{"id":19306,"date":"2013-05-06T14:03:13","date_gmt":"2013-05-06T19:03:13","guid":{"rendered":"http:\/\/techcitement.com\/?p=19306"},"modified":"2013-05-06T14:03:13","modified_gmt":"2013-05-06T19:03:13","slug":"digging-deeper-into-the-bitcoin-mine","status":"publish","type":"post","link":"https:\/\/techcitement.com\/software\/digging-deeper-into-the-bitcoin-mine\/","title":{"rendered":"Digging Deeper Into The Bitcoin Mine"},"content":{"rendered":"
Unless you’ve been living in a self-imposed media blackout throughout 2013, you’ve seen and heard bitcoin become a mainstream news topic. With its higher profile comes an inevitable increase in popularity and acceptance as payment. For example, DWI Attorney Jay Cohen of Houston, TX now accepts<\/a> bitcoin. In Cypress, the world’s first Bitcoin ATM<\/a> is about to go online. Even eBay’s chief executive, John Donahoe, claims he’s looking at ways to integrate bitcoin with PayPal. In a recent Wall Street Journal<\/em> interview, Donahoe stopped short of making any promises, but said, “It\u2019s a new disruptive technology, so, yeah, we\u2019re looking at Bitcoin closely.”<\/p>\n All of this attention isn’t lost on government regulating bodies either. The Treasury unit called FinCEN, the Financial Crimes Enforcement Network, already has rules about bitcoin, and the IRS is expected to create a bitcoin center too. While bitcoin’s anonymous nature may encourage individuals to attempt to dodge taxes, current IRS tax rules are relatively clear. If you provide services or sell goods in exchange for bitcoin, you have income. The IRS taxes income, regardless of its nature. At this time, it’s debatable whether bitcoin should be considered a currency or a commodity. But if the IRS sides with the commodity argument, bitcoin holders will be subject to taxes on any appreciation in its value as well. Things get more interesting if employees are paid a salary in bitcoin. (While not yet too common, 13 employees of the Internet Archive recently elected<\/a> to receive some of their pay in bitcoin.) There’s no way to withhold some of the bitcoin to send to the IRS, so these employers have to pay employees a portion of the wages in cash, so the money can be sent to the IRS for taxes.<\/p>\n Things aren’t getting any less complicated for those trying to mine bitcoin. Traditionally, mining was accomplished with free software running on off-the-shelf PCs with 3D graphics cards (the GPU of a graphics card turns out to be far more efficient than a computer’s own processor at doing the repetitive math calculations needed for mining), but the complexity of the calculations increase as new bitcoins are created. We’re just starting to see purpose-built bitcoin mining machines with ASIC processors hitting the market. With processors designed for the sole purpose of mining bitcoins, these machines <\/a>are destined to become the only cost-effective tools for the job. In the meantime, only those with access to large numbers of computers can mine worthwhile quantities of bitcoin. This, of course, results in some individuals resorting to less than ethical means of obtaining sufficient processing power. ESEA (e-Sports Entertainment) admins were recently caught<\/a> inserting a bitcoin mining client into anti-cheating software downloaded to all of its customers. ESEA, who facilitates competitive video game leagues and tournaments, earned over $3,500 worth of the e-currency before customers complained of performance issues with their computers.<\/p>\n The difficulty of mining bitcoin with a standard-issue PC has also led to the development of\u00a0 companion virtual currencies. Litecoin<\/a> is explained by some advocates as analogous to silver versus bitcoin gold. Litecoin’s design allows running on the same consumer-grade hardware traditionally used for bitcoin mining (even in tandem with it, if desired). With faster transaction confirmations, Litecoin mining currently remains viable for the hobbyist or computer enthusiast without a large upfront investment. One Litecoin recently had a value of $2.31 when a bitcoin had a simultaneous value of $93.70.<\/p>\n