Right now something like 95% of miners mine on pools, and none of the pools payout from tx fees. Unless this changes, there is no pressure for fees to do anything.
They will have to start sharing them eventually. If they don't there will be no point in mining, and which means nobody will use their pool. 
Topic: What's your magic number? (or, Should I keep mining?) (Read 8752 times)
It may be more beneficial to run it even when the sale of coins doesn't pay for electricity and upkeep, just to keep the hardware generating.
No, it won't, and you'd better stay away from business if you think so. 
But at each of these discontinuities in block bounty, the supply/demand situation changes. A lot. When there are half as many per unit time being created, that will create pressure for appreciation.
It will also create pressure for significantly higher fees. If people aren't willing to pay them a lot of miners will stop mining, and the network will get much less secure.[/quote]
Right now something like 95% of miners mine on pools, and none of the pools payout from tx fees. Unless this changes, there is no pressure for fees to do anything.
I am not sure why people are overgeeking this into obscure numbers.
5. Forget magic numbers.
5. Forget magic numbers.
I tend to agree, I don't really feel like there is much need for a magic number. Work out how much profit you are comfortable making and decide that way.
I'm personally considering dropping out already even though I'm way above/below a magic number, and I'm still making more than electricity costs, simply because electricity costs an arm and a leg here, and the hassle and noise and heat of running mining is approaching a level of not being worth it for me when half the money made pays for electricity, even though techincally I'm still getting a fair amount of "free money".
Your number is for instantaneous profitability. That may apply if you are selling all mined coins immediately and saving in other currency. However, if you expect in the longer run bitcoin may appreciate, then it can be worth it to accumulate as many as you can now in anticipation for that day, even if you have to pay by operating at an instantaneous loss in the mean time.
We've been over this many times. If you keep them it's speculation, and the potential gain should be attributed to this, not the mining. Also, if you are operating at a loss you should stop mining and buy coins instead.Not necessarily. Hardware is a one time cost. It may be more beneficial to run it even when the sale of coins doesn't pay for electricity and upkeep, just to keep the hardware generating. Obviously this is less attractive if you expect the value of bitcoins to fall instead of climb.
Your number is for instantaneous profitability. That may apply if you are selling all mined coins immediately and saving in other currency. However, if you expect in the longer run bitcoin may appreciate, then it can be worth it to accumulate as many as you can now in anticipation for that day, even if you have to pay by operating at an instantaneous loss in the mean time.
We've been over this many times. If you keep them it's speculation, and the potential gain should be attributed to this, not the mining. Also, if you are operating at a loss you should stop mining and buy coins instead.But at each of these discontinuities in block bounty, the supply/demand situation changes. A lot. When there are half as many per unit time being created, that will create pressure for appreciation.
It will also create pressure for significantly higher fees. If people aren't willing to pay them a lot of miners will stop mining, and the network will get much less secure. Quote
Anyone whose magic number is lower than this shouldn't be mining.
Thanks, that's a good analysis. Except there's one other consideration. Your number is for instantaneous profitability. That may apply if you are selling all mined coins immediately and saving in other currency. However, if you expect in the longer run bitcoin may appreciate, then it can be worth it to accumulate as many as you can now in anticipation for that day, even if you have to pay by operating at an instantaneous loss in the mean time.
I think it will be an interesting dynamic at the point in time when the bitcoin block bounty halves to 25, and again later as it halves again and again towards zero. The market will have to absorb a lot of new bitcoins that are created in the meantime, and they can drop a lot. But at each of these discontinuities in block bounty, the supply/demand situation changes. A lot. When there are half as many per unit time being created, that will create pressure for appreciation.
The current profitability is around 2-3% / month (compared to hardware costs). I don't see why would anyone start mining at this moment. Am I wrong maybe?
Ok so I set up this site with a simple dashboard based off this magic number equation
http://bitcoindashboards.com
Please check for any errors. I will keep building on it. The next step will be to factor in some what ifs for $ projections, ROI %, fee incorporation etc. etc. Any suggestions welcome. Also I will pass along 10% of any donations to the original poster of this equation, Ian Maxwell .
http://bitcoindashboards.com
Please check for any errors. I will keep building on it. The next step will be to factor in some what ifs for $ projections, ROI %, fee incorporation etc. etc. Any suggestions welcome. Also I will pass along 10% of any donations to the original poster of this equation, Ian Maxwell .
I am not sure why people are overgeeking this into obscure numbers.
1. Take your 7 day average of BTC generation. While difficulty remains stable, this is your current income estimate in BTC. As it adjusts, you get a new figure that should ideally remain vaguely proportional.
2. Figure out the Watt difference of your system between generating and not. This is either idle vs load if using the PC anyway, or off vs full GPU load while running if dedicated.
3. Calculate your extra / total kwh per day. Multiply by xx cent per kwh. Have a daily cost.
4. You can now calculate: At xx BTC per day income and xx cent or USD cost per day, I need the exchange rate to remain above xx USD to break even or make a profit.
5. Forget magic numbers.
1. Take your 7 day average of BTC generation. While difficulty remains stable, this is your current income estimate in BTC. As it adjusts, you get a new figure that should ideally remain vaguely proportional.
2. Figure out the Watt difference of your system between generating and not. This is either idle vs load if using the PC anyway, or off vs full GPU load while running if dedicated.
3. Calculate your extra / total kwh per day. Multiply by xx cent per kwh. Have a daily cost.
4. You can now calculate: At xx BTC per day income and xx cent or USD cost per day, I need the exchange rate to remain above xx USD to break even or make a profit.
