Well YES, Silicon Valley VCs do think you're a CRETIN

Bitcoin-mining toasters leap forth from stealth

Watch the electricity bill grow

It's the monetary equivalent of those countries where the coinage has become so debased that they give you a sweetie instead of small change. The accumulated value of whatever is mined by one single chip will be that sweetie once every couple of weeks. And, well, how much computation can you buy in the cloud for a sweetie?

And do note its business model includes the idea that it acquires some percentage of the coin mined by its chips.

So, sure, OK, maybe convenience has a value, maybe having the blockchain as a form of verification, of ownership, everywhere has a value. However, the main idea of actually using distributed chips like this for the actual mining is an absurd economic proposition. It's not just something of no value to the consumer, it's something of negative value to them.

They'll never actually mine enough coin to be able to buy anything and further, they'll be spending very much more on their electricity bill to gain it than they can possibly earn. This is, in reality, a way for our electric bills to mine Bitcoin for 21 and no more than that.

As such of course it's a brilliantly marvellous business plan for as long as it takes everyone to work this out. At which point it's not a very good one. My best guess is that this would have worked beautifully a couple of years back, especially if launched when stand alone chips could actually mine reasonably, and as the price was soaring.

Today? Well, I guess they might get chip makers buying the protocol to install: but I'd bet very good money indeed that very few consumers use the ability, assuming that there's an option to turn it off.

At which point, an interesting little project for anyone who has the technical chops to be able to do this. You can register for a devkit here. If anyone gets one it should be possible to work out what the hash rate of the chip is.

Plus the electricity consumption at whatever that rate is. And knowing the hash rate we can work out the value of Bitcoin that will be mined.

Yes, I know, pools, the coins go to the winner not to all who worked on the problem. But we can side step that as an assumption simply by assuming that, say, 10 million of these chips will work as a pool. And then we'll know whether at normal retail 'leccie prices it makes sense to be trying to mine.

Further, we need to ask what fraction of a Bitcoin one of these chips will make (on average, you know, pooled) in any specific amount of time. I wouldn't worry, at this stage, about the fact that 10 million more mining chips increases the computational power devoted to mining: while that's important in the overall scheme of things that's a second order effect that I think we can safely ignore. For I don't even think it works as a first order matter.

If we get more than one cent of coin for each $1 of 'leccie used I'll be damned surprised. And if we get more than $1 of coin for that $1 of 'leccie I'll be so damned astonished that I'll eat that chocolate hat I have prepared for this very eventuality.

If anyone wants to work through this do let the rest of us know. ®