The chief executive officer of Nook Malaysia, Daniel Yap, says he
started accepting Bitcoins as a “social experiment” since November. Yap,
who operates a co-working space in Bangsar, started to accept Bitcoin
to help encourage its use in this country.
“If you don’t encourage people to use it, then it will never be adopted,” he said
Muaaz Mohamad Nor, owner of Footsteps who operates kayak tours and
sells outdoor gear, says that the number of customers who pay via
Bitcoin are similarly small, although in his case, they’re mostly
Malaysians.
“My opinion is that there are three factors that affect Bitcoin
adoption — education, Internet access and desperation,” said Muaaz.
Muaaz explains that in countries where the first two criteria are
met, weak currency will usually push people to start adopting Bitcoin as
a form of currency.
“The practical reason for me to start accepting Bitcoin is that it’s
relatively low-cost for mom and pop shops like mine, and in the wider
view, I like the idea of an alternative to fiat currency,” he said.
Unlike fiat currency, which derives its value from goverment
regulation or law, Bitcoin’s value is determined by its users and the
value they place on the currency.
“If you look at the value of Bitcoin, it suffered three major
crashes over the years but its value has quickly risen again. You can’t
say that about most other currency crashes,” he said.
According to Muaaz, he used to own some 5,000 Bitcoins which he
bought for just five euros in 2007 when he was studying and living in
Germany.
“Back then it was hip to pay for stuff using Bitcoin,” he said.
When asked about how much of those 5,000 Bitcoins he still holds, Muaaz
laughs and said, “None of it!” At current exchange rates, if he had held
on it would be worth some RM6.35mil.
However, both Muaaz and Yap have opted to hold on to the Bitcoins
they’ve obtained from their businesses rather than convert it to cash.
Arsyan Ismail says that he likes Bitcoin because of the decentralised, open and instantaneous nature of the cryptocurrency.
Arsyan Ismail, chief excutive officer of 1337 Tech Sdn Bhd and
creator of. Ked.ai, an online marketplace that also accepts Bitcoin,
says that he likes it because of the decentralised, open and
instantaneous nature of the cryptocurrency.
Currently, Arsyan enables merchants who sell products on Ked.ai to
accept Bitcoin and will convert it to cash for them automatically.
However, like the other local online retailers, payments made with
Bitcoin on Ked.ai still amounts to a very small percentage.
Arsyan says the biggest hurdle to Bitcoin acceptance is that most
people find it very hard to understand the concept, and there are no
local exchanges for buying and selling Bitcoin.
“What I’ve seen in Malaysia is that there are two sides — a
community of miners who have Bitcoins but don’t know where to sell it,
and on the other side, a group who wants to buy Bitcoin but don’t know
where to get it,” he said.
The function of Bitcoin exchanges is to bring these two groups
together but without an official one the flow of Bitcoins from miners to
buyers is a little more complicated, he said.
Contributed by Tan Kit Hoong The Star/Asia News Network
Bitcoin Mining Boom Sputters as Prospectors Face Losses
Portland: The bitcoin mining rush is sputtering.
Speculators, known as miners, use powerful computers to solve
complex
software problems and verify transactions to unlock new bitcoins.
They’re finding that the enterprise isn’t as profitable as it once was.
Drawn by the virtual currency’s jump in value last year, digital prospectors have turned the
mining industry
into an arms race as they buy expensive computing equipment and gobble
up electricity. While that worked well as long as bitcoin’s value kept
rising, smaller players are now being crowded out by bigger competition,
high utility bills and declining prices.
“If you mine at the
moment, you have to be very lucky to get anything,” said Mehmet
Vatansever, who bought $16,000 worth of mining computers in February to
chase after new bitcoins. “It’s a very difficult business.”
Mining,
a nod to the excavation of minerals and metal ore, is entirely digital
and part of bitcoin’s design, so that the money self-regulates supply
and prevents out-of-control inflation. The mining process gets
increasingly complicated as more bitcoins are created, driving demand
for computing power.
