Speaker 1: Welcome to tech Stuff, a production from I Heart Radio.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,
Speaker 1: John van Strickland. I'm an executive producer with I Heart
Speaker 1: Radio and I love all things tech. And Twitter user
Speaker 1: Janusian w O seven asked if I could do an
Speaker 1: episode talking about LHR versus non LHR or f HR
Speaker 1: graphics cards, And that's actually a gateway question to really
Speaker 1: dive into the proof of work style cryptocurrency mining operations.
Speaker 1: So today we're gonna talk about what that process actually involves,
Speaker 1: how that process has affected the graphics card industry, what
Speaker 1: a s i C is, what an fpg A is,
Speaker 1: and how companies like Nvidia are trying to respond to
Speaker 1: the issue so that gamers can act they get their
Speaker 1: grubby little hands on graphics cards because, in case you're
Speaker 1: not familiar, uh, graphics cards are sometimes very hard to
Speaker 1: get hold of, especially to get hold of at their
Speaker 1: market price. They often end up on secondary markets at
Speaker 1: ridiculous markups. So we'll also touch on some other elements,
Speaker 1: like the proposed stopping the grinch bought acts in the
Speaker 1: United States, But first let's talk about what it takes
Speaker 1: to mine some cryptocurrency that uses the proof of work approach. Now,
Speaker 1: first of all, what the heck does mining mean? I mean,
Speaker 1: cryptocurrency is digital, right, It's just a digital record when
Speaker 1: you get down to it. So when you really boil
Speaker 1: it all down, you ultimately get to machine language of
Speaker 1: zeros and once. How the heck do you mind zeros
Speaker 1: and ones? Well, since the whole intended point of Bitcoin,
Speaker 1: which is, you know, kind of the the cryptocurrency that
Speaker 1: really started at all, at least as far as the
Speaker 1: current craze is concerned. If you assume that the creators
Speaker 1: of bitcoin were being sincere they wanted it to perform
Speaker 1: as a currency, well, that means you have to have
Speaker 1: some sort of systems in place in order to make
Speaker 1: this happen. So let's take Bitcoin as our example. Though,
Speaker 1: just to be clear, the issue with graphics cards doesn't
Speaker 1: relate to bitcoin. Bitcoin has outgrown graphics cards. When we
Speaker 1: talk about cryptocurrency, mining and graphics cards, we're more frequently
Speaker 1: talking about ethereum, not Bitcoin. But we'll get more into
Speaker 1: that later in this episode. But Bitcoin is the easy
Speaker 1: one to talk about, right because that's the one that
Speaker 1: everyone has heard about. A lot of people have heard
Speaker 1: about ethereum, but not as many as have heard about bitcoin.
Speaker 1: So in order for bitcoin to work, you need to
Speaker 1: have a record or ledger of who has bitcoin and
Speaker 1: who is transferring bitcoin to whom. So without a verifiable
Speaker 1: record of all the bitcoin that are in circulation, it
Speaker 1: would be possible for someone to duplicate a bitcoin and
Speaker 1: to spend it repeatedly. Right, It's just a digital file.
Speaker 1: You can copy digital files. I'm sure you've done this
Speaker 1: thousands of times, whether it's to copy a file from
Speaker 1: your hard drive to go also onto a network drive
Speaker 1: or maybe onto some form of physical media, or maybe
Speaker 1: you're just copying a file on your own computer multiple
Speaker 1: times for some reason. I don't I'm not judging you anyway.
Speaker 1: Duplicating files is easy, Like it's just a couple of
Speaker 1: clicks on your mouth, right, So that would mean that
Speaker 1: you have to have a way to counteract that for
Speaker 1: digital currency, otherwise you could just print your own money essentially,
Speaker 1: And they have to be able to prevent people from
Speaker 1: copying or counterfeit bitcoin, otherwise the whole system would collapse.
Speaker 1: So one element that helps with this is a distributed
Speaker 1: ledger of all transactions. To be involved in bitcoin mining,
Speaker 1: you have to connect to the Bitcoin network, and everyone
Speaker 1: connected to this network can see a shared ledger that
Speaker 1: records each and every transaction dating back to the origin
Speaker 1: of bitcoin itself. Actually, the transactions propagate outward from their
Speaker 1: point of origin throughout the network. It can take a
Speaker 1: little bit of time, as much as fourteen seconds. In fact,
Speaker 1: that is an issue that is a limiting factor for
Speaker 1: bitcoin in particular. But it's a that's a that's a
Speaker 1: matter for another podcast because it goes a little beyond
Speaker 1: what we want to talk about today. So Bitcoin protects
Speaker 1: itself in part by having this ledger visible to everyone
Speaker 1: in the system, so that it would be pretty much
Speaker 1: impossible for someone to to cheat the system because everyone
Speaker 1: can see the history of transactions. It gets more technical
Speaker 1: than that, but we'll leave it here. However, you also
Speaker 1: have to have a way to verify transactions to authorize payments.
Speaker 1: So let's say you're going to a brick and mortar store.
Speaker 1: This is just like a an example from everyday life.
Speaker 1: So you're going to a store physically yourself, and you
Speaker 1: fill your shopping card up with whatever it is that
Speaker 1: you're buying, and you're going to use a credit card
Speaker 1: to pay for it. So when you go up to
Speaker 1: the cashier and you swipe your credit card or inserted
Speaker 1: into the machine, whatever it is, the system does a
Speaker 1: quick check to make certain that you have the available
Speaker 1: credit in order to make that purchase. So in this case,
Speaker 1: the point of sale at the cashier would send an
Speaker 1: electronic request to the appropriate bank or processor for that
Speaker 1: particular merchant via a phone line or an internet connection.
Speaker 1: So the request goes from the merchant to a bank.
Speaker 1: That bank then forwards the details of the credit card
Speaker 1: to a credit card network like Visa for example, that
Speaker 1: can then clear the request to send a message on
Speaker 1: to whatever bank issued the credit card, and it's this
Speaker 1: bank that authorizes payment if you have the available credit
Speaker 1: if everything lines up. In other words, so if it's
Speaker 1: clear that the credit card is is a valid card
Speaker 1: and that there is UH credit on it. In the
Speaker 1: case of filling out stuff online, it would check things
Speaker 1: to make sure that the building address that you filled
Speaker 1: out matches the one that's in the records, all that
Speaker 1: kind of stuff. So, assuming everything is cool, the issuing
Speaker 1: bank since the approval backed down the same chain, so
Speaker 1: the approval goes to the credit card network. The credit
Speaker 1: card network then sends that over to the merchant's bank.
