Topic: Where will the mining industry be in the long term? (Read 2698 times)

"Computers in the future may weigh no more than 1.5 tons."
– Popular Mechanics, forecasting the relentless march of science, 1949

"We don’t like their sound, and guitar music is on the way out."
– Decca Recording Co. rejecting the Beatles, 1962.

"640K ought to be enough for anybody."
– Bill Gates, 1981

Quantum computing will not exist as useful platform for at least another century, if ever. We knew cold fusion was possible for at least 100 years, and it still only exists as a theoretical. We knew room-temperature superconductors were possible for 60 years, yet the drawing board is the only place it exists. I am still waiting for the flying car they promised me that everyone would be using by now. You are better off working on building a time machine so that you can go back to 2011 and solo-mine some coins with a graphics card than you are waiting for quantum computing.

The only folks touting quantum computers are wonk-heads looking for more government grants. No one alive today will ever see one do anything besides add a few bits, and they will certainly not see them break bitcoins.

Rich people and off all people the government can be misinformed and mislead. I accept they may or could exist but will hold off asserting it until a reproducible test happens or they do something quantum with it. Just because a company exists and people invest in it is not evidence it is anything yet.  I will do a bit of digging to se if their is anything their with that company yet. Last time I looked their wasn't but that was a few years ago now.

You are wrong. The world's first quantum computer is already running. It was developed by a Canadian company on Canada's west coast.

Guess who the two biggest investors are?

1) CIA
2) Jeff Bezos - Head of Amazon.com

Quantum computing is a reality.

http://www.dwavesys.com/en/dw_homepage.html

~ C

Like has been pointed out to you before if you have existing stock you may need or want to sell that first. I do think you are correct that would be a bad strategy. hmmm I wonder if you could somehow figure out how to sell existing product but still sell new product without competing with existing product. What would that be called something like pre orders. No I don't actually think that is happing it won't work. All of my post have been just speculation and I wanted to se if people agreed with me or not and why. For whatever reason you are angered by this and have to insult everyone.   I encourage you to join the conversation and make your points but se if you can be civilised about it we are all just trying to understand the BTC economy.

Right, so upgradeability has an actual benefit. Not only to the customer, even to the manufacturer.

I didnt argue about that part anywhere, just upgradeability. Possibly you are the one smoking crack if you are implying that i stated that manufacturers shouldnt ship new products.
Not that that doesnt actually happen in the real world often enough, e.g. cars not being as fuel efficient as they could be etc, but i didnt argue that asic manufacturers should do that as well.

You need to stop smoking crack before posting. No, seriously. Put down the crack pipe.

The companies selling hardware only care about re-usability if -- all other things being equal -- they perceive it will give them some temporary edge against a competitor. Hey, it might even shorten their production lead times for the next product.

But if you think manufacturers are holding back for any reason other than they can't ship the product, you're smoking crack. The notion that they're holding back to avoid obsoleting their own product is the most mind-numbingly stupid thing I've heard this week.

Are you really serious? I mean, sure, we will have to wait and see if the next gen boards will fit into the same slots (the rest is basicly just power supply and a Rasberry Pi controller board), but even BFL produces PCI-E cards (those Monarchs), not even a controller or power supply. You can reuse the same computer once the next gen cards ships. Doesnt really get more modular than that, or does it?
Not like thats a big difference from an financial point of view, most of the hardware in those miners are cheap standard components anyway, the big markup are those custum hashing chips. But that still doesnt mean it makes sense throwing the rest away.

Capitalism isn't solely an American concept.


Fantastic. And if Bitmine at any point holds back their next, faster product because they still have previous models in stock (or worse, because they're still making the previous model) do you honestly believe that the miners who currently own a modular Bitmine product won't jump ship to a faster product from someone else? I mean, we're talking about mining here, where hashing power drives difficulty, rendering smaller hashing power obsolete very, very quickly. We're also talking about a community that willingly gives ghash.io enough hash power to get close to 51%, because they are entirely driven by greed and care not a single iota for the health of the community, let alone the environment or any of the other bullshit reasons that you're fantasizing about.

So go on: try to tell me how all the miners will just wait for Bitmine to get their act together, even while other manufacturers produce better product.

But I call bullshit.

Geez, you are american? Allways thinking about short term profit?
You know, there are companies producing modular miner, e.g. Bitmine.
Upgradeability isnt just good will or environment consciousness. It also about getting repeat customers. Someone already paid 2k for a miner? Quite possibly more likely to buy another 2k for upgrades later on than purchase from a competitor.
And even in markets where people can buy competing parts (e.g. normal computer business) standards vor upgrading hardware are common.
After all, the customer is the king, vote with your wallet, e.g. i wouldnt buy a smartphone with a non-replaceable either. But well, if customers are dumb enough to put up with stuff like that and buy anyway its their fault.

