Topic: Difficulty post ASIC? - page 3. (Read 11607 times)

Well we know that at *Least* a quarter million dollars of ASIC was bought yesterday with Bitcoin.

http://www.marketwatch.com/story/bitpay-shatters-record-for-bitcoin-payment-processing-2012-06-26

So that means a minimum of about 8.3TeraHashes is coming down the pipe in October. Anyone care to crunch the numbers about what that represents for difficulty adjustment?

but that does not mean that there are more bitcoins available.

i am not sure, but i still think price will go down after reward halfing (only through speculation - too rip people off which invested before the reward halfing)

i dont think asics will have a huge influence on price.

This. 

Yes, sorry about that.  Was just meaning to pop in and make a correction.

See the bit about perfectly competitive markets again, in the long term they stop balancing.  Endgame for Bitcoin looks like an oligopoly of a few very large, very efficient miners with microscopic/no profit margins.

Relating to the first point I'm not arguing if it was good or not, just pointing out the way the system works.  Whether or not it is good depends on your idea of what a digital currency should be: if you highly value decentralization and a large pool of small miners Bitcoin is not designed to satisfy you in the long run.

You have only answered the question as to why years-long ROI is bad for miners.  But miners are self-balancing.  If years-long ROI's are too risky, then miners won't continue to invest to the point where years-long ROI's are the norm, thus keeping it down into the months.  If miners are willing to risk buying even with years-long ROI's, then they might be called stupid or crazy, but they're still helping to give Bitcoin more hashing power to protect it.

It's just like ANY other business out there.  The more people invest into a particular market, the less room there is for competitors.  The less room there is for competitors, the less attractive it is for investing, and the less people will invest.  Those who already invested in the market have sunk costs, and might choose to ride it out or sell out and take the hit.  Those who sell out will help increase the profit of those who don't, and the ROI would eventually sink back to months instead of years again.

It's like you guys are complaining that gas stations open up near each other and compete, and it makes it more risky because it'll take longer for gas stations to recoup their investments, and some of them might not be profitable.  Ok... so??

So again, I ask the question, why is a years-long ROI a bad thing?  And I'll make it more specific:  Why is it bad to Bitcoin?

Risk.  On top of that, remember that bitcoin mining is perfectly competitive - the longer this time period gets the closer you'll be getting to the magical long-term point where you are no longer profitable.

Yes, but believe me, that's not my fullest intent. I do mine with FPGA and ASIC will "crush" my operation, but I have the financial capability to invest in first gen ASIC and I'm not because I see the early adopter advantage being very small, especially given the length of time any funds invested in such an operation will be held up. Too high of a risk vs. reward IMHO, but I suppose we'll see if I'm wrong.

I see a revisiting of the period of time when GPU miners first started considering buying more than one unit to mine with. Say, March 2011. And the followup of 6 months that took the price per coin from a low of $.60 to $30+. It wasn't profitable to buy GPU miners as much as it was to buy coin during that difficulty increase. In fact, had you bought just $500 of coin at $.80 in March, sold at $20 in July and started a GPU farm of 15 mining machines netting you an average profit of 12 Bitcoin/day (actual profit over this period of time was quite a bit higher where I live, and nearly double that when the difficulty hit its bottom), then today you would have at least 3,500 coin, enough to have paid off those GPU miners, invested in FPGA, and pocketed a nice profit instead of buying a dual GPU unit at that $500 when it was first viable. Still better would have been the guy that sold at $20 and rebought at $2, but folks still say you can't time the market (especially if you ignore when difficulty is falling and when it is recovering). I disagree.

I guess what I'm saying is that if you expect the price to be falling drastically from $6 then it's time to invest heavily in miners, and I just don't see that happening right now. Not with the inevitable difficulty increases ahead of us and the block reward halving. Especially with graphs like these showing Bitcoin interest and use at all time highs:
https://blockchain.info/charts/n-transactions-excluding-popular?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

https://blockchain.info/charts/market-cap

So if difficulty isn't falling and is, in fact, increasing exponentially, now is definitely not the time to be buying miners. It's too risky and we don't know where/when the difficulty increase is going to stop/decline.

Ok, so your post is more of a warning to miners than anything else?  Fair enough, I can agree that that isn't a bad thing to do.  Plus, it disincentivises mining, thereby increasing your own mining profits in the meantime. 

