Topic: I do believe bitcoin price will boom when we switch from GPU to ASIC mining (Read 3242 times)
October 26, 2012, 04:13:20 AM
More likely "plunge" and then "Boom".
October 23, 2012, 08:21:27 PM
Exactly.
When I found bitcoin I realized it made the most sense to simply buy coins if you wanted nothing else but appreciation.
I happen to like hardware and computer gear.
I happen to want to secure the network. Remember this whole thing collapses without miners processing transactions.
So I said, hmmm I can mine bitcoins and basically "buy" them over time with an averaging strategy at a discounted rate.
So I have sold enough to pay my operating costs and cover my hardware.
Now I get to keep "buying" at an even cheaper rate and accumulate a stash.
Assuming I could have bought at the bottom after I found out about bitcoin (approx. $2) and sold at the top (approx $14) of course I would have made more money overall.
Unfortunately the odds of that happening were very slim, so I chose a more risk adverse strategy and simultaneously helped strengthen the network, while also getting to screw around with 15 GH worth of GPUs.
The reality is that when I bought most of my GPU's, coins were selling for about $10 - $12. Had I just bought a lump sum then I would be marginally ahead. Considering I don't enjoy the speculation game, my strategy worked out best for me.
When I found bitcoin I realized it made the most sense to simply buy coins if you wanted nothing else but appreciation.
I happen to like hardware and computer gear.
I happen to want to secure the network. Remember this whole thing collapses without miners processing transactions.
So I said, hmmm I can mine bitcoins and basically "buy" them over time with an averaging strategy at a discounted rate.
So I have sold enough to pay my operating costs and cover my hardware.
Now I get to keep "buying" at an even cheaper rate and accumulate a stash.
Assuming I could have bought at the bottom after I found out about bitcoin (approx. $2) and sold at the top (approx $14) of course I would have made more money overall.
Unfortunately the odds of that happening were very slim, so I chose a more risk adverse strategy and simultaneously helped strengthen the network, while also getting to screw around with 15 GH worth of GPUs.
The reality is that when I bought most of my GPU's, coins were selling for about $10 - $12. Had I just bought a lump sum then I would be marginally ahead. Considering I don't enjoy the speculation game, my strategy worked out best for me.
October 23, 2012, 06:51:07 PM
The history shows that difficulty follows price, but asic miners are the top serious gang of miners that don't need to cash out on a monthly basis to cover running costs. They will sit tighter on their coins than the average miner does now. However the Market size now is big enough not to be influenced much by miners cashing out.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
I disagree. If someone has just invested thousands or maybe even tens of thousands in Asics, he will sure as heck try to sell as soon as possible for the highest available price, especially if he knows more Asics are going to show up real soon wanting to be paid off as well. Perhaps they don't need to cash out on a monthly basis anymore, but they need to cash out as much as they can once they get the hardware. They will not sit tight unless the price falls like a rock, and even then some will cling to panic selling.
Agreeing with this. Maybe if ASIC miners recoup their initial investment in the machines then they might sit or buy more hardware. But then you're looking at the GPU race all over again.
What if they wanted to buy bitcoins, but they realized it is cheaper to mine them? No need to recoup hardware costs in that scenario.
October 23, 2012, 06:35:34 PM
The history shows that difficulty follows price, but asic miners are the top serious gang of miners that don't need to cash out on a monthly basis to cover running costs. They will sit tighter on their coins than the average miner does now. However the Market size now is big enough not to be influenced much by miners cashing out.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
I disagree. If someone has just invested thousands or maybe even tens of thousands in Asics, he will sure as heck try to sell as soon as possible for the highest available price, especially if he knows more Asics are going to show up real soon wanting to be paid off as well. Perhaps they don't need to cash out on a monthly basis anymore, but they need to cash out as much as they can once they get the hardware. They will not sit tight unless the price falls like a rock, and even then some will cling to panic selling.
Agreeing with this. Maybe if ASIC miners recoup their initial investment in the machines then they might sit or buy more hardware. But then you're looking at the GPU race all over again.
October 23, 2012, 03:56:11 PM
The history shows that difficulty follows price, but asic miners are the top serious gang of miners that don't need to cash out on a monthly basis to cover running costs. They will sit tighter on their coins than the average miner does now. However the Market size now is big enough not to be influenced much by miners cashing out.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
I disagree. If someone has just invested thousands or maybe even tens of thousands in Asics, he will sure as heck try to sell as soon as possible for the highest available price, especially if he knows more Asics are going to show up real soon wanting to be paid off as well. Perhaps they don't need to cash out on a monthly basis anymore, but they need to cash out as much as they can once they get the hardware. They will not sit tight unless the price falls like a rock, and even then some will cling to panic selling.
