We’ve powered up the miner and can confirm that its little red light turns on, that it burns hot, and that it makes the sound of a toy hair dryer. Whether it will melt or make you rich or not remains to be seen.

Bitcoin mining is a bit of a zero-sum game. The Bitcoin peer-to-peer network produces 25 bitcoins every 10 minutes. That’s a constant. But people who have more cryptographic processing power have a better chance of winning those 25 bitcoins, and these days, there’s an ongoing race to up the compute power on the network.

Butterfly Labs is one of a handful of companies that has taken this race to the next level, producing custom processing machines that are designed to radically up your Bitcoin mining capacity.

The problem is that Butterfly has had a hard time delivering its systems. A really hard time. And to make matters worse, its customers started paying for these systems on pre-order back in June. Butterfly says it has thousands of orders on the books, but to date, it has only delivered 35 to 40 of them, according to Josh Zerlan, chief operating officer of Butterfly Labs.

So most of the people who shelled out the $274 it costs for one of these systems back in June are still waiting. And they’re mad.

They’re mad, because other companies — most notably Avalon Asics — have shipped hundreds of their own custom-chip machines. That’s already made the Bitcoin mining game harder than it used to be. One miner said that he was generating more than 15 Bitcoins per day with a 67-Gigahash-per-second Avalon rig he set up in late January. As of this week, his daily production had dropped to 4 Bitcoins.

And Avalon expects to put another 1,200 systems into the Bitcoin network in the next month or so.

Meanwhile, Butterfly Labs is nowhere near full production capacity. The company says that its systems will continue to trickle out, with another 75 to 150 shipping in the next few weeks.

In the meantime, if you have any questions about the Butterfly Labs machine, send us an email.

According to antivirus seller Kaspersky Lab, there’s a new Trojan — spotted just yesterday and spreading via Skype — that takes control of infected machines and forces them to do known as Bitcoin mining, a way of earning digital currency.

The Bitcoin digital currency system rewards miners (in Bitcoins, natch) for their number-crunching work, which is essential to keeping the anonymous Bitcoin currency system working. With the Trojan, hackers are forcing others’ machines to earn them money, and it can really put a strain on these machines. Victims might notice that their CPU usage shoots sky high.

Yesterday, the Trojan was spreading via Skype messages. In one Spanish message obtained by Kaspersky, the Trojan was supposed to be a “favorite” picture of the victim.

About two thousand people per hour were clicking on the website hosting the Trojan software, Kaspersky said. “Most of potential victims live in Italy then Russia, Poland, Costa Rica, Spain, Germany, Ukraine and others,” Kaspersky Researcher Dmitry Bestuzhev wrote in a blog post.

Once computer criminals have tricked you into downloading a Trojan, they have control of your computer, and there are a lot of things they could do. And the Trojan isn’t only used for Bitcoin mining, Kaspersky says.

This isn’t the first time a Bitcoin mining Trojan has popped up, and malicious software that flat-out steals bitcoins has been around for years. Two years ago, Symantec spotted a Trojan — calledBadminer — that sniffed out graphical processing units and used them to crank out bitcoins.

A regular PC wouldn’t be able to do much Bitcoin mining on its own, but hackers could pretty easily register a group of compromised computers with a specific Bitcoin mining pool and point all of the systems there, according to Charlie Shrem, the founder of Bitcoin payment processor Bitinstant. “If he infiltrates a million computers, then it will pay off,” he said in an email message.

Bitcoins have been on a price surge lately. Right now, they’re trading at about $140, about ten times their value at the end of last year.

Maybe that makes mining a little more attractive to the bad guys.

Like the currency itself, this strangely lucrative game is heating up — in a big way. One mining rig — available for preorder at a cost of about $1,800 in February — is now selling for more than $22,000 on eBay. And it hasn’t even shipped yet.

Over the past year, a handful of companies have raced to build a new generation of computers that are specifically designed to mint digital money, and many speculators across the Bitcoin world are dying to get their hands on the latest hardware. This week, one of these companies, Butterfly Labs, is finally shipping its first custom-designed machines, six months behind schedule.

