The Chronic Dev team of eager iOS hackers at GreenPois0n has announced an untethered jailbreak for the current Apple TV in the form of RC6 of the eponymous utility. This new build features contributions from the NitoTV team to enable the tetherless feature.
Up until RC6, most iOS 4.2 jailbreak tools performed a tethered jailbreak, meaning you would have to connect your device to your Mac or PC on reboot to get it to start up properly. While this wasn't a huge issue with the ATV (you could simply set it not to sleep), it could be a pain in the neck with iPhones and iPod touches if they lost all charge and needed to be restarted.
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