Topic: Small time miners - What do you do when ASICs hit and you don't upgrade? (Read 10143 times)

Great little read. A couple excellent comments too. May look into the book - I enjoy most the topic of economics to any new understanding.

That was an interesting read, thanks!  I wish I had time to read the entire book, but for now the blog sure put some different perspective on things for me.  So really, it shouldn't be called bitcoin, it should be called bitgold.

VanityKey Miner/LTC

Look, you've got to understand that right now we are in the early "early adopter" stage. I do not disagree with you one bit that the market would make a huge swing off of just one large sale that you spoke of...at least for the time being. Let some years pass by (4, 5, maybe as much as 10) and you will find that moving large sums of money is happening quite often with little effect overall on the price. Right now you have the chance to capitalize on these huge swings. Just imagine that the regular price of a bitcoin is worth $340 American dollars. Huge sales cause the price to plummet to $310 and people get excited and begin to jump on that potential to make about 10% when the price levels off in a few days. These same people would suck yo *&$# if you let them buy some BTC at $9 and some change. Just sayin'

I've no quibbles with your other points, but this nit is worth picking.  I recently read a book called "Debt: The First 5,000 Years" which contradicts the usual dogma that money arose to solve the problem of barter.  Here is the author's discussion of that point in depth.

http://www.nakedcapitalism.com/2011/09/david-graeber-on-the-invention-of-money-%E2%80%93-notes-on-sex-adventure-monomaniacal-sociopathy-and-the-true-function-of-economics.html

For the time being I find the volatility of this market exciting, profitable, yet refreshing and allure odstability to me. Entirely my own I admit, however I plan to go wide open, I already will accept btc for anything in life. I plan to offer what I can from my store online for btcers. Also, market will stabilize in terms of volatility as it becomes more accepted. I don't doubt this will happen in time.

Yeah, but the problem is the BTC market is still prone to wild swings on big exchanges.  If someone walked into your local Bank, withdrew a million dollars and then promptly sent that off to his aunt who spent it on cars and booze, it would have no impact on the dollar bills sitting in my wallet.  Yet, if someone does that to BTC, all the BTC I have sitting in my wallet could easily be worth a lot less, or even a lot more.  Those wild swings are what are going to scare off most legit vendors.

I agree with this man. The very liquidity of BTC nature allows some inherent value to me. I can move money anywhere in almost any fraction in almost any time. Now from my phone, from the net, from home.. I can trade and move money cheaply or freely. I am opening a physical general store within a month or so and I plan to accept BTC for any good in my store assuming no legal complications (I'd also like to accept silver), that's beer, tobacco, general convenience goods, glass, horse/cow feed/corn, etc. So while an offline merchant may not receive much BTC.. I am planning to offer and advertise just like VISA on door/counter, etc.

Speaking of, what kind of online services or stores would be good for BTCers but don't currently exist? All I see is a sea of BTC wanting to be spent.

Yeah, what fcmatt said.  Even if someone really wanted to transfer a huge sum of money, the risk of BTC not being worth what you bought in for when you try to sell is big.  So, say you wanted to buy 100K worth of BTC, you'd likely drive the price up a good clip, but the market would get flooded with BTC sellers as people try to cash in on the wave which would stabilize things and bring it back down.  Now you go to cash out the 100K and you'll likely have a hard time making your money back.

Hm. That is great and all until someone actually wants to use the play money for something real.. Like buying property, durable goods, etc.. Then you are right back in the problem world of somehow converting to fiat. Good fucking luck when you find out a 100,000 btc sale just crashed the markets and you get much less in fiat then you thought you would....

I would suggest a third party escrow initially until you build up more trust.  Buyers are more wary because of all the scams and the fact that payment is non-reversible.


I never thought of it that way.  We could think that BTC is created to replace most currency, as a currency of the people as opposed to a currency of the government.  So instead of looking for goods and services to be used on, BTC should be targeting government regulations or corruption.

Barter -> Precious metals -> Paper money -> Digital money


This is because people are speculating in BTC.  For the speculation to stop, there needs to be many merchants accepting it, making it just as good as fiat.  But for there to be many merchants, people need to be willing to spend the current exchange rate and stop speculating.  Otherwise, we will only see merchants with low costs, such as service-oriented ones.

