The key to determining difficulty increase is to look at GPU vs CPU mining. GPU was an exponential increase over CPUs, as Asics are over GPUs. It increases exponentially at first because they are so much faster, but as more and more come online it becomes more linear. As we saw after everyone switched to GPUs. People added more and more gpus so they were increasing 50%, 100%, 150%... not 500%, 1000%, 2000% as we see from people getting 70gh/s machines. They go from hasing 5-10Gh/s to 70gh/s thats a 7x-14x increase of course diff jumps up. Now when they add the second avalon thats a 70gh/s to 140gh/s increase only a 2x increase. even adding a 3rd avalon to 210gh/s is only a 3x increase. Nowhere near a 7-14x increase of their initial jump from GPU to Asic.
So in the same way we'll see diff flatline but the $64,000 question is WHEN because it makes a HUGE difference.
Topic: The Impending Stalemate on Mining Hardware and ROI (Read 3941 times)
some people like to make fresh coins... freshens up their laundring
and miner makers can just keep making them for themselves
there is a lot of whining of people who want the easy button on a money tree to last forever.. where in the world does that ever last?
vultures, etc will always swooop in
and miner makers can just keep making them for themselves
there is a lot of whining of people who want the easy button on a money tree to last forever.. where in the world does that ever last?
vultures, etc will always swooop in
This is the key. A good business return is 5% roi, the S&P, ie big business pushes 10. No where in the world outside of the cocaine business do we have returns that are comparable to what the early miners were able to achieve.
Miners are hurting bad today with BTC value plummeting all over the exchanges. The gold rush is already over, those with the first few Avalons were the only big winners to come out of it.
The rest still hoping to get their hardware soon will be faced with their units having a pretty low ROI unless Bitcoin rallys up hard. There is nothing saying we won't see another Cyprus that will pump Bitcoin and Litecoin back to a good ROI level, and I actually think there will be in time with more of these "bail ins" and people needing a fiat escape pod, but for now the mining scene is pretty grim
The rest still hoping to get their hardware soon will be faced with their units having a pretty low ROI unless Bitcoin rallys up hard. There is nothing saying we won't see another Cyprus that will pump Bitcoin and Litecoin back to a good ROI level, and I actually think there will be in time with more of these "bail ins" and people needing a fiat escape pod, but for now the mining scene is pretty grim
ASICMiner will deliver to your door within 2-3 business days of placing your order.
Bitcoin mining is a waiting game. Those who can wait the longest will benefit the most.
If you like waiting I've got a bunch of GPUs that I'll sell cheap
I stopped mining for about 2 years back when the difficulty was at 150k and bitcoins were at 3.00 each. I thought to my self, ahh this is a waste of time. I'm over it. How much I regret that decision of not being patient.
Mining is a grinders game, for people who want to mine and hold for years. Mining to sell for fiat makes no sense, just get a job, lol.
Bitcoin mining is a waiting game. Those who can wait the longest will benefit the most.
If you like waiting I've got a bunch of GPUs that I'll sell cheap
Bitcoin mining is a waiting game. Those who can wait the longest will benefit the most.
Miners are hurting bad today with BTC value plummeting all over the exchanges. The gold rush is already over, those with the first few Avalons were the only big winners to come out of it.
The rest still hoping to get their hardware soon will be faced with their units having a pretty low ROI unless Bitcoin rallys up hard. There is nothing saying we won't see another Cyprus that will pump Bitcoin and Litecoin back to a good ROI level, and I actually think there will be in time with more of these "bail ins" and people needing a fiat escape pod, but for now the mining scene is pretty grim
The rest still hoping to get their hardware soon will be faced with their units having a pretty low ROI unless Bitcoin rallys up hard. There is nothing saying we won't see another Cyprus that will pump Bitcoin and Litecoin back to a good ROI level, and I actually think there will be in time with more of these "bail ins" and people needing a fiat escape pod, but for now the mining scene is pretty grim
...