5. Forget magic numbers.
I find it interesting just to look at the numbers. I don't even mine as it's totally unprofitable for me.
I am not sure why people are overgeeking this into obscure numbers.
1. Take your 7 day average of BTC generation. While difficulty remains stable, this is your current income estimate in BTC. As it adjusts, you get a new figure that should ideally remain vaguely proportional.
2. Figure out the Watt difference of your system between generating and not. This is either idle vs load if using the PC anyway, or off vs full GPU load while running if dedicated.
3. Calculate your extra / total kwh per day. Multiply by xx cent per kwh. Have a daily cost.
4. You can now calculate: At xx BTC per day income and xx cent or USD cost per day, I need the exchange rate to remain above xx USD to break even or make a profit.
5. Forget magic numbers.
1. Take your 7 day average of BTC generation. While difficulty remains stable, this is your current income estimate in BTC. As it adjusts, you get a new figure that should ideally remain vaguely proportional.
2. Figure out the Watt difference of your system between generating and not. This is either idle vs load if using the PC anyway, or off vs full GPU load while running if dedicated.
3. Calculate your extra / total kwh per day. Multiply by xx cent per kwh. Have a daily cost.
4. You can now calculate: At xx BTC per day income and xx cent or USD cost per day, I need the exchange rate to remain above xx USD to break even or make a profit.
5. Forget magic numbers.
I went a step further and did a profitability chart. Profitability = Magic number/cutoff
Ian, I used you magic number of 9700 shares/USD as an example for this chart.
If I'm interpreting it right this number shows the ratio of money you are generating by mining vs the money spent on electricity. So a number of 10 means you are making 10 times as much in bitcoins by mining as you are spending in running costs. If the number goes below 1 then mining is unprofitable. There is no consideration for initial hardware costs or depreciation or anything like that.
Ian, I used you magic number of 9700 shares/USD as an example for this chart.
If I'm interpreting it right this number shows the ratio of money you are generating by mining vs the money spent on electricity. So a number of 10 means you are making 10 times as much in bitcoins by mining as you are spending in running costs. If the number goes below 1 then mining is unprofitable. There is no consideration for initial hardware costs or depreciation or anything like that.
Inspired by this thread and bitcoinBull's thread http://forum.bitcoin.org/index.php?topic=7427.msg109079#msg109079 I created a graph of the cutoff number over time.
It uses the daily average price from MtGox and the difficulty level on that day.
It uses the daily average price from MtGox and the difficulty level on that day.
Great, thanks guys!! I get it now. With the given numbers, is there then a way to calculate what you are generating btc/hr from your magic number?
Thanks for the replies. What I'm asking is where did the 233 in the first post come from? How do we know it's a constant? Is it a calculation related to the difficulty? If the difficulty goes up, does the shares per Thash go down?
1E6 / 232 = 0.000233
Thanks for the replies. What I'm asking is where did the 233 in the first post come from? How do we know it's a constant? Is it a calculation related to the difficulty? If the difficulty goes up, does the shares per Thash go down?
It is a calculation given a difficulty of 1. It is an approximation, because in practice you might get more or less.
If you have a six sided die, the odds of getting three is 1/6. But in practice, you might only have to roll the die 4 times to get a 3 instead of 6. Or maybe you'll need to roll it 13 times. But if you do try this billions of times, the number of threes as a percentage of the total number of rolls will approach 1/6.
Given a difficulty of 1, 233 is the approximate number of valid hashes you would generate with 1 Thash.
At least, that's how I understand it =)
Thanks for the replies. What I'm asking is where did the 233 in the first post come from? How do we know it's a constant? Is it a calculation related to the difficulty? If the difficulty goes up, does the shares per Thash go down?
frozen, what you wrote seems pretty much correct. It's worth pointing out that the 8.5 seconds is an average, and there's a significant chance that once in a while it will take a minute or longer (or a second or less). In fact, if you're mining 24/7, that probably will happen once in a while.
Where did the shares =233Thash/hr come from? I can't find where that is calculated.
From the first post: "shares is the (constant) rate of "share" generation per hash, which is about 0.000233 shares/Mhash or 233 shares/Thash"
For every Thash, approximately 233 "shares" are generated. A "share" is a hash that would validate if difficulty were set to 1.
Suppose that you have a machine generating 500Mhash per second. Multiply by 60 seconds per minute = 30000Mhash per minute. Multiplying again by 60 gives 1800000Mhash per hour, or 1.8Thash per hour. Approximately 1.8*233 (419) shares should have been generated during that hour, 7 shares per minute. It will take approximately 8.5 seconds to generate a share. Double this to 1000Mhash, and it will take about 4 seconds to generate a share.
If anyone finds a mistake please let me know.
Bitter Tea: Thanks for writing the script, but something seems backwards, when I put 15mhash it says profitable, when I put 1500Mhash its says not profitable.
Oops, I messed up the comparison. It should be
Code:
if(magicNumber > baseline) alert('Mining is profitable!'); ...
Where did the shares =233Thash/hr come from? I can't find where that is calculated.
Bitter Tea: Thanks for writing the script, but something seems backwards, when I put 15mhash it says profitable, when I put 1500Mhash its says not profitable.
Bitter Tea: Thanks for writing the script, but something seems backwards, when I put 15mhash it says profitable, when I put 1500Mhash its says not profitable.
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