Topic: ASICs - which should you choose? - page 3. (Read 12980 times)

Very nice graph and good article, keep up the good job 

Mmm, I am a bit confused now. Would you please restate your point?

AFAIK it's simple: assume you have an initial amount of $1000. You decide to buy mining equipment which generates 100 BTC before it blows up in your face (we neglect the electricity cost for simplicity). Alternatively you could have bought 100 BTC from your initial $1000 at $10 per BTC. Assume in 1 year BTC is $1000 a piece. Now your mining equipment generated $99000 profit.
Correct? No - because the profit is an outcome of the value appreciation of BTC. Your device just made it barely to break even.

I'm not sure about the opportunity cost as it applies to mining since converting either from local currency to btc or btc to local currency means you have to hold on to one or the other. So, assuming you're correct - and I guessing here - but is there no opportunity cost for local currency because you're spending it and not earning it?

nothing?

Technically you can easily renormalize the denomination at the break even point with the above assumption. Personally, I prefer the BTC denomination, because it provides information on how much BTC can be "generated" with the device (production-cost). If you denominate in $, you should always have two graphs: the value increase of your mining investment, and the missed opportunity of holding on to your BTC. The difference provides true information on the ROI.

Sorry. Ummm...sharing is caring?

Looking forward to your updates.

Ah crap. Another update is due, I believe. Once I've hashed out the ROI curve details with Jutarul, I'll update.

That's pretty much what I thought. What have I misunderstood?


Since I'm not attempted to create an accurate model for mining but a comparison between devices, I'd thought that evaluating a1(x) - a2(x) at the point of evaluation only (ie as if no electricity bills are paid until the evaluation point, and no btc are spent until then). In this case isn't the denomination of the graph immaterial? Whether it's denominated in btc, local currency or % ROI the results should be equally valid. Is this right?

I'm just asking this because I'm working on an ROI chart like yours, but as a tile-plot, the third dimension as the exchange rate at evaluation point. I don't want to post it if there's a glaringly unforgivable error in doing so.

You're welcome. Since you took the time to create a nice post, I thought I'll take the time to give you some feedback. Also gave me an opportunity to re-evaluate some aspects about mining profitability.

Yes. a2(x) is a bitch. And in reality it's not a constant and does not resemble an average.

Rational miners should mine as long as a1(x)>a2(x). However, that disregards other factors, like resale value of the hardware, protection of the network, etc.... That's why I used the term "upkeep". It's the expense you have for generating new coins and "protecting" your investment.

The thing about a1(x)>a2(x) is also that it may trigger some people to hold on to their hardware for latter use, when the exchange rate becomes high enough again... It's a very dynamic system.

Hot off the presses


I believe that should send that debate to it's final resting place.

https://bitcointalk.org/index.php?topic=79637.2060;topicseen

Of  course, go ahead and use what you need. It's why I wrote the blog post.


The challenge for you will be modeling the initial change in difficulty until it reaches steady state. After steady state it's likely to increase by some arbitrary average percentage, but until steady state is reached the increase in hashrate will be a function of the hashrate and number of sales of the devices over time. At a very uninformed guess, I would expect the cumulative increase in hashrate over time to be something like an exponential or pareto CDF.

Once you have your model for the hashrate increase, you need to model the increase in difficulty. To do this properly you'll need to include difficulty increase by a maximum of 400% per difficulty period, and also that the greater the increase in hashrate, the shorter the difficulty period will be (in terms of time elapsed).

You've probably already thought of all this, but if not I hope it helps. I'll be interested to see the results you get.


It was based on the average percent difficulty change since the start of the year, and assumes that difficulty has reached a steady state after the bulk of the ASICs have been introduced. It is an assumption that may not be at all warranted, but it's likely closer to be more accurate than trying to model the exchange rate.

Thanks for taking the trouble to write a helpful, clear and thoughtful post, Jutarul. I followed your explanation well enough to have a few questions which I'll post one at a time.


a2(x) what what I was trying to avoid. I think btc exchange rates will continue to be much more volatile than I'm happy to attempt to model. So by calculating the fiat to btc conversion once and using the the exchange rate as an independent variable, I don't have to be concerned with long term exchange rate volatility affecting a model's outcome.

Have I misunderstood any of this so far?

TIA

Thanks a lot organofcorti for all this info, charts, blog.. very nice

Def donation worthy.

I've learned lots and I hope you don't mind me using some of this.
I'd like to project some possible difficulty curve increases. Yes, it will be full of assumptions.

Was there any reason why you chose 5% per diff change or was it just a reasonable assumption used to evaluate your original analisys of "Which ASIC to choose?"