Reading the forums, especially the securities forum, has given me the impression that many people start with 0 trust in one another and build up that trust through small transactions.  I can't say I necessarily blame them for that stance since there have been so many scams through out the community.  That's a problem for people like me who deal in hardware that sometimes costs in the hundreds of dollars.

It is because pretty much everyone who has BTC wants it more than everything else on offer. You have to be fairly enticing to get it from people who have declined everything else.

What is the trust issue? People don't trust you?

i'll keep mining ltc like i have been for the past 12 months.

I agree with you Bels. I believe a big issue that has been noticed the retail business especially in the United States over the past 20 years is the decline of "Mom and Pop" stores. The huge "Walmart" stores basically come in and devour the little guys. I miss the old days of having options of where I do business in my community.

Hey Jack!

I agree 100% and that is why I am pushing forward doing business in bitcoin.  I believe a system that allows people to transfer funds and work directly with the people that are sending you the money is the way to go.  I believe one of the greatest things about bitcoin is that you can work directly with people instead of the massive layers of a bank or some other rigid organization.

The fact that a single person *anywhere in the world can send an **unlimited sum of money to any person of their choice without any rules or regulations being imposed is probably the most valuable property that bitcoin has. The security of the network is in the construction process as we speak. As more time goes by I believe bitcoin will be considered a powerful form of storing/transferring wealth. Have you looked at what would happen to single bitcoins if the entire economy were to have a value of just 1 billion dollars? Half a trillion?

*internet connection required
**depends on the worth of bitcoins

See, I think that's the problem.  Most currency is created due to the fact that people are already exchanging goods and services and they need a simpler way to do that beyond bartering and the like.  The problem with BTC is that the currency came first and it's looking for goods and services to be used on, and to be honest, I don't see that getting any better.  As others have said, due to the wild fluctuations, what producer of goods or services is going to want to deal with?  And while I'm sure BTC will and can always be used for some niche things, I don't know if it'll ever get any traction.

This is harder than it sounds.  As a business trying to deal in bitcoin I have found it very difficult.  The reasons I have found it difficult is people for some reason think that I should be practically giving away the hardware I sell when I do it in bitcoin, who knows why that is but most times people want to offer my 2/3rds what I would sell something in USD for.  Also, because there is a big problem with trust transactions have been taking me longer to close.

I'm going to keep trying for now to sell things in bitcoin but I don't know for how much longer because it has started being a bit of a pain in the neck.

Since bitcoin is still in its infancy, I would say almost everyone.  What bitcoin needs today to start on the path to becoming mainstream are merchants who will accept bitcoin.  Without merchants, it will never become mainstream.

But the biggest problem for that is bitcoin to fiat exchange rate.  It fluctuates so much that businesses would have to change their prices too often for their liking, so the merchants that accept it now are probably also speculators banking on the fact that the bitcoins they make today are going to be worth a lot more next year.  That is why you see service-oriented merchants accepting bitcoins more than product-oriented merchants.  Their fiat costs are low, and so they are essentially working for free hoping that in a few years, they would be making 10x what they could have charged in fiat today (speculation merchants).

keep on mining PPcoin 

That's something that I'd be interested to know too. Right now, it looks like a lot of interest in Bitcoin is there purely for mining and speculation.

I would love to know the percentage of people involved in BTC that are not:

A) Miners
B) Speculators

What do we think the percentage of people using BTC are actually 'using' BTC.

When bitcoin hits mainstream, the block reward will be small and mining profit comes from transaction fees. Transaction fees are partially based on size already, and in the future I believe that it will increasingly depend on size.

again, look at how many transactions are with satoshidice, compared to p2pool, p2pool is like 0.1% or even less...

https://bitcointalksearch.org/topic/m.1299719 

No I didn't realize.  But I've only mined in 2 pools ever, and I haven't studied how each pool works


I realize that, but even if it is a block every hour or every other block, the overhead is still there.  And you yourself brought up that other pools do direct payment, so if you combine all pools that do this, and combined they find every other block, my thought process is still valid.

looks good, best of luck with the venture
we need more things to do with our coins

Im most likeley going to end up "out of the mining game" because I dont have acces to competitive electricity-rates. But I started a small bitcoin buisness and will see if I can grow: https://bitcointalksearch.org/topic/btc-trinkets-btc-tiepins-cufflinks-lapel-pins-keychain-money-clip-120686

But isn't it the transformer outside (on a pole, in a box, or underground) that is likely to heat up most from noise? 