BTW, the time in which mining with an ASIC meant "wild profit" is already over. Expect many people investing now in ASIC mining never recouping their investment. Especially those that buy "mining bonds" at inflated prices.
Agree, that 'wild profit' is only possible at the very beginning of some new technology coming to Bitcoin mining. BTW, the time in which mining with an ASIC meant "wild profit" is already over. Expect many people investing now in ASIC mining never recouping their investment. Especially those that buy "mining bonds" at inflated prices.
Expect the same situation we had in 2011 and at the end of 2012, which is the normal situation.
Miners mining for peanuts, the profit is in having free electricity and free storage for your units. If your electricity is expensive, you will have to turn your rig off or mine at a loss.
Mining is by nature a marginally profitable business, as soon as the advantage of the ASIC early adopters goes away we will be back at the normal situation where miners fight for pennies.
BTW, the time in which mining with an ASIC meant "wild profit" is already over. Expect many people investing now in ASIC mining never recouping their investment. Especially those that buy "mining bonds" at inflated prices.
Miners mining for peanuts, the profit is in having free electricity and free storage for your units. If your electricity is expensive, you will have to turn your rig off or mine at a loss.
Mining is by nature a marginally profitable business, as soon as the advantage of the ASIC early adopters goes away we will be back at the normal situation where miners fight for pennies.
BTW, the time in which mining with an ASIC meant "wild profit" is already over. Expect many people investing now in ASIC mining never recouping their investment. Especially those that buy "mining bonds" at inflated prices.
If difficulty rises too high people stop buying hardware and inefficient hardware drops out. Difficulty corrects. End of story until the next price bubble hits.
Unfortunately, several hundred TH/s were pre-ordered in the form of BFL, Avalon chips, KNCMiner, Bitfury, etc. So for the next 4 months at least, the difficulty will follow an exponential curve. There is a tremendous amount of head room in the difficulty rate for operation of mining equipment because the USD exchange rate moved from low double digits to low triple digits.
If the exchange rate continues to rise the hash rate growth will not slow. However, that does not make investment in mining equipment a good investment. If you stand to make more from buying BTC than buying equipment to mine BTC, then prices for equipment must correct eventually.
Your thesis requires they fix the recurring problems with their production and shipping procedures. ASICMiner is the only company shipping with reasonable lead times. I think they will get there, but it might take 4 months before it starts to smooth out.
There are roughly 2000 TH/s of chips either produced or planned for production so far (roughly 1000 TH/s of which has already been paid for). 3000 TH/s of chips would take us to 20X current difficulty, which is about the upper limit on profitability for some of the lower end ASICs. Where is all the money going to come from to produce the last 1000 TH/s of chips after the difficulty skyrockets and another 1000 TH/s worth of demand is soaked up by chips on the way?
And yes, if you are investing USD, you need to ensure your ROI is good at today's prices or potentially even lower. You should not count profits in USD terms without a significant margin of error added. Things are a bit simpler if you are investing BTC.
cuz they mine with your device
More then a few times I was just a click with a mouse away from paying for a BFL miner. And every time I stopped, thinking - why would they rush to ship me a device they can so easy use to mine for themself?
...
What if the price of Bitcoin stays at around $100 ... yet the difficulty skyrockets?
Everyone is going to need the $22,000 Mining Rig just to mine a few coins. But nobody is going to pay $22,000 just to mine a few coins.
If nobody is going to pay for a '$22,000 mining rig', how will the difficulty skyrocket, exponentially?What if the price of Bitcoin stays at around $100 ... yet the difficulty skyrockets?
Everyone is going to need the $22,000 Mining Rig just to mine a few coins. But nobody is going to pay $22,000 just to mine a few coins.
some people like to make fresh coins... freshens up their laundring
and miner makers can just keep making them for themselves
there is a lot of whining of people who want the easy button on a money tree to last forever.. where in the world does that ever last?
vultures, etc will always swooop in
and miner makers can just keep making them for themselves
there is a lot of whining of people who want the easy button on a money tree to last forever.. where in the world does that ever last?
vultures, etc will always swooop in
The most unfortunate part is that there are many pre-orders that may or may not be shipped by BFL and KNC. If all of those devices hit the market we could be looking at upwards of 500m difficulty ~3.3 petahashes. I wouldn't be surprised if many people don't believe this however once the market becomes saturated with ASICs only the most efficient will win the battle (hint knc/bitfury).
