Topic: Tarnished image - page 2. (Read 5369 times)

Yes, ffs!  Unless you think that the $1 billion market cap for Bitcoin is the cost of gear & electricity for the miners up to this point. (HINT:  Daddy, where do Bitcoin come from?  The miners make 'em, Explodicle, the miners.


No. First, see the red text above.  I am describing that scenario to show that your claim -- mining being a zero-sum game -- is patently stupid.  I'm hoping to accomplish that by generating a contradiction.  I fail.  I get bored of repeating myself.  I click the "Change Color" dropdown & choose red.  Did i do any better this time?


Wrong.  People who understand "chalkboard economics," collectively referred to as "the rich," care very much about "chalkboard economics."  It's those who don't get "chalkboard economics," collectively referred to as "the poor," who do not.  It's sad, it seems somehow unfair, and yet it remains true.  These unfortunates often try to validate their simpleminded notions by wagering small amounts of newfangled money they don't quite understand.  More fail and heartache, but such is the nature of free enterprise

1) If you add up all the gains from mining, and subtract all the costs, you think this number will be greater than zero?

2) Do you or do you not think the number of miners will ever reach zero? If not, why are you describing what would happen when there are zero miners?

This isn't some electrical system, it's a real life economy with real scalability limits. No one cares about imaginary chalkboard economics - it's that same kind of thinking that predicts all rational actors will hoard a deflating currency.

Quote from a post you're replying to:
Boldface added for emphasis.

Edit:  Not everything is summed up in TL;DR, that's why i type up the rest of the stuff

Then please post your model. Use an equation to describe this behavior and claim something falsifiable with more numbers than zero and infinity.

It sounds unreasonable because the number of entities mining has never reached zero on any other commodity ever, but there have been times when the cost of equipment has gone up quickly.

Edit: bolded to highlight ignored important parts.

You're absolutely right, above quote was a reply to a user who was arguing that if mining profitability tends toward zero, mining is a "zero-sum game."  My response is a hypothetical, highlighting the absurdity of that assumption.  By definition, a zero-sum game's profitability is provably 0,* which makes it as sound a business as tossing a coin & expecting to profit by betting heads. 

The miners/ASICs scenario you're describing is also not without flaws, though these flaws are rooted in different assumptions.
You assume the smooth negative feedback model.  At least that's the model that comes to my mind, the standard market self-regulation.  For me, that's similar to a feedback loop in an op-amp, or a centrifugal governor on a steam engine (Yeah, i know, but bear with me   I'm guessing you're familiar with at least one of the two, they both are straightforward examples of negative feedback, and really handy for modeling feedback systems).  IRL, both fail to stabilize unless all the conditions are just right ( otherwise the op-amp will oscillate, the steam engine will hunt).  For mining example, this implies a bunch of stuff.  The "corrections" in mining also won't necessarily mimic damped oscillations, the swings will increase in amplitude 'till the system self-destructs.*

TL;DR: There are sound models in which ASICs destabilize & crash Bitcoin value.  Being concerned by the impending flood of ASICs is not unreasonable.

*An aside: Any analog electronics guy will tell you that *everything* desperately wants to become an oscillator

OMG what is going on here?

What I meant was that the rate at which the difficulty was rising is the result of fewer miners with larger hashing power. Now that is not really the problem or the concern but a side effect of human nature according to competition.

My concern was the rate at which this is being allowed to go ahead at where the increments at which we are doling this new technology is causing negative effects. The effects I am concerned about was the ever shortening time spans in between the ROI of these miners.

GPU's are at a point now where you burn more electricity cost than you receive in BTC/LTC or what ever currency you mine. This was a regulator on BTC difficulty. When BTC rose in price from $13 to $120 the difficulty increased as more GPU's came into the fold.

Litecoin was GPU resistant until the mining software was adapted to GPU's and the difficulty began to rise when the price spiked from 0.06 cents to $6 dollars. However Litecoin dropped to $3 dollars for a while and stalled the difficulty rate. Now at $2 dollars GPU's will never generate enough to pay for its self UNLESS your a big enough of a farm to offset other smaller miners out of the game.

Bitcoin is a unique contender as ASIC's move in the price is not a limiting factor and the cost of electricity is not a limiting factor as well. This will just make the bitcoin miners with 1st gen asics the sole players with no limits. This will make the difficulty jump higher and faster.

Will there be less miners? Will they be trading in their 1st gen asics to get 2nd gen asics? or will they sell them second hand to other people even if they can get higher discounts trading them in to get their hands on 2nd gen asics? So was anyone able to buy a 2nd hand BFL FPGA in the last 6 months for a lower price than what they were being sold by BFL new? The values of used FPGA's were still too expensive because BFL was giving great trade in prices.

So don't expect to buy used asics for cheap now. If that trend continues......   

BTW true cost of electricity its the amount due / the kilowatts used. That includes the taxes and all the other bullshit they add on your bill. So don't give me that I pay only 0.06 / KWh.

In Toronto we have 4 tiered rate for different times the electricity is being used.

0.07
0.06
0.05
0.04
plus taxes
plus deliver
plus line loss factor
plus I'm just a stupid slave that accepts all kinds of bullshit on my bill and never complains cus I'm just and idiot....

You get it the picture.

Stupid thread alert!!

