Someone spent $1 million worth of bitcoins for mining gear

October 29, 2013

(btckeychain / Flickr)

Bitpay, a startup that helps ordinary businesses accept bitcoins from their customers with minimal hassle, announced Tuesday that it had processed its first million-dollar transaction. Butterfly Labs manufactures Bitcoin mining hardware, which allows users to participate in Bitcoin's transaction-clearing process and earn bitcoins of their own in the process. A Butterfly Labs customer purchased $1 million worth of hardware, using Bitpay's payment system to do it.

Bitpay accepts bitcoins on behalf of vendors and automatically converts them to dollars, saving vendors the hassle of doing the conversion themselves. The company says cash was deposited in Butterfly Labs's bank account within one business day.

Bitcoin has an important advantage for vendors like Butterfly Labs: because transactions are irreversible, vendors don't need to worry about "chargebacks," a feature of credit card networks in which a customer says a charge was unauthorized and reverses it.

Of course, while chargebacks are a headache for merchants, it's a benefit for customers, who don't have to worry about criminals hacking into their accounts and draining their bank accounts. Bitcoin doesn't have the same protections; if someone hacks into your computer and steals your bitcoins, you likely won't have any recourse

Bitcoins are now worth nearly $200, so that $1 million Butterfly Labs transaction would have required around 5000 bitcoins.

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Brian Fung | October 29, 2013