You will need stronger, faster, better machines just to mine a few coins after that.
What if the price of Bitcoin stays at around $100 ... yet the difficulty skyrockets?
What if the price of Bitcoin stays at around $100 ... yet the difficulty skyrockets?
Then the network is more secure against 51% attacks. That's a good thing.
If difficulty rises too high people stop buying hardware and inefficient hardware drops out. Difficulty corrects. End of story until the next price bubble hits.
Unfortunately, several hundred TH/s were pre-ordered in the form of BFL, Avalon chips, KNCMiner, Bitfury, etc. So for the next 4 months at least, the difficulty will follow an exponential curve. There is a tremendous amount of head room in the difficulty rate for operation of mining equipment because the USD exchange rate moved from low double digits to low triple digits.
If the exchange rate continues to rise the hash rate growth will not slow. However, that does not make investment in mining equipment a good investment. If you stand to make more from buying BTC than buying equipment to mine BTC, then prices for equipment must correct eventually.
If difficulty rises too high people stop buying hardware and inefficient hardware drops out. Difficulty corrects. End of story until the next price bubble hits.
...
What if the price of Bitcoin stays at around $100 ... yet the difficulty skyrockets?
Everyone is going to need the $22,000 Mining Rig just to mine a few coins. But nobody is going to pay $22,000 just to mine a few coins.
If nobody is going to pay for a '$22,000 mining rig', how will the difficulty skyrocket, exponentially? What if the price of Bitcoin stays at around $100 ... yet the difficulty skyrockets?
Everyone is going to need the $22,000 Mining Rig just to mine a few coins. But nobody is going to pay $22,000 just to mine a few coins.
Hi Peter -
Im definitely no expert. I believe you guys refer lovingly to me as a "NEWB"
So its not the difficulty which will inevitably rise forever and ever. And the hardware chasing it.
Its the hardware which defines the difficulty. When the hardware power doesn't increase anymore, a stalemate wont be reached. In fact we will reach a "plateau".
Sure there will be companies out there fighting to have a bigger and bigger machine.
There will be some rich people who will have the fastest of the bunch.
But unless they continue to increase their machine power, the difficulty wont budge.
Everyone will settle into a comfortable groove.
I almost wonder how that will play out then.
As human nature kicks in.
What will the dynamic be in ... 2, 5, 10 years.
Maybe difficulty begins to increase only every 6 months as new computer power is "invented"
As the computing industry has its natural progression of hardware improvement.
I wonder what shady things will begin happening by those wanting to own the bitcoin mining dominance...
So interesting. Love this stuff...
Thanks guys/girls.
Im definitely no expert. I believe you guys refer lovingly to me as a "NEWB"
Quote
Only if new mining power is added exponentially. If no new mining power is added to the network the difficulty will stop rising.
This! Answers my question perfectly. I think ... So its not the difficulty which will inevitably rise forever and ever. And the hardware chasing it.
Its the hardware which defines the difficulty. When the hardware power doesn't increase anymore, a stalemate wont be reached. In fact we will reach a "plateau".
Sure there will be companies out there fighting to have a bigger and bigger machine.
There will be some rich people who will have the fastest of the bunch.
But unless they continue to increase their machine power, the difficulty wont budge.
Everyone will settle into a comfortable groove.
I almost wonder how that will play out then.
As human nature kicks in.
What will the dynamic be in ... 2, 5, 10 years.
Maybe difficulty begins to increase only every 6 months as new computer power is "invented"
As the computing industry has its natural progression of hardware improvement.
I wonder what shady things will begin happening by those wanting to own the bitcoin mining dominance...
So interesting. Love this stuff...
Thanks guys/girls.
Jump to: