For most it doesn't matter. I store flac but decode to wav on the server
(not in the SB). I can't hear a difference versus decoding in the SB.
But some say they can. This has nothing to do with "bits is bits"
discussion of flac versus wav. Both are lossless. This is easy enough
to test for yourself. 

One hypothesis (not mine) is that the Flac decoding process in the SB
may cause noise that gets coupled to the power line that excites
resonances in some transformers. We are talking about a transformer in
an external dac in a high resolution audio rig. Higher quality
transformers can ring at certain frequencies, which could be excited by
noise on the power line if it is at the same frequency. You can see how
this could be very system dependent.  

If the above hypothesis were in fact true and it affected your system,
then one might be able to address it by implementing Jim Hagerman's
snubber circuit for power supplies, which is probably a good idea aside
from this topic. 

http://www.hagtech.com/pdf/snubber.pdf


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RioTubes
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