Topic: Projected Minimum Cost per BTC over the next year (Read 18793 times)

I am not the author.
Alex did it https://twitter.com/bitcoin3000

Very interesting analysis. Have you considered updating your model with more accurate numbers for electricity cost?

Bitfury has never been friendly to the retail environment, even when they did share some of the chips they WAY overpriced it.

They already have funding from major investors to have everything to build in the first place, selling to retail is probably extra runs from the chip and wafer orders, or older tech as they are developing the next gen.

Energy Eaten By Bitcoin and what it mean for price by @bitcoin3000
https://www.youtube.com/watch?v=9_owNVdYZlg

I estimate/calculate the market cap-to-TEEBB ratio and graph it over time in order to gain new insights into the historical, current, and future values of bitcoin.

data: https://docs.google.com/spreadsheets/d/1kesn0wWxE5NvQUz4QE5h8SVrpNeqNJIHqxUM3cakHaw/edit#gid=0

graph 1: https://plot.ly/~bitcoin3000/235/market-cap-vs-total-energy-eaten-by-bitcoin-with-estimated-mining-efficiency/

graph 2: https://plot.ly/~bitcoin3000/234/market-cap-to-teebb-ratio/

That's looking awesome. hopefully Bitfury hits there target and has a retail solution, it aligns with my upgrade cycle.

I'd agree, once we see the proof that this chip works at the spec they claim it does.  Still no concrete evidence other than statements, or if it will be board level or ATW efficiency.




Interesting to revisit my post from this long back as an estimate to the S5, S7 and future Bitfury chip efficiency.   

When the S5 was released, x=25 for Jan '15,

11.2e^(-0.118)(25)=0.586 W/GHs
7.0376e^(-0.112)(25)=0.428 W/GHs

When the S7 was released, x=32 for August '15:

11.2e^(-0.118)(32)=0.257 W/GHs
7.0376e^(-0.112)(32)=0.195 W/GHs

Let's say we see Bitfury chips by April '16, or x=40

11.2e^(-0.118)(40)=0.0998 W/GHs
7.0376e^(-0.112)(40)=0.0798 W/GHs

Could be on to something here, first formula seems to hold somewhat true at this time.

Burt,could you re-calculate please numbers to BitFury 16nm/0.1 J/GH chip?Thx
https://bitcointalk.org/index.php?topic=1291890.0;all
 

The best deal right now is probably the s5.

Can't tell if that was a jab at me (for whatever reason), if you were trying to be helpful, or if you misread my post...



What I was getting at was that you never stated the period of time used in the calculations (though 1 day, 86400 seconds, was assumed based on the first example), and your yield was a bit off.

Going back to the math part:
First example
1 TH/s, using 1 kWh, will (on average) generate BTC0.01143723 per day at a difficulty of 43,971,662,056, or roughly $2.65 @ $232/BTC. However, it will cost $2.40 (@ $0.10 per kWh) to mine those coins. Net income at this point is $0.25 per TH/s per day.

A few things could happen that would generate a loss in this situation. Either,
1) Difficulty would need to be greater than 48,615,027,051.
2) The price per Bitcoin would need to be less than $209.84.
3) Energy costs would need to be greater than $0.11 per kWh.

Second example
1 TH/s, using 0.7 kWh, will still generate BTC0.01143723 per day at a difficulty of 43,971,662,056, or roughly $2.65 @ $232/BTC. However, since this miner is more efficient, it will only cost $1.68 (@ $0.10 per kWh) to mine those coins. Net income at this point is now $0.97 per TH/s per day.

A few things could happen that would generate a loss in this situation. Either,
1) Difficulty would need to be greater than 69,450,048,235.
2) The price per Bitcoin would need to be less than $146.89.
3) Energy costs would need to be greater than $0.158 per kWh.


Overall, you're right; profitability is getting squeeze pretty hard, and the constant jumps in difficulty, while expected, don't help. It would only take ~5 jumps at 10% to kill off the profitability of 0.7W/Gh miner, and the less efficient 1W/Gh miner is more or less dead for the average user at this point anyway. Thankfully we've already seen a rise in 0.5W/Gh miners, with more efficient ones under development.

At what efficiency is this asic and what are electricity  costs?

At the current difficulty, 1Th/s makes 0.01144 BTC per day.

I used current 43.9 Billion difficulty in my calculations.

The fact cannot be disputed that the difficulty level has risen 47 out of the last 49 jumps.

Over the last 10 jumps the average adjustment is increase of 4.9%, the last 20 jumps averaged 9.2% increase

I only use conservative 3% in my examples.

https://bitcoinwisdom.com/bitcoin/difficulty

Usually helps in a pinch...

Calculating at the current difficulty, you may want to check your math here...

at the current difficulty, it costs about $200 CAD in electricity in Canada to mine a Bitcoin using Gen 3 asic hardware (market value around $280) - the latest hardware will do it at half the cost.  

But hardware is not free,  a  gen3 3 asic machine cost $280 in your example and electricity to mine 1 btc $200 = $480 for the first coin.  Buying a $232 coin is easier.

A gen 4 asic will cost much more than $280 even though it offsets the electricity by 30-40%.


Examples:

BTC at $232 price:

1TH machine at 1.0 watt/gh efficiency will yield .013 btc at .10 kw/hr and loss at .16  with 3% diff jumps  (machine value $3 max)

1TH machine at  .7 watt/gh  efficiency will yield .37 btc at .10 kw/hr and loss at .16  with 3% diff jumps   (machine value $86 max)

Gen 3 machines are obsolete already not in 2-3 years.  Gen 4 machines are lucky to last 4-5 months.

at the current difficulty, it costs about $200 CAD in electricity in Canada to mine a Bitcoin using Gen 3 asic hardware (market value around $280) - the latest hardware will do it at half the cost.

so given the new efficiencies of new hardware I think the cost to mine Bitcoin will increase moderately at the current BTC price until gen 3 hardware becomes obsolete over the next 2 -3 years, but then again market demand for the limited supply is a random wild card.  

a sudden increase in price will see large scale deployment of new hardware, and wild volatile pricing or low profit margins will tend to distribute mining hardware as hardware providers sell mining rigs to avoid risk.  

I think it's become quite clear that you can't predict things like hashrate and the mining network.  There are too many factors that will influence it.  Hardware advancements in efficiency will, however, slow down in the near future and along with them the depreciation of mining equipment. The question is, when old miners stop leaving the network due to inefficiency and the playing field is more level, will the price in BTC rise to accommodate the cost of mining at higher difficulty, or will more people simply pull the plug on mining altogether.

The problem is:  at this point in time they cant even make any asic equipment that doesnt lose at least 70% of its value in capital expenditure and running costs over its useful lifetime.

Estimated Next Difficulty:   40,355,658,265 (+1.90%)
Adjust time:   After 10 Blocks, About 1.6 hours

Things are slowing down.

Here fixer upper house sets you back $1,000,000 but we pay $0.0752 /kWh and soon we'll have increased capacity by an additional 1,100 MW hydroelectric dam so some industries will have much needed cheaper electricity.

If you're using more than 1,350 kWh's you pay $0.1127 and need to move to an industrial area to keep the competitive rate.
Just realised if I was mining at home I'd be paying a higher rate for 1/3 of my consumption