Sgt, don't misinterpret my words as disgust regarding Bitcoin as a whole. I just think there are a LOT of miners that are not thinking things through and don't understand just how difficult mining is going to be getting, and that they could still become miners again after second-gen ASIC blows first gen out of the water.

I'm really worried about these sorts of things, because I get the impression that a lot of miners will be under the impression they are owed something for the work they do, and they aren't going to be very pleased with the reward halving for sure. It could be this translates into a hoarding of Bitcoin at some unspecific point around the beginning of the difficulty adjustments, but given that so many people will have already wrapped up funds in ASIC hardware, it could be these folks that miss out the most...

I'd just like to make a few points.

- It is likely that, as faith in Bitcoins increases, and price stability increases, more professional companies who are willing to look at ROI in terms of years instead of months, and who already get excellent incentives on electricity, will start making larger investments in mining equipment.
- There will always be an aspect of volatility.
- There will always be an aspect of the "average joe" being able to mine and make a profit.  If it is profitable for a company, it can be profitable for an average joe.  The break-even only has to do with electric rates, and the ROI will settle around a certain number of years of break even compared to electric rates.
- The ROI won't increase to years until we either have more faith in Bitcoin, or a significant price decrease in BTC.

- Why is a years-long ROI a bad thing?
- Why are large scale mining operations a bad thing?
- Why can't we push the merits of Bitcoin as a transactional system instead of a magic money making machine?

If ROI really is pushed out to years-long, then that means Bitcoin will be better secured than if ROI is months long, because it means more people and companies are mining. Isn't that a very GOOD thing? It means it is that much more difficult for someone to stage an attack on the network, does it not?

If large scale mining operations are put into place, isn't that also a very GOOD thing?  Again, more hashing power protecting Bitcoin, and more people taking it seriously (as evidenced by people making large-scale investments).  It also means that those mining companies would work hard to keep the price of Bitcoin stable - they want to have consistent returns, not returns where they might be losing money one day, and making twice as much the next.  If mining companies are holding back on the sale of coins to help stabilize the price, is that not a good thing?

On top of all of this, it will NOT be centralized mining.  It will be a variety of companies or business groups making a variety of investments in a variety of sizes of mining operations.  Just because you can't profitably mine at residential electric rates doesn't mean it is centralized.  It just means that mining has moved from a hobby to the real business world.

Centralized is the buzzword around here, but everyone is using it wrong.  If there was only one person or company in the world mining Bitcoin, then I would call that centralized.  But a group of businesses competing with each other is the opposite of centralization.

This is not the end of Bitcoin - this is just the beginning.  Sorry you don't like the way it is going, but deal with it.

I believe it IS worth it.I have done some figureing(up to 240th),I feel I can be as competitive with 50gh ASIC as I was with my 2gh of GPU's,for about 4 months,maybe less,but we'll see.Then I'll roll some of my profits into another 40gh & so on...................

The very low power consumption makes it VERY worthwhile.Up to 70% of my mining proceeds currently pay the electric bill  I will be INCREASING my profit margin,ALOT 

Until someone forks the chain This would be very destructive to the integrity of Bitcoin,at least for me, it will show that folks have lost faith in this concept.

The local authorities are not an issue and sadly like you experienced, not much help either.  A 12+THash (current avg) network is actually impressive by using off the shelf hardware and some specialized hardware.  

I am unsure the costs at this stage are going to be worth the network speed increase.  We are assuming bigger is better.   Profit Incentive is a very important aspect of the BTC concept.  It is what allows many disassociated parties to collectively work towards a common goal in not a purely socialistic or communistic manner other than the important fact that we all share in the benefits of the network.

The way I see it:What's easier to 51% attack,a 10TH network or a 250TH network...............................

I just don't see Bitcoin being centralized at any point,sorry.

BTW,I was hacked on MTgox & was told "call the police & get a report & send it to us",guess what the police said........wtf are BTC?...what do you want us to do?.............I don't think any gov agency will have anything to do with BTC anytime soon,(unless SR gets too big & money laundering gets out of hand)maybe many years down the road,MAYBE.

OK.. so I have kind of a different take on where difficulty post-asic will wind up....