Speaker 1: The merchants bank then sends it to the merchant and
Speaker 1: says transaction complete. The money has been transferred from the
Speaker 1: airline of credit to you, and the merchant then prints
Speaker 1: up a slip that's usually either you sign it or
Speaker 1: it's just a you know, receipt. UH. This whole process
Speaker 1: takes very little time typically with the classic system. Right,
Speaker 1: We've got incredibly fast communication systems, so assuming everything's working it,
Speaker 1: there's rarely much of a delay. You might be standing
Speaker 1: there for a couple of seconds while you're waiting for
Speaker 1: the approval to go through, but it doesn't take long
Speaker 1: at all. UH. There's also transaction fees that are involved
Speaker 1: with this. That's important too because it's going to play
Speaker 1: into cryptocurrency. So with this approach, merchants who accept credit
Speaker 1: cards also have to pay transaction fees on every sale
Speaker 1: that involves a credit card. UH. It's usually a small
Speaker 1: percentage of whatever the overall price is for the items,
Speaker 1: and merchants typically seek out the cheapest available processing fees,
Speaker 1: or they might also you know, increase the price of
Speaker 1: their products to help compensate for that expense, or they'll
Speaker 1: do both. So credit cards have these centralized authorities, the
Speaker 1: issuing banks. They ultimately authorized transactions and they verify that
Speaker 1: money has changed hands. So again, in this case, it
Speaker 1: would be a line of credit issued to the card
Speaker 1: holder and then transferred over to the merchant that amount
Speaker 1: of money. But one of the big selling points of
Speaker 1: cryptocurrencies like bitcoin is that there is no centralized financial
Speaker 1: authority at the middle of all this. There is no
Speaker 1: issuing bank, but you still have to verify transactions otherwise
Speaker 1: we get back to that problem that someone could duplicate
Speaker 1: cryptocurrency and crash the whole system. So the way bitcoin
Speaker 1: does this is it groups transactions together in blocks, and
Speaker 1: these blocks form a chain, a block chain if you were,
Speaker 1: and bitcoins blocks currently have a limit of one megabyte
Speaker 1: in size. That's how big a blockchain block in bitcoin
Speaker 1: can be. In twenty nineteen, a simple transaction from one
Speaker 1: Bitcoin wallet to another would take up around around the bytes. Now,
Speaker 1: if you do some math and you take one megabyte
Speaker 1: and you divide it by three eight bytes, you end
Speaker 1: up with around two thousand, seven hundred and sixty transactions.
Speaker 1: A little less than that, actually, uh, that can fit
Speaker 1: in one block of the Bitcoin blockchain, so two thousand,
Speaker 1: seven sixty or so uh per block. By the way,
Speaker 1: this leads us to some serious limitations of bitcoin when
Speaker 1: it comes to actually using it as a currency, but
Speaker 1: again that's the story for another matter, another podcast episode. So,
Speaker 1: the way the bitcoin system currently works is that a
Speaker 1: block of transactions are to join the chain every ten minutes.
Speaker 1: So really the goal here is that every ten minutes
Speaker 1: you add a block, whether it's full of transactions or not.
Speaker 1: So even if let's say it's a super slow time
Speaker 1: and there's not that many transactions, you still need to
Speaker 1: add a block every ten minutes, because that's just the
Speaker 1: way the system works. So you have all these computers
Speaker 1: that connect to the bitcoin network, right these are uh
Speaker 1: and then you have all these transactions that are waiting
Speaker 1: for verification. So every time a bitcoin has changed hands,
Speaker 1: as it were, all of that has to be verified.
Speaker 1: So the computers that are connected to the bitcoin system,
Speaker 1: the miners, in other words, when you really break it down,
Speaker 1: their auditors. They are auditing the list of transactions to
Speaker 1: verify that they are all valid transactions, that in fact
Speaker 1: the entity that transferred bitcoin to another entity, that all
Speaker 1: of that is accurate and valid that in fact there
Speaker 1: was that bitcoin to transfer, that the wallet it came
Speaker 1: from is valid, and the wallet it's going to is valid.
Speaker 1: The computers connected to the bitcoin system are all trying
Speaker 1: to process this at the same time. They're taking on
Speaker 1: a role that would normally go to a centralized bank authority,
Speaker 1: and instead of a merchant paying a transaction fee of
Speaker 1: the auditors, you've got the bitcoin system itself releasing some
Speaker 1: bitcoin into circulation, and that that circulation goes straight to
Speaker 1: whichever auditor is able to verify the transactions first. That's
Speaker 1: the mining element here, So when you mine bitcoin, what
Speaker 1: really means is that you were able to validate a
Speaker 1: block of transactions before anyone else could. Now, interestingly, bitcoin
Speaker 1: mining will only last as long as there are bitcoin
Speaker 1: left to be mined. But there is a finite amount
Speaker 1: of bitcoin. There didn't have to be, you know, you
Speaker 1: could have created a system where there is no limit,
Speaker 1: but that's not how bitcoin was designed. So there's actually
Speaker 1: a cap of twenty one million bitcoin, and once they
Speaker 1: are all mined, there will be no new bitcoin going
Speaker 1: into circulation. Interestingly, the number of bitcoin released upon verifying
Speaker 1: a block of transactions goes down by half every two
Speaker 1: d thousand blocks, which because a new block has added
Speaker 1: every ten minutes or so, we can essentially say that
Speaker 1: around four years, you see the number of bitcoins released
Speaker 1: per block, mind go get cut in half. So when
Speaker 1: bitcoin first launched back in two thousand nine, if you
Speaker 1: were to mind a block of transactions, that would get
Speaker 1: you fifty bitcoins. So if your computer was the first
Speaker 1: one to mind it, you got fifty bitcoin. Now, back then,
Speaker 1: bitcoins were worth a fraction of a dollar, right, fifty
Speaker 1: bitcoin was nothing back then. Today a single bitcoin is
Speaker 1: worth more than fifty seven thousand dollars at least as
Speaker 1: I record this episode, that's where the value is. It's
Speaker 1: above fifty seven thousand dollars per bitcoin. So imagine that
Speaker 1: you were able to get fifty bitcoin for mining a block.
Speaker 1: That means, assuming that the value was the same back
Speaker 1: then it wasn't, but let's say it was. That would
Speaker 1: mean you would pull in two point eight five million
Speaker 1: dollars just for verifying block of transactions, and another block
Speaker 1: would join every ten minutes. So let's say that you
Speaker 1: had built out the best mining system to verify transactions,
Speaker 1: and if bitcoin had been as valuable back then as
Speaker 1: they are today, then you would soon be a billionaire, except,
Speaker 1: of course bitcoin weren't worth nearly as much back then.
Speaker 1: In fact, people would spend thousands of bitcoin just to
Speaker 1: buy a pizza. It's a very different world. But the
Speaker 1: number of bitcoin released per block has gone down since
Speaker 1: two thousand nine. In it was twenty five per block,
Speaker 1: so went from fifty to twenty five. It reduced again
Speaker 1: to twelve point five bitcoin per block. Mind today it's
Speaker 1: at six point to five bitcoin per block. That process
Speaker 1: will continue until nearly all bitcoin or mind. The fact
Speaker 1: that you're having and having and having means that eventually
Speaker 1: you get to a point where it's like, not all
Speaker 1: bitcoin will actually be mine. There'll be some that will
Speaker 1: rum unmind, but it's like a tiny, tiny, tiny fraction,
Speaker 1: right um. But that means that once you get to
Speaker 1: that point and there are no more bitcoin to mind,
Speaker 1: then auditors will not be paid out in mind bitcoins
Speaker 1: because they're they're all gone. Instead, they'll be paid in
Speaker 1: transaction fees, very similar to the way that merchants have
Speaker 1: to pay transaction fees on credit card purchases in their establishments. Anyway,
Speaker 1: that whole system of bitcoin, where we're only looking at
Speaker 1: transaction fees. That's the good ways off. In the future,
Speaker 1: it won't be tillt before all the bitcoin or mind.
Speaker 1: So for now, the promise of mind. Bitcoin provides an
Speaker 1: incentive to miners to dedicate their computer processing power to
Speaker 1: verify blocks of transactions. And when I say computer processing power,
Speaker 1: I'm not talking about the desktop or a laptop. I'm
Speaker 1: talking about specialized machines that are drawing enormous amounts of
Speaker 1: power in order to process this as fast as possible. Now,
Speaker 1: the mining process fulfills some very important functions. It creates
Speaker 1: a predictable rate of adding more bitcoin to circulation. We
Speaker 1: know that every ten minutes we're gonna get six point
Speaker 1: to five more bitcoin, at least until we hit that
Speaker 1: next milestone, in which case it will be had yet again.