If Bitcoins are the fiat currency alternative for techno libertarians, then Bitcoin miners are the digital mint operators who keep the whole thing running. Bitcoin transactions are not registered with any central bank or brokerage firm or website. They’re logged by a peer-to-peer network of computers. These computers keep track of who’s transferring Bitcoins to whom, and then — every 10 minutes — they enter a kind of cryptographer’s lottery, with the winner getting paid 25 Bitcoins for their work. That’s how new Bitcoins get into the network. It’s also how the Bitcoin miners earn their keep.

For Bitcoin miners, the name of the game is cryptography. And the lottery ticket is a hash — a number that represents a big bunch of data and is created via cryptographic algorithms. If one miner — or a group of miners — can take the transactions on the Bitcoin network and convert them into more cryptographic hashes faster than someone else, they have a better chance of winning that 25 Bitcoin payout. As Bitcoins have skyrocketed in value, the Bitcoin miners have been throwing more and more computing power onto the network.

When Bitcoins were first introduced, you could win the hashing lottery with a regular old personal computer. Now that’s pretty much impossible. In fact, it now takes about 9 million times as much processing power to produce Bitcoins as it did in the beginning. So, for any Bitcoin miner to have a reasonable chance of winning, they have to seriously up their game.

That’s where the new mining gear comes into play.

In the past year, three companies, Butterfly Labs, Avalon Asics, and Asicminer led a race to produce a new generation of computers built with custom-designed chips (they’re called ASICS: application-specific integrated circuits) that do nothing but create tickets for the Bitcoin mining lottery.

You plug one of these machines into your computer, run special mining software, and sit back and wait for the Bitcoins. But they’re so powerful that they’re making things harder for other miners. “The difficulty has been skyrocketing lately as these ASICS have been coming online,” says Gavin Andresen, chief scientist with the Bitcoin foundation.

Last summer, Bitcoin miner Scott Novich bet on Butterfly Labs. It seemed like a reasonable bet at the time because Butterfly had already shipped specialized Bitcoin mining rigs that, when pooled with other miners, were cranking out an average of four to six Bitcoins per month for Novich, a graduate student at Rice University. Butterfly had the best reputation; it had shipped well regarded mining rigs in the past. And its miners — which look like stretched out versions of the Roku media player — simply looked cool.

So last July, Novich and a few friends shelled out an advance payment of about $1,200 for a Butterfly miner that the company said would be able to perform more than 60 billion hashes per second. His current mining rig performs 750 million hashes per second.

The Butterfly gear was supposed to ship by November. Today Novich is still waiting.

The problem was that Butterfly — based out of Kansas City, Missouri — banked on a cool design and a brand new chip manufacturing process and ended up getting in over its head. “We’ve hit quite a few snags along the way, says Butterfly Chief Operations Officer Josh Zerlan.

The company had to redo its initial chip designs, but the worst snag was in November, when the Butterfly got a hold of its first chip samples. They were basically too hot to work, Zerlan says. “The plastic packaging on the top of the chip just couldn’t exhaust the heat fast enough, so it basically melted the package.”

And so, with customers growing angrier by the day, Butterfly was soundly beaten in the great Bitcoin mining race by Avalon Asics. Avalon used a less-cutting-edge chip manufacturing process, and it didn’t pay too much attention to aesthetics, but it managed to ship out its first boxy, 67 Gigahash units back in February.

To hear CEO Yifu Guo tell it, Avalon won because they bet everything on a network of friends, college buddies, and acquaintances in China — who helped them build their first 300 systems in four months. After spending September and October last year working with “friends or people that were really smart” designing the systems, Guo flew to Shenzhen, China, where he spent another two months negotiating with the suppliers who would help him build his Bitcoin mining machines.

Guo called on his network to lend him cars, to introduce him to parts suppliers, even to ship packages. Avalon had sketched out the chip in the U.S., but it then paid (using Bitcoins, natch) a group of engineers at a Chinese computer company to build out the chip’s design using specialized chip-making software that created specifications that the chip’s manufacturer, Taiwan Semiconductor Manufacturing Company, could actually use.

