Topic: What Keeps You in BTC for the Long Haul? (Read 2747 times)

http://dustcoin.com/mining

So far most "rich bitcoin mines" seem to dismiss altcoins as beneath their notice.

Possible volume might have something to do with that: quantities that might look quite attractive to a hobbyist looking for chains to add to his merged-mining portfolio might look like chickenfeed to multi million dollar "mini"-rig farms.

Small miners who aren't really making anything at their bitcoin mining can subsidise it by earning on quite a few other chains alongside, assuming the large firms are not able to squeeze them out by making the bandwidth (etc) cost to the small merged miner of the bitcoin chain alone too large to leave any bandwidth (etc) for processing a multitide of merged chains alongside.

Possibly though as the budget crunch approaches more pools will see the addition of more chains to their merge to be something their users might appreciate...

-MarkM-

Because the math looks poor.  If I were to place an order for a Jalapeno now, by the time it arrived I wouldn't pay it off for a year or longer, and after that, I'd be making next to nothing (at current BTC prices).  The investment looks very poor even if one assumes BTC prices will rise a fair bit.  Frankly, the only reason I can see for buying a Jalapeno now is to help the BTC network (and it's not much help!).  You'd have to gather quite a lot of willing folks who don't care about the math in order to sustain a decentralized network.

Now this isn't as significant a problem for folks who are already on Jalapeno preorder.  They'll stand a better chance of making their investment back more quickly, but they'll very shortly be making almost nothing.  The profit motive here is tenuous.  But maybe you think something other than profit is going to motivate all these people?

To the extent that there is a profit motive for speculators, they'll be motivated to BUY BTC with FIAT, not flush money down the drain buying a Jalapeno.

Try to convince me to buy a Jalapeno.  Why should I do it?  Out of the generosity of my heart?  Because I want to promote a decentralized currency even if it doesn't profit me to do so?  Because that's what a good person would do?

Heathrow,  You appear in your reply to me to have agreed to the essential pieces of the jigsaw but are missing the picture it makes...

If I may assist...




Let me repeat what I wrote:


What this means is if difficulty is so high that you are unable to be making a sustainable ROI from a Jalapeno then it's also too high for the 'ASIC farms' to be making a sustainable ROI from their kit.  OK there will be differences for instance if a 'farm' locates itself in a very low power cost area or where the ASICs are mined by the manufacturer making the cost of their rigs significantly cheaper but if anything the farmers have admin charges to run as a business including premises whereas I suspect you have no need to charge for the space your Jalapeno is taking and for your time ensuring it keeps running!

It certainly does add to the discussion - it is essential to the discussion, in fact it is the next consideration.

You talk of increasing difficulty and increasing prices.  They do affect profitability but the point is they affect profitability approximately equally for you and your Jalapeno as it does the farmer.  Who do you think can keep mining at a loss longer, the business who has business expenses or the hobbyist who just has a slightly higher electicity bill and a slightly warmer house?  Regardless of who switches off first when (whether sooner or later) mining ceases to be profitable, when enough people have switched off it will be marginally profitable for those lremaining - until the price/difficulty situation changes again either making it unprofitable again so more have to switch off or more than marginally profitable in which case more ASICs will come back on line making it marginally profitable again.

The point is scale really doesn't matter. Everyone's in the same boat.  After the ASIC 'gold rush' there will be no big money made (relative to purchase price) regardless of scale.  The ones I'm feeling it for are those, whether spending hundreds or hundreds of thousands, who have borrowed or are banking on making more than they will.

But from the network perspective it is great.

My understanding is that the decentralisation of mining does not need to grow relative to the number of Bitcoin users.  It just has to be distributed enough and to be located in enough jurisdictions not to be vulnerable to being taken over by authorities and to keep the risk of anyone controlling >50% to a minimum.  From what I gather there is a much bigger risk from the pools controlling too high a proportion of mining than the actual miners.  But that's for another discussion.

So if you were referring to something along the lines of 'the population of potential BTC adopters' the proportion that need to be mining to keep the network safe is actually miniscule - probably way less than 1%.  But if a random hobbyist in every hundred Bitcoin users fancies playing a role and mining for the fun of it and it is just as likely to be profitable for him (relative to his investment) as the big boys then I don't see where there's a problem.

My question is why would there not be?

The other assumption you appeared to have was that miners (ASIC farmers) would be fiat-rich and that something about the distribution of Bitcoin that is just going to make already rich people richer at the expense of everyone else.  I hope you can see now that the advent of ASICs isn't going to concentrate bigger profits into smaller number of hands.  There's also the consideration that a smaller and smaller proportion of the money made in Bitcoin will be made by miners.  There's speculators, long-term holders being coaxed into spending by higher spending power, there's payment service providers and all the other Bitcoin-centric businesses. 

