Universities should ban Facebook before punishing Dogecoin miners

Mar 10, 2014 by Gordon Fletcher, The Conversation
Students are busy mining Dogecoins at night.

Universities are facing a dilemma now that students have been discovered mining cryptocurrencies using campus facilities. Are these students displaying entrepreneurship or unacceptable behaviour?

Harvard has decided it's the latter, permanently banning an unidentified person from using its computer research facilities after they were found using a supercomputer to mine dogecoin. It is not known if the punished miner was a student or member of staff.

Imperial College London now needs to choose a side in this argument after a student – who also remains anonymous – revealed that they had been using campus facilities to mine around £20-worth of the cryptocurrency.

Many grey area

This campus-based Dogecoin generation follows several months of intense interest in Bitcoin mining. The spectacularly sudden rise and fall of bitcoin prices has shown that other cryptocurrencies also have the potential to bring further massive windfalls. With at least 200 cryptocurrencies that can currently be exchanged into bitcoin and then onto more familiar forms of everyday fiat money, its no wonder people are tempted to try to get rich quick.

In both cases, computing power and electricity were being used without the official knowledge or approval of the university so Harvard's response is not necessarily that surprising. But other universities may well be wondering what their position should be on this issue in anticipation of finding one of their own students mining.

A quick search throws up no reference to bitcoin or cryptocurrency within the acceptable use policies published by IT departments. Although there are coverall policies about not using facilities for commercial purposes or for loading software without permission, miners could still technically continue with their activities without breaking a specific rule.

Such learning

There are only two valid arguments that a suitably informed IT manager could fall back on if they decided to pursue a miner caught in the act.

Computers, and particularly their component chips, quickly fail when they operate at a high temperature for too long. Any enthusiastic miner with access to "free" computing power will want to run a computer at 100% of its capacity for as long as possible to extract the maximum number of coins. This will reduce the lifespan of any computer – potentially quite significantly.

The more invisible but equally important cost of mining is the value of the electricity consumed. All the online calculators for determining return on investment for mining cryptocurrency consider this important factor. If you're spending hundreds of pounds to produce a handful of Dogecoins, it's probably not worth the effort, but in a university environment, the cost of electricity is a more complicated equation.

While mining on a computer for long periods of time will consume electricity, this will be only marginally greater than a computer in a common access lab being used for Facebooking or watching cat videos on YouTube – two activities that appear to represent much of the activity that goes on in any university's common-use computer labs. The key difference is that mining directly converts electricity into exchangeable value for the student. Using Facebook on a university computer only converts the university's electricity into value for Facebook, by enabling the delivery of advertising to students. You don't often see universities banning Facebook though.

And over in the business school, where students are encouraged to be entrepreneurial, understanding cryptocurrencies could bring some very real benefits. Cryptocurrency mining requires a student to think about the likelihood of successfully mining a particular coin and the best way of pooling resources to increase success. It also requires an appreciation of the costs associated with the activity, even if the resources are free to the student.

If they go on to trade their cryptocurrency, still more skills need to be developed. All of the coin exchanges mirror the functions and principles of a more traditional securities market. Trading cryptocurrency can give students the chance to experience a form of trading floor without the issues of access or cost associated with more mainstream exchanges.

Most importantly, actively encouraging an understanding of mining among students would help to avoid "futility mining", mining for those coins that produce such a low return on investment that the setup, electricity and maintenance costs are never recovered. With awareness, students would avoid mining Bitcoin entirely. Those using a desktop computer with no specialised hardware such as a graphics cards designed for high-end gaming would learn to steer clear of mining cryptocurrencies that are based on the calculation function used by Bitcoin technology.

Without specialist technology mining these coins is simply not viable. My own experience mining coins based on the original Bitcoin technology is evidence of how difficult it is and how unimpressive the returns can be for small-scale mining.

After three weeks of mining with a specialist USB-based device, my portfolio of 134,000 coins represented in 13 different currencies are nominally worth 94.5 US cents at March 2014 prices. Of course, with time and some luck these coins could become much more valuable but nothing is certain in cryptocurrency.

This is why the two anonymous individuals from Harvard and Imperial College were mining dogecoin. Based on an alternative technology to bitcoin, dogecoin and other similar coins are easier to mine in a university computer lab. However, it will not be long before even this phase of the cryptocurrency gold rush will become the domain of large scale operators with custom equipment.

All of these interrelated complexities coupled with cutting edge concepts and technologies are exactly the types of knowledge and skills that universities seek to teach to their undergraduate and postgraduate students. Rather than pursuing the anonymous Imperial College student perhaps he or she should be invited to offer guest lectures to the computer science, business and management, IT and MBA students. That is, if they can be dragged away from Facebook long enough to listen.

Explore further: Dogecoin miner barred from Harvard research computing facility access

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Eikka
3.7 / 5 (3) Mar 10, 2014
Are these students displaying entrepreneurship or unacceptable behaviour?


They're displaying gambling and fraud, considering that the new cryptocurrencies work predominantly on the bigger fool principle, where profit is derived from spending on a worthless thing in order to sell it to someone who is ignorant about its lack of value.