“Nothing happens in Asia if you don’t know somebody. It doesn’t matter how much money you have,” Guo says. “That’s really what it came down to.”

Those folks who’ve been lucky enough to get their hands on one of these early Avalon systems are cleaning up. Miner Jeff Garzik was the first person to take possession of a Avalon machine. Last year, he plunked down preorder money for a variety of custom ASIC rigs, including $1,300 for his Avalon system. “At the time, it was a very risky bet,” he said in an email interview. “None of the ASIC vendors were shipping, and all were funding their efforts through a pre-order model, akin to Kickstarter. This meant any buyer was paying months in
advance for hardware that did not exist, and not even a guarantee of a refund upon failure.”

But Garzik’s Avalon bet paid off. Big time. He got his system the end of January. Within 20 hours, it had earned him nearly 15 Bitcoins. Today it cranks out just under 4 Bitcoins per day. That’s about $500 at current Bitcoin exchange rates. “The first mover advantage is enormous,” Garzik said in an email interview.

Avalon expects to ship another 1,200 rigs within the next month.

Until this week, Butterfly customers like Novich had been left on the sidelines, watching the compute power on the Bitcoin network rise up, day by day, while they waited.

Butterfly’s Zerlan says the experience has been “very painful” and some customers are extremely angry. But reviewers and first-in-line customers are finally getting their hands on Butterfly’s systems. Zerlan says that customers will still be able to make money mining Bitcoins. It will just take more time.

But with each new computer that ships, and each new adventurer that gets into Bitcoin mining, the bar is getting higher. Butterfly has already taken thousands of orders for the new systems. And Asicminer, which is both selling its own custom-designed machines and mining the Bitcoins itself, has already brought new custom ASIC systems to play.

So a year from now, the 750 megahash mining rig that Scott Novich is running at home may not be worth the power it sucks up. It really depends on how much a Bitcoin is worth in 2014. And that’s anyone’s guess.

Intel builds out its API portfolio with another acquisition. Steam Gaming Platform sees huge adoption and plans API. Plus: Learn why API security is critical and 8 new APIs.

Intel acquires API Company Aepona

Intel, which acquired API Management company Mashery recently, is not yet done. Aepona, which provides API management tools to track location, device type and other features tied to a mobile connection, has been acquired. This latest acquisition clearly shows that Intel is focused on a future of connected devices and it sees APIs as the glue that will bring that vision to reality.Aepona  will be integrated into the Intel’s Services Division.

Online Gaming Platform Steam To Offer API?

Steam, an online game platform that distributes and manages thousands of games to a 50 million+ community of gaming enthusiasts is planning torelease an API. The online platform allows game developers to submit game proposals and allows a community of users to vote and greenlight it. If the game is Greenlit, Steam contacts the developer to help develop and move the game to their online platform. The API if released would help Developers get early access to Steam platform features and ensure that the devs are already integrating Steam features and making the game ready and optimized for the platform.

8 New APIs

Today we had 8 new APIs added to our API directory including a bitcoin sentiment polling service,a bitcoin game service, a national digital library, a parallel sdk management service, a bulk sms service and a swedish statistical database. Below are more details on each of these new APIs.

Bitcoin Sentiment API: Bitcoin Sentiment is a polling site where users vote on the future price of Bitcoins. The site also offers charts of the sentiment data, and makes the data freely downloadable. The Bitcoin Sentiment API allows users to send votes to indicate bullish or bearish prospects for the Bitcoin economy, and get data from Bitcoin Sentiment. The services uses REST calls and is free to use.

Block Chain Roulette API: Block Chain Roulette is a Bitcoin game that rewards users who correctly guess a random number that is generated by solving a new Bitcoin block. The Block Chain Roulette API gives users access to URLS to enable them to create their own roulette playing bots. The API has queries that can get a list of all possible bets, get a list of all bests made on the table, get a list of the last 50 bets, and get a list of blocks processed and spin results.