This was discussed in another thread quite recently https://bitcointalksearch.org/topic/bitcoin-will-not-solve-all-problems-but-will-make-rich-people-richer-149389 but I hope you will be able to conclude from what people have commented in this thread that you need not be overly concerned about a supposed increasing gap between Bitcoin Rich and Bitcoin Poor.

The future's bright

amen, even though for me pissing off goverments is just a side effect

This is a good point.  I might even be willing to purchase a Jalapeno just to "help" Bitcoin, and I suspect there are quite a few people who feel the same.  Enough?  I don't know. 

I certainly wouldn't expect a return on my investment, however.  At current difficulty, one could respect a return on a Jalapeno in several months.  Unfortunately, those Jalapenos will come out at the same time as all the other ASICs, and the current difficulty will skyrocket, pushing back a recovery on one's investment to a year or more on the assumption that BTC prices remain the same.

So you really do have to be seriously bullish on the price of BTC or be willing to be in this for the long haul in order to not just flush money away.  It's not clear to me that enough folks will be wiling to do this.


I was referring to a much larger population than the current bitcoin user population.  Something like the population of potential BTC adopters.


So you expect folks to mine, even at no profit, just to help the Bitcoin network?  The question is whether there will be enough such people to keep BTC decentralized and secure when the massive ASIC farms start coming online.


This is a truism.  It adds nothing to this discussion.  You have to think about some of those "ifs".


Interesting point.  But note that you also have to be willing to do this for free (unless BTC prices skyrocket).  Your Jalapeno isn't going to pay itself off for a LONG time (again, unless BTC prices skyrocket).

. Pissing off governments

. Value

. Ease of use

. No stupid forms to fill out every time I want to do something with my money

. I can actually freely earn money with Bitcoin because of so many obstacles being taken away

Curiosity 

That does sound like something I might say. Some folks observe that I have an astute perception for the obvious.

C++

I just like using it much better than crappy paypal or the like.

Sitting on the sidelines frowning about all of these rich people buying ASICs so that they could get more rich is talk of someone who will never be rich.

If you want some Bitcoin purchased pizza just go to http://pizzaforcoins.com/ If I were in the states I would only order through them when buying pizza.

This made me smile.  It appears to describe a good few of those who have ASIC pre-orders.

There appear to me to be a number of flawed assumptions in Heathrow's argument.

Anyone else slightly suspicious of the numbers of someone too keen to see everything in terms of 99% v. 1%?

The first '99%' to address is '99% of folks'.  Are we talking 99% of people who mine now?  I am given to understand (though I don't have links to hand) that the vast majority of 'hobbyist' miners mine such small numbers as to make little difference to the mining distribution in terms of securing the Bitcoin from attack and the amount they make is probably peanuts by now also.  So to whom is it a tragedy that they will have a choice to upgrade to a BFL 'jalapeno' or equivalent or stop mining?

I think we will all be in agreement assuming ASIC mining is the soon-to-be future, there will be no value in mining BTC by any other means but how one gets from that to the assumption one needs an 'ASIC farm' to make money I don't know?

I'm failing to see where this 'fiat rich reaping the profit' claim is based on.  Is it because some of the ASIC machines are priced in tens of thousands whilst video cards are priced in hundreds?  Buying a large number of GPU cards (which incidentally in contrast to ASICS would have commanded a substantial purchase discount) also costs tens of thousands.  I don't see how ASIC changes that picture in the way implied.

With prices per hashing capacity virtually the same for the hobbyist (e.g. BFL Jalapeno buyer) and 'farmer' spending tens of thousands there are virtually no economies of scale to speak of which would drive the hobbyist out.  It will take the same duration for the hobbyist and the farmer receiving their kit at the same time to recover their investment (other than for some variation in running costs).

The next percentage referred to is '1% of population'.  It's unclear to me whether this refers to the currently mining population, to bitcoin user population or world population.  Let's hazard a guess at Bitcoin user population?

There is evidence of wider adoption of Bitcoin by some orders of magnitude from say a couple of years ago when maybe 70% of Bitcoiners were mining as against say 20% today.  But 70% of 1000 is 700 whilst 20% of 10,000 is 2000.  Which of the two makes for a stronger network - and that's without even considering the increase in difficulty thereby the decrease in likelihood of successful attack?  All those figures are probably way off but the principle stands.  Other than for securing the network why does the percentage matter if the primary purpose of Bitcoin is not to make money for miners but to serve the needs of its users?

