Projected Minimum Cost per BTC over the next year - page 3.

AnonymousEconomist

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Quote from: keystroke on September 25, 2014, 07:33:22 PM

Quote from: AnonymousEconomist on September 25, 2014, 07:26:13 PM

Quote from: mvalley on September 25, 2014, 07:02:17 PM

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

Yes, but I imagine that now home miners are a small percentage of the overall mining market. Does anyone have a guess at how sizable they are now?

I would guess around 20%.

But that IS just a guess. With no scientific backing whatsoever.

keystroke

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Quote from: AnonymousEconomist on September 25, 2014, 07:26:13 PM

Quote from: mvalley on September 25, 2014, 07:02:17 PM

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

Yes, but I imagine that now home miners are a small percentage of the overall mining market. Does anyone have a guess at how sizable they are now?

AnonymousEconomist

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Quote from: mvalley on September 25, 2014, 07:02:17 PM

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

mvalley

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Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

AnonymousEconomist

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This thread is excellent so far!

It would be great to have more data. Like a chart with the price of bitcoin overlayed on top of price to mine bitcoin, but over the course of the history of bitcoin. If that is possible...?

BurtW

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Quote from: keystroke on September 25, 2014, 01:54:53 PM

Looks like the current difficult bump a few hours from now is about to be about 15.7%.

Edit: Can we update the table based on this data? It would be cool to have this on a website where the data is brought up to date in live time.

Something like bitcoinclock.com but better.

I will update this again some time in October. It really does not change that much on a month to month basis since I am looking back one year and forward one year.

A real time version of this, updated after each difficulty adjustment would be totally cool. Someone could do that. If anyone wants/needs my Excel spreadsheet as a basis for the web site just give me a PM and I will send it to you.

If this was done on a web site I could stop doing it manually and that would be totally fine with me.

Opnsrc

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Love this thread. Going to keep a close eye on it.

keystroke

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Looks like the current difficult bump a few hours from now is about to be about 15.7%.

Edit: Can we update the table based on this data? It would be cool to have this on a website where the data is brought up to date in live time.

Something like bitcoinclock.com but better.

mikerbiker6

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well said molecular

molecular

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Quote from: mikerbiker6 on September 24, 2014, 04:15:36 AM

I changed my mind, a growing competition doesn't necessarily force miners to sell their coins higher.
A growing competition will push out less efficient miners, so the miners are left with higher efficiency that can sell their coins even lower.
there is no lower boundry, more and more people will fold so the remaining miners will make more bitcoin and can afford to sell low.(since they made more coins than before).
So a higher difficulty or higher competition will not always lead to a higher BTC value.

correct. The hashrate (cost to mine) will adapt to price, not the other way around.

Bitcoin mining is a weird beast.

With gold mining, if price falls below production cost, inefficient gold mines will close down. Produce supply decreases, which has a positive effect on price.
With bitcoin mining, if price falls below production cost, inefficient bitcoin mines will close down AND the remaining mines will automatically become more efficient. Produced supply remains essentially constant and effective supply brought to the market can even increase (if miners have to sell a higher percentage of production), having potentially negative effect on price.

mikerbiker6

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I changed my mind, a growing competition doesn't necessarily force miners to sell their coins higher.
A growing competition will push out less efficient miners, so the miners are left with higher efficiency that can sell their coins even lower.
there is no lower boundry, more and more people will fold so the remaining miners will make more bitcoin and can afford to sell low.(since they made more coins than before).
So a higher difficulty or higher competition will not always lead to a higher BTC value.

samsonn25

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Quote from: ruins on September 23, 2014, 10:46:12 PM

Quote from: samsonn25 on September 11, 2014, 05:15:09 PM

So next September it will be 381 times harder to mine for BTC. Unless the price rises to $181,000 to make it equal to mining today. Something has to give.

why it will be harder to mine for BTC? you mean the price will be down and few people mine?

The difficulty level to mine seems to gets harder every 13 days

ruins

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Quote from: goose20 on April 15, 2014, 03:30:19 AM

Humans are not rational beings either.

Many will keep mining at a loss with the hope btc will reach new heights.

well, BTC does have a promising future.

ruins

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Quote from: samsonn25 on September 11, 2014, 05:15:09 PM

So next September it will be 381 times harder to mine for BTC. Unless the price rises to $181,000 to make it equal to mining today. Something has to give.

why it will be harder to mine for BTC? you mean the price will be down and few people mine?

Finksy

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Just thought I'd try to contribute something. Your model relies on a fixed 1 W/GHs which we know is not realistic, so I thought I'd try to make a model to predict future chip efficiency using past and current developments of both BitmainTech's and Avalon's chips, as they are 2 of the bigger players that have been around for a while. Please feel free to interject where you see any of my assumptions as unrealistic:

Both Exponential formulas come out somewhat closely, so I feel it could be useful to predict future technology as far as efficiency goes. We know there has to be a point of diminishing returns.

mmeijeri

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Martijn Meijering

I don't think the miner developers are in a bad position at all, I expect retail mining to disappear and mining companies to mine with their own hardware and also sell hardware wholesale to data center operators. They've already made the investments necessary, now they only have recurring costs to deal with. They have their mask sets, now they can cheaply order new wafers every now and then.

Stratobitz

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Great thread. Thanks BurtW for this fantastic analysis on the numbers that drive Bitcoin.

I think it would be impossible to argue that the next few months will be very interesting. In many ways the tables are now turning against the miner manufacturers. Increased difficulty coupled with a sliding price will place the miner companies in a terrible place, where they themselves can no longer use their rigs to mine prior to sale of the miner itself, and also rendering the miner unsellable.

A mining rig company like Bitfury, and also a large Bitcoin holder could in effect deliberately push and hold BTC prices down and put tremendous pressure on their competitors, if not shut their lights off for good.

Bitcoin will survive. Not so sure about the mining rig producers however.

Strato

mikerbiker6

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very interesting, +1.
If we will wait a few more months miners will not let go of their coins this cheaply, so they will sell higher.
But efficiency gets higher and more expensive miners get pushed out, leaving the super efficient miners.
So this means that it will still take many months.
But hodl on.

zvs

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BurtW

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To answer a question that has been asked a few times. This analysis only used the electrical power and estimated cost of that power. The cost of equimpment is ignored. Basically the cost of equipment, infrastructure, etc. will effectively reduce the power consumption of the network so this is an estimate of the maximum power the network will rationally attempt to consume given the price of BTC. In practice it will not consume these numbers due to these other costs factors.

Topic: Projected Minimum Cost per BTC over the next year - page 3. (Read 18793 times)