Digital Public Library of America API: The Digital Public Library of America (DPLA) is designed to bring together content from America’s libraries, archives, and museums and make them freely available online. Its goal is to make the written words, art, historical records, and science of the U.S. available as widely as possible. DPLA users can search the millions of items in the catalog, save items in lists, and share those lists with others.

The DPLA API provides a programmatic method for accessing the metadata for items stored by the DPLA. Among other information, each metadata record contain a link to the object’s location on the content provider’s website.

Groovy enVironment Manager API: The Groovy enVironment Manager (GVM) helps users manage parallel versions of software development kits (SDKs) on Unix-based systems. It provides a command-line interface for installing, switching, removing, and listing candidates. Although the GVM API’s primary purpose is to work with the GVM clientside bash scripts, it can also be used by other clients.

SMS Fastly API: SMS Fastly is a bulk SMS service that provides coverage for 160 countries. Text messages sent through the service can be up to 160 characters long, though a “concatenated SMS” method is available for longer messages. SMS Fastly offers an API that lets resellers give their users a means of sending SMS without using the web interface on the reseller’s site. This API functions using HTTP GET (REST) calls.

Statistics Sweden API: Statistics Sweden is an administrative agency that supplies statistics for decision-making, debate, and research purposes. It primarily serves government agencies but will sometimes provide statistical data to private researchers. Statistics Sweden provides an API for accessing any table or part of a table from their Statistical Database. The API can be used without registration and is currently in beta.

TheBigDB API: TheBigDB is a loosely-structured database that is free and open to the public. It contains miscellaneous facts stored as statements, which are simply arrays of nodes that anyone can create, upvote, or downvote. TheBigDB has no datatypes, namespaces, lists, or domains. Users can search through the nodes programmatically using REST calls issued in JSON format.

Weather Source API: Weather Source is a service that provides weather data. Weather Source provides weather data for clients in multiple industries for multiple purposes. Weather Source provides historical weather data and reports, weather forecast data, and astronomical reports.

The Weather Source API allows developers to access and integrate the functionality of Weather Source with other applications and to create new applications. Some example API methods include managing account information, retrieving weather history data, and retrieving astronomical data.

If you opened your virtual wallet, looked down on your collection of Bitcoins and wondered ‘What on earth can I spend these on?’,

then today is your lucky day. Double Fine are now accepting the digital currency for their Humble Bundle, so you can now trade them for the likes of Psychonauts, Stacking, and Brutal Legend.

Take a trip over to the Humble Bundle website. It would be a far more advisable place to spend your virtual money, rather than the ‘Illicit drug and gambling’ areas of the web that Wikipedia reliably informs me Bitcoins are often used for. Your money goes to charity and/or Double Fine, and you can grab yourself an awesome game in the process.

As of March 18, 2013, FinCEN requires certain people and entities that deal with virtual currencies to register as a Money Services Business (MSB).I Deal With Virtual Currency. Do I Need To Register as an MSB With FinCEN? What Happens If I Don’t?

This post is meant to help people who deal with virtual currencies in their daily life to get better understanding of: (1) What is an MSB?; (2) Who needs to register as one?; and (3) What are the penalties for failing to register? (some doom and gloom)

What Is an MSB?

A Money Services Business is a type of business that provides various money related services to its customers. This may be check cashing, wiring money through Western Union, or bill payments.

The United States Treasury Department defines an MSB more specifically here. The definition of an MSB “includes, among other things, money transmitters.”

A money transmitter is a vehicle FinCEN uses to bring virtual currency exchangers and administrators under the definition of an MSB:

“An administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person.” (FIN-2013-G001, p1)

Money transmitter businesses commonly charge a fee for taking money from a person in one location, and delivering it to a person in another one. Common examples of money transmitters include Western Union, Money Gram, and PayPal.

Overall any person or company engaged in a business of charging a fee for money transmitting services may fall under the definition of a money transmitter, because the FinCEN regulation is broad enough for that:

“Whether a person is a money transmitter as described in this section is a matter of facts and circumstances.”

The same regulation tells us that a person is not a money transmitter if all he is doing is giving access to a network through which the money is moving, or if the person physically moves the money. A person is not a money transmitter if all he does is act as a clearing house between sender and receiver.

