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Will The Price Crash Affect The Bitcoin Mining Network? .::. Flipside Bits 15

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-= DJ BOOTH =-


-= EPISODE 15 =-

We're kicking off this week's show by presenting an award. The first major hack of the year goes to Bitstamp!
Bitstamp couldn't be with us to accept the award but left this brief statement.

"On January 4th, some of Bitstamp’s operational wallets were compromised, resulting in a loss of less than 19,000 BTC. This breach represents a small fraction of Bitstamp’s total bitcoin reserves, the overwhelming majority of which are held in secure offline cold storage systems. "

Bitstamp have been tight-lipped about what actually happened but blockchain analysis by Danno Ferrin shows that Bitstamp was in a race with the hacker to sweep funds from their hot wallet, saving almost 6,500 bitcoins from theft.

Bitstamp went offline for 5 days during CES in Las Vegas where their booth was a ghost town. Bitstamp rebuilt their systems from the ground up and will now use 2 of 3 Multi-sig hot wallets provided by BitGo. Amazingly, Ben Davenport of BitGo said that all it took for Bitstamp to implement multi-sig was just one line of code, and a whole lot of work on BitGo's side.

The Bitstamp news even made it's way to Jimmy Fallon who joked "if it's not safe to keep your money in a Slovenian bitcoin exchange where can you keep your money?"

UK Prime Minister David Cameron said that he would ban the use of mathematics and that no UK citizen has a right to use mathematics to communicate.

Encrypted messaging services like WhatsApp, iMessage, Telegram, BitMessage and PGP encrypted emails would all be banned under the newly recommended surveillance powers in the wake of the Paris shootings.

Encryption is just maths. Thankfully, in the aftermath of Edward Snowden's revelations, the web has become increasingly more encrypted, and I'm all for it.

This isnt about terrorism. This is about control and spying on ordinary citizens. We're not free to communicate.

The trial of the alleged operator of the Silk Road marketplace began this week with defense lawyers for Ross Ulbricht claiming that he was framed by the real Dread Pirate Roberts.

Defense attorney Joshua Dratel began his opening statement admitting that Ross WAS in fact the founder of the Silk Road but after a few months, he found it too stressful and handed it over to someone else.

That someone would later trick Ross into serving as the “fall guy” when they sensed an impending law enforcement crackdown.

Ross's defense are trying to paint the picture that he is not a drug dealer or a king pin.

Bitcoin mining hardware firm CoinTerra fell back to earth after apparently defaulting on it's debt obligations and stopped making payouts to customers of it's cloud mining operations.

Court documents show that C7 Data Centers is suing CoinTerra for having their head in the clouds and a breach of contract for failure to pay it's bills here on terra firma. C7 are seeking $5.4m in damages, court fees and related charges.

C7 was providing data center colocation services and said CoinTerra was using $12,000 a day in electrical costs.

I've never quite understood the appeal of mining clouds. Why not just wait for it to rain?

And another cloud mining service has suspended it's operations. This time it's CEX.IO, the company behind the GHash mining pool, who once had a freakish 50% of the mining network.
Ghash now has just 10% of the network hashrate.

Citing the recent price drop as the primary reason for the suspension, CEX.IO claims that the Maintenance Cost exceeds the reward for each mined block.

Chief information officer, Jeffrey Smith, told CoinDesk that operations would resume if the price of bitcoin climbs above $320.


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