Gladly.
it's a 2d graph with follows: y = a*x+b. It should be denominated in BTC since this compensates for opportunity cost. In that case we assume the miner holds on the the mined BTC till the break even point (at which point the exchange rate matters).

y = profit per day in BTC
x = day
a = mined BTC per day
b = (negative) initial hardware costs in BTC

a itself is a function of x, since the efficiency of the mining changes with time, thus: a=a(x)
a(x) can become negative since mining operation include an upkeep (electricity cost), thus the price of electricity matters:

a(x)=a1(x)-a2(x)

a1(x) = generated coins
a2(x) = upkeep

a1(x) depends on difficulty (D), hashing power (H) and reward (R)
a2(x) depends on electricity costs (EC), consumption (W) and exchange rate (ER) (since the graph is denominated in BTC)

a1(x) converges against zero with time since difficulty is supposed to increase and rewards drop according to the schedule.
a2(x) may fluctuate a lot around an average value. It is supposed to decrease in short term (increasing exchange rate) but increase in long-term (higher electricity costs).
The lifetime of the hardware is characterized by the time (x) at which a1(x) intersects a2(x).

To provide an example I use your data from your post for BFL (some simplifications used):
b= -100 BTC ($1299 with $12.99 per BTC)
a1(x)= [ 60 Ghps / ( 90 Thps * (1 + 0.05 * (x/14) ) ) ] * ( 25BTC * 6 * 24 ) = [ 60 / 90000 ] * [ 1 / (1 + 0.05 * (x/14)) ] * 3600BTC = 2.4BTC / (1+0.05*(x/14))

(1.05 derived for your 5% increase in total hashing power per difficulty period, 14 days per difficulty period, neglecting compounding)

a2(x)= [ (60 * 24 Wh)*(0.1 USD/kWh) ] * [ 0.1 BTC/USD  ] = 0.0144 BTC

The graphs look something like:

Good work organofcorti and nice blog

I've written an updated post with the suggested specifications:

http://organofcorti.blogspot.com/2012/11/92-asic-choices-update-2nd-november.html

I've attempted to stick to consensus, so I wont update again until there's new published information about device specs or I've made another transcription error.

Avalon is 66Gh/s at $1,299, currently topping out at 400Ws. the reason is we are still finding the good balance between power consumption and speed. which means speed can still go up and power can still go down.

Here are my estimation on the competition's power consumption based on simulation using tools we have at Avalon - do make yourself clear of this fact.

With that said,
from the look of things and information released by Tom, they will be running 100W per module, each module at 27Gh/s, their 54Gh/s rig will be around ~200Ws. ( Yes, I also believe 300 is too high. )

BFL, I expect to reach ~1.5W or more per Gh/s with their 65nm chip. whether they can power their 8 slot board at 7.5Gh/s/7.5W chips each to met their announced specs is a totally another story.

p.s.
been a long time reader of your blog, keep up the good work, some donation has been sent your way.

You misread me. My suggestion was to plot starting diff vs exchange rate at break even vs number of days to break even.


I have no idea how you could possibly include these things without making lots more assumptions. As I mentioned in the blog post I didn't want to make any assumptions about what the exchange rate would be at a given point in time, so it is the independent variable. In order to make sense of this, you have to assume a miner is holding on to all mined coins. Hence the importance of exchange rate at break even point.

As they stand, I think the calculations provide the average miner with a simple method of comparing several different ASICS based only on hashrate, power consumption, assumed starting difficulty and assumed change in difficulty per difficulty period. We can make some educated guesses about these last two assumptions, but not about the exchange rate at a given point in time.



Post a link to an example and an explanation of the calculations you're talking about and I'll try to make one. Otherwise I've provided a method to calculate the data - go for it!

contour sounds interesting. plotting 'starting diff vs exchange rate at break even' may not give you a lot of information since it's strongly correlated. If you want to do a three dimensional graph (which is a contour plot) you'd preferably have 3 independent variables of significance.

Actually I don't really understand why you'd want to use the exchange rate at break even point. AFAIK you should rather use the exchange rate at the time of buying the hardware / pre-order since this factors in opportunity cost. What matters is the time required to recoup the equivalent amount of bitcoins through mining, and this is rather independent of exchange rate (of course low exchange rates at ordering time discourage hardware investments, because more BTC have to be mined...) with the exception of having to sell some BTC for covering for electricity. (actually your post makes no reference to opportunity cost, why?).

A more intuitive graph would be a ROI graph, with the x-axis being the time of operation. the y offset is the initial hardware cost, and the xoffset is the break even point... I didn't see one.

I agree these would be good measures, and I did do a few charts along those lines (unpublished). But I think they might mystify most miners, and the idea here wasn't to present charts but to present the math that will allow people to make their own decisions, and to illustrate that with charts.

That being said, I love a pretty contour plot, and I generally prefer them rather than use a synthetic variable (eg I'd prefer a tile or contour plot of starting diff vs exchange rate at break even, colour indicating number of days to break even).

Any preferences? Get them in now and I'll try to do it when I fix my errors tonight.