Topic: Break even difficulty by hardware efficiency (power cost = value of BTC) - page 3. (Read 18881 times)

Was this on the reduced speed boards?  The reason I ask is if the boards intended for 25 GH/s are getting 21 GH/s then they are essentially underclocked (even if unwillingly) and that will improve efficiency. 
Was the 116W increase at the wall? 

Rising difficulty doesn't give you a hard stop in BTC production though - it just makes your mining more expensive in terms of electricity per BTC - and if your electricity is free, you can keep going until either you, or your miners die, can't you?

Even with free power, some people ponied up more BTC for an ASIC (Batch #3 from Avalon for example) than it can ever generate due to the rise in difficulty. I guess some will be so stubborn to let the machines run to recover whatever they can.

One other reason why people might rationally mine with hardware that is apparently no longer cost-effective: if they want the heat output anyway.

I think you mean Eastern Europe and not Europe in general...


Even with free power, some people ponied up more BTC for an ASIC (Batch #3 from Avalon for example) than it can ever generate due to the rise in difficulty. I guess some will be so stubborn to let the machines run to recover whatever they can.

There's also lots of people with "free" electricity (as in, someone else pays for it). For instance my rent includes bill within a certain usage. I run ASICs and honestly I don't look at their consumption (well, I did just for curiosity, but I'm not tracking it).

This is rather common in Europe and Asia.

Obviously these are not going to be big operations, but many people can add up to be significant. Depends on how decentralised mining ends up being for the next few years.

There's also lots of people with "free" electricity (as in, someone else pays for it). For instance my rent includes bill within a certain usage. I run ASICs and honestly I don't look at their consumption (well, I did just for curiosity, but I'm not tracking it).

This is rather common in Europe and Asia.

Obviously these are not going to be big operations, but many people can add up to be significant. Depends on how decentralised mining ends up being for the next few years.

I think it's highly unlikely that people will order custom hardware like ASICs to mine BTC and NOT track the power consumption and do the math (unless they are the kind of customers BFL got where Josh was laughing at them buying items where they had no clue what it did)

That is a good point.  Another way to look at it is difficulty may overshoot before correcting.  We say this multiple times over the years with GPUs.  The trend is something like, exchange rate rises rapidly and then difficulty follows over a much slower timeframe as miners deploy new hardware prices, eventually prices peak and decline and thus pushes the most inefficient miners into a negative operating margin.  Maybe they hang on for a while hoping difficulty goes lower or prices rise but eventually they give up and difficulty declines back towards equilibrium.

If the electrical cost to mine a Bitcoin is slightly higher than purchase cost miners may continue to mine for some time.  One reason is that it is an easy anonymous way to "buy" Bitcoins from your power company.  However it is important to keep in mind that unlike the GPU world the efficiency between the least efficient rigs and the most efficient ones is on the order of 12x (possibly more if/when Bitfury produces a 28nm device).   So while electricity is still a small % of gross revenue for a cointerra miner it will be >150% of gross revenue for an Avalon one.  So difficulty can continue to rise far beyond the break even point of an Avalon miner to a level where even the most "stubborn" miner will admit defeat (Paying $5 in electricity for $1 in BTC).

I've always assumed that, in the short-to-medium term, the equilibrium point will be on the wrong side of breakeven, due to optimism bias in the purchase decisions.  It's true it wouldn't make much financial sense to continue to mine under those circumstances, but there are other reasons to hash than profit, and even the people who were in it purely for the money will find other ways to justify their purchases to themselves.

roy

I've always assumed that, in the short-to-medium term, the equilibrium point will be on the wrong side of breakeven, due to optimism bias in the purchase decisions.  It's true it wouldn't make much financial sense to continue to mine under those circumstances, but there are other reasons to hash than profit, and even the people who were in it purely for the money will find other ways to justify their purchases to themselves.

roy

The cost to reach the "break even point" is based on current cost so I don't find it too useful, because cost will decline significantly.  The network will approach a small margin below the break even point.

I doubt even that will happen with ASICs. With GPUs, people had other uses for them. With ASICs, lots of people are not even aware of their consumption and they don't have any other usage for them. I don't think they will track the price so tightly if at all... but I guess we will eventually find out when we get closer to break-even.

@ muyuu,

I think you misread (or I wasn't clear).  The scenario is the network is in equilibrium (hashrate growth changes with exchange rate because the difficulty is near the collective break even point for the network).  To illustrate lets say the exchange rate is $200 per BTC and there is a miner with an older 130nm rig which requires $180 in electricity to produce 1 BTC (based on difficulty, efficiency, and power cost).  Now the exchange rate falls and remains below $150 for thirty days.  At some point that miner is going to stop producing one BTC worth <$150 using >$180 in electricity and just buy BTC because it is cheaper.  People may make bad long term plans but generally make better short term ones.  When you are spending >1 BTC to produce 1 BTC it is pretty easy to see you should stop.  On the other hand he is unlikely to throw his rig away.  If the price (or more importantly price/difficulty) rebounds then we will turn his rig on.  The bad news for this marginal miner is that the higher price/difficult will bring in new investment likely by miners with lower power cost and more efficient gear so difficulty will likely overshoot his break even point and he will have to idle again. 

We aren't concerned with hardware costs for the break even point as you indicate they are a sunk cost even if a miner has a lifetime loss it still makes sense to mine to reduce that loss UNTIL difficulty exceeds the break even point.  At that point any additional mining is just increasing the loss for the miner.  

We saw this in dynamic in the GPU era where difficulty would track price.  Today it doesn't simply because we are no where near the break even point for the network.  For even the least efficient gear and the highest power cost user it would be >6PH/s.

Was this on the reduced speed boards?  The reason I ask is if the boards intended for 25 GH/s are getting 21 GH/s then they are essentially underclocked (even if unwillingly) and that will improve efficiency. 
Was the 116W increase at the wall?