It will take 500 years to recover the cost of the equipment? Vitalik Buterin says HTC mobile mining is a fool's game

Author: LornaQ

Recently, HTC Corporation (HTC) announced that it has cooperated with ASIC chip design company Midas Labs to launch the DeMiner application to its blockchain smartphones Exodus and EXODUS 1S in the second quarter of 2020. Users can use the newly added DeMiner application to mine Monero (XMR).

In response, Ethereum founder Vitalik Buterin, who once supported his blockchain phone Exodus 1, tweeted: "Mobile mining is a fool's game, which runs counter to the economies of scale built through hardware mining (for example, mining Bitcoin). Mobile mining may deceive users through false hope rather than help them."

He explained: "POW (proof of work) requires miners to obtain wealth through labor, that is, they get what they work for, while mobile phone mining is more like deceiving users to spend money to buy hardware, that is, the hardware mines on their behalf, and they get what they don't work for, which runs counter to POW."

Moreover, according to data provided by Midas Labs, assuming the price of XMR remains unchanged, users will need to "mine" for nearly 500 years to recover the cost of purchasing equipment.

Jri Lee, founder and CEO of Midas Labs, said, "Midas Labs enables EXODUS 1S users to mine at least $0.0038 of XMR per day on average, while the electricity cost is less than 50% of that (i.e. $0.0019)." Based on this calculation, the annual profit is only $1.39, given that the EXODUS1S device is priced at $700. Assuming that the price of XMR remains unchanged ($53.38 per coin), it will take nearly 500 years for users to recover the cost of the device if they use the phone to mine without stopping.

Prior to this, Candy Mobile and Changhong Group had both launched blockchain mobile phones that can mine with their phones in 2018, but the response was mediocre. In addition, the efficiency of mining with mobile phones is far inferior to that of specialized integrated circuit mining machines. Some people believe that whether it is "security" or "mining", the symbolic significance of HTC's launch of blockchain mobile phones is greater than the practical significance, and user demand is not high.

As for "security", Douglas Schmidt, vice president of the Department of Computer Science and Engineering at Vanderbilt University, once said that it may not be safe for users to store personal information on Exodus phones, and HTC may profit from customer data.

“If HTC can gather a large user base to use blockchain on their phones, then HTC could potentially monetize customer profiles. Using blockchain to obtain user information and sell user data is similar to Facebook or Google, vendors can better target ads, and HTC can track transactions to gain marketing insights. My guess is that they are trying to build a private network of HTC customers similar to Venmo, using their devices to get special deals, such as no transaction fees,” he said.

In July 2018, HTC's revenue shrank significantly, falling 37% from the previous month and 77% from the previous year, setting the worst revenue record since August 2003. Since then, HTC has transformed into a blockchain phone and started its road to self-rescue.

At the end of 2018, HTC launched its first blockchain phone, Exodus. According to HTC's financial report, HTC's annual revenue in 2018 was NT$23.7 billion (about RMB 5.6 billion), and in 2019, HTC's annual revenue was NT$10.01 billion (about RMB 2.35 billion), a year-on-year decrease of 57.8%.