Nearly Two Months, In Fact, Since issue 91
The biggest reason for the lack of Bit-Talk newsletters has been my new obligation to Agora Financial to write their Crypto Newsletter for them and that, along with the additional Crypto Trader service I run for them, keeps me pretty busy to say the least.
The second reason for the lack of Bit-Talks has been the quiet period that Bitclub has been going through. They and all but the absolute biggest of the Bitcoin mining organisations have encountered difficulties with obtaining new mining kit and continuing their expansion.
CONTROLLED GROWTH
Bitclub have, as a result, had to tightly control the number of new mining pool shares that they sell so that us existing members still get what we were promised. It has been common just lately to get a "sold out" notice when attempting to buy Bitcoin mining pool shares. It's not all bad because they have still expanded their GPU mining activities and shares for these have been available during most of this recent period.
MORE NEW MINING POWER COMING
But now there is some good news. It seems, based on their 17th September update, they have been able to secure more mining kit for installation by January 2018. With kit already purchased earlier in the year targeted for November installation, Bitclub will go over the 500 peta-hash mining level. And now, with another 200 peta-hash targeted for January 2018 installation, we could go into 2018 with 700 peta-hash of power. That is impressive indeed.
NUMBER CRUNCHING
I know that for some those numbers don't mean too much but using a simple Giga-Hash guide, if you think of a Giga-Hash (G/H) in the same way as you think of a Giga-Hertz (GHz) you can relate it to your home PC. Typically, a modern home PC or lap top will have 3 GHz of processing power. The latest and most expensive Intel processors you are likely to see available now are around the 4 GHz power level. But it is possible (but not cheap) to buy really powerful desk top computers with 5 GHz processing chips.
A real nut gaming maniac with very deep pockets could even throw a few of those together in one machine for some awesome graphical power. Basically the chips that run mining rigs are close in nature to a graphics card. In fact they are very close in nature to the GPU machines Bitclub and others like them use for altcoin mining (Ethereum for example).
So if we think of a GHz as the same as a G/H we can picture the power of Bitcoin Mining capacity. The simple scale is based on decimal multipliers, so you start at a K for kilo (meaning 1,000) and from there to M for mega (meaning million), G for giga (meaning billion or 1,000 million), T for terra (meaning trillion or 1 million, million) and then P for peta (meaning a bloody lot! Or one billion million).
If Bitclub have 500 peta-hash (P/H) that is huge in processing terms. 500 giga hertz is 500 BILLION cycles per second of processing functionality (computing power). 500 peta-hertz would be that figure to the power of 2. In other words multiplied by itself TWICE.
So imagine 100 of the most powerful computers you could reasonably put together with 5 giga hertz of processing power each (5 billion cycles per second of processing power) and then multiply them by 1 MILLION and you get the picture. That is what Bitclub will have in place in processing power before the year end and then another 200 peta-hash come the end of January 2018.
That's a lot of mining power but it will still be dwarfed by some of the absolute largest mining farms out there.
BIG CHANGE IN MINING INCOME SET UP
I don't think people should get too excited about this but it does constitute a huge change and therefore merits discussion.
Ever since I joined Bitclub, some 27 months ago, there has been an obligation to re-invest part of your mining proceeds back into the mining pools so that there was always new money coming in to buy more mining power even if they closed the doors. In theory, they could stop taking in new members and still continue to function perfectly because we were all continuing to add income and, ultimately, mining power, through the partial share re-investment program.
Having to re-purchase partial shares, in my opinion, is a good thing because it encourages us to create a bigger income for the future. If you switch to 100% of your mining returns going into your Bitcoin wallet, you aren't doing anything more for the future from that point on. What I and many others did for the first year or so of our Bitclub membership was to actually re-invest 100% of our mining pool income into partial shares.
So, first off, I certainly will not be switching to 100% income as I want to continue to see new partial mining pool shares accumulating in my accounts. There will be those however who do not look long-term and the will take the 100% income option. If you think along those lines just remember that you will stop adding future growth and future income. You, will, in effect, remove the compounding aspect of your mining.
I don't know how I feel about this change but I do know that this makes it more important to think about diversification. And, no, that does not mean I am going off to chase empty promises with some alternate cryptocurrency offerings where the only thing being sold is the dream itself. I am, however, always keeping one eye on the future.
I love Bitclub and I will support them for as long as they allow me to. Given the state of the World economy, I cannot imagine not getting an income from mining Bitcoin but I have started to diversify into other safe haven, long term plans. If you want to know what, feel free to email me at profitmagnets@gmail.com
THE BANKING SYSTEM, IS IT SAFE NOW?
Please be careful with your assumptions about life and the traditional way we operate financially. There are clear signs out there if you look for them, that all is not well with the financial system. Ask yourself this question. If there is another 2008 type financial crisis, what steps do Governments take next to attempt to correct the problem?
Is a bank account a safe place for your money? There has been much said just lately about it being the 10th anniversary of Northern Rock going down and this has got me to thinking about the negative possibilities all over again. Back in the 2008 financial crisis Northern Rock was the UK's only real (big) casualty. There were 3 big casualties in the USA, most notably Lehman Brothers.
The Government reacted to the crisis in the UK with massive cuts in interest rates and big bank bailouts amounting to billions of pounds. And their mechanism for dealing with the crisis and insuring that more banks didn't bite the dust (and there were lots that could have) was to go further and introduce QE (Quantitative Easing).
The next step would have been a bail-in. It didn't get to that stage in the 2008 crisis but then, at the start of 2008, interest rates were 5.5% and so a drastic cut of rates over the course of the year, combined with bank bail-outs and quantitative easing meant that a larger scale crisis was averted. But what happens when you can't drop interest rates by more than 3% or even by 3%? What happens when it isn't two or three banks in crisis but 20 or even 30 of them? What then?
A 3% drop in bank interest rates historically (before the 2008 crisis) was all it took to avoid further financial calamity. The 2008 crisis was unique (so far) in that it introduced the concept of quantitative easing when, after interest rate cuts and bailouts, the crisis still looked like worsening.
So what if it happens again or, as some are saying WHEN it happens again? Be prepared. Bail-ins could be the only solution available. It happened in Cyprus in 2013. It could happen anywhere. Don't think for a moment that there are not written plans in place in the halls of Government as a response to another big crisis. With interest rates now at 0.25% there is no big rate cut to save anyone.
What is a bail-in? That's when the Government authorise your bank to take part of your money to re-finance themselves.
QE can only work to a point otherwise currency literally can become totally worthless. The pound is only as good as its ability to trade against other currencies. Bail-ins may be the only other thing a Government can use to get out of a debt crisis and boy are we in one now! The US federal reserve has just hit the 20 Trillion dollar debt level. It really is a pack of cards that could fall at any time.
My view is simple, we're heading for a crisis and I am going to leave the absolute minimum I need to get my monthly bills paid in my bank. The rest is getting moved across gradually into other assets.
I never thought I'd hear myself say this but, quite frankly, cash under your mattress is probably now safer than it is in your bank account.
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