Topic: Anti solo mining myths debunked - page 3. (Read 12312 times)

Getting a little OT here, but for people solo mining how are you checking if you have any downtime?  

The thing I like most about pools is I'm able to see instantly if any of my computers are down without any extra software.  I just have one worker per computer and can see whether or not it completed any shares in the past two minutes, and if not I know exactly what computer has the problem.  For me, this utility itself is worth more than the 3% fee charged by the pool.

You, sir, like to gamble. And might I say, congratulations on mining a block solo on your 5870!
I have the same card and I wonder how long it took you. If I'd only get a Bitcent from pool mining on a single card I might just as well keep it running for a couple more days to find the "jackpot".

I see your point about myth 1, though. Stale shares and pool outages is what really gets on my nerves. Not only does the yield decrease dramatically each and every week, I also have to combat connection problems, hardware errors on my part (freezes), hardware errors on a pool server, invalid pool blocks after 12 hours of work... This oughta be much better when you can poll the network yourself.

So 0.5 BTC is bad, but 1% chance of finding 50 BTC is good?

Then this isn't at all about pool fees decreasing your expected payout... It's just that you're among the few people that actually enjoy the rush of having high variance. Good for you. (And consider the lottery for satisfying your variance cravings.)

I guess you're right about this one (though I don't know a lot about this myself). Wikipedia has a "be bold" policy which I guess applies here too, feel free to change this.

0.5 BTC a day doesn't have any utility for me compared to the effort.

Finding 50.0715 BTC in my wallet this morning had great utility in contrast.  


What about Myth 1, BTW?

Why is this nonsense still in the wiki?

If the difficulty keeps going high at average 4% each day, there is, for smaller hashrates, a very good "chance" that you will NOT mine ANY block at all, regardless of how long you will try.

Like with 200 MHash GPU you will never get 50 BTC mined using the pool, there is a very high probability that this GPU will never find a block.

So, it is better to earn 10 BTC with 100% probability, than to earn 50 BTC block with 20% probability, hence 80% probability you will not get anything. I would not take the risk.

The term you were looking for is "extrapolation" and it's still incorrect. I am a big fan of health insurance. The costs of keeping enough liquidity to be prepared for the worst cases covered by health insurance is higher than paying health insurance. The required liquidity for the latter is much lower, because there is enough inflow of money every month.

My point is, if you have multi-GH/s power you can afford solo mining with its better average returns without too much risk of never finding anything. If you have less hashing power, the return of pooled mining is too wimpy to be worth the hassle (if you aren't a kid) and possibly risk of investment (even tighter increases of difficulty or price drops). Mining solo is fun on the other hand. You either write it off after a while (0.5 BTC/day wouldn't have changed much) or you jump in circles over $750 in you wallet after waking up.

They were just saying that the utility of money does not scale linearly.  To a dirt poor person $1,000 guaranteed is better than a 51% chance of $2,000, or a 25% chance of $5,000, or even a .1% chance of $2,000,000, while the math would tell you to just take the odds x the value to get your expected value.

I think that's still a little far fetched at the moment, since a block is only worth about $750 today, hardly life changing money to most.  

Did you even read what I said? The expected money for solo mining is higher, but its variance is insanely higher and it's bad.

I think you need to read up on utility.

That's incorrect. Even at insane difficulties solo mining pays more on the bottom line. The chance to find a block solo decreases as much as the average payout of a pool, the relationship between both stays invariant.

Would you rather:

1) Pay me $1,000. I generate a random number from 1 to 1,000. If that number is 523, I will pay you $1,000,000,000. You can keep playing as many times as you want, but after you play a few times the reward drops from $1,000,000,000 to $500,000,000

2) Take $1,000 I give you for free right now.

See the problem? If you are unlucky before it drops to 25BTC/block, you CAN NOT expect things to average back out in the long run. You COULD get lucky in the short term too, but then your EV is the same as (not better than) solo mining. It's a question of whether you think the implicit fees you mentioned are worth the fact that you might make losses that will not be smoothed out by the law of large numbers after block payout changes.

EDIT: Wait, or would the probability rise to 1 in 500 at the same time (in situation 1)? In that case, nevermind, but:

The logical extension of your mentality about this is that you shouldn't buy health insurance because you would pay more per month on health insurance than you would on average spend every month on paying for your own healthcare when you get badly injured.