Speaker 1: And it also brings in auditors to perform the task
Speaker 1: of verifying transactions, which is necessary for the system to
Speaker 1: really work alright, So mining ultimately boils down to someone
Speaker 1: using a computer or these days bloods of specialized computers
Speaker 1: to comb through a block of transactions and verify them
Speaker 1: before anyone else does. And then the winning computer system
Speaker 1: gets some bitcoin for their trouble. But when I say,
Speaker 1: verifying it's kind of misleading, like that's one way to
Speaker 1: look at it. But really, what the computers are ultimately
Speaker 1: doing is trying to come up with a hash value
Speaker 1: that most closely matches one created by the bitcoin system.
Speaker 1: So we have to talk about hash values. And yes,
Speaker 1: this does tie in to those LHR graphics cards. So
Speaker 1: hash values are really good at establishing the identity of
Speaker 1: something like say a file. Uh so this gets a
Speaker 1: little confusing, but just stay with me, all right. So ultimately,
Speaker 1: you know, a computer file, just like any other computer
Speaker 1: information is data that you can ultimately reduce down to
Speaker 1: binary to zeros and ones using a hashing algorithm, which
Speaker 1: is essentially a set of rules that say this is
Speaker 1: the process of operations you should perform on any incoming data. Right,
Speaker 1: That's what an algorithm does, is just algorithms are just instructions.
Speaker 1: So a hashing algorithm is a specific type of algorithm
Speaker 1: where a machine takes this binary data these zeros and
Speaker 1: ones that represent a file, performs some mathematical operations on
Speaker 1: that data and generates a hash value. Hash value is
Speaker 1: a fixed length value, and it can you know if
Speaker 1: it's hexadecimal, it can contain numbers and and other characters
Speaker 1: as well. Um, so a lot of hashing algorithms convert
Speaker 1: data into hexadecimal values. I'm not gonna go deep into
Speaker 1: hexadecimal here. The important bit is that you have a
Speaker 1: fixed lengths set of values. That means you have a
Speaker 1: fixed number of characters that will always appear as a
Speaker 1: hash value no matter what you fed into the UH.
Speaker 1: The algorithm is going to produce an answer or a
Speaker 1: result that is that number of characters long. So let's
Speaker 1: say it's sixty four characters long. That means you feed
Speaker 1: a big file into this algorithm, it will generate a
Speaker 1: result that's sixty four characters long as a hash value.
Speaker 1: You feed a tiny file into the same algorithm, it
Speaker 1: will also generate a different sixty four character lengths UH
Speaker 1: hash value. So another words, just looking at the hash values,
Speaker 1: there's no way for you to tell what the size
Speaker 1: of the file was, let alone the content of that file,
Speaker 1: what type of file it was. But it will, which
Speaker 1: is why it's used on a lot of security measures
Speaker 1: right because just glancing at it doesn't give you enough
Speaker 1: information for you to draw any conclusions about what was
Speaker 1: fed into the algorithm. So again, let's say that we've
Speaker 1: got an algorithm that puts hash values that are sixty
Speaker 1: four characters in length. It doesn't matter how you know
Speaker 1: how large the file is, if it's huge or if
Speaker 1: it's tiny, you still get a sixty four character length answer,
Speaker 1: and you will always get that answer based upon the input.
Speaker 1: So if I have file A and I feed it
Speaker 1: through the algorithm a hundred times, I will get one
Speaker 1: hundred identical hash values. But if I feed file B
Speaker 1: into the algorithm a hundred times, I'll get that one
Speaker 1: same times, but it will be different from file A.
Speaker 1: Right like, the hash values are unique to whatever the
Speaker 1: input is. So hashes are also not reversible. You can't
Speaker 1: get a hash value and then magically reverse it back
Speaker 1: to the original file. So if you sent me a hash,
Speaker 1: I couldn't do anything with it other than really, you know,
Speaker 1: look at it and compare it against hash values that
Speaker 1: I have. I can't. I can't reverse it and say, oh,
Speaker 1: you took a copy of pac Man and you hashed it.
Speaker 1: I wouldn't know. So what you can do is you
Speaker 1: can use hash values to verify that a file, for example,
Speaker 1: that someone has is the exact same file that you have.
Speaker 1: You both use the same algorithm. They hash their file,
Speaker 1: you hash your file. They send you the hash value,
Speaker 1: not the file itself, and you compare it to your
Speaker 1: hash value. If it's the same, then you say, ah,
Speaker 1: we both have the same file. That's a way of
Speaker 1: verifying that someone is who they say they are. For example,
Speaker 1: like if you ask them to prove that they are
Speaker 1: who they claim to be, and they send you a
Speaker 1: hash value that could only come from them because it's
Speaker 1: unique to something they possess, and you have a record
Speaker 1: you have like a database that matches this, then you
Speaker 1: can say, ah, ha I got it. You're in Okay,
Speaker 1: that's basics for hash values. We're gonna take a quick
Speaker 1: break because I've been going on a long time here.
Speaker 1: When we come back, I'll talk a little bit more
Speaker 1: about hash values before we move on. Okay, I talked
Speaker 1: before the break about hash values and how you can
Speaker 1: use them for verification processes where you don't really know
Speaker 1: the content that was in the original piece. Necessarily you
Speaker 1: just can compare hash values to each other. Well, hashes
Speaker 1: are used in lots of other ways. So for example,
Speaker 1: some anti virus databases will take known malware and they'll
Speaker 1: create a hash value from the malware, and then anti
Speaker 1: virus saw where will have a whole database of all
Speaker 1: these hash values, and the antivirus software will search a
Speaker 1: suspected infected computer system and hash the various files that
Speaker 1: are on the computer system, compare it against that database
Speaker 1: of known malware hash values, and if it finds matches,
Speaker 1: it says, aha, your computer has been infected by the
Speaker 1: specific types of malware. All right, but let's let's go
Speaker 1: back to bitcoin and talk about what hash values mean
Speaker 1: for that. So, for each block of transactions in a
Speaker 1: bitcoin blockchain, the bitcoin system itself assigns a sixty four
Speaker 1: digit hexadecimal hash, and the auditors the miners are trying
Speaker 1: to generate a hash that is closest to the one
Speaker 1: provided by the system without going over. And the more
Speaker 1: miners that joined the system, the more possible solutions there
Speaker 1: will be to the hash value. So as more auditors join,
Speaker 1: as more computational processing power is added to the Bitcoin system,
Speaker 1: the bitcoin system increases the difficulty of the guessing game
Speaker 1: problem that all the computers are engaged in, and that
Speaker 1: means you have to have even more computing power if
Speaker 1: you want to be the one to first mind a
Speaker 1: block of transactions. Now, computing power is expensive, both to
Speaker 1: acquire all the pieces for the computing power and to
Speaker 1: maintain it. Right, you have to pay for specialized hardware
Speaker 1: because if you don't, then others will. Then you'll be
Speaker 1: left behind. Right the older stuff that you're using won't
Speaker 1: be up to task. It would be like if you
Speaker 1: were trying to enter a street race and you were
Speaker 1: driving like an old Volvo and everyone else is driving supercars.
