Topic: Bitcoin and the ASIC Conundrum (Read 14566 times)

aham just to piss u off:)

Was there a point to dig up a half-necroed thread just to quote the first post?

Hey guys, just updated my October Analysis to January given all the new data that has come to light over the few months, including the reward halving. Surprisingly enough, I found there are thousands more workers out there mining away...but the total hash rate over all the pools has decreased. Maybe there's a botnet snagging up CPU cycles to mine a bit?

Anyway,

Here's my latest January Analysis.

I'm glad I see people still taking a look at it! I'll have to do another update near the end of November right before ASICs ship...the closer we get to that time, the more accurate I think I can get.   

Thanks for the analysis again Korbman.
It contained some numbers I was looking for for my own models.
I think my math is pretty close to yours again.
good to see.

Quite right. Usually what I find is that the average break even timeframe is between 8-10 months...if you early adopt new, faster, tech then that time is shorter...if you wait to purchase the same tech long after it's on the market, the time is usually longer. My guess is that 8 months is a good number to work with, but don't hold it to me. Using these sort of 'average timeframes' I can get a better picture of where prices and hash rates could go (this isn't something I've included in my latest docs).

Similar to you, I will continue to mine unless I result in a loss (due to electricity).

Mining is about return on investment and profitability for the majority of miners. If you are printing money at a loss, you'll stop doing it. It doesn't get much simpler.

There will be those miners who mine to secure the network or because they don't care about the price because they'll never sell their coins, but for the vast majority of miners, it's about profitability.

Even if you own 20% of the network, if you cannot sell your coins for what it costs you to mine them, you're going to be faced with a big decision. Anyone who came into mining after Nov. 2011 has not faced this yet. I mined through the drop from $20 to $2. It's a stomach churning experience to know that you are loosing money to watch other miners drop out of the game.

That's an excellent point, and I think one I've also touched on in the past. But the problem is that predicting where price will go is absurdly difficult, if not impossible. At least with the hashing predictions I can gleam some sort of idea of where things will go.

Maybe some day I'll consider a full analysis of the price in comparison to the hash rate. I think I've seen preliminary data displayed by other users showing when price goes up, hashing goes up (which makes sense), but I think there's a lot more to it than that.

Hi Korbman,

I have been doing some thinking around this lately. I have come to a couple conclusions.

Price Drives Difficulty
The price of bitcoin is going to be the ultimate determining factor in how large the network becomes. This relationship only works one way through, difficulty does NOT effect the price.

If we see a stable or steadily increasing price (no bubbles), I can easily see the network being 700-800Th in 12 months. I put the likelihood of this happening at around 30%. The other factor involved here is that manufactures can deliver and keep up with demand in this scenario.

If we see an unstable price, many less dedicated miners are going to be unwilling to ride the roller coaster and keep investing in equipment. In this scenario I would think that your network targets 12 months out would be pretty good or just a tad low. I put the likelihood of this happening at around 60%.

So where is the other 10%? I would put a big boom bust cycle here and the price crashing back to last years low of $1.94. In either case, we'd see a lot of miners leaving mining because of inefficient equipment (this includes ASICs) which would lead to unprofitable mining operations.

I do know one thing for sure, I'll be mining no matter what happens. 

Best,
gigavps

Thanks guys, but seriously though let me know what you think about the numbers, layout, etc...when I do my next analysis I'd like to know what I could do better. I don't expect my stats to be perfect either haha. My goal was to get a broad sense of the people most likely to make substantial mining purchases, and then do some math to get a sort of "minimum" hash rate....and then compare current preorder stats to my prediction to see how it's going.

Thankfully, we seem to be on track

+1

Thank you for your underestimated work.

Hey guys, just updated my August Analysis to October given all the new data that has come to light over the past 2 months.

Here's my latest October Analysis.

Hi all and thanks to Korbman for the analysis,

Here some of my thoughts on this matter.

An FPGA running at 800 MH/s would cost around $800 running at 80 Watt.
The BFL ASIC SC presumably running 40 GH/s costs $1300 running at 100 Watt (uncertain).

While neglecting the difference in electricity consumption, the ratio ASIC to FPGA would be:
(40000/1300)/(800/800) = 30.8 times the capacity per dollar on purchase.

If we assume the current network capacity of 20TH/s is running on FPGA and invested hardware would be completely replaced per dollar by ASIC, the resulting network capacity would be around 600 TH/s.

BFL would need to sell 15000 SC's (or 600 SC rigs) for the miners to achieve this enormous figure.

Using TP's Bitcoin calculator, I would reach break even after almost 500 days:
http://bit.ly/P8lEME


Having said that. This figure will probably not be reached in a short period. Miners have to invest in hardware again. Miners have to ensure more bandwidth. Making the entire operation more like running a business.
BFL probably won't be able to ship 600 rigs, or the equivalent in single SC's in a short period. Resulting in sales for the amount of 600*$30k = $18M.


Then again, I think Korbman's TH/s prediction (143 TH/s) will be reached in 2013 easily.


Challenge me :-)
http://betsofbitco.in/item?id=612 (difficulty will exceed 8000000 on March 1st, 2013)

There is a mechanism for it, a getwork request returns a target difficulty and all the software I've tested accepts it and does the right thing.  My mining pool is the only one I know of that allows miners to select their difficulty (but I don't expect this to be true for long, others will almost certainly do it).

http://hhtt.1209k.com/

After a year or less or with increasing price, every BTC mined is profit (minus the low electricity costs), so yes, it's profitable. Remember that ASIC has to actually come out. Without the power requirements from the final phase of tweaking, you can be assured BFL is still easily over a month from release testing for pool ops and coders, even. Given the way they are going about it, there's no way we'll see ASIC devices actually shipped to customers by the end of October. Also, those with GPUs have an asset that can be resold to recoup their costs, so their ROI is even lower, technically.

With regards to "YEAR"... Starting a "real world" mining operation requires loans with a repayment schedule of 3 years, and you're not really expected to turn a profit at all the first three years since you'll mostly be covering loan payments and employee salaries. But when you are done you own the equipment outright and every year after that is profitable. My point here is that you could get a 3-year loan for FPGA devices (or ASIC, once it's released) and be profitable in the first year. That's why it's silly to be concerned about a 51% attack while the price is this high.

So long as there's no shortage of supply of ASICs, it stands to reason that they will keep selling until they raise the difficulty to the point where they no longer provide an attractive ROI. (Of course, you have to factor in risk, and there's lots of that because of difficulty changes and exchange rate changes.)

p2pool would solve that problem

and if you spent 30.000$ then you better be able to use p2pool instead of using deepbit.

Interesting.. I did not know that there was already a mechanism in place for increased difficulty shares.  Do all the common miners already support this?   

I don't see how an increased difficulty would really have that much of an effect on stales.  Stales should only occur when a new block is started right?  As pretty much everybody already uses long-polling, I don't see how the difficulty of a share would affect how long it takes between the new block event on the server and the long-poll/new block recieve event on the miner client.  All things besides share difficulty being the same, you are going to waste just as much electricity between the two.

Sigg