The alternative is heating and noising up your house for a wimpy 0.72 BTC a day on the same assumptions. That's really not worth the hassle.

On the other hand, I have switched 1 week ago from pooled to solo mining, after earning 3 BTC in total, the hard way. Today I have 53 BTC in my account, that's really worth the effort. The big profits make you smile. IMHO, a trickle profit of <1 BTC really isn't much more satisfying than 0 payback and the chance for big cash. That might be interesting for kids converting their parents' electricity to cash, but not for me.

The utility of money is concave, logarithmic is a good model. It's expected utility you need to maximize, not expected money.

This means that variance is not just "psychological", there is a real economic cost to variance. These days you might get away with saying that if you're a Vulcan you're better off mining solo, but in the future when mining will be one in a million chance to get $100M even that much won't be true.

And we're not Vulcans. Trying to mine solo caused me to lose sleep. Plus, some pools have convenience and monitoring features, and in the future end users won't be able to run a full network node.

Only if you think mathematics is about extremely oversimplified models completely detached from reality.

Solo mining is undoubtedly better mathematically, but you could mine for years without ever finding a block and I just can't see that sitting well with most people.  This is a bit of a simplification because I am not taking difficulty increases into account and because I am assuming every day as an individual trial instead of every share, but the average time to solve a block with a hash rate of 1ghash is 68.5 days at the current difficulty.  If you convert that to a percentage you have a roughly 1.46% chance of generating a block in any given day, or a 98.54% of not solving a block today.  

Chances of solving at least one block, at constant difficulty and 1ghash/sec:

1 day : 1.460%
10 days : 13.676%
50 days : 52.064%
100 days : 77.022%
200 days : 94.720% (1 chance in 19 of having a run this bad with no blocks)
365 days : 99.534% (1 in 214)
500 days : 99.936% (1 in 1,561)
1000 days : 99.99996% (1 in 2,436,681)

I have 3M+ shares mined on btcguild, yet Blocks Found: 0

So if it were not for pools, my 4 GH/s would have produced nothing for me so far if I mined solo.

No. Stale work has no chance of producing a block. Current work has a non-zero chance of producing a big reward.

LOL!!!!!!!!!!!!!!!!

After my last post my lonely HD5870 (940/300) has just generated a block! Can't see, which one it is, yet. It includes 0.0715 BTC fees and has only 23 confirmations so far.



Compare that to a measily 0.4 BTC a day, is that really worth your time? All or nothing!  

Difficulty has increased.
http://www.btcserv.net/bitcoin-calculator/

How is it rhetorical if no one seems to accept it. There is a sure return now because pools of a certain size do not go full difficulties without block solving. There *is* no sure return of any kind with solo mining. if difficulty were constant perhaps, but as it jumps up up up your time to hash keeps increasing. Getting 50 BTC now or later does not make a difference except that the longer it takes you to actually GET that 50BTC the less likely you are to command similar returns to pool payout. This is why its not rhetorical?

The idea that the lottery will reward you more handsomely in the future is just wishful thinking. Yeah you could find like 20 blocks in a row at 20mil difficulty with 500MHash/sec, but you really aren't going to.

This isn't rocket science. You have a probability curve that models your expected time to solve a block that keeps getting shifted away from where you are as time passes and difficulty increases. This is what bugs me about people saying "oh anyone CAN find a block at any time!" Yes, and anyone can win the lottery, it is still a stupid investment if the odds are stacked against you. Spread your timeline out, and you will see the advantages that grabbing as much as possible for yourself as soon as possible will yield. it's simple.

Again, i will use myself as an example to make this less abstract for you:

i have been mining for 2 months more or less. in that time i have solved 0 blocks. i have earned roughly 350BTC in that time. this means going forward i would need to solve > 7 blocks just to catch up to myself. the next difficulty (occuring in about 2 hours) will be about 1.4mil. The average time to find a block at this difficulty is 14 days at my current hash rate (> 1 difficulty change). Coin toss @ 9.75 days. The chances of me dropping 7 blocks in a row in this time period are astronomical against. Obviously i'm an unlucky case, but i'm also a real case. Again increasing difficulty isn't just some boogeyman, it's a real consideration and why you need to consider the coinage you can gather now as superior to ones you imagine getting in the future.

Pools are the tax authorities, which levy tax on ignorance and lack of knowledge of elementary theory of probability. Kind of like weird reverse lotteries.

Aren't the blocks some time next year going to be 25 BTC from then on?