Speaker 1: You would do it doesn't matter how good a driver
Speaker 1: you are, your your equipment just won't be able to
Speaker 1: keep pace and uh. And since bitcoin mining is effectively
Speaker 1: a race to guess a very complicated number as quickly
Speaker 1: as possible, being left behind means you're stuck with expensive
Speaker 1: equipment and a reward. So now you've got you know, costs,
Speaker 1: but you're not bringing money into offset those costs. You
Speaker 1: would be out of business. So there becomes this escalation
Speaker 1: among bitcoin miners to get hold of the most advanced
Speaker 1: machines possible that can work at screamingly fast rates in
Speaker 1: an effort to mind blocks before anyone else can so.
Speaker 1: Right now, a block is worth around three fifty six
Speaker 1: thousand dollars. I got that by multiplying fifty seven thousand
Speaker 1: dollars per bitcoin times six point two five bitcoins per block,
Speaker 1: and you get a new block mind every ten minutes.
Speaker 1: So a day has one thousand, four hundred forty minutes,
Speaker 1: and that means there are one hundred forty four ten
Speaker 1: minute blocks per day. So let's let's say hypothetically you
Speaker 1: create the best killer mining system and you improbably managed
Speaker 1: to beat out everyone else in the world for every
Speaker 1: single block in one day. That would mean one day's
Speaker 1: mining would let you fifty one million dollars at the
Speaker 1: current value of bitcoin per day, fifty one million dollars.
Speaker 1: That is a heck of an incentive. Now, this is
Speaker 1: why you hear about huge bitcoin mining operations that co
Speaker 1: locate with power plants, because to run those machines, you
Speaker 1: need a lot of electricity, and electricity costs money. Right Like,
Speaker 1: if you're if you're paying for your electricity, that bill
Speaker 1: is an operating expense you have to factor in. And
Speaker 1: while you could theoretically net around fifty one million dollars
Speaker 1: a day, in reality, you're you are competing against lots
Speaker 1: of other big bitcoin mining operations around the world. You're
Speaker 1: not going to succeed with every single block, So bitcoin
Speaker 1: mining becomes a balancing act. You know, can you make
Speaker 1: more money then you have to spend to cover the
Speaker 1: costs of operation. Can you make a profit? So for
Speaker 1: a lot of miners, the answer is yes. I mean, like,
Speaker 1: the value of bitcoin is so high that it's worth
Speaker 1: going to these extremes to try and go after it
Speaker 1: because the payoff is better than what the costs are. Right. So,
Speaker 1: we've talked about how bitcoin mining involves lots of computers
Speaker 1: all racing to guess the number that will produce a
Speaker 1: hash that is equal to or less than the hash
Speaker 1: value that the bitcoin system generates. I'm not going to
Speaker 1: go into further detail with that because, um this episode
Speaker 1: is going to be super long already. But but the
Speaker 1: important part here is that, you know, the more miners
Speaker 1: that join the system with more computing power makes these
Speaker 1: problems get even more difficult, which means the bitcoin miners
Speaker 1: have to feed even more computational power into the system
Speaker 1: if they want to be competitive. It becomes this vicious
Speaker 1: cycle that will continue as long as the value of
Speaker 1: the bitcoin is greater than the cost sunk to chase.
Speaker 1: After that bitcoin. Right, if you get to a point
Speaker 1: where the value of the bitcoin is lower than that,
Speaker 1: then obviously people are going to ease off because otherwise
Speaker 1: you just lose money. Now this we'll switch gears now
Speaker 1: and talk about graphics cards. So again, graphics cards are
Speaker 1: more relevant to ethereum mining than bitcoin mining. Uh. Ethereum
Speaker 1: one point oh follows a similar approach to bitcoin, and
Speaker 1: that it's a proof of work system. So that's why
Speaker 1: I focused on bitcoin first because a lot of what
Speaker 1: we talked about with bitcoin also relates to ethereum one
Speaker 1: point oh. Alright, So when it comes to computer processors,
Speaker 1: there are a lot of different kinds. So your basic
Speaker 1: central processing unit or CPU is a microchip that has
Speaker 1: one or more core is dedicated to executing commands operations
Speaker 1: in other words, on input data. You know, numbers. So
Speaker 1: a very oversimplified approach might say, like, take whatever data
Speaker 1: comes in and then add this specific number to that
Speaker 1: incoming data and produce a result. That would be a
Speaker 1: very very very simple operation. Right now, your basic CPU
Speaker 1: has to be flexible. It needs to be able to
Speaker 1: process information for lots of different kinds of programs. It
Speaker 1: needs to be able to allow anything from a spreadsheet program,
Speaker 1: to a media player, to a web browser, to complex
Speaker 1: computer simulations to run on a machine. These are general
Speaker 1: purpose microchips. In other words, they need to be able
Speaker 1: to do pretty much anything. But there's a trade off
Speaker 1: with this. While a general purpose processor can pretty much
Speaker 1: do anything, that doesn't mean it can perform any specific
Speaker 1: task better than a microchip that is only nt to
Speaker 1: handle that specific task. So, in other words, your basic
Speaker 1: CPU lacks optimization for particular tasks because the CPU has
Speaker 1: to be concerned with everything, not just that one thing.
Speaker 1: Enter the graphics processing unit or GPU. When these emerged
Speaker 1: a couple of decades ago, the whole intent was to
Speaker 1: offload calculations relating to computer graphics that would normally go
Speaker 1: to the CPU and instead redirect those to the GPU,
Speaker 1: so the CPU would be freed up to work on
Speaker 1: other stuff, and the GPU would be optimized to do
Speaker 1: the kind of work needed to produce more sophisticated graphics.
Speaker 1: So one element that you find in processors is called
Speaker 1: an a l U or arithmetic logic unit. GPU cards
Speaker 1: typically have a lot of a l U s, and
Speaker 1: it's this specific element that becomes really useful when you're
Speaker 1: trying to perform calculations to guess the right hash value
Speaker 1: when you're trying to mine a block of cryptocurrency that's
Speaker 1: on a proof of work style blockchain. The GPUs are
Speaker 1: great at performing repetitive tasks at very high speed. That's
Speaker 1: what they were built to do. So Bitcoin miners originally
Speaker 1: sought out powerful graphics cards to build bitcoin mining rigs.
Speaker 1: Uh And there are some cryptocurrency mining rigs no longer
Speaker 1: bitcoin Bitcoin outgrew graphics cards, and again we'll get to that.
Speaker 1: But like ethereum, mining rigs that are essentially a computer
Speaker 1: case that holds as many graphics cards as the motherboard
Speaker 1: can support. And typically these are part of larger networks
Speaker 1: of similar systems, all with similar buildouts. So you end
Speaker 1: up with a very high demand for graphics cards to
Speaker 1: mine ethereum. Moreover, as more miners jump on to try
Speaker 1: and mine you know, ethereum or bitcoin, it creates a
Speaker 1: demand for the fastest machines on market. So it's not
Speaker 1: just good enough to have a ton of graphics cards.
Speaker 1: Let's say it's ethereum, it would be graphics cards. It's
Speaker 1: not just good enough to have a lot of graphics cards.
Speaker 1: You need graphics cards that work at the best rates,
Speaker 1: at the best efficiencies possible. You're possibly modifying them a bit.
Speaker 1: If you're new to it, you might over clock your GPUs.
Speaker 1: That means make them run faster than they were meant
Speaker 1: to run uh in order to try and process this
Speaker 1: information faster. But interestingly enough, experienced miners typically won't over
Speaker 1: clock their their GPUs. In fact, they might underclock the
Speaker 1: GPU because they're more concerned with efficiency than they are
Speaker 1: with speed, so they'll still get really fast GPUs, but
Speaker 1: then they'll reduce the amount of power going to the
Speaker 1: GPU to make them more efficient. Now, this means that
Speaker 1: crypto minors have a big incentive to rush out and
Speaker 1: grab all the best graphics cards that are available, So
Speaker 1: when a new graphics it hits the market, crypto minors
Speaker 1: are among the most let's say, enthusiastic customers. Meanwhile, graphics
Speaker 1: card companies are producing products based on their own manufacturing capacity.