All of this legalese makes a difference in determining who needs to register with FinCEN as an MSB.

Who Needs to Register With FinCEN as an MSB?

In general, the United States government requires all MSB’s to register with FinCEN. Registration needs to happen within six months from starting a business, or in case of virtual currency within six months of the March 18, 2013 guidance statement.

Virtual Currency Exchangers and Issuers Must Register

No mystery with this one. Any company that issues or exchanges virtual currency must register with FinCEN, either by themselves or through their agent.

Linden Lab will have to register. Linden Lab issues virtual currency. No surprises there.

Mt. Gox itself probably does not need to register with FinCEN. The regulation directs foreign owned MSB’s to designate an agent. An agent is someone who agreed to be an agent with respect to Treasury-related compliance. Mt. Gox’s has such an agent in the United States, which is CoinLab.

“Virtual Currency Makers” May Fall Under Exception

It is really unfortunate that FinCEN decided to apply Treasury Department regulations to all virtual currency folks through the definition of Money Transmitter. Using the definition of a currency exchanger instead of a money transmitter would have made things so much easier. Here is why.

This regulation makes an exception for currency exchangers who transact currency exchages in the amount greater than $1,000 on any given day. This would have made life a lot easier for some bitcoin miners — most of whom probably make way less than $1,000 a day from their mining activities. The problem is that FinCEN classifies virtual currency exchangers and administrators as money transmitters, and not as currency exchangers.

A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange. Virtual currency does not meet the criteria to be considered “currency” under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN’s regulations. (See pages 5 and 6.)

In a previous article, I explained how anybody who sells virtual currency for any reason may be considered an exchanger or an administrator under existing FinCEN guidance on virtual currencies. Consequently, anyone who sells their virtual currency for any reason other than to purchase goods with it is a money transmitter.

There may be a couple of exceptions that virtual currency users may take advantage of.

First, a money transmitter business must have customers. In one of its private letter rulings, FinCEN ruled that the business must provide services to customers or third parties to meet the definition of a money services business.

This seemingly conflicts with the March guidance definition, which classifies any person who sells virtual currency for profit as a money transmitter. The reason that these two definitions conflict is that a money transmitter, by definition, provides money transmission services on someone else’s behalf. Bitcoin miners or Linden Dollar harvesters — though Linden Dollar harvesters probably do not generate any significant amount of money — do not transmit money on anyone else’s behalf. This is why this exception may apply. At the same time, FinCEN may take a position that Bitcoin exchangers or other Bitcoin users are the miner’s customers if miners sell their Bitcoin to users directly.

Consequences Of Not Registering

U.S. law imposes both civil and criminal penalties for failing to register a business as a money transmitter.

This law specifically imposes criminal penalties on operation of unlicensed money transmitting businesses.

Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.

Once the statutory six month period for when virtual currency money transmitters must register is up, the government will be able to start prosecuting people who do not comply. Though most likely the government will not go after a small-time Bitcoin miner, because that will be a tremendous waste of time and resources.

Fortunately, I remembered the Asus Aspire Revo I had collecting dust from when I had tried to set up an XBMC machine long, long ago. After the XBMC debacle I had installed Ubuntu 11.04 (natty) on Asus box so I could play with a CouchDB server, then promptly forgot all about it. Time to bring it back to life and make me rich!

Just so we’re clear, Ubuntu 11.04 was released 28 APR 2011, and stopped being supported 28 OCT 2012. But I didn’t care – I am a glutton for punishment, and I had been drinking heavily – so I played “dependency merry-go-round” and mercilessly hacked the /etc/modules file to try to force load a usbserial device. I drank and cried and got nothing working. And then it hit me:

Upgrade. Your. Shit.

Once I went to Ubuntu 11.10 (Oneiric), everything was smooth sailing (though 11.10 stops being supported by Ubuntu today, 9 MAY 2013!) Here are my steps to get this box working (normal caveats – your mileage may vary, know what you’re doing, and don’t log in as root and drink unless you’re feeling all “The Deer Hunter” lucky about it).

