I knew that the lightbulb space was getting interesting (I wrote about it here). There are lightbulbs that can talk to you and play music. Let’s not even go into the orchestrated colour combinations, which sound quite mind-blowing. And I’ve been researching and writing about Bitcoin (not published yet, still trying to get to grips with hash functions). So this made me almost spill my coffee:
There is now such a thing as a lightbulb that mines bitcoins. Yes, you screw it in, and it mines bitcoins.
That sounds a bit disingenuous. You don’t just “mine” bitcoins. You can try to mine bitcoins, you can solve the blockchain hash functions for new transactions with your incredibly fast, very powerful computing chips. And if you’re lucky, you get the solution first, and you get some bitcoins. There is definitely more to it than just turning your computer on, or just screwing in a light bulb.
BitFury, the developer, is considering incorporating a wallet into the technology, so we can make payments from our lightbulb. I feel a bit silly even typing that phrase.
Cheaper mining technology will not necessarily help the sector. Right now, there is a limit on the number of bitcoins that can be mined. The total supply limit is 21 million, and the amount that can be mined will halve every year until we reach it, around the year 2140. So, cheaper mining will not increase the amount in circulation.
Cheaper mining could well, however, put the established mining groups out of business. Even if the bulbs never “win” a bitcoin, the fear that they will could push the market value of bitcoin down, to a level where it is not profitable for the big groups, with their expensive equipment, to mine. And, if the chips do get so powerful and cheap that they can mine from a lightbulb, the expensive equipment becomes redundant, and the mining competition becomes even more fierce. The nodes could regroup and update their technology, but with a lower value, would it be worth it for them? And with mining capability spread more thinly, would that increase stability, or decrease it?
Of course, these appliances are not just mining, they’re also giving us light, so whether they make money or lose money on creating currency is not that important. Except that it is. Energy costs are also coming down, and are likely to continue to do so or at least remain low, as alternative energy sources come on stream. So the light emitted has less economic value. If the economic benefit from mining bitcoin also comes down, the usefulness of the lightbulbs will be limited, and on a bigger scale, the viability of the currency as a transmittor of value will be questioned.
Still, the development is interesting for its technology. It may not end up being inherently useful, but it will deepen our appreciation of possible uses and consequences of digital currency creation. Just because it’s way too offbeat for me to get my head around, doesn’t mean that it won’t lead to important breakthroughs that could, who knows, change the way we communicate.
So back to the old joke: How many bitcoins does it take to screw in a lightbulb? I’m sure there’s a very good punchline at the end of this one.