You do realize that p2pool isn't the only pool to distribute blocks directly to miners?


A virtual impossibility.

If my ASIC pre-order never ships and others ship, I may point my GPUs to p2pool.  But if it arrives, then I will probably take out my GPUs and put the nVidia one back in.

I don't think I would point my ASIC at p2pool since I haven't really studied the effects of increasing your own difficulty for the benefit of the smaller guys in the pool.

The noise get converted to heat too.  Not much heat but still heat.  It's all heat in the end.

This is not really true, as some of the energy get's converted into noise. For all intents and purposes this is correct though .

as for now it arent alot of transactions and i think it will stay that way since ppls dont really want to set it up nor understand backgrounds etc. the problem with the huge blockchain already exists and therefore i hope we find a good solution soon.
im sry if i insulted u in any way

well if you mine for fun then you want to see some BTC coming in dont you? so why not picking the pool with the most payout

I did look at how p2pool works.  That's why it took me a day before responding instead of just pulling BS out of nowhere, because p2pool piqued my interest.

There is a key difference between SatoshiDice, which is an application of bitcoin that pays transaction fees, and p2pool, which is a miner that is paid transaction fees and generates coins.  Now granted I did not know about SatoshiDice when posting the above statement, but this is the rationale behind my statement when looking at it purely from a miner perspective:

With p2pool, each block found has an extra set of addresses to distribute the block to the peers.  With a centralized pool or solo miner, there is only one address to reward the block reward and fees to.  So if mining was only done with p2pool and no centralized pools or solo miners, then every block found would have that extra set of addresses, and the blockchain would be much larger.

Granted right now, it could be 50-100 addresses every 4-20 hours (I didn't look into the numbers, but that is what you said).  But my thought process is if p2pool finds every block, difficulty of main-net is 1 block every 10 minutes, difficulty of p2pool-net is 1 block every 10 seconds.  That means average work for a block is 60, and so each main-net block has up to 180 unique addresses to pay to.  That is 3600 bytes just in the addresses compared to 20 bytes, with 1400 more bytes to represent the actual bitcoin amount to send to each versus 8 bytes.  That is over half a megabyte extra every day regardless of any transactions done.

Finally, note I said If you don't care about the payouts and are just mining for fun, then why load the network with more transactions? in my original post.  I like the idea of p2pool much better than centralized pools because it is better for network security.  So I think that half a megabyte every day is worth it for network security considering the size of the rest of the transactions.  But if you don't care about more regular payouts, then solo mining is still better for the network (both in terms of security and blockchain size)

Basically.

im sry but this is total BS (bullshit), first take a look at how p2pool works and after that compare it with other websites/projects. The biggest transaction spammer is still SatoshiDice. 50-100 Transactions per 4-20 hours isnt alot for p2pool...

+1

It is more cost effective to use GPUs as a heat source if your house does not have gas infrastructure.  A 10kW electric furnace produces the same amount of heat equivalent to 10 kW of GPUs. 

You can just pipe all the heat produced into the fan that can distribute heat to the vents of your house.

For converting electrical energy to heat, almost any device is effective because it's basically the "waste" that's heat. Gas -> heat is still more cost-effective though.

That's true meatball but a video card gives you a rebate

Aaron

Ah, yes and no.   Heaters will probably give you more efficient conversion of power to heat compared to the cards, but it might be close.

I so love my computers running during this cold time, so nice and toasty (outside 42F, inside 75F) that I do not eager much to turn them off. I guess if you live in a house that would be a different story.

When  my asic arrives, I may just switch to litecoin mining, already tried figured out how it works so the process will be easy. Maybe consider gaming on them too, but haven't tested 2 5970's against gtx570.

p2pool is only a way to make sure you get more regular payouts than solo mining.  If you don't care about the payouts and are just mining for fun, then why load the network with more transactions?