October 23, 2012, 03:01:57 PM
The history shows that difficulty follows price, but asic miners are the top serious gang of miners that don't need to cash out on a monthly basis to cover running costs. They will sit tighter on their coins than the average miner does now. However the Market size now is big enough not to be influenced much by miners cashing out.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
The coming block halving have stopped the inflow for some time now, and we will see a reaction to that around the transition to 25BTC. If it is a correction, or a major dump, time will tell.
October 23, 2012, 02:42:10 PM
currently we're at ~40% profit margin for miners. When ASIC comes out, difficulty is expected to skyrocket. (i've seen speculation between 5-20x current difficulty.) If and when that happens, miners will either have to quit mining because it's no longer profitable, sell their old rigs and upgrade hoping someone doesn't come out with something faster/cheaper, or hoard and hope the price increase will cover. I've done a combination of all 3 at one point or another since may '11. One thing's for sure, miners won't sell at a loss (most of them), and with the current projections it's going to become a lot more expensive for the current miners and a lot longer ROI for anyone who doesn't receive their ASIC in the first batch. People assume that because ASIC is cheaper per gh/s and w/s that they're more profitable. Quite the contrary actually due to the sheer volume of ASICS expected to sell. Mining is an arms race and everyone is going to get nukes at once. I believe price is going to get a significant bump 3-6 weeks after the first batch is up and running. It will also be a good time to buy used cards for gaming/brute forcing rigs 
October 23, 2012, 12:39:19 PM
Wasn't it always the other way around - price increase pushed difficulty higher, just because more and more people found mining profitable. Not higher difficulty pushing price, this sounds counterintuitive 
So, with ASICs, difficulty would certainly go higher. How would the price change? A completely unrelated thing. If price goes down, less people would be interested in investing into new hardware, so less difficulty growth. If price stays stable or rises at the time ASIC adoption begins - difficulty could grow exceptionally fast, kicking all the old hardware miners out of the game (who would have to sell their BTC to buy new HW which would keep the price at bay etc)
As a completely unfounded prediction, I expect the price to grow slightly / stay the same.
So, with ASICs, difficulty would certainly go higher. How would the price change? A completely unrelated thing. If price goes down, less people would be interested in investing into new hardware, so less difficulty growth. If price stays stable or rises at the time ASIC adoption begins - difficulty could grow exceptionally fast, kicking all the old hardware miners out of the game (who would have to sell their BTC to buy new HW which would keep the price at bay etc)As a completely unfounded prediction, I expect the price to grow slightly / stay the same.
October 21, 2012, 02:30:03 PM
OP had such flawed logic.
Okay what will probably be a positive pressure on prices are if asics start to take over the mining network to the point it's more profitable to sell GPUs and FGPAs offthan to keep mining, one could surmise that some of that money will go into buying bitcoins.
It already is extremely secure, any increase in hashing power is only a marginal increase in security as anything else would have to replicate the entire existing blockchain. A fork can be created as well. I'm not sure how much more secure it can get after this.
Okay what will probably be a positive pressure on prices are if asics start to take over the mining network to the point it's more profitable to sell GPUs and FGPAs offthan to keep mining, one could surmise that some of that money will go into buying bitcoins.
I'm not sure about boom but significant increase is reasonable as transactions can be trusted with more real-world value. Increased hashing power means greater protection from attack.
It already is extremely secure, any increase in hashing power is only a marginal increase in security as anything else would have to replicate the entire existing blockchain. A fork can be created as well. I'm not sure how much more secure it can get after this.
October 20, 2012, 11:29:02 PM
I agree that a bump in difficulty bumps the price. When CPU's dominated mining, price was $0.01-$0.05, in the first trades on mtgox back in August 2010 (correct me if wrong). Shortly thereafter, the first GPU miner was publicly released and difficulty skyrocketed. Price followed suit.
I don't expect there would be such a drastic effect on price this time, even if difficulty increases by a factor of 10x, because the market is much more liquid. But traders do watch difficulty.
I don't expect there would be such a drastic effect on price this time, even if difficulty increases by a factor of 10x, because the market is much more liquid. But traders do watch difficulty.
Take a look at
http://bitcoin.sipa.be/
and
http://bitcoincharts.com/charts/mtgoxUSD#tgCzm1g10zm2g25
You can clearly see that difficulty lags on price by almost a month.
Difficulty doesn't have a causal effect on price.
October 20, 2012, 06:59:21 PM
That's a very well thought out point OP.
The problem is no ASIC company has yet spent significant expenses inside the bitcoin economy. So: IF that were the case price would already be booming.
Did they hire engineers to be payed in Bitcoin? Did they purchase machinery for Bitcoin? Did they pay for out-sourced manufacturing and services for Bitcoin?