This ^

I would be intrigued to hear an argument as to how it is expected that ASIC (or any) mining will be anything other than marginally profitable in the long term, especially seeing as you don't need to be a geek anymore, rather just to buy something to plug into your PC and let it run.

Give me something substantive and I'm ready to listen and to change my mind accordingly - otherwise it just sounds like a rant.

As for what keeps me in Bitcoin for the Long Haul - it's simply because it is awesome.  The decentralised thing, the privacy thing, the known-from-day-one inflation thing, the virtually infinate divisibility thing, the ability to transfer irrespective of distance or boundaries thing etc. etc.  What's not to like?!

No.  I'm the kind of sucker who will invest in something that is provably good.  But I suspect we mean different things by the word "invest".

Money isn't everything.  I mined from Q1 2011 through August of last year, but - not being a coder, or able to contribute in that way - I've spent quite a bit of it here and there along the way.

We agree though... or at least I think we do.  More suckers like me are needed.

I'm not going to invest in something unless I think I'll probably make money by so investing.  Are you the kind of sucker who will invest in something even if you know you will lose money by doing so?  We need more suckers like you.

What's going to happen to bitcoin is that it will be used for what it was intended to be used for.

To transfer and keep money safe from the banks and the governments.  To promote freedom, and options.  To reduce dependence.  To make some part of the world better than it was.

Bitcoin was never a get-rich-quick scheme:  it's an incentive.  Some will get rich - but they're the people who are working to make bitcoin work and to get it adopted - and they should get rich.  It's hard work.  Do you think all the people who adopted early have been sitting on their asses waiting for people like you to make them rich?

Where do you get the idea that bitcoin is about getting rich?

No, you aren't.  Also, it's "you're", not "your".


99% of folks are about to be cut out of mining BTC at current prices.  There will soon be NO value in mining BTC unless (i) you run an ASIC farm, or (ii) you speculate that the value of BTC will skyrocket (like, through the fracking roof).


Ok. So hope.  Great.  You hope Bitcoin turns out like Microsoft.  Fantastic.  But your hope is not a good reason to think that this will come to fruition.

When everybody but 1% of the population (that is fiat rich) is cut out of getting any profit from building the blockchain, what's going to happen to BTC?  You can hope that this will work out well for BTC.  But do you have any good reason to so hope?

your not seeing the entire picture.

There is a roughly the same amount of BTC mined each day. as long as it has value people will mine it. if the value is sufficiently high where someone can get the equipment to mine with and make a profit then people will do so. if the profit drops then a percent of people quit mining untill its profitable enough to sustain a profit for the remainder of those involved. also keep in mind the difficulty changes based on the network hash rate, so as people join and leave it will adjust accordingly.
 if you dont get what im saying then try to spend some time thinking about it, those that mine understand this.

As far as what i see in bitcoin, i see the possibility of a future. one where i would be stupid to have not gotten involved with bitcoin. i dont plan to be those people that say "i wish i had bought stock in Microsoft, Google, Amazon etc".

I have been a part of the struggle for many years. I have fought for worker rights even when it was dangerous. I have remained true to myself even when those around me did not share my vision. I have kept my integrity in spite of the temptations to become part of this corrupt system. I have followed many paths that were going in the right direction, but ended up going nowhere. Now I realize they were leading me to a path that has been paved by people with not only a passion for justice, but the skills to do something about it. Bitcoin is the Manhattan Project to end the war against the gobalist banksters once and for all. I may not be a rocket scientist bitcoin developer, but I can help anywhere I am needed.

As for the early adopters who are rolling in BTC's?  See this paper:

http://eprint.iacr.org/2012/584.pdf

You're the romantic type, aren't you?

The only people who are living off Bitcoin purchased pizza are the early adopters who have already accrued BTC before it exploded.  Nobody else is living off BTC purchased pizza (if they are, it's because they exchanged USD for BTC, and then exchanged BTC back to USD in order to purchase pizza).  Nor is anybody trying to purchase an ASIC living off BTC purchased pizza.  And nobody who wants to get into mining now is living off BTC purchased pizza.  99% of people who are getting into BTC mining are currently doing so because it's a hobby, they're bad at math, they're very, very optimistic, or they want to contribute to something good in the world.

When ASICs come out, and they will at some point, building the blockchain and reaping the profit for having done so will be transferred almost entirely into the hands of the fiat rich.  Thus anyone who wants to use BTC will have to purchase it with fiat (or some other cryptocurrency).  I can't see how this looks good for BTC in the long run.

$$$$ in my eyes...

that and hoping for a nice convenient way to easily spend monies online while saying "Screw you" to the banks.