Topic: miners: how are you going to react to the reward halving? - page 3. (Read 5889 times)

Miners really shouldn't have much to worry about.  The portion of miners that will mine at a loss is very low.

When reward is halved, gross revenue is halved, and profit is cut in more than half since expenses are static.  Miners will drop out, difficulty will drop.  ASICs won't have a big effect on this.  It's very simple economics.  X investment returns an average of Y profit.  The more profit to be had, the more people mine, the worse their profit margin becomes.

The key here is the following formula:   Price/Difficulty * Block Reward.  If half as many coins are produced per day, difficulty will be cut in half (not precisely, but very close), unless price doubles, in which case difficulty would be roughly the same.  Obviously it will be a mixture of the two.  It will be worse off than we are now because there will always be hobbyists (who mine at a loss), botnets (who mine at no cost), and people with "Free" electricity (who effectively steal it from their oblivious landlord).

The only thing miners are going to notice is pool fees will likely go up/pools will cease to be free.  The reward halving DOES cut pool operator income in half, assuming each pool loses speed proportional to their current share of the network.  This is because pool's earn [at neutral luck]:  Pool Fee * Pool Share of Network * 7200 BTC (daily production of BTC).  With the change, pool's will be earning:  Pool Fee * Pool Share of Network * 3600 BTC (daily production of BTC).

I'll still be mining... not on GPU's though.

Im newish to bitcoins and have only just recently bought my GPUs and started mining. I bought them second hand and used other hardware I already had laying around. Once my hardware is paid for its all profit for me. Even if I only just breakeven Im happy because I love playing around with computer hardware and I would have done something similar anyway with zero return.

But it is that simple for me, if the market crashes I'll sell my hardware and move on, if it doesnt I'll keep mining.

But I am perplexed.  

One argument is that even when BTC daily production drops [Edit: the block reward], if the exchange rate rises maybe to the $20 range and difficulty doesn't rise much, that come December, mining can still be done profitably --- barely.

So today let's say a 58xx GPU might sell for $150 or whatever.  

But if the exchange rate does rise from today's $12 to $20, isn't that $150 worth of value better invested in BTCs than in GPUs?   Sure, the GPU will still be worth $150 or whatever in December after the drop, so there's not a lot of risk in waiting to see if the exchange rate does rise sufficiently to compensate, but you'll definitely miss the opportunity to capture the increase in the BTC/USD from $12 to $20.  But if it doesn't rise you'll be selling the hardware then.

And regardless, how much longer after the reward drop before ASICs will decimate GPU mining entirely?

Unless you have really cheap (e.g., $0.05 per kWH) electricity (or free if included in rent, lease, botnet, etc.) the likelihood that you'll continue mining on GPUs in 2013 is approaching zero.    

But for now, .... the less risky move is to dance while the music is playing I guess (er ..., to milk that cow while it is still producing.)

It's not like even, if you bring 100x times more hashpower to pools, they will mine ridiculously more coins. There is difficulty to keep sure there is only 1 block per 10 minutes.
Though, nothing stops US gov.

The same thing I was planning when I started mining over a year ago, keep on mining.  Not like this is an unexpected event.  It's the way bitcoin works.

What are you planning?

What comment would you expect the pool operators to have?
Sam

Hm... keep on mining?

US Govt prints ridiculous amounts of currency

BFL produces a ridiculous amount of asics

Reward halves


Guess I'll go buy some gold.

I'll react like this:

o_o

im liquidating all my coins and gpus the week prior... then using the funds to buy ammo, firearms, and canned food.  december 21st is right around the corner!

GPUs are definitely going to be done.   ASICs should be arriving about that time.

I may just hold the coins minted with the expensive hardware for a while, if the value does not increase at least a bit.

I imagine it's the same for most miners: they will either continue mining or they will not.

I plan on watching what the market does and either continuing mining or not.

sure, nobody knows what will happen to the market when the reward halving happens, but what are the miners PLANNING?

can any pool operators comment?