Bitcoin Mining: High-Tech Arms Race

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Jan. 9 (Bloomberg) -- Bloomberg’s Matt Miller discusses how to increase your value of investment in Bitcoin. He speak with Betty Liu on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Are we accomplishing what they want to accomplish?

Are they creating a wealth effect?

Yes.

Do i expect it to continue?

Yes.

Am i going to participate in the up, i am not.

I refused to be long equity in a low environment.

The german stock market has doubled in the last four years.

They have got gdp growth of .7%. the risks for me are two great.

) you have been saying for quite some time you will not be participating in the market.

Has anything changed?

Will you be a part of the market or not?

There are other opportunities.

I am not invested.

There are other areas.

What are the other favorable asset classes of the fed?

It is real estate.

In my mind, owning real estate keys my money out of financial assets.

They want real estate to go up and it appears to be working.

I still like that asset class.

I want to be really careful with equities.

I am not the big scary bear.

I am just not going to participate.

I just do not see the growth story.

As long as we do not get gdp growth where i wanted, i will be skeptical.

Thank you.

From the trade to the call on the markets, i want to bring in david, the chief market strategist.

The s&p is going to be flat this year.

The biggest risk investors will be to complacent about inflation.

Why is that one of the biggest risks?

I have a very different view from your previous guest.

The growth environment is getting better.

I may be surprised of the strength.

As that happens, it may get a little more concerned about their policy.

I think the market will anticipate inflation will be rising a little bit.

Clearly, the fed is in a shifting mode.

As a result, equities will struggle when the liquidity environment starts to deteriorate, despite what i think will be an improved operating environment.

That means you put your money where?

I think you want to be overweight equities, at least relative to bonds.

At the same time, there will be a market correction at some point when investors start to become concerned about the future fed policy.

I think there will be a better entry point.

While i will be overweight equities relative to bonds, i would have a higher than normal cash balance.

Normally, you want to be five percent.

I might go to 10% or 20%. you might get a better entry point.

I know you have got distinctive use on emerging markets -- distinct views on emerging markets.

Not all of them are the same.

They do look cheap.

You track emerging-market index, trading on a four-month low, it is the biggest valuation to the s&p 500 in roughly a decade.

The biggest concern, it is the taper.

You have already seen currencies in some of the emerging-market companies.

Indonesia has been selling off.

The threat is as taper continues, the cost of capital will start to normalize and that can hurt businesses and stocks in the emerging countries.

Despite the selloff we have seen, big banks, including morgan stanley and goldman sachs, they are telling clients emerging markets will underperform.

David, your view is?

I agree with that.

I would differentiate to some extent.

Emerging markets in asia are a little more attractive.

Growth prospects are better than latin america.

More commodity heavy.

I agree, i think emerging markets in general will underperform.

Having said that, if i own emerging markets in my portfolio right now, i would hold onto them because evaluations are pretty compelling here.

This is not a time to sell.

Alex is looking at industrials and the negative view on industrials.

I took a look at caterpillar.

If you need to build anything, you are probably buying caterpillar equipment.

Worldwide fewer sales on november 2013 year on year.

That is the latest data that is available.

They were down 12%. it was really across the board.

12 consecutive desk -- 12 consecutive month.

China down.

It is so important to the industrial cycle because of how much commodity buying they actually do.

This prevailing negativity over the industrials.

You have a rosier outlook on industrials.

Yes, i agree with the assessment that the international outlook for industrial sales is probably fairly weak.

The environment is improving.

I think the construction activity and housing activity to improve if rates do not go up too much.

Industrials have not been necessarily the leadership here.

Throughout most of the recovery and as a result, the relative evaluations are pretty attractive.

It will depend on the relative strength of the u.s. economy.

I think we get the three percent this year, maybe even better.

If we do not, however, industrials will not perform as i expect.

Thank you, david, for joining us.

The chief market strategist.

Coming up, making money buying and selling bitcoins.

There might be other ways to cash in without using the virtual currency.

We will tell you how.

And, handing his weapons over to the u.n.. we take you aboard the american ships tasked with making them disappear.

Stay in the loop.

? samsung is releasing its galaxy s5 smartphone.

Samsung is hoping their next high-end handset will be able to compete with apple's high-end iphone.

John announced yesterday his company added 869,000 monthly subscribers last quarter.

Its best quarter in eight years.

He himself became the talk this week after he crashed and was exported out of and at&t party wearing a big team on -- people -- t-mobile t-shirt.

A court is nearing a decision to stop the webtv service.

Aereo.

It closed a $34 million round.

Aereo is reselling its content without permission.

And, catch all the latest in tech and media every weekday only on "bloomberg west." and the easiest way to get a bitcoin is to buy one.

There are plenty of other ways to cash in on the digital currency.

A bitcoin expert now, matt miller, joins us more on companies now popping up.

They say you can get in on this now.

You do not even have to own this currency.

I would not call myself an expert yet, -- you are.

For the past four weeks.

I will say there is a long- standing debate in the bitcoin community about which is a better way to increase the value of your investment in bitcoin.

That is, do you just buy it and hold it, or do you mine -- you mine it and make it?

One of the big things i always thought was the comparison to the gold rush.

I cannot remember who said it.

Someone said, when there is a gold rush, you do not want to go out and look for gold.

You want to sell pickaxes and wagons to other people who are looking for gold.

The same holds true, basically, in the bitcoin madness that we have seen as the price of bitcoin has gone from cents to a few dollars to $100 to $1000. it was trading for only $200 act in september -- back in september.

It has been an amazing ride.