People are already complaining that the blockchain is big and hard to download, p2pool is accelerating that because of all the small transactions per block found

why solo mine? just join p2pool

Or he could just not care about the small loss in electric and cooling costs

(like if I never receive my bASIC pre-order, I would still run my 400MH/s: https://bitcointalksearch.org/topic/m.1289314 )

For some, it is only a hobby, not a money maker.  Similar to why people run distributed.net, SETI@Home, or BOINC

I will buy old gpu's, and use them to heat my house =D
It's cold and rainy where I live, and heating is useful everywhere!
I figure 10 kwh through video cards is better returns than 10 kwh through heaters =/

As a bookend to this thread, further discussion on the topic here:


What will happen to all the "traditional" mines once the new ASIC based miners
 - https://bitcointalksearch.org/topic/what-will-happen-to-all-the-traditional-mines-once-the-new-asic-based-miners-114585

ROFL.  With a plan like that we should be able to charge at least 2x more for GPU coins.

quick.. somebody put out a youtube video saying that asic mined coins are tortured coins of low quality! buy organic GPU mined coins :-P

This argument makes no sense really since it does not take into account the increase in difficulty that will result from a significant raise in overall TH/s that ASIC rigs will produce.

Industrial revolution allowed more land to be farmed but it did not make it harder to get the same yield, in fact it was the opposite.

Bitcoin mining is a totally different ball game altogether. With the ability to have for less than $10K 270 to 420GH/s of power and very limited electricity consumption, GPU mining will quickly become obsolete (read not profitable). Unlike farming, there is no gain in small MH/s operation (such as organic farming for example). ASIC mining will just become the new norm since anything else will be not profitable.

That said, this will not happen overnight but I would think over the next 2 to 6 months. We shall see.

You are correct....assuming the market value of a single bitcoin doesn't increase dramatically.

Don't forget though that soon after ASIC's hit, if it hasn't already, the bitcoin value is going to halve.  Your profits are now cut in half.   Now factor that into your cost of electricity and besides those who can
use their computers for cheap space heaters in the winter, I see many folks getting out because it's more expensive to mine than it's worth.

Aaron

I'm not sure what I'll do. My cards are paid for and my electricity is cheap ($0.088 per kWh) and with current prices I am profiting. I am in Texas and would run electric heat anyway come winter, so I may keep the miners on in various rooms of my apartment to provide heat as long as I still relatively break even.

No matter what, I need to keep one PC on to run the Bitcoin client, so if it comes down to that, I'll liquidate most of the hardware and see how many cheap ASICs I can afford. They have to be shipping though, no wait list BS.

I sold my extra 5830s off a couple weeks ago. With electricity costs already close to break-even, my switch to a metered 4G connection for home broadband cinched it - mining uses too much precious bandwidth.

Once ASICs hit, I'll calculate how long it will take for a jalapeno to pay itself off, then order or not based on that number.

Bigger picture I think the arrival of ASICs will be like the Industrial Revolution (in the US) impacted farmers - lots of small farms closed down or were consolidated into bigger, more efficient farming corporations. There were (and are) still plenty of small farms around, but the majority were replaced by larger, for-profit businesses. Bitcoin mining will go the same way. Mining farms will invest and buy tons of ASICs, some enthusiasts will run a few jalapenos for old time's sake, but most will sell their GPUs and (hopefully) start using their coins to buy and sell things.

how many bitcoin's do you have in hand to buy ans sell them

and at what rate's you buy and sell them and which exchange you use.

That is something miners are good for.  I have mine in my basement and the excess heat trickles on up and helps heat my house by a degree or two.

Mine through the winter since GPUs will serve a 2nd purpose(space warmers) which is what made it so cool to begin with(gaming). When 2013 begins to warm up, I'll stop. Possibly buy an ASIC if production at that point doesn't require a multiple month waiting period for delivery.

I'm just going to sell my cards for as much as or a little less than I bought them for. I bought them used and worked out how much they'd make before the block halving/ASIC hit, so I have no qualms about just selling them off and taking my profit.

