someday.