I thought bitcoin mining hardware was only useful for a few months at best due to rising complexity built in the protocol? If so the computers hidden by the criminals won’t be very useful when they get out of prison a few years from now.
That is true when buying the hardware - it needs to be fast & efficient to recoup its initial investment and still make extra money down the line before becoming obsolete (due to using more energy than the money it makes).
When you don’t buy the machines to begin with, you get a head start which allows you to profit immediately up to the point when the electricity costs outweigh the benefits without having to sacrifice part of the profits to pay for the machine itself.
There is also a premium on fresh block rewards that have not been spent yet. These are called “coinbase transactions” which is why the company is called Coinbase. The reason these fresh coins are valuable is that they are untainted by prior transactions and have various uses because of that. So mining BTC has an additional premium above the spot price of BTC.
> The reason these fresh coins are valuable is that they are untainted by prior transactions and have various uses because of that.
What "various uses" are you talking about? Are you talking about fears of future blacklisting, or something else? If fears of future blacklisting, the only use I can see would be speculative holding. I've written raw Bitcoin transactions, and I don't know of any technical distinctions between coins that would change how they can be used based on prior transactions.
If you have fresh coins you can say you mined them which is good for financial reasons. They also have zero prior history so companies like Chainalysis cannot link them anywhere.
I really don’t have more to say on this subject, just think about it for a while.
Where are these "fresh block rewards" sold? Not on any exchange. These transactions would have to take place via a backchannel, which very very few miners do.
Coinbase's name has nothing to do with those transactions. It's just a name, taken from the technology.
Miners can pick any address when they assemble a new block to have the new coins mined to. They make deals ahead of time for where to send these. This is definitely a thing in China and if you look at my profile you can see I know what I’m talking about.
I wasn’t saying Coinbase was named for the premium, I was saying they were named for that piece of blockchain trivia as an interesting aside.
> They make deals ahead of time for where to send these.
Like I said, backchannel deals :-)
> if you look at my profile you can see I know what I’m talking about
I just saw a bunch of crypto tweets on your profile. I've been involved in Bitcoin etc since 2011, mining, trading, and am pretty active elsewhere - I just use a pseudonym in that community. Too many salty "advocates" there, I'd rather put a buffer between that and my work and my family
> they were named for that piece of blockchain trivia as an interesting aside.