I have no idea in hard numbers / actual terms... but in relative terms, it will wind up wherever it needs to be for the break-even running costs point to be around 10 cents per Kw/hr..   (this will of course vary based upon the USD/BTC exchange rate)

So.. if your electric costs more than 10 cents, don't even bother getting on the waiting list.. you'll never get your money back.

If you pay between 5 and 10 cents.. your break even (initial purchase + running costs) will be 1 to several years...   Up to your individual confidince in bitcoin if you wanna play.....

If you pay less than 5 cents.. Time to beg/borrow/mortgage-the-farm and buy as many ASICs as you can.  You will be in the select few who will still be able to mint money mining. 

If you happen to live in the arctic circle, and heat with electric.. well then you might wanna consider robbing a few banks....  Just buy the company outright.

And one last thought...  just like the gold rush, ultimately the ones who make the most money will be those that provide the picks & shovels (errr ASICs).. not the miners. 

Sigg

You don't seem to be able to read the above comments and actually address what they are saying.  I am not trying to troll you, but some very valid points have been made and its like everyone seems to ignore it and then say, "ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!".   To make it clear, the argument against ASIC is that is will centralize the network over time because people will quit when it is not profitable AND an agency (gov) could easily come in and purchase enough capacity to pull off the 51% attack (their pockets are much deeper and it would be just a trickle in the bucket for them). 

This is what you should address first before the quote from you I quoted.

Sincerely,
D

+1   I tried to state this as well but I was flamed for being a GPU having hater.   No one wants to talk about this reality.   At this point it seems to be a forgone conclusion and we will just need to sit back and watch.    The senior developers like Gavin really need to weigh in, I am still surprised we have heard nothing except an off-hand tweet calling the Jally "cool".

D

I agree, it's good for Bitcoin, but bad for all these miners and people expecting to "get rich quick" by buying. They are going to be looking at VERY long ROI, enough that it is unprofitable for them, now the question is, what are they doing to do because of this? The block reward halving is a threat to them, enough miners making not enough money means they are going to pursue some very ingenuitive things, and an attempted fork of the blockchain into an alt-currency that doesn't have the reward halving isn't entirely out of the realm of possibility here.

We really should be talking about what is going to happen when thousands of miners and GLBSE businesses are faced with the prospect of no profits, because I really do think it's going to result in increased pressure on developers to change the way Bitcoin is done. The real winners here will be anyone that owns Bitcoin, because fork or not, they'll still win.

+1 What are people worried about? Suppose SC MR ROI is 200 days. An SC Single is only 9% more in terms of $/Mh, so it would be profitable in 218 days. This requires and investment of $1300, an amount that very many small players in GPU mining found within their reach. The Jalapeno is 42.5% more than the SC MR in terms of $/Mh, so it would be profitable in 285 days. And this is only $150 - well within the reach of very small players who before might have just bought one $150 GPU. Plus it doubles as a cup warmer - woot! GPU can't do that! A lot of people will probably buy Jalapenos just for fun and not care about the ROI. Add to this the fact that these are plug and play mining appliances, so you don't have to spend days reading forum posts to figure out how to get the thing running, and it's obvious that ASIC will make mining *more* accessible to small players. It will take longer for them to get a ROI, but that was true before with GPUs (i.e. efficiency gains for a rig with 5 or 6 GPUs). MR owners owners will have more of an advantage than I've let on here b/c they will do better in short rounds in pools for example, but the same was true before with big players and their huge GPU farms. I've also assumed a constant difficulty, so Singles/Jalapenos might take longer to reach profitability with difficulty increases, but again the same was true before for large vs small players in GPU. It's true that ASICs will make mining so accessible that this might accelerate the decrease in profitability that we've already been seeing for a long time, but it's unclear how much, and this is probably a long way off. At some point we should see an equilibrium where ROI takes a long time, but is nonetheless possible. And for Jalapenos the ROI may take so long that it doesn't look very attractive, but realistically that was true a while ago for someone with one $150 GPU. ASIC increases the hashing power of the network, but so far I haven't seen a solid argument that it will make it less secure or less profitable - if anything it makes it more secure and no more or less profitable than it was before. It's just a change, and a good one IMO.   

ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!

This IS for the layman & general public.It WILL secure the network like never before.

The sky is falling,wtf is everyone on drugs