Topic: Countdown To 25 BTC / Block reward (Read 4943 times)

Price dictates difficulty.  If existing miners (those who have the most accurate numbers to work with) can get more bitcoins by buying hardware then paying for them directly, they will buy hardware.  If price drops below what it take to pay the electric bill, miners will turn off their hardware.  There is often a time delay for bringing new hardware online though.  Difficulty rises pretty quickly as existing hardware becomes profitable again, but it also overshoots as new hardware is purchased and isn't brought online until after the price corrects down.

Bitcoin protocol tries to keep avg block time at 10 minutes.  Every 2016 blocks difficulty is adjusted to whatever difficulty would have made the last 2016 blocks take avg of 10 minutes each. 

As more hashing power comes online blocks are found faster and thus difficulty rises.
As hashing power is taken offline blocks are found slower and difficulty falls.

So your question is better phrased "why is hashing power go up and down"?

Economics.  If it is unprofitable miners turn off rigs and hashing power falls. As more efficient equipment comes online people expand.  New miners are always joining and expanding, and inefficient miners always quitting, and scaling back.  So the network will always balance itself.  Now if revenue for miners is too low then the network will be very weak and easily attacked however even if hashing power was cut in half ~5TH/s is a very "hard" target.

it appears some of my assumptions were not correct.  I assumed difficulty would be rising exponentially one way.  Your graphs posted indicate that difficulty & price are directly linked, and are not linear or exponential, but rising & falling.

If I assume price is related to difficulty, why does difficulty rise & fall?  The more I try to learn about BTC, the more complicated it is!   I'm not trying to understand all of it, just enough to decide my own involvement!  LOL

Depends on what you mean by collapse?

To a miner nominal price is totally irrelevant.
To a miner nominal difficulty is totally irrelevant.

All that matters is (price * reward) /difficulty.  So if the reward subsidy is cut in half and difficulty falls by 50% or price rises 100% (or some combination of the above) then you are making them same. 

No collapse.  Some miners (the highest cost and least efficient ones) will be forced to quit and when they do difficulty will fall.  The system will balance itself. 

Since the concept of  (price * reward) / difficulty is somewhat abstract you can look at it in terms of revenue per GH/s.  Bitcoinx makes some nice charts (they are 100MH/s not 1 GH/s).


Today a miner makes about $3.60 per GH/s in gross revenue.  If neither price nor difficulty changed then that would be $1.80 per GH/s after the subsidy cut.  However as you can see from the chart difficulty & price do change continually.    If we had the same difficulty and price as in early January after the subsidy cut then a miner would make $3.00 per GH/s only 16% less than now. 


There is no IF.  Miners won't be making 50 BTC next year.  Period.  Transaction fees may rise but not that much.  Fees average 0.2 BTC per block.  Maybe they rise to 1 BTC per block but they aren't going to rise 10,000% in 9 months.

Block mining payouts of 11 BTC will only be acceptable if 1) its profitable using the hardware required  and 2)  Its cheaper to mine BTC than to buy it.

Both of these depend on the fiat currency value of BTC at that time (or the barter value!); a completely unknown quantity.

If the 50BTC  per block payout is not maintained next year, I personally suspect mining except for the hardcore miners will collapse.  Miners will have to be able to produce multiple GHashes to be profitable (prob already so).   In the meantime I'll be buying my BTC I think, and possibly doing a little FPGA mining only if its cheaper than buying from the exchanges.

With these assumptions, I reckon next year will be crunch time for BTC!

If maintaining a minimum of 50BTC per block is the goal, then we're going to need to see much higher volume of transaction.  I'm not sure this is the goal.  Perhaps in 20 years, when BTC is widely used and blocks are worth 1BTC, transaction fees will only total 10BTC.  I think this is also an acceptable result.

Thanks.  Yeah, I don't remember reading that before.  Certainly not understanding it previously.

So I take it the idea/hope is to maintain an approx payout of 50BTC per block indefinitely, made up of BTC earned & fees gathered from community transactions.
So the less raw BTC that is earned per block, the more fees needs to be payed out to miners to maintain their current level of payout per MH.

I may be really behind the curve here, but I haven't been aware of any transaction fees in my few BTC transfers yet.  I seem to remember that the wiki piece does mention the fees is optional currently.  If I'm right here, then transaction fees will become much  more important later on, minimum fees applying etc.

You haven't heard of fees? Really?

https://en.bitcoin.it/wiki/Transaction_fees

OK so you're saying that miners will be paid "fees" to topup the decrease in BTC earnings?

Where do I find documentation regarding these plans, or is this just an idea so far?  I've seen nothing on the internet to explain this to me.

Hopefully fees will be large enough to make up for the subsidy.

I like the idea of mining BTC, am currently using 1 x 6970 @ 400MH, not profitable, so discontinuing GPU mining & will be researching the FPGA options.  However using exchanges to just buy  BTC seems to me like the best overall option.  Just buying BTC is approx 1/2 the cost to me of mining with 1 x 6970!   Buying from an exchange is cheaper for me than even using 3 x Radeons for mining (assuming approx 400MH per card).

When mining starts to pay 25 BTC/block, then I don't see the point of any mining, and BTC payment has a long way to decrease from 25 BTC/block!
Why bother mining for 1/2 (and then less & less later on) the previous reward?   Just buy the  BTC!!

..... unless BTC _really_ jumps in price & mining using the expensive FPGA options actually becomes more economic than buying using fiat money.

Anyone's comments on the economies of mining for 25 or less BTC/block??

it seems bitcoinclock.com is just having problems because it polls blockexplorer.com which is currently down / extremely slow.

i might have to put some kind of fall-back to get the blockcount from elsewhere.

works for me... try this: http://www.downforeveryoneorjustme.com/bitcoinclock.com

errrr... or the shorter equivalent: http://isup.me/bitcoinclock.com

bitcoinclock.com is down.

From my calculation,  We are only off by 2.12 days @ 10 minutes per block from the genesis block start date.

but it could be wwwaaayyyy off depending on the market.


scenerio: 
1. price of bitcoins shoot up
2. lots of miners start to mine,  diff shoots up
3. price hits 2
4. miners leave in droves

now it takes 20 minutes on avg to find a block.


what is the actual launch date of BTC?, and how close are we to the projected 25btc date?

It is an estimation based on 10 min per block.  It pulls the current block number from blockexplorer.com. Just for fun.

That other clock is pretty cool

You don't know what day it will happen, so how can you have a clock like that?

this one is acurate.  when the hour hand hits twelve, reward will be cut.
http://bitcoinclock.com/

it resets to 300 days everytime you refresh :')

I made a countdown clock for countdown to 25 BTC per block reward

http://serason.com/projects/emccharts/countdown.php

Enjoy!