Apples to oranges. You're developing a product that has a selling point (a feature, if you will) that resists obsolescence. And that's great. But your effort is driven by good will, not by profit. I applaud that. Publicly-held companies rarely pay anything more than lip service to good will, for the simple reason that their shareholders expect them to put profit ahead of public service. Even the privately-held companies are, by and large, driven by profit. Reducing obsolescence is only a viable strategy when you're the underdog and you want to steal market share from someone else, and then only for a short period of time.

Cannibalization only applies to products that are still being manufactured. The application of the word "cannibalization" to something that is merely in stock is questionable, at best. But regardless of what you want to call it, any manufacturer that delays the Next Big Thing in order to stabilize sales of the Previous Big Thing is an idiot. They might not want to cannibalize their own product, but their competitors are most assuredly willing to cannibalize their sales for them.

What you are revering to is Cannibalization (marketing) but you wrongly assert it is the only way manufactures operate and that it works in every case.

Umm we are certainly concerned about miners going obsolete too quickly and that is why we are trying produce a modular miner that can mitigate that to some degree for people who will potentially buy or manufacture them.

Not quite right. A hardware manufacturer is very much concerned if the old product is obsolete if he produced more than he could sell. E.g. BFL now has 25GH/s and 230GH/s miner from the 65nm line in stock. Those devices are obsolete, no one in his right mind would buy those. That may be ok if the company sold like 90% of the items produced and margins were high enough. If the company totally overproduced and only sold like 10% of the items produced the company would go bankrupt.
So yes, limiting to production to a size you are fairly certain you can sell makes sense.

This is wrong. There are zero hardware manufacturers (whether related to Bitcoin or not) who have even the slightest concern for whether the new product will obsolete the old product. In fact, the opposite is true -- the more obsolete the old product, the more money they make.


That's ridiculous on the face of it. Any manufacturer that limits production will simply provide an opportunity for someone else to sweep in and steal market share. In a capitalist economy, the scenario you've outlined Does Not Exist.

Yeah, i know. But those arent the only ones, other scientists have predicted quantum computers are just 5-10 years away, well that would basicly be more like 3-8 years now considering the age of the article. And well, 3-8 years doesnt sound much worse than the average pre-order to delivery time a lot of asic producers have ..

Lot of skepticism if it is a true quantum computer and if there speed clams are true. You buy one first and let me know how it works out

Well, if you get your hands on one of these tell me how many PH/s (EH/s?) you can get out of it.

I should point out I am in the mining game just a bit with 80gh for fun not profit. So I hope in 6 months someone can throw my wrong predictions in my face and laugh at me.   

I would put Quantum computers next to free energy machines as not going to happen in our lifetime. I hope I am wrong about Quantum computers.

I think you are correct you wont go up at this rate forever. It will level off. What will level it off will be power cost. The diff will jump to a point that the hardware you can run in your house will cost more than it makes. That will shake out all the home miners. That is happening already as many of the 1+th miners wont or will just barley run on a home power grid.

The other factor is how fast you get your money back and at what rate. The market will push the mining sector to a more normal rate of return. Again that is happening now.  Getting you money back in three months not going to happen unless you have an inside edge. Make 5% per year on you investment ok that will happen. But for most miners spending 10,000 to make 5% per year is forever. So you win on a technicality.

If Quantum Computers show up we'll got a huge problem SHA256 as encryption will not be safe.

I'm not saying that we won't get to less than 20nm circuits. I'm just saying it's pretty easy to go from 110 nm (1st gen ASICS), down to 65 nm, then 55 nm, then 28 nm, because that technology already exists and it's mature.

20 nm is on the horizon right now for later on this year. Beyond that, you have 12 nm tech, that they are working on for a couple of years down the road (and smaller).

But, your average fly-by-night BTC hardware company doubtfully has the deep pockets that is required for that kind of hardware investment, unless they are backed by HUGE amounts of venture capital. Not saying it cannot happen, it's just less likely to given current BTC prices.

With 10 times current BTC price, maybe.  

Quantum Bitcoing mining, anyone? 

There is only one immutable law governing everything in this universe

Balance

If you need two words
Rhythmic Balance

If you need 3

Rhythmic Balanced Interchange....Walter Russell

What goes up will come down...

And round and round we go

I have an issue with your "if ever" clause.  This assumes that the difficulty will rise forever and forever, and this is not going to be the case. 

In a steady state, if your cost of mining per one bitcoin is less than one bitcoin, there will always be a time-frame where you get to repay your investment.

Nothing can go up forever.

There will be globally listed mining companies and you will buy shares in those companies.

Anything else will just be buying lottery tickets with an extremely small chance of paying anything ever.

The end.

This is what I tend to think also. The 1% or a new 1% will control all the mining. Selling mining hardware will go back to mostly hobby stats or buying what is no longer in use for fun. From my understanding the big boys in LTC are the bot nets. I would rather corporations make the big bucks than people who are steeling computer power. But I hop I am misinformed about LTC.