Please check https://en.bitcoin.it/wiki/Mining_hardware_comparison and http://www.alloscomp.com/bitcoin/calculator

You can still make money with GPUs mining litecoins AND Bitcoins. Even if it takes you a whole year to break even, you're still doing better than most startup companies.

People who say that GPU mining is dead are either stupid or too noob to realize that the price increases in bitcoin will recoup their costs faster.

Oh gotcha - of course. And after it starts falling, more miners would probably come back again and we will get some kind of equilibrium.

No that is simplistic.

Higher difficulty = Less miners = less hashing power = longer block interval = lower difficulty
Lower difficulty = more miners = more hashing power = shorter block interval = higher difficulty

The idea that you would ever get to no miners as in literally 0.0000000 GH/s mining is just nonsense.  The first miners have sunk cost.  Once you have hardware your ongoing cost is just electricity.  So long before existing ASIC miners become unprofitable new miners will stop deploying additional ASIC rigs slowing the rise in difficulty.  Even if difficulty so overshoots to a point that some ASIC miners are unprofitable those with lower electrical costs will still be profitable. The highest cost miners will shut down their rigs, difficulty will fall, and the margins for remaining miners will rise.  It is likely this will also overshoot, difficulty will fall far enough that the profits for remaining miners is "excessive" this will encourage more miners to go online (possibly buying rigs second hand) raising difficulty and lowering profitability all over again.

Please describe this scenario where all miners simultaneously stop mining and network hashpower goes to 0.000 GH/s.

 

I think you missed the point.  OP seems to think mining will get so hard that all the miners will leave.  If a large amount of hashing power goes offline difficulty will fall.

That is what the OP seems to be missing.  Only a small % of users will be miners.  I mean there are 7 billion people of the planet, there aren't going to 7 billion bitcoin miners.   If there are "too many" miners the ROI will suck and some will drop out, if there are too few the profits will be very high for those who do mine so more will join.  The idea that everyone needs to mine or Bitcoin will fail is just silly.

Solo mining at 19m difficulty would likely take you many years just to find that first 25 BTC.

If nobody is mining then the difficulty will be so low that I'll start solo mining and clean up.

So you mean "literally no miners," but then your definition of "no miners" means you just ignore miners if they include people you disparage.  That would not be "literally no miners" in any sense normally understood.  That would be a small number of miners.  If there were a small number of miners, the supply would be reduced.  If any demand remained, that would increase the price by simple, inflexible laws of supply and demand.  Eventually, the price would be enough to encourage people to mine again, or the remaining miners to step up their game and do more mining, at which point they wouldn't be "fetishists."

So long as anyone is actually mining, you can't have a "literally no miners" situation without changing the meaning of the words.

Suck it up buttercup. You can't be a milk toast and expect to play in this sandbox.

You don't really think that we're growling & spitting at our monitors as we type, do you   or 

You guys make me laugh. lol It always end up the same way when two people argue. Its not important who is right or wrong. What is important is we offer opposing opinions on a forum to exchange idea's. I don't expect anyone to accept what I say and it would be even more idiotic to believe I can force someone to accept what I say as fact.

If we can't convince the other person I won't hold it against anyone. You guys need to kiss and make up. lol or I'll bust a gut laughing.

Of course.  That's why i'm going to offer you two possible alternatives as to why you can't make heads or tails of what i'm saying:
One possibility is i'm a babbling boob spouting gibberish, so there's nothing to get.
The other (protip: this is the right one1!) is you're simply not bright enough.  I mean that with all the respect due you. 
Good night.

Gambling is such harsh term. Think of it like insurance. Since we can't trust each other I'd be perfectly willing to agree on an escrow or something similar. I can't speak for other Bitcoin supporters, but I'm willing to actually put my money where my mouth is when predicting (or denying) zero miners. Perhaps Bitcoin's future would be less shaky if I were all FUD like you?

I mean this with all due respect, but it sounds like you have no idea what you're talking about. You're waving your hands talking about zero and infinity, unwilling to quantify a useful real-life prediction.

That sounds more than fair if you're trying to judge how easily i'm tempted into betting, though i'm not sure what my tendency to gamble has to do with this discussion.
I get paid for being right in other ways, and, having never met you, i've absolutely no interest in making you pay -- the hard or any other way.  If this is the level of debate offered by an average Bitcoin supporter, Bitcoin's future is shakier than i guessed.


  I was being hyperbolic there.


Don't worry, it's a safe bet that no merchant is. (that's a figure of speech, a colloquialism -- i ain't betting)   Oh, gox looks like it's back up!  Joy!  I gets to live another day

Crumbs -

Since you think there will someday be no Bitcoin miners, for reasons that won't hit Litecoin for years, let's bet on whether or not Bitcoin will exist in X months (your choice) and denominate the bet in Litecoins. That way you'll get paid for being right, and I'll pay for a lesson the hard way. Does that sound fair?

IMHO someone will probably find a weakness in SHA256 someday and we'll have to switch hash algos anyways. Without getting all "Ship of Theseus" on you, I don't care what we call it so long as it works similar to how Bitcoin does now. Everyone freaking out and throwing their paper wallets on the street just seems kind of silly to me; BTC is no stranger to crashes.

If any merchants reading this are actually worried, you might want to read this:
https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_businesses#Setting_Prices
BitPay for example can hedge your BTC/USD risk with minimal hassle.