Speaker 1: In other words, you can't make more cards than what
Speaker 1: your facility can produce, right, I mean that just makes sense.
Speaker 1: You can't, like, if you're limited to cards per day,
Speaker 1: you can't magically produce five hundred cards in a day.
Speaker 1: So we often see a problem where the demand for
Speaker 1: a new graphics card is way higher than the supply
Speaker 1: and the rate of production is such that bitcoin miners
Speaker 1: will keep on scooping up as many cards as they
Speaker 1: can until something better comes along, and then they repeat
Speaker 1: the whole process. Meanwhile, gamers find themselves struggling to track
Speaker 1: down a new graphics card. This also creates a pretty
Speaker 1: vicious aftermarket for graphics cards, because there are profiteers who
Speaker 1: will rush out and buy graphics cards as fast as
Speaker 1: they possibly can in an effort not to join bitcoin mining.
Speaker 1: Like they're not necessarily interested in mining bitcoin themselves instaid,
Speaker 1: what they want to do is sell off the cards
Speaker 1: they have bought at an incredible markup, like on eBay
Speaker 1: or whatever. These folks are exacerbating an already tough problem,
Speaker 1: and they probably don't really care if the person who's
Speaker 1: buying from them is a gamer or if it's a
Speaker 1: crypto minor. They're just looking to make a profit. And
Speaker 1: this brings us to the stopping the Grinch Act proposal
Speaker 1: in the United States. See One way to get an
Speaker 1: edge on others is to develop automated scripts or bots
Speaker 1: that shop for specific items faster than any human could
Speaker 1: possibly manage. So the idea is that you design a
Speaker 1: bot to go after something specific, like the latest graphics
Speaker 1: card from a specific manufacturer, and you buy up all
Speaker 1: the available stock as fast as you possibly can. Now,
Speaker 1: maybe you're doing it because you're a bitcoin miner and
Speaker 1: you just want to dedicate that to your sister. Stim
Speaker 1: Maybe you're doing it because you're a profiteer and you
Speaker 1: just plan to sell the cards to whomever wants them
Speaker 1: on the aftermarket for a huge markup. Either way, you're
Speaker 1: beating regular human customers to the punch. Well. In twenty nineteen,
Speaker 1: several US politicians introduced proposed legislation that would make it
Speaker 1: illegal for people to use those kinds of automated scripts
Speaker 1: or bots to get the jump on normal retail customers.
Speaker 1: And they call it the Stopping the Grinch Act, because
Speaker 1: the Grinch is a character from Dr SEUs who sneaks
Speaker 1: into a town on Christmas Eve to try and ruin Christmas,
Speaker 1: which partly involves him stealing all the presents in the town.
Speaker 1: While the two thousand nineteen version of this legislation stalled
Speaker 1: out in committees in Congress, but that was back in
Speaker 1: twenty nineteen. That was before, problems like the pandemic and
Speaker 1: the semiconductor chip shortage really made things worse now because
Speaker 1: of supply chain woes and shortages. The fear is that
Speaker 1: people using these automated scripts will make a tough situation
Speaker 1: even worse for millions of people who are just trying
Speaker 1: to do stuff like buy some gifts for their loved
Speaker 1: ones for the holidays. So, should this legislation pass, the
Speaker 1: Federal Trade Commission or FTC in the United States will
Speaker 1: be in charge of enforcing this law, and the hope
Speaker 1: is that this would create a more even playing field
Speaker 1: for everyone seeking certain retail items without fear that some
Speaker 1: automated bot is gonna scoop all of them up before
Speaker 1: you even have a chance to go to the store virtually,
Speaker 1: and we'll end up scalping these at a much higher
Speaker 1: cost down the road on other you know, sites like eBay.
Speaker 1: Of course, we might just see this legislation dying committee
Speaker 1: the way it did the first time. Okay, I'm gonna
Speaker 1: take a break here. Then then we're gonna join in
Speaker 1: with some more information about crypto mining and graphics cards.
Speaker 1: But first I'm gonna catch my breath. Okay, let's talk
Speaker 1: about the issue of ethereum miners going after graphics cards. Now,
Speaker 1: according to the John Petty Research Group, crypto miners bought
Speaker 1: up of all GPUs all GPUs in the first quarter
Speaker 1: of one, so one quarter of all GPUs on the
Speaker 1: market were claimed before gamers could get a chance at them. Now,
Speaker 1: that might sound like a bummer, but not too bad.
Speaker 1: I mean that means three quarters of GPUs we're not
Speaker 1: claimed by crypto miners like ethereum miners, right, But then
Speaker 1: you have to remember that crypto miners were targeting the
Speaker 1: best of the best, the highest end cards, specific graphics cards,
Speaker 1: which meant that a lot of gamers were left with
Speaker 1: cards that weren't at the highest of performance levels. And
Speaker 1: it's not that much fun when you're a gamer and
Speaker 1: you're trying to really invest in building out a good
Speaker 1: gaming PC. Then you find out you're gonna have to
Speaker 1: settle for less and the best because there's just none
Speaker 1: of the cards you want are available. Also, sometimes miners
Speaker 1: will choose to sell off used GPUs. This could happen
Speaker 1: for lots of different reasons. Let's say that the value
Speaker 1: of a certain cryptocurrency like Ether goes down. Well, if
Speaker 1: it goes down enough, it could get to a point
Speaker 1: where the cost of operation is so high that it's
Speaker 1: no longer profitable to run a large scale mining operation.
Speaker 1: You know, you'd be paying more money to run things
Speaker 1: than you would be making in mining. So that's one
Speaker 1: time when people might start selling off used GPUs. Or
Speaker 1: it might be that the miner is changing things up,
Speaker 1: maybe they want to switch to a different GPU, or
Speaker 1: maybe even the different system altogether, And so occasionally miners
Speaker 1: will sell off the GPUs they had been using to
Speaker 1: mine crypto. So the question is should you buy a
Speaker 1: used GPU from a mining operation, Well, you gotta keep
Speaker 1: in mind that those GPUs have been run for twenty
Speaker 1: four hours a day, seven days a week, for however
Speaker 1: long the operation was relying on them. Now, it's possible
Speaker 1: that a used GPU will be in good condition and
Speaker 1: that you'll be able to run it just fine, and
Speaker 1: that there won't be any appreciable difference in its useful lifespan. However,
Speaker 1: it's also possible that the mining operation was cramming as
Speaker 1: many components together as they could in order to conserve space,
Speaker 1: and if the card received insufficient cooling, because these cards
Speaker 1: do generate a lot of heat, and heat is bad
Speaker 1: for electronics, right, Well, not only are these cards generating
Speaker 1: a lot of heat individually, they're packed in with other
Speaker 1: cards that are also generating heat. So these these bitcoin
Speaker 1: mining operations get real hot if they are not sufficiently
Speaker 1: cooled down while then those cards could be damaged right
Speaker 1: just from being exposed to heat for so long. So
Speaker 1: that's something you need to look out for. It's possible
Speaker 1: that used GPU from a mining operation really doesn't operate
Speaker 1: at what it should anyway, because just the wear and
Speaker 1: tear and the heat wore it down. So it really
Speaker 1: all depends on the mining operation and how it was
Speaker 1: set up and how it was maintained. Also, you're not
Speaker 1: likely to see a big mark down in price. Yeah,
Speaker 1: it's a used GPU and it was used for months,
Speaker 1: but that doesn't mean it's going to be cheap. Doesn't
Speaker 1: mean it's even gonna be less than what the market
Speaker 1: prices for those cards, because they are still in such
Speaker 1: high demand. I mean, GPUs are are in such high
Speaker 1: demand that even a used one will end up being
Speaker 1: valuable enough that people are willing to pay market price
Speaker 1: or higher than if it were brand new, because again
Speaker 1: that the supply is so low compared to the demand. Uh,
Speaker 1: this is dependent upon the actual card and the region
Speaker 1: you're in and all that kind of stuff. But yeah,
Speaker 1: it's a harsh reality. Now I've said it a few
Speaker 1: times in this podcast, but when it comes to graphics
Speaker 1: cards used in crypto mining, we're typically talking about Ethereum
Speaker 1: and Ether rather than Bitcoin. Ethereum has some similar at
Speaker 1: east to bitcoin, but there are also a few major differences.