The good old days could be at an end. Like every new big thing a few will do very well and the rest can say they were along for the ride. If everyone got rich now one is rich. For me the real shame is it is so much fun I hate to think the party is close to over. I don't need or want to make a lot at it not even close. I would just hate to se it get the point of CPU mining where it is utterly pointless unless you spend hundreds of thousands to millions.

 I would predict in the next two years 90% of hashing will be preformed by 10 or 20 big time mining corporations and the last 10% for the rest of us. The only thing to stop that is if the price of BTC crashed for a time but that would be even worse.

This sounds like : 640K is more memory than anyone will ever need on a computer.
Do you honestly think people will stop above 5mm ?

ps. Of course it's a myth that Bill Gates ever said that

The hardware manufacturers and their partners are the miners and will be from here on out.

There are no other miners of consequence, only people who choose to donate their money to the manufacturers.

After 28 nm ships in quantity, and if they ever get 20 nm mining chips to work, that's when the REAL test will begin, of who is really committed to Bitcoin.

Because after that, there will be no more technological edge to push. The only way to increase your earnings will be to add hashpower, at whatever price it will cost (hint: 20nm circuit lithography machines are NOT cheap).

So, I think the weak hands and fly-by-night operations will be shaken out, and only the dedicated/properly planned mining operations will remain.

Network hash rate will become more stably predicted, and it will start to fall into a more linear range.

And, most importantly, I think BTC price will stabilize and will not have so many wild swings.

This will be good, in the long run. In the short run, people will whine

I am sure there is more margin to be sacrificed at the production/re-seller end of things. If there is greater demand, the cost to produce will drop and so forth.  Sadly though, consolidation of the hash-rate into the hands of larger and larger companies seems inevitable. This has changed my view of  LTC which is more resistant to such conglomeration. Bitcoin was more enjoyable when a bunch of nerds were risking fires in their basement cranking out hashes with GPUS.   

They will always be around, but I do not think they'll always be directing their hash power towards BTC.

From what I've gathered, they are only for cryptocurrency mining, but you can also mine any other SHA-256 coins with them too, like Betacoin, E-Mark, Peercoin, Zetacoin, Terracoin, etc. I've noticed though, that mining these coins, according to Coinwarz, most of them seem to have kept within a reasonable closeness in value in the amount of profit per day you can mine with these other coins vs mining Bitcoin, and their value over time is a lot less predictable, so most folks stay with Bitcoin. I think the market controls this, if one got to be a bit more profitable for a sustained time, folks would pump and dump them and this would level the playing field again. Correct me if I'm wrong. I don't know if the increasing rise in BTC diff would help these other coins later, probably not. Just a lesser ROI across the board.

What is the other application of an ASIC chip or are they purely engineered for bitcoin mining? I assumed they were for sum other application originally? If they are what is that application and what percent of sales would be going to bitcoin hardware. Will ASIC chips speed go up at the rate cpu are.

Another interesting sign is BFL seems to have stock of sum of the products and have lowered the price on them. So the demand for current tec is getting meat for at least that company. I assume BLF is more where new to bitcoin people go so maybe the frenzy of new people is leveling off. Or BFL is just cranking stuff out now or reputation is tarnished.

ASICs have finite technological limits in terms of $/GH and GH/watt. These limits, and the value of BTC, will determine where difficulty will more or less plateau. The current rate of difficulty change is not sustainable.

At some point, everyone still mining will have the best possible ASICs, the difficulty will level off, and miners will just barely be making money.

That point might be reached in 2014.

There are just so many factors it seems like a crap shoot predicting where the diff will go and how fast it will grow long term. The manufactures have to be careful they don't make the hardware they sold 6 months ago worthless by selling new hardware that will make it worthless. I wonder if that is why some are holding back a bit.

I can’t figure out how the hardware manufacturers will keep customers. The more they sell the more worthless their product becomes. I wonder if they will start losing repeat customers as they figure out they can’t get their money back in a reasonable time if ever. 

I think the first sign that we may level off a bit will be if a few hardware manufactures going out of business. Most business rely on something like 80% repeat business. But if the only people who will make any kind of money are first few customers and everyone ells gets nothing how long can that business last.

I would think the next step would be the manufactures will start limiting production as to not cannibalize their current customers. It may not happen this gen of hardware but soon. Or they will have to steadily lower the price over every unit as they get further down the line. For the long term health of the manufactures I can’t see this arms race benefiting them.  If all their hardware could say all ROE in say 6 to 12 months that would be good vs the first 1000 ROE in three days and at unit 10,000 it will ROE in two years.

I love bitcoin as an example of an unregulated market and a real world test of how it will work. It will be fascinating to see how it all turns out jut in the mining portion of bitcoin. My bet is 90% of mining will be controlled by 1% or business will start sum type of self-regulation of manufacturing.