Of course, if the ASIC thing doesn't pull though how it's expected to or somehow GPU mining is still even a little bit relevant, I'll just keep mining away. Having free electricity helps!

I don't think realize how expensive electricity is here.

Why? Mining is more profitable right now then it was some months back...

I just turned off my 6990s. They'll be for sale shortly.

I plan on picking up a few 7970s for dirt cheap either here or on ebay when the market gets flooded with people getting out of GPU mining. Maybe a 2nd for crossfire. Maybe throw one in my brother's computer to replace his 7770. Who knows?!

I am a small time miner with 5 Ghash/s. Half of those hashes are already supplied by FPGAs which willl be upgraded to ASICs when they become available. At that point in time my 7970s will be auctioned off on ebay. I don't understand why a small time miner won't or cannot upgrade to ASICs. Going by price point, a Jalapeno would be the new 5830/6870.

Unless you are talking about the really small time miner, like someone who mines part time with his gaming rig when he is not playing games. Not sure if their hashes would still make any significant contribution to the security of Bitcoin . They might as well save electricity and buy BTC with cash.

Well I am not a small time miner.. well with the new diff yeah i guess i am.. hahaha

honestly i haven't upgraded anything yet.. no pre orders in place.. show me the hardware before i lay down the money.

Will i be left behind in mining? Probably.. so will many others.. I will just buy and sell Bitcoin.. i seem to make more that way anyways..

Well my GPU's will be space heaters in the living room this winter and be available for games too.  Maybe solo mining won't pay off but maybe it will.  My meager 500Mhs has found 3 blocks via pools which has garnered me 100BTC.  Maybe I would have earned more solo, maybe not.  That's the great thing about Bitcoin, higher hash rate only increases your chances of finding a block.  Lower hash rate does NOT eliminate you from the chance of finding a block.  It is all just random chance in the end.

If the jalapeno's do come to fruition I will can certainly afford at least a couple of those which will decrease my power consumption.  But 3.5Ghs in a 400+Ths network is still miniscule, but I still won't just quit.

My .02BTC worth
Sam

You could just put a space heater out on your porch, it'll use about the same amount of electricity, it'll be cheaper to buy, and it'll generate just a many bitcoins.

Very true .

But I figure if allot of, what will be low end miners, start solo mining that would go a way's into decentralizing the network.  And random chance will pay off once in a while.

Anyway that's what I'm going to do IF the difficulty skyrockets.  I'm too stubborn to just quit.
Sam

This is what I am thinking about doing.  My gpus have been paid for by mining and I imagine I will sell them to raise the money to go buy asics.  I just hope that I can raise enough money to buy enough hardware to make around the same amount of BTC that I do now.

The gold rush of getting asic first will be brief. Think in terms of a few months. No diff then those who used gpu first.
Eventually everyone who wants to mine will get asic or back then gpu.
So one can sell their paid off gpus and buy asic. Yes they miss the gold rush of quick earnings but you take less risk, get the lay of the land, and can buy the best hardware for the buck once determined.

Many here started mining after june 2011 and by then gpu was dominant. Did you not make money, pay off hardware, and have fun?  same thing with asics. The difference is software was the key back then. Now it is hardware.

Plus for those who simply held onto their btc have been rewarded with a 100% profit pretty much since the mad rush to buy bfl hardware. Your btc can buy two of what they bought for the same price in btc.

Sell aaaaaall the GPU!

Is it possible that ASIC can be used for something other than bitcoin mining? I know the whole point is to develop a very specific chip to do a very specific task, but maybe just maybe someone could take what the ASIC does and utilize it in a game or other software that's not bitcoin related?

Yea, really. I am only mining with the cards I have available in the machines that I use for other purposes, and the beefier cards were for gaming. I just happened to have been buying ATI (now AMD) cards for years

+1

I upgraded to a 7970 so I could play games for many years into the future, and if I make a few BTC in the process, what the hell?!

finally turn the fans down and play a game when I feel like it?

^^^^^^^ Was never a math major 

Non of the above.  I'll solo mine full time as soon as it isn't profitable to pool mine anymore.
Sam

Are you going to switch to LTC, PPCoin, etc... or just cash out your hardware by selling on ebay or similar?