Speaker 1: For one, Bitcoin, as I mentioned earlier, has a cap
Speaker 1: of twenty one million bitcoin. There will never be more
Speaker 1: than twenty one million bitcoin in circulation. Ethereum does not
Speaker 1: have a cap. There are actually more than a hundred
Speaker 1: million Ether coins out there today and there's no cap
Speaker 1: on supply. Bitcoin's value, as I record this podcast, is
Speaker 1: more than fifty seven thousand dollars per coin. One Ether
Speaker 1: is equal to around four thousand, seven hundred dollars. Now
Speaker 1: four thousand, seven hundred dollars. That's a lot of money,
Speaker 1: but it's less than one tenth of what you would
Speaker 1: see with bitcoin, right and you only get to Ether
Speaker 1: per mind block. Remember right now, with Bitcoin it's six
Speaker 1: point two five bitcoin per block. Ether you only get
Speaker 1: to per block. However, you can also mind blocks more
Speaker 1: frequently in Ether than you can with Bitcoin, because with
Speaker 1: Bitcoin it's unblocked every ten minutes. With Ether it's one
Speaker 1: block every fifteen seconds on average. So you do get
Speaker 1: smaller payouts per block with a bit more than nine
Speaker 1: grand in value of ether mind per block, but you
Speaker 1: also have way more blocks mind per day, so it
Speaker 1: is a different beast from Bitcoin. Graphics cards are still
Speaker 1: the rage when it comes to mining Ether, but for
Speaker 1: Bitcoin many miners have moved on to heavier artillery in
Speaker 1: the form of a S I C S or a
Speaker 1: SEX If you prefer and FP G A S or FOOTCAS.
Speaker 1: I guess you don't. I guess you don't actually pronounce
Speaker 1: the the initialism. Okay, So, and a s I C
Speaker 1: is an application specific integrated circuit. So remember how I
Speaker 1: said CPUs are general purpose machines and GPUs are more
Speaker 1: specialized machines. Well, the A s I C is even
Speaker 1: more specialized than a GPU. This is a cir it
Speaker 1: that has been hard coded to do a specific task.
Speaker 1: It cannot do other stuff because that's just not how
Speaker 1: the circuit is wired. So an A s I C
Speaker 1: can be optimized to do something ultra specific and do
Speaker 1: it wicked fast. A lot of bitcoin miners have spent
Speaker 1: a huge amount of money developing A s I C machines.
Speaker 1: They are more expensive than your typical computers are, and
Speaker 1: they have finally tuned these A s I C machines
Speaker 1: specifically to generating those hash value guesses in order to
Speaker 1: mine bitcoin. It's not something that would necessarily be economical
Speaker 1: for ether mining because again, the scale of the payout
Speaker 1: is different, so you wouldn't necessarily use these to mine ether.
Speaker 1: There'd be too expensive to acquire and maintain, you wouldn't
Speaker 1: get enough of a payout for it to be worthwhile.
Speaker 1: But for Bitcoin it makes total sense because of the
Speaker 1: scale of the value. As for f p g A,
Speaker 1: that stands for fuel programmable gate array, this is another
Speaker 1: type of integrated circuit. It is very similar to a
Speaker 1: S I C with one major difference, and that is
Speaker 1: with a s I C, what you have is what
Speaker 1: you got right. It's kind of like the old style
Speaker 1: video game cartridges. You can't write to it, you can't
Speaker 1: change it. You're limited to whatever was hard coded programmed
Speaker 1: on the circuit board itself. But an f p G
Speaker 1: A is at least slightly alterable, slightly programmable so you
Speaker 1: can make changes to it. Only recently have fpg as
Speaker 1: started to reach a level of performance that puts them
Speaker 1: on par with A S I C systems. Before that,
Speaker 1: they were considered much slower and less efficient than A
Speaker 1: S I C s, so you didn't see them as
Speaker 1: much in bitcoin mining operations. That's starting to change, by
Speaker 1: the way, the bitcoin situation eventually will change dramatically, because
Speaker 1: either we'll get to a point where the number of
Speaker 1: bitcoin your that you mind per block is gonna drop
Speaker 1: to a level where it just doesn't make financial sense
Speaker 1: to run expensive operations, or we'll get to a point
Speaker 1: where the miners all become just auditors because there's no
Speaker 1: more bitcoin to mind. They're only paid in transaction fees,
Speaker 1: and it wouldn't make sense to run these super huge
Speaker 1: bitcoin mining operations anyway, and they'll all fade out. So
Speaker 1: it's hard to say temporary problem, because it's a problem
Speaker 1: that could potentially last beyond all of our lifetimes, since
Speaker 1: bitcoin will continue to be mined until but it isn't
Speaker 1: a problem that lasts forever with bitcoin right. Also, we
Speaker 1: have to remember that as the amount of computational power
Speaker 1: reduces in the bitcoin system, the problem. Uh, difficulty will
Speaker 1: also reduce, so it will become easier to get to
Speaker 1: that hash value uh as more computers drop out the
Speaker 1: bitcoin system. So it is one of those things that
Speaker 1: will correct itself in theory over time. Obviously, if the
Speaker 1: value you a bitcoin continues to skyrocket, this will persist
Speaker 1: longer and longer. Right, I mean we know that in
Speaker 1: a couple of years the number of bitcoin released per
Speaker 1: block is going to be cut in half yet again, right, Well,
Speaker 1: if it gets to a point where that number of
Speaker 1: bitcoin and the value of bitcoin falls below what would
Speaker 1: mean operational costs, we'll see a drawbag change. But if
Speaker 1: the bitcoin value goes up, like let's say it's a
Speaker 1: hundred fifty thou dollars per bitcoin, then people are gonna say, no,
Speaker 1: it's still totally makes sense to keep to keep pushing
Speaker 1: as hard as we can because the value is so high.
Speaker 1: So it's depended upon a lot of variables, all right.
Speaker 1: That finally sets us up to talk about what the
Speaker 1: heck and l h R graphics card is. So this
Speaker 1: was introduced by Nvidia earlier this year, and LHR stands
Speaker 1: for light hash rate l i t e. Hash rate,
Speaker 1: and you can probably make some guesses as to what
Speaker 1: that means. Now, essentially, this technology is intended to check
Speaker 1: for signs that the card is just being used to
Speaker 1: mine cryptocurrency by generating hash values. So when the card
Speaker 1: detects this, the idea is that it cuts that hash rate,
Speaker 1: that is the speed at which the card can make
Speaker 1: these kinds of guesses, and these are the kind that
Speaker 1: relate to proof of work cryptocurrencies like Ethereum, one point
Speaker 1: oh and Bitcoin. So in other words, the card hamstrings
Speaker 1: itself if it determines that it's being used for mining cryptocurrency.