It has been up and down and very volatile.

People who have made money throughout have been people who have popped up to start building the machine you use to mine.

We have a great story coming out and issue of "bloomberg businessweek." you see butterfly labs and miners.

I spoke with a ceo a couple of weeks ago and asked how he got into this.

Listen to what he had to say.

The higher the performance, the higher the probability.

The idea is, build a very powerful machine in terms of performance and consume the least power in terms of the electricity.

In the bitcoin world, performance minus electricity, it is revenue.

What he is talking about is when bitcoin first came out and you could mine it, you could use a regular computer and a lot of people were using old nintendo's . you did not need much computing power.

Special chips have been made now that will do the work faster and better as it becomes more complicated.

People like him have built special computers around these special chips in order to do the work.

One of his computers does as much work as 70,000 chips combined peer it is a lot of competition will power necessary.

Does it push out the little guy?

That is one of the big problems and concerns in the community.

There are a lot of mining operations getting together a large number of computer processors, a large number of these special chips.

In order to mine bitcoin.

There are multibillion-dollar operations.

There is one involved with some people from the paypal mafia and a bunch of these multimillionaire superstars.

They want to make the fastest ships and build the biggest computers.

Then, it is kind of like, something that was supposed to be a democratic and the centralized currency for the people of the internet, controlled by the super millionaires sitting in their towel -- towers, and that has been a real concern.

As if they need any more money.

It is great.

It is a two-sided coin.

It is great they are involved in it.

People are so happy they are into it.

And a bunch of these big names.

They are investing in it and making it more popular and mainstream.

That has undoubtably been a drive in the price up to this $1000 point we are at now.

On the other hand, you do not want a small number of people holding all of the bitcoin wealth.

And hoarding it.

It is not what the whole movement is about.

) it has given away to rival bitcoins.

That is right.

There are a ton of different -- i laughed because it is kind of a joke.

There are a ton of these coins created.

Initially, people were like, there are additional clients and these coins basically do the same thing.

They make a lot of money for the inventor and then trade against bitcoin and other coins.

They are not serious contenders because they do not have the acceptability or the use, but now there is doggy coin, named after this.

It has created his own.

A story about a company that spoofs kanye west.

There are so many different ones.

I thought opera coinfrey would be a good one.

The real thing is bitcoin.

Class coming up, an inside look at the u.s. ship ready to turn syria's most deadly chemical weapons.

Stay in the loop.

? moving and shaking this hour, chris christie.

He will give a news conference in about an hours time to address the incident some are calling bridge gate.

In september, multiple lanes leading onto the george washington bridge from a new jersey town were closed, causing massive backups.

Critics have accused him of closing the lanes to take revenge against a democratic mayor who did not support his reelection efforts as governor.

This has been linked to some of his eight.

Lawmakers are looking into the incident.

He has repeatedly denied any involvement and said he was unaware of any of this.

Staying in regional politics, i spoke with bankunited earlier this hour about his thoughts on the new mayor here in new york city and whether he will be friend or - flow on big wall street.

-- foe on big wall street.

I do not think he will kill the golden goose.

It is now time for our global outlook.

The process is moving serious or deadly chemical weapons has finally been done.

Beginning in the u.s. where the weapons will be destroyed.

Adam johnson shows us how the x is will pull it off.

This floating hunk of steel is where weapons of mass destruction go-to guy.

The mission is the first of its kind.

It is outfitted with two hydrolysis system designed last year for field use.

The high-tech systems will neutralize 700 metric tons of deadly weapons and will take about 90 days.

Getting the chemicals on board will take several steps.

First, russian trucks will transport the weapons to a syrian port.

Then norwegian ships will deliver them to the sea.

A transfer that should take two days.

It turns out the biggest danger might not be the toxic chemical weapons but mother nature.

If they become unmanageable, we have to shut down production.

It currently docs in portsmouth, virginia.

Adam johnson, bloomberg.

? bloomberg television is on the markets.

We are 30 minutes into the trading day.

We are seeing a slight update.

The nasdaq is leading the way, almost 3/10 of one percent.

We are looking at health care, industrials, and financials.

A little bit of risk and safety in what investors are buying.

The lowest level in a month.

Tamara is the all-important job today.

Speaking of jobs, perhaps a new sign the economy and the job market might be improving.

More people are quitting their jobs.

Janet yellen might be taking notice.

Economic sentiment, anna jackson and michael mckee.

You have been looking into the numbers.

How many could -- how many people quit their jobs.

In october, 2.4 million people quit their jobs, up 15% from last year.

Where are they mostly quitting from and any read on where they might be going e people were quitting their jobs.

That saw the largest change.

People are not quitting as much.

It is a good sign because people are maybe taking another job or are confident they may find another job soon.

Qwest there is a quit rate.

In the monthly job report.

We will see that tomorrow.

It is a sign of confidence.

That is important when the economy goes south, so does the number of eagle leaving their jobs voluntarily.

Is that a big number?

It is fairly big.

That is one thing people do not understand about the labor market.

People quit all the time.

The number of jobs created each month is huge.

Many millions.

What we report, a couple hundred thousand difference tween the number of people quitting and the number of people getting jobs.

You want to watch a quit rate of how many people and what percentage of those people are doing it voluntarily.

We look at all separations and layoffs and retirements.

This is one percentage of separation, 56%, the highest in five years.

That is a good sign.

It means people are voluntarily quitting.

It is not layoffs and more people retiring.

When you look at the data on its own, that ratio is what a lot of

This text has been automatically generated. It may not be 100% accurate.

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