The problem is no ASIC company has yet spent significant expenses inside the bitcoin economy. So: IF that were the case price would already be booming.
Did they hire engineers to be payed in Bitcoin? Did they purchase machinery for Bitcoin? Did they pay for out-sourced manufacturing and services for Bitcoin?
October 20, 2012, 02:14:15 PM
I agree that a bump in difficulty bumps the price. When CPU's dominated mining, price was $0.01-$0.05, in the first trades on mtgox back in August 2010 (correct me if wrong). Shortly thereafter, the first GPU miner was publicly released and difficulty skyrocketed. Price followed suit.
I don't expect there would be such a drastic effect on price this time, even if difficulty increases by a factor of 10x, because the market is much more liquid. But traders do watch difficulty.
I don't expect there would be such a drastic effect on price this time, even if difficulty increases by a factor of 10x, because the market is much more liquid. But traders do watch difficulty.
October 20, 2012, 02:01:45 PM
AMD did promote Bitcoin in a small way when the 7xxx series was being marketed. But regardless, I do hope BFL and the other ASIC companies find it in their best interest to do a lot of advertising, that would be great.
I think adoption will be the largest (and healthiest) factor in price increase. However, it's possible the switch to ASICs mining may affect things in a smaller way. There's no "may become" about it, mining has always been an arms race.)
What's different now is that it's the difficulty is going to change quickly and the only people who know how quickly and what order their customers will get their products are the ASICs manufacturers. So it's possible that the decisions miners make about selling/holding will change. It's very possible that people who thought they were going to make a quick buck will see their break-even time stretching ever farther into the future (based on current prices.) In that case, their only hope for profit will be to wait for price increases before selling. As some of them realize this (assuming they have the option to wait) supply could shrink enough to raise prices.
Hard to predict, though.
I think adoption will be the largest (and healthiest) factor in price increase. However, it's possible the switch to ASICs mining may affect things in a smaller way. There's no "may become" about it, mining has always been an arms race.)
What's different now is that it's the difficulty is going to change quickly and the only people who know how quickly and what order their customers will get their products are the ASICs manufacturers. So it's possible that the decisions miners make about selling/holding will change. It's very possible that people who thought they were going to make a quick buck will see their break-even time stretching ever farther into the future (based on current prices.) In that case, their only hope for profit will be to wait for price increases before selling. As some of them realize this (assuming they have the option to wait) supply could shrink enough to raise prices.
Hard to predict, though.
October 20, 2012, 01:00:50 PM
is more likely to see the price stuck below last HH (1540) for a year that the price booming
October 20, 2012, 11:18:40 AM
I'm not sure about boom but significant increase is reasonable as transactions can be trusted with more real-world value. Increased hashing power means greater protection from attack.
While this statement is true, I believe bitcoin is weaker to an attack now. There is now an ASIC company (butterflylabs) that someone could simply buy.
October 20, 2012, 02:47:21 AM
I'm not sure about boom but significant increase is reasonable as transactions can be trusted with more real-world value. Increased hashing power means greater protection from attack.
October 20, 2012, 02:01:07 AM
When we use GPU, money from miners go to AMD's hand and doesn't comeback. When we use ASIC, the asic companies will use a portion of that money to promote their business, attract more users & miners come to bitcoin economy. This causes a positive feedback loop and bitcoin economy will boom. Right now, butterflylabs are promoting its business using google ads.
Actually reward halving seem to coincide with mining using ASIC devices. This may lead to a huge arms race, and the price may boom due to speculation.
October 20, 2012, 02:00:09 AM
When we use GPU, money from miners go to AMD's hand and doesn't comeback. When we use ASIC, the asic companies will use a portion of that money to promote their business, attract more users & miners come to bitcoin economy. This causes a positive feedback loop and bitcoin economy will boom. Right now, butterflylabs are promoting its business using google ads.
I guess someone out there might click their Google ad and find out about bitcoin that way, but writing "Bitcoin" on the back seat of a buss might be more effective marketing, to bring new money in...
I fully expect ASIC mining to bring a lot of new miners on board (mostly old bitcoiners trying out mining for the first time) and that's why I'm staying away from mining.
October 20, 2012, 01:48:03 AM
When we use GPU, money from miners go to AMD's hand and doesn't comeback. When we use ASIC, the asic companies will use a portion of that money to promote their business, attract more users & miners come to bitcoin economy. This causes a positive feedback loop and bitcoin economy will boom. Right now, butterflylabs are promoting its business using google ads.
no, this won't affect the price
October 20, 2012, 01:15:05 AM
Won't change the speed at which coins are produced, were just gonna cycle through Moore's law and the ones to profit are the ASIC companies. Wooooo!
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