Speaker 1: Now that is a huge disincentive for crypto miners obviously.
Speaker 1: I mean they want cards that will give them the
Speaker 1: advantages they need to outperform all the other miners that
Speaker 1: are going after Ethereum in this case, so they would
Speaker 1: naturally avoid cards that would essentially slam on the brakes instead. Also,
Speaker 1: the LHR cards have a higher power draw rate. That
Speaker 1: means they need more electricity to run, So that means
Speaker 1: you have you have cards that are not going to
Speaker 1: process hash values as quickly as other cards are, and
Speaker 1: they're drawing more power than other types of cards are.
Speaker 1: That means they're also more expensive to operate if you're
Speaker 1: running them seven. Technically they're more expensive to operate for
Speaker 1: gamers as well, but your your average gamer isn't playing
Speaker 1: twenty four hours a day, seven days a week, so
Speaker 1: it doesn't accumulate as much. It is a bigger expense,
Speaker 1: but hopefully not as um prohibitive as it would be
Speaker 1: for a bitcoin or rather ethereum mining operation. Now you
Speaker 1: might wonder if this LHR technology would also inhibit gameplay,
Speaker 1: Like if you hear, oh, this graphics card is designed
Speaker 1: to put out half it's uh it's output under certain conditions.
Speaker 1: Does that mean that when I fire up you know,
Speaker 1: the latest game, uh, that everything's gonna perform more poorly,
Speaker 1: Like I'm not gonna get the graphics quality and speed
Speaker 1: that I expect. I'm not going to get the phrase
Speaker 1: per second that I want. The answer to that is no,
Speaker 1: because that doesn't relate to generating hash values. As long
Speaker 1: as whatever you're doing doesn't relate to generating hash values,
Speaker 1: then the cards not gonna kick in that that break system.
Speaker 1: In other words, now, the video's approach is not perfect.
Speaker 1: When the company released the g E Force r t
Speaker 1: X thirty six, they did so with including the LHR limited.
Speaker 1: When it started releasing it's it's thirty or three thousand line.
Speaker 1: Some of the earlier ones came out before in Video
Speaker 1: had developed LHR, so they don't have an inhibitor on
Speaker 1: them at all. They can be run at the full
Speaker 1: speed that's f HR full hash rate. But the thirties
Speaker 1: sixty came out with an LHR limitter. However, in Video
Speaker 1: accidentally included in a beta driver for the card away
Speaker 1: to deactivate the limitter. Essentially, it's like removing a limited
Speaker 1: on a on a car so that it can exceed
Speaker 1: its quote unquote top speed. Same sort of thing here,
Speaker 1: Like you could deactivate that and then run the card
Speaker 1: as a full hash rate card, and that meant that
Speaker 1: crypto minors could use the thirty sixty without worrying about
Speaker 1: the LHR slowing things down. And Video went back to
Speaker 1: the drawing board and reportedly make sure that newer cards
Speaker 1: will integrate LHR elements closer to the firmware to make
Speaker 1: it more difficult to bypass it. That doesn't mean that
Speaker 1: minors won't try to find ways to crack the limitter
Speaker 1: and deactivate it. Currently, the r t X thirty seventy
Speaker 1: t I and the thirty E t I cards still
Speaker 1: are light hash rate only that's the only version that
Speaker 1: that in videos cells of those two cards. I can
Speaker 1: guarantee you there are people who are working to find
Speaker 1: ways to crack the LHR limitters. Okay, we have a
Speaker 1: little bit more to talk about, but I've been going
Speaker 1: on for a long time. Let's take another quick break
Speaker 1: and we'll be right back. So I think this issue
Speaker 1: with light hash rates and graphics cards and the the
Speaker 1: desire for miners to get around it is going to
Speaker 1: be a bit of a c solve problem in the
Speaker 1: short term. Um, as long as there is money to
Speaker 1: be made mining ether through proof of work, then people
Speaker 1: are going to explore every possible avenue in order to
Speaker 1: make that money, as long as the amount they're investing
Speaker 1: is less than what they're going to get as a payout. Again,
Speaker 1: if we eventually, if this all revolves around money, if
Speaker 1: it eventually gets more expensive to do than you make
Speaker 1: out of it, then it doesn't make sense to keep
Speaker 1: doing it. Eventually you'll bankrupt yourself trying to do it.
Speaker 1: So if in videos implementation strong enough and hard enough
Speaker 1: to crack, not not perfect, but hard enough that could
Speaker 1: be enough to push crypto miners to look at different
Speaker 1: graphics cards and just avoid in video graphics cards because
Speaker 1: they have to spend time to crack that LHR protection
Speaker 1: and time is money. If they take too long to
Speaker 1: crack LHR before the next round of graphics cards are released,
Speaker 1: well then it's a waste of effort, right because there
Speaker 1: are better cards that are already on the market. So
Speaker 1: that's the ideas. It doesn't have to be perfect, it
Speaker 1: just has to be hard enough where there's no reason
Speaker 1: to go that route, you can go some other way.
Speaker 1: And not all companies are working to discourage crypto mining.
Speaker 1: Both A m D and Intel are not incorporating any
Speaker 1: sort of crypto limited on their graphics cards. And you
Speaker 1: might even say, well, of course, why would they. I mean,
Speaker 1: the crypto miners represent valuable customers. They demand the best
Speaker 1: performing cards on the market, so their guarantee, right, You
Speaker 1: don't have to even market to them. You just have
Speaker 1: to make a screamingly fast card. So while in videos
Speaker 1: trying to cater to a specific customer base that of gamers,
Speaker 1: other companies don't necessarily worry about that. Now that could
Speaker 1: work in gamer's favor if they happen to like in
Speaker 1: Video's cards, because if the crypto minors all go to
Speaker 1: Intel an a m D that frees up in video
Speaker 1: means that there will be a greater supply of those
Speaker 1: cards and gamers will actually be able to get their
Speaker 1: hands on them. If the gamers instead prefer a m
Speaker 1: D or Intel, well, then they're still competing with the
Speaker 1: crypto minors. Something else that will likely have a massive
Speaker 1: impact on this whole situation is that Ethereum is actually
Speaker 1: headed toward a different method than proof of work. That's
Speaker 1: how you currently mine ether. Proof of work is the
Speaker 1: same way that bitcoin works. Right that you have these
Speaker 1: computer systems that are putting out all this this computational
Speaker 1: power to race to get to an answer first, Well,
Speaker 1: Ethereum is going to move away from proof of work
Speaker 1: and head toward proof of steak s T a k E.
Speaker 1: So in that strategy, participants in the ether community who
Speaker 1: want to mine ether will have to put a steak
Speaker 1: of some of their ether toward the chance to earn
Speaker 1: more ether from mining. So, in other words, they're dedicating
Speaker 1: some percentage of the ether they own towards this process.
Speaker 1: And the more you stake, the more you dedicate to this,
Speaker 1: the better the odds are that you'll earn more ETHER.
