Tag Archives: mining

Bitcoin Spoilage: 2 Million Bitcoin Likely Lost on Old Hard Drives

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Up to 30% of the Bitcoin Economy May Be Unrecoverable

Early mining rewards may be lost forever.

For the first few years of Bitcoin, 2009-2010, mining was a relatively simple computational task. Miners could use idle CPU cycles and generate Bitcoin. The value of the digital currency was low, less than $0.05, and mining was a hobby for computer geeks.

Back then, the reward for mining a block was 50 Bitcoin. Every 2 years the mining reward halves; today it is 25 Bitcoin.

Since the blockchain, or distributed ledger of Bitcoin transactions, is public, one can determine the exact balance of every address. However it’s important to note that because an individual can have many Bitcoin addresses and there is no personally identifiable information, it is not possible to determine how much Bitcoin any single owner has.

But here’s the revealing data, first published by Reddit user rutkdn: there are 38,399 addresses with exactly 50 BTC.

The logical conclusion is that each of these was an address setup by a miner in the first 2 years of the digital currency. The reward was paid into that address and no currency was ever added to it.

When you sum it up, there are 1.9 million Bitcoin in these addresses, or about $2 billion of value ($1.4 billion after last night’s sell off). And it’s highly likely that this money is unrecoverable. That’s 16% of the total number of Bitcoin available today.

Bitcoin Lost

In the early days, all Bitcoin were stored on personal hard drives and mining was performed using desktop software. Again, 50 BTC at the time was worth very little, maybe up to $1 or $2. So why would any miner go through the trouble of backing up their Bitcoin wallets when they could easily mine more the next day?

Many did not, and when those hard drives crashed or computers were thrown away, a lot of Bitcoin went to spoilage.

Related: You May Have a Fortune on Your Hard Drive: Recovering Lost Bitcoin

Here are some testimonials from Reddit by miners who lost Bitcoin this way.

One miner wrote:

Mine went back to Sony when hdd failed under warranty. Never bothered to save them – clicking and adding that weird path to the backup of my documents didn’t seem worth it. Back then even if I wanted to sell or buy, I’d have to navigate IRC or do cash-in-mail. They were practically worthless, except for the educational value.

Another miner added:

When I first heard about bitcoin, right at the end of 2009- I was mining ~400-700 a day for a week or two. plain old AMD tower

I never actually spent any bitcoin in exchange for products at the time nor managed to exchange them – All deleted years ago,hard drive gone, kaput, send to trash and god knows where right now.

it’s so easy in retrospect to say you would of just mined for a few days and held those coins for 4 years and be rich. You’d have to have some crazy self control and strange level of foresight to hold onto them. once you got wallet balance them what would you do with it? There was nothing you could buy with them, no exchanges just a few guys on IRC.

there was no economy, it wasn’t seen as a get rich scheme nor an investment. it was just a test of niche beta software with a tiny community of hackers and libertarians.

So, 16% of the total Bitcoin economy is stored in these early miner addresses. What about other losses? Well, it’s reasonable to assume that early Bitcoin owners who accumulated Bitcoin via trade may also have been susceptible to loss due to hard drive failure or file corruption. Maybe even 30% of the today’s Bitcoin economy will never be recovered.

Will increased scarcity make your Bitcoin more valuable?


CC image by Images_of_Money

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Bitcoin: An Animated Short Explores Mining, Buying and Selling Bitcoins

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We love seeing the different ways people try to educate others about Bitcoin.

In this animated documentary submitted to us by FilmTree Productions and Evan York Pictures, two cartoon Bitcoiners are interviewed about mining, what you can buy with Bitcoin, and what would happen if Visa or MasterCard embraced the alternative currency.

Bitcoin An Animated Short

By the way, the mining efforts in this video are not yet profitable. They are pulling in about 2 BTC per week after buying 32 miners.

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Tradehill is Back with Avalon Bitcoin Mining Equipment Auctions

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In August, Tradehill announced that they had suspended trading over regulation concerns. When we reached Tradehill for comment, they provided the following explanation:

The Internet Archive Federal Credit Union has experienced operational and regulatory issues and we are no longer able to continue our developing relationship. Both Tradehill and IAFCU were excited about this relationship and both regret this unfortunate outcome. Tradehill’s integration with IAFCU had allowed for clients to buy Bitcoin with a balance in an account with their own name. This allowed clients to trade Bitcoin with funds that were stored in a federally insured institution.

Well, Tradehill is back, sort of.

Tradehill suspends Bitcoin trading

Tradehill is now running an auction business, hosting BitSyncom’s newest round of next-gen Avalon ASIC mining equipment sales. The company is launching a series of auctions, which allows customers to set their own purchase price.

To participate in the auctions, you still need to have a Tradehill verified account, and all bids are in Bitcoin.

While this wasn’t the business Tradehill originally set out, it looks like they are creating some defensibility in the Bitcoin mining equipment space. Tradehill auctions is the exclusive provider of Avalon products, as it is not possible to purchase Avalon chips directly from Avalon.

Visit Tradehill Auctions to learn more.

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Bitcoin Mining, An Infographic

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Bitcoin Mining Infographic

The team over at The Cash Store has put together an interesting infographic about Bitcoin mining, what it takes, and the impact it has on the Bitcoin economy and beyond.

Click on the image below for full resolution:

Bitcoin Mining Infographic

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Mining Bitcoins with the $15,000 Cryonic Bitcoin FrostBit

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Mining Bitcoins Cryonic Bitcoin FrostBit

Bitcoin Mining Taken to the Next Level

Mining Bitcoins today requires a powerful computer, and the next frontier in Bitcoin mining seems to be dedicated hardware. One of the latest machines to come to market specializing in Bitcoin mining is the Cryonic Bitcoin FrostBit, which also comes with a $15,000 price tag.

TechCrunch interviewed Fahad Koumaiha, CEO of Cryoniks.

It’s the first time a ‘PC’ has been built for consumers with built-in liquid nitrogen generators. We use helium compression technology to super-cool condensers that in turn condense nitrogen air into its liquid form. There’s nothing even remotely similar available to the consumers. By sustaining cryonic temperatures we were able to achieve superconductivity with our custom designed ASIC processors. Not only do we get a huge boost in speed, but we cut down power consumption to around 2800W per unit; significantly less than anything on the market today.


Via TechCrunch.

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