10
I have seen some people on the bitcointalk forum looking for hashing power to rent (here is one example) and usually they pay more to rent the rig than they would earn by selling the mined coins at market price.
It seems to me that they are losing money with the deal so why would someone want to do this? Are there other uses for the hashing power besides bitcoin generation?
11
1+1 for some interesting possibilities. Interesting evolutionary argument arising for number 6. – Gary Rowe – 2011-12-19T12:48:16.680
The number 6 reminded me that one can try other attacks on the network. Performing a Finney attack is much easier if I can get hashing power on demand. – nmat – 2011-12-20T21:21:04.150
@nmat - It might be connected to point 4, guess I'll expand it. – ThePiachu – 2012-01-26T00:40:08.287
@ThePiachu I just removed the comment when you posted. It was about using rented power to launder bitcoins, but now that I think about it, there are probably much better systems for that. – nmat – 2012-01-26T00:42:39.547
@nmat I think money laundering through renting, or even buying hashpower is kinda interesting. Certainly would be odd enough for the police not to even consider it for awhile. Have some other ideas on how one can use Bitcoins to aid in their criminal activity, but it's kind of off-topic here. – ThePiachu – 2012-01-26T00:51:25.710
3
There are two main reasons:
1) The person wants to build the hash rate for an alternative currency or mining pool in which they have a financial interest. You can't get a mining pool or alternate currency going without hashing power.
2) The person wants to mine something other than Bitcoins, typically a currency that isn't yet available on any exchange. So hiring mining power is the only way to get the currency.
This may be a worthwhile link to those observations: http://bitcoin.stackexchange.com/questions/256/what-would-a-country-adapting-bitcoins-as-official-currency-have-to-reinvent/276#276
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Some possibilities:
1) Pool-hopping.
2) Password cracking.
3) Supporting a specific mining pool / alternative blockchain currency.
4) Betting on the difficulty decreasing (relatively to the exchange rate), and securing a long-term contract which will be profitable in that contingency.
2
If one could enter into a long term agreement at a particular price for renting the equipment, then they would benefit from any increases in the exchange rate.
I can't think of any other reason, but others might.
.@irregular, actually they would benefit from increases in the exchangeRate-to-difficulty ratio. That number is (in the long run) actually more stable than the exchange rate, though, so I'm not sure it's such a great bet. – eldentyrell – 2011-12-19T09:57:56.800
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We've sometimes had to rent hashpower for a coin when there are too few miners, e.g. when it gets stuck at a high difficulty after other miners leave it there. Beats buying a rig :-)
-1
or the person might be in financial difficulty and cannot afford the hundreds or even thousands of dollars to build a proper rig, renting is much cheaper than building one yourself. rig rental services are ideal for poor people that can't afford to build a rig themselves.
-1 This post doesn't offer an answer, as the question asks "why people would pay more for renting the rig than the worth of the mined coins". – Murch – 2016-07-24T10:30:01.233
1Note that the thread you link to is actually looking to rent GPUs, not pure hashpower. He's insisting that people let him run his own code on the GPUs. Sounds like he's not actually mining BTC (if he were, he could just export a GetWork proxy), but doing something fairly similar. – eldentyrell – 2011-12-19T07:43:13.923
@eldentyrell That's why I also asked about other uses besides mining. He is not looking for a CUDA/OpenCL cluster. He specifically wants to rent Mhash/second. – nmat – 2011-12-19T08:43:48.267
.@nmat this guy isn't looking for "Bitcoin hashing power", or else he'd be happy offering a GetWork proxy. He might be looking for "hashing power" of some other sort. Maybe you want to modify the title of your question? I think there's a possibility that he's just using BTC-hashes-per-second as a vendor-neutral measure of how much compute power he wants, and is asking on the bitcointalk forums because he knows lots of people with GPU clusters hang out there. – eldentyrell – 2011-12-19T09:52:34.000
@eldentyrell OK. I also changed the link because that thread was just an example. There are lots of other people looking for it. – nmat – 2011-12-19T16:11:51.107