Speaker 1: This quickly becomes a system that rewards the people who
Speaker 1: have the most already, or at least who are willing
Speaker 1: to stake the most already. And there's other problems with that,
Speaker 1: but we won't get into it. But you know, there's
Speaker 1: no hash value guessing in this approach, so there's not
Speaker 1: nearly the same need for computational power. That means that
Speaker 1: that hold scent of structure that is feeding this frenzy
Speaker 1: around graphics cards falls away, at least for ethereum, so
Speaker 1: it will no longer tie to graphics cards, and all
Speaker 1: those miners who are currently pushing so hard to mind
Speaker 1: ether will be in possession of very expensive and largely
Speaker 1: useless hardware. Right, they'll have these computers with screamingly fast
Speaker 1: GPUs that are expensive to run. But since it's no
Speaker 1: longer a proof of work system, those systems won't won't
Speaker 1: do them any good. Those computers won't do them any good. Uh.
Speaker 1: They could switch to mining a different proof of work cryptocurrency,
Speaker 1: because there's no shortage of different cryptocurrencies out there. There
Speaker 1: are hundreds of them. Uh. That and many of them
Speaker 1: still use proof of work. There's some that use proof
Speaker 1: of steak, but a lot most of them use proof
Speaker 1: of work. However, a lot of those currencies are built
Speaker 1: on top of the Ethereum blockchain, so things are going
Speaker 1: to change for them, Plaut. A lot of those currencies
Speaker 1: have a fraction of the value of Ether, so yeah,
Speaker 1: you could use them to mind these other types of crypto.
Speaker 1: But if you know, like one Ether is worths and
Speaker 1: one of these other cryptos is worth point zero to
Speaker 1: five dollars, well it wouldn't make financial sense to dedicate
Speaker 1: your screaming fast system two getting loose change, right, You
Speaker 1: wouldn't be making a profit. Plus, uh, you know, the
Speaker 1: GPU miners aren't likely to scale up to bitcoin, at
Speaker 1: least not with GPUs, because they wouldn't be able to
Speaker 1: compete against the bitcoin miners who are using a S
Speaker 1: I C systems out there, because GPU just can't match that.
Speaker 1: So the ethereum miners out there are working on borrowed
Speaker 1: time at least as the current ethereum process works, and
Speaker 1: once Ether switches is to proof of steak sometime in
Speaker 1: two at least that's the plan, we should theoretically see
Speaker 1: a decline in demand for graphics cards from the crypto community.
Speaker 1: That should, in theory, give gamers a greater supply and
Speaker 1: lower the costs for those graphics cards. Uh, you know,
Speaker 1: there won't be as strong of an aftermarket for them.
Speaker 1: I think that will be a good thing, And it
Speaker 1: would also mean that LHR might not be as important
Speaker 1: unless some other proof of work cryptocurrency gains a ton
Speaker 1: of popularity, in which case the whole process will start
Speaker 1: up again. Now, I might do another episode down the
Speaker 1: line to talk about some of the other limitations of cryptocurrencies,
Speaker 1: with Bitcoin being the prime example, and I might really
Speaker 1: focus on things like the number of transactions that a
Speaker 1: system can handle per given unit of time. Bitcoin has
Speaker 1: a scaling issue when it comes to processing transactions. The
Speaker 1: limitations on the size of the blocks in the blockchain
Speaker 1: and the fact that you only generate a new one
Speaker 1: every ten minutes means that Bitcoin is limited to processing
Speaker 1: a fraction of the number of transactions per minute that
Speaker 1: a centralized company like Visa could handle. Like I think
Speaker 1: it's like three eight times slower something like that, Like
Speaker 1: it's it's it's it's just in other words, for Bitcoin
Speaker 1: to work as a currency, so that people can use
Speaker 1: it for regular transactions, then it has to be faster
Speaker 1: at processing those transactions. Otherwise you're waiting forever for a
Speaker 1: transaction to be verified, and that slows everything down. The
Speaker 1: entire capitalist system that we use right now is built
Speaker 1: on speed, and this would be a reversal of that. However,
Speaker 1: that's kind of a moot point, at least at the moment,
Speaker 1: because right now bitcoin is really more of a speculative
Speaker 1: investment and it's less of a currency. So it kind
Speaker 1: of doesn't matter because we don't see the number of
Speaker 1: transactions reaching anything close to what VISA handles because people
Speaker 1: aren't buying and selling or they're not they're not spending
Speaker 1: bitcoin at that kind of pace. Uh, they're more people
Speaker 1: are investing in bitcoin. They're buying it, but then they're
Speaker 1: holding onto it and hoping that that investment grows up,
Speaker 1: and it might not be for another century or so
Speaker 1: before we see that change, so we've got some time anyway.
Speaker 1: My hope is that the combination of LHR technology and
Speaker 1: the oncoming merge of ethereum one point oh, which is
Speaker 1: the proof of work version, with Ethereum two point oh,
Speaker 1: which is the proof of steak version, well, mean, we'll
Speaker 1: see some relief for gamers out there. I know I
Speaker 1: have been putting off putting together a gaming rig until
Speaker 1: that stuff is a little less hectic. The combined problems
Speaker 1: of profiteers who are buying up cards and selling them
Speaker 1: at huge markups. Then you've got the crypto minors who
Speaker 1: are champing at the bit to scoop up cards left,
Speaker 1: right and center. And then you've got the semiconductor shortage
Speaker 1: and all the supply chain issues that are already made
Speaker 1: the expensive activity of building out a gaming rig to
Speaker 1: become prohibitively expensive, at least for me. Here's hoping for
Speaker 1: better days and better gaming ahead. All right, that's it
Speaker 1: that you and I know that that went well beyond
Speaker 1: what the heck is an LHR gaming or graphics card.
Speaker 1: But really, I think to appreciate why it's necessary we
Speaker 1: had to go through all of that and to kind
Speaker 1: of get a handle on the landscape of crypto, it
Speaker 1: is possible that will we will see bitcoin miners return
Speaker 1: to graphics processing cards in the future if the value
Speaker 1: of bitcoin drops to a point where it would be
Speaker 1: prohibitively expensive to run as a systems or a s
Speaker 1: I C. Systems, and you would want to downgrade because
Speaker 1: otherwise you'd be losing money by I mean, that's a Again,
Speaker 1: that's a delicate balancing act that will be dependent upon
Speaker 1: the value of bitcoin and what other miners are doing.
Speaker 1: So we'll have to wait and see how that all
Speaker 1: shakes out over the next few years. Um, I'm still
Speaker 1: not like you could say I have a bias against crypto,
Speaker 1: and I think that would be totally fair for you
Speaker 1: to say that I am not a huge crypto fan.
Speaker 1: I feel like it's it's not a Ponzi scheme, at
Speaker 1: least not in the purest sense of the word. But
Speaker 1: I do feel like it's yet another system that consolidates
Speaker 1: an enormous amount of wealth among a very tiny group
Speaker 1: of stakeholders at the expense of everyone else, and that
Speaker 1: it doesn't really benefit society in any way apart from
Speaker 1: like the small number of stakeholders who are making crazy
Speaker 1: bank on the whole thing. Ah, but hey, that's my opinion,
Speaker 1: and and I fully admit there are plenty of evangelists
Speaker 1: out there who love crypto who would disagree vehemently with me,
Speaker 1: and I'm not saying they're wrong, And then I'm right
Speaker 1: it's just kind of my own perspective. If you have
Speaker 1: suggestions for future episodes of tech Stuff, kind of like
Speaker 1: the one we just did today, reach out to me
Speaker 1: on Twitter. The handle for the show is text Stuff H.
Speaker 1: S W and I'll talk to you again really see.
Speaker 1: Text Stuff is an I Heart Radio production. For more
Speaker 1: podcasts from my Heart Radio, visit the i Heart Radio app,
Speaker 1: Apple Podcasts, or wherever you listen to your favorite shows.