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One Wrong Assumption by Wired Ended up in a Loss of Thousands of Dollars of Bitcoin

One Wrong Assumption by Wired Ended up in a Loss of Thousands of Dollars of Bitcoin

Reading Time: 2 minutes by on May 14, 2018 Bitcoin, Commentary, Finance, News
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In May 2013, Wired published an article where it went through a tutorial on bitcoin mining, titled “Watch Wired Get Rich Quick With Our Sleek Bitcoin Miner.” At the end of the article, the company decided to destroy the wallet’s private keys and therefore lose access to a nice haul of bitcoin that today would be worth a few hundred thousand dollars.

Presently, the amount Wired was able to gather with that experiment would be worth around $116,000 (and at BTC-USD’s all-time high near $20,000, it would be valued around half a million dollars). By not going more in-depth in their investigation and calling bitcoin an abstraction, Wired squandered a hefty sum of money.

“Lost Coins Only Make Everyone Else’s Coins Worth Slightly More”

In 2013, the technology-focused online publication started an experiment with the intent of promoting the then-new Butterfly Labs ASIC miner. Wired agreed to set up one of these Butterfly miners at its office and with that take part in a mining experiment while advertising the product at the same time. Little did they know that the amount of bitcoin gathered with that experiment would be worth a small fortune five years later.

This was just a test and an advertisement contract taking place to produce later an article that would bring a lot more information on bitcoin mining to the public. Wired joined a bitcoin mining group called the Eclipse Mining Consortium and mined solo as well, and with only 4.86 GH/s to 6.15 GH/s worth of hashing power, they were able to recoil a sheer amount of coins in a few weeks.

The experience was set in the online magazine office and even recorded live using a ‘BitCam’ to show the readers the performance of the new mining hardware. The article begins by explaining the type of energy consumption the device has and what is its sole purpose. It then goes through a simple explanation of the rewards given to the miners when a block is found and how the whole process works.

After that, the article describes the device and its capabilities in comparison to the old hardware for mining bitcoin such as CPU mining or GPU and FPGA hardware.

Lack of Foresight

Wired also wanted to give its readers a closer look at how mining was done and how the incentives for mining were distributed. Back then, bitcoin was still on the shady side of the financial world and as so the online magazine disregarded its real potential.

At the end of the experiment, Wired didn’t quite know what to do with the amount of bitcoin gathered. Back then two bitcoins would be worth around $220 and a few options to get rid of it were set upon the table; either use it for beer or charity, but neither was picked. Instead Wired decided to destroy the private key used for the wallet where the bitcoin gathered throughout the experiment was stored.

The article concluded:

“The world’s most popular digital currency is really nothing more than an abstraction. So we’re destroying the private key used by our Bitcoin wallet. That leaves our growing pile of Bitcoin lucre locked away in a digital vault for all eternity — or at least until someone cracks the SHA-256 encryption that secures it.”

At the end of the day, even if the coins are locked, the squandered bits ends up being like a reward for the community as the loss only contributes to bitcoin’s scarcity. The public address used to store the bitcoins generated by the experiment is; 1BYsmmrrfTQ1qm7KcrSLxnX7SaKQREPYFP.

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