1. First, get thee to a mining consortium – we had Eclipse Mining Consortium recommended to us by Butterfly. It worked like a champ.

2. Once you have an account, navigate to the My Workers tab, and select the Manage Workers button. Add a new worker or rename your current worker to something you like. The password doesn’t matter, you won’t be using it. Write the worker name down and turn your attention to the Linux box.

3. Start running some commands:

>> sudo apt-get install autoconf automake libtool pkg-config libcurl4-gnutls-dev libjansson-dev libncurses5-dev libudev-dev git
>> cd [ whatever-directory-you-want-to-install-the-miner ]
>> sudo git clone https://github.com/luke-jr/bfgminer
>> cd bfgminer
>> ./autogen.sh
>> ./configure --enable-bitforce --disable-opencl
>> make -j3


4. Bam! If all goes according to plan (why wouldn’t it?!) you’ll have a working bfgminer in that directory.

5. Plug the BFL unit into the computer (I swear to God I actually forgot this step at one point)

6. Run ./bfgminer. It’ll ask you for a url, worker name, and password:

url: stratum+tcp://us2.eclipsemc.com:3333
worker/username: that worker name you wrote down in step 2
password: go to town, it's not really used


7. And that’s it. Check your “Current Speed” on the Eclipse MC dashboard, it should be going up. If so you’re gtg, and you may begin fantasizing about your fabulous wealth.

Next Steps

I always like to write some Next Steps for myself, even though I don’t usually follow through. It gives me a warm feeling inside. There are ways to mine anonymously (called Anonymous PPS mining) with EMC and have it drop Bitcoins right to a wallet (less a 5% administration fee), as well as setting up a Dwolla account to get paid in USD (pfff!) I haven’t done those things. I also have this machine plugged into a Kill-a-Watt I had bought when I thought I was going to do the Tweet-A-Watt project (unfinished because I accidentally crushed the XBee under a keg) – it would be cool to tweet the power usage of the BFL box + BTC mined + BTC->USD conversion, maybe mash the data to see how much money you actually make, all things considered. Last thing – the EMC API is a little weak, but I didn’t really explore the bfgminer API too deeply, might be some interesting stuff to do around there.

With webcams being available to watch about anything you would want to in our modern ever-online way of life, it was only a matter of time before someone would stream Bitcoin mining livefor all to see. The camera runs all day long and streams on Ustream, where thousands of people watch the lines of text scroll down on the monitor positioned in front of the camera. This text is simply what the mining software outputs, and the only exciting part of this process is when a successful coin is actually found.

The way mining works is that 25 coins are awarded every few minutes from the virtual network, in relation with how many hashes your particular device can process. Just like a real life lottery, the more people try to mine, the lower your chance at getting those coins. Modern miners however rarely try to mine by themselves. Instead, they join mining pools, and after just two weeks, the Wired crew said that their $274 ASIC device has paid for itself. Needless to say, this makes these types of computers in very high demand.

Everyone’s favorite virtual currency has been on quite a wild ride over the past few weeks. The mainstream media finally caught wind of Bitcoin and curious parties sent it skyrocketing to $220 before watching it plummet below $70 a few short days later. It has been quite a roller coaster, but all this attention may have caught the IRS’s eye, too — Forbes contributor Robert Wood noted in a recent column that the Treasury’s FinCEN already has rules pertaining to Bitcoin, and soon the IRS might as well.

“Income is income, whether you get it in cash or in kind,” Wood wrote. “Bitcoin may be accepted as currency and may not be easy to trace but so are trades and barters. When you barter or swap one item for another, both parties have tax consequences.” The IRS requires that taxpayers report any and all income, of course, and there’s a good chance the agency will soon grow tired of seeing some people use Bitcoin to game the system.

“The FinCEN rules say Bitcoin exchanges and Bitcoin miners should register as Money Services Businesses (MSBs) and comply with anti-money laundering regulations,” Wood noted. “Ordinary Bitcoin users don’t have to register just to purchase goods and services. But will Forms 1099 and other nettlesome signs of civilization soon bite Bitcoin? Yes, and probably soon.”