Bitcoins, which jumped to more than $1,200 last year from $12, were trading at about $420 apiece yesterday, according to the
CoinDesk Bitcoin Price Index, an average of prices across major global exchanges.
China’s
tighter controls on alternative currencies, the implosion of the Mt.Gox
exchange and a U.S. Internal Revenue Service ruling that bitcoins
should be taxed as a property have all weighed on the virtual currency.
Used Equipment
While
he has been able to create new bitcoins, Vatansever soon discovered
that his equipment was on track to earn less than his monthly utility
bill of $480. After selling his computers on EBay Inc. in April,
Vatansever estimates that he lost a total of about $6,000 on his mining
adventure.
In the past week, miners made $14.9 million in
revenue,
compared with a weekly average of $25.2 million in December, according
to Blockchain.info, a bitcoin-data aggregator. The figures represent the
number of bitcoins mined plus transaction fees, multiplied by the
dollar-based market price.
EBay now features more than
1,600 listings for mining computers, many of them used.
“The
mining market has evolved from being mostly isolated ventures to more
organized entrepreneurial ventures that are still racing to get an edge
with increasingly fast equipment and lower electricity costs,”
Gil Luria,
an analyst at Wedbush Securities Inc., said in an interview. “At this
point, the opportunity for individual miners is very small.”
Big Miners
While
individuals give up prospecting, at least two other larger mining
companies, KnCMiner and Cloud Hashing, are still generating profits. By
scaling up operations, they’ve been able to save costs on cooling and
power, making their computers more efficient and cost-effective.
KnCMiner also sells mining computers to other miners.
KnCMiner, based in
Stockholm,
operates about 7,000 machines. While the mining company’s electric bill
in March came to $450,000, the computers mined 21,000 bitcoins,
according to co-founder
Sam Cole.
Cloud
Hashing, which lets people buy computing capacity in its data center
and share in profits, mines about $230,000 to $260,000 worth of bitcoins
a day, according to Chief Executive Officer Emmanuel Abiodun.
“We
are profitable whether we sell contracts or not -- through mining,”
Abiodun said in an interview. “Our business model can handle volatility
in pricing.”
Sales Shift
Mining-equipment suppliers are feeling the cool-down firsthand.
CoinTerra Inc.,
a manufacturer of the powerful computers used to crunch numbers for new
bitcoins, has seen new sales shrink by 30 percent in the past three
weeks from the preceding period, according to CEO Ravi Iyengar.
Mining-equipment suppliers are also detecting early signs of a shift to new virtual currencies. Approximately 250
KnCMiner
customers switched their orders from $10,000 computers to similarly
priced alternative-currency mining machines in the past three weeks,
according to Cole.
Because they are newer, designed differently
and currently mined by fewer people, currencies such as Litecoin can be
more profitable, according to
CoinWarz, which tracks mining activity.
“The new rush right now is Litecoin,” Colin Lusk, a network engineer in Portland,
Oregon, said in an interview.
While he once mined only bitcoins, Lusk now uses five of his eight machines to produce
Litecoins
and other virtual currencies. Created in 2011, Litecoin is similar in
design to bitcoin yet requires less computing power.
A $3,500 computer
can produce $25 worth of Litecoins a day for $3 in electricity, while
producing $20 worth of bitcoins would cost $17, Lusk said.
Math Problem
Andrew
Korb, another miner, said buying bitcoins outright is easier than
participating in the mining arms race. While Korb and fellow investors
have spent 900 bitcoins on mining equipment since last year, they have
only generated 77 units of the virtual currency, he said.
“People
do the math,” said CoinTerra’s Iyengar. “If the price goes down
significantly, people realize they may be better off buying bitcoins
directly from an exchange rather than buying machines.”
Contributed by Olga Kharif Bloomberg
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