Quote from: cypherdoc on May 21, 2015, 12:40:12 AM

Quote from: Peter R on May 20, 2015, 11:45:51 PM

Quote from: jmw74 on May 20, 2015, 09:23:54 PM

...
21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

Let's do an order-of-magnitude calculation

An article from Life Hacker reports that it costs about $0.50 to keep your phone charged-up for a year:

Now, my phone gets pretty warm when it's charging so the new mining chip can't draw that much more power. But then again, a lot of times my phone is plugged in and already fully charged, and so the mining chip might as well be running. So let's say that 21 Inc. can boost the yearly energy consumption of the typical smart phone from $0.50 to $3.00 before people start to complain about "hot phones." $2.50 goes to mining bitcoins

We'll also make the assumption that the cost to mine the bitcoins is exactly equal to the market value of the mined coins. In reality, the first coins will probably be cheaper to mine, becoming progressively more expensive to mine as the network hash rate grows. But for our order-of-magnitude calculation, we'll assume that $1 of BTC cost $1 of electricity to produce.

At the current market value of ~$250 / BTC, this means that each phone will produce approximately

   -> 0.01 BTC per year, or
   -> 1,000,000 satoshis per year, or
   -> 83,000 satoshis per month, or
   -> 2,700 satoshis per day

For comparison purposes, note that the current dust limit is 540 satoshis. This means that the amount of bitcoins generated by the phones is not insignificant (when compared to the dust limit) over time periods measured in days, weeks or months.

Let's go further

The same Life Hacker article claims that:

Quote from: Life Hacker

Global smartphone shipments (which includes people upgrading to newer phones) will reach 567 million units [in 2012] alone.

Let's be ambitious and assume that eventually 21 Inc. chips will be included with 10% of the new smart phone shipped (~57 million phones). The total bitcoins produced by these phones would then be

   57,000,000 x 0.01 BTC / year
   = 570,000 BTC / year

Or about 1560 BTC per day. Since there's presently ~3600 BTC mined per day, these 57 million smartphones would contribute

   ~43% of the network hash rate.

If 75% of these mining rewards flow back to 21 Inc and its partners, that works out to

   0.75 x 57,000,000 x $2.50 / year
  ~= $107,000,000 per year

This means that the expected revenue is not insignificant.

interesting analysis.

i'm amused by the guys here presuming that the 21 guys have not made a similar analysis. in fact, i'm sure they've made a very extensive marketing and technical analysis. Balaji and company are no slouches. they are in a different category from your normal, shoestring startup with minimal capital. Balaji is an established VC as are his cohorts. he mentions this:

"towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has built not just a chip, but a full technology stack around the chip including reference devices, datasheets, a cloud backend, and software protocols. And we have already engaged with a wide variety of early access partners across the industry, from small startups to multibillion dollar hardware companies."

similarly, the list of investors includes alot of smart, analytical, successful people and companies. they surely didn't just throw their money at this w/o any research.

The analyzis is flawed, in that it does not take into account all cost. The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining. If you suppose the chip is free, the design is free, the electricity is free and the management of the device for the mining purpose is free, then it can compete. But none of those things are free.