Real money, fiat or not, is backed by either resources or debt, which makes it redeemable in either work or physical things that are of some use to someone. Owning a dollar backed by gold means you own that much gold, and owning a dollar backed by debt means you are due a dollar's worth of work, goods or services.

Bitcoins, dogecoins, etc. carry no such obligation to anybody, so their only value is in tricking somebody to exchange them to real money or goods.

Eikka
3.7 / 5 (3) Mar 10, 2014
Of course, if we accept that pointless work like bitcoin mining creates the value for bitcoins, then I propose a new currency:

It's called mime money. For every mime dollar issued, I guarantee that a french-canadian person spends an hour in a public park walking against the wind and being trapped in a glass box. This of course is of no use to anyone and most people find it incredibly annoying, but, if bitcoins are valuable because they're created by wasting electricity then mime dollars are valuably because they're created by wasting everyone's time.
AltCoinsFTW
5 / 5 (1) Mar 11, 2014
Oh Eikka, how little sense you make. How is it gambling and fraud? How did the dollar come into existence (or any paper currency)? Do you know how long it's been since the dollar (or insert paper currency here) has been backed by gold? Why is gold worth anything? Would gold be worth anything if the world was in war, and everyone was struggling to get good/shelter?

Answer those questions, and ask yourself again why you think crypto currency is working on a "fool principle". How many people do you know who have the knowledge to put together a mining rig capable of making money? Compiling the source code needed for the mining rig? Knowing how to optimize said mining rig for optimum hashrate/electricity unit? Obviously not you, as you think it's not backed by anything but thin air.

Let me explain something to you. I offer a service. I only take bitcoin. You want my service. Guess what? Too bad, as you don't have the "currency" it takes to obtain my service. If you want it, you need to ..
AltCoinsFTW
5 / 5 (1) Mar 11, 2014
Mine it, or exchange a good or service - JUST LIKE ANY OTHER CURRENCY. What makes a currency "real" is the "belief" (as you sort of alluded to) that someone will offer up a good or service in exchange. Who says that it is not possible for someone to do the same with any other thing besides a dollar? We already have many shops, and even some car dealerships accepting the coin - but you are believing that it's worthless.

The only thing that makes a dollar worth ANYTHING is the belief that it is worth SOMETHING. This common belief is what keeps things going.

It's simple economics. If you want something, and I demand a bitcoin (alt-coin/litecoin/whatever) - you simply need to obtain this before I give it to you. Supply and demand.

You think these things have no work behind them, and it's a complete waste - what do you say to all the millionaires made by the bitcoin roar? Why do you think the dollar is worth something (remember, it's NOT backed by gold) and an alt-coin is not? Y
AltCoinsFTW
not rated yet Mar 11, 2014
And you obviously do not understand the "good" values of a crypto currency. Under normal circumstances (read: I give you bitcoin for a product and you keep it in a wallet safely), here are the following things that are true for bitcoin that are not true for the dollar:

1.) It is nearly instant to give someone money anywhere in the world - without any bank fees or costs.
2.) It is ultimately perfectly secure. The entire purpose of mining is to validate all transactions that have occurred in the past; as a reward for this validation, the miner is rewarded.
3.) There can be no fraud. If you send me a coin, you sent me a coin. It is tracked EVERYWHERE (meaning in the block chain that miners are validating). You say you pay merchant X, and merchant X says you didn't? Anyone can prove you did or did not without resorting to a centralized location (aka bank).

http://www.slate....bad.html
AltCoinsFTW
not rated yet Mar 13, 2014
@Eikka - one more thing, as I think you do not understand that these coins are not made out of thin air. In other words, without people spending the coins - the miners would have nothing.

When a miner mines, they are taking all the transactions that have ever been made with the currency, validating them via a very difficult to find resultant hash - and as a REWARD for making sure that YOUR transaction is indeed VALID, the miner is "PAID". The coins are not just given away - the whole purpose of the crypto currency mining is to ensure that there is no fraud/double transactions/etc...

You can keep pretending it's "fake money" since you don't understand it though. As they say, ignorance is bliss.

The Fed prints off money without any regard to a backing "worth", but you accept this; another currency that is backed by actual work/proof/science/math/economics and you claim it's fake and compare it to a mime.
AltCoinsFTW
5 / 5 (1) Mar 13, 2014
And you understand that no electricity is being "wasted", right? It's not like the operators at the coal plant say "Oh, looks like the guy on X street just turned on his miner, better dump another load of coal into the fire".

The electricity that is generated will either get used or not get used. This is a common misconception that turning off a lightbulb actually saves any actual energy. It's not conserved. Unless EVERYONE stops using the lightbulb will the average LOAD go down, and the power plant will then generate less MW based on less average demand.

It's not instantaneous - and will not react to a change of miners. You probably drive a Prius and think you are saving the environment when all you have done is switched from a hydrocarbon to a fossil fuel. You then probably drive it above the speed limit, and in doing so it's less efficient than a normal car a la: http://www.youtub...3w#t=214

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