So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?
People are focusing too much on the cost that these chips will produce bitcoins for. That's not the play I'm imagining. The play I'm imagining is to
create some hype and then get a bunch of phones out across the world with these chips in them!Once the phones are out there, they'll start generating bitcoins. It doesn't matter at that point whether they do so cost-effectively or not (we're only talking a few bucks a year anyways). As long as 75% (or whatever %) of the coins flow back to 21 Inc and partners, the cost of the electricity used to produce those coins doesn't matter very much
to their revenue .
From the perspective of the end-user, once they've bought the phone, they are going to use it for a few years, and thus mine bitcoins for 21 Inc. and partners. They're not going to throw out a $100+ phone because it consumes a few extra dollars per year in electricity.
I obviously don't agree to that, it has to be economically viable to exist. Are you suggesting a big con?
I'm not suggesting that the phones will
necessarily consume more $ in energy than $ in bitcoins they produce. I just saying that even if the
do mine inefficiently (e.g., once the network hash rates grows), that
21 Inc and partners will still earn revenue as long as the phones are out there.
The next question is then: Can 21 Inc and partners get a bunch of phones out in the field? It's an interesting marketing problem, for sure, but imagine that during the next bitcoin bull run all this excitement gets created for the new "Samsung Mining" phone. What would happen? I think a bunch of people might think it's a really cool idea! Especially if there's a
chance they'll mine bitcoins that appreciate in price. In fact, I wouldn't be surprised if phones with a bitcoin mining/wallet chip inside sell for a premium. Heck, I'd pay an extra $100 for a phone with a secure mining/wallet chip factory installed! I don't care that $2 per year of my electricity goes back to 21 Inc. That's negligible to bank fees that can run $20 per month.
That is the way more sophisticated users of such a mining phone can view the economic proposition. The vast majority of naive mobile phone users in the developing world (especially females) won't even need that level of sophisticated analysis (women don't typically analyse anything). Rather for them it is simple. They get a discount on the device and/or they get these cute ringtones and other walled garden upsells for these "bitcoiny" things the phone gives them. And it is "free", uncomplicated to use (all automated), they won't have to "pay" anything for this. Thus it is a no brainer for them.