Topic: Zeno's paradox in mining. (Read 1614 times)

Generally I agree with you but I would think some may sell for less than it could make. The key word is it could make 1btc over its lifetime it is all just speculation. It could also make .5 or less likely 1.5. but if they sell it to us today they get what it may make over its life right away and no risk. Even better is they get you to pay for it before it even exists. So they get what a miner may make before they even make it. It is a very impressive business model.

It's not a paradox.  Miner manufacturers have to set a price for the miner.  If a miner will make 1.0 BTC over its lifetime, it is silly to sell it for less.  In fact they want to sell it for as much as they think people will pay.  People aren't really good at math and so they can price these things at 1.5 BTC and they sell out.

it won't keep doubling every month unless the bitcoin value doubles every month as well, or the ASICs efficiency doubles every month.

Since we're still not at 14nm chips, the ASICs efficiency can still grow, so the difficulty will continue to skyrocket. But once the mining will become unprofitable, noone will buy more miners, so the difficulty will eventually stop to double every month.

The question is when.

With bitcoin in general I agree. But the intent of the post is miners. The barrier to entry for miners is skyrocketing. But that is not a bad thing and I would even say it is necessary. You will always get more growth when a few can make a lot vs everyone make a little.

I agree with you to a certain extent, but you're missing a major point. A rising tide lifts all boats.

I have to think that most folks who were invested in bitcoin for at least a year are doing pretty well now since the price went from ~$20 to over $800. It's hard to lose money in that type of environment!  

If Bitcoin truly goes mainstream within the next year or two, many mistakes will be forgiven and most folks who are invested now will be happy...

You did a much better job explaining  what I was trying to get across in a round about way with my second point.

It all depends on how you define a win, and how well your strategy performs.

It is nearly impossible to become wealthy investing $1000 in a DOW company or spending $1000 on a bitcoin miner. You might make a little eventually, or you may lose your ass, or you may break even in a year. This does not mean that there are not people who have developed strategies in those spaces who actually will become wealthy. It just means that it is very likely that you will not be one of them.

You need an edge. You need information most people do not have, or an innovative way to use the information that is widely available. Like counting cards, you can turn the odds against the house. You can play Blackjack all day along with the thousands of other casual gamblers and you will probably experience the same result that they do: The house will take most if not all of your money. Unless you have the edge.

It sounds so appealing: Buy a magic box that spits out $20.00 bills all day and all night. Seriously? That is a sheep strategy, and you will be fleeced. If it were that simple we would all be sipping Margaritas on our yachts with topless supermodels rubbing our feet. You need to be smarter than everyone else to get the yacht, there are just not enough of them to go around for everyone.

Guys who got into cryptos early essentially had information few others had access to. They got paid well for having that information. Everyone is focusing on difficulty and ROI. Find a way to focus on something no one else is paying attention to and the BTC will come rolling in. If you cannot find an edge, mining is a game you should not be playing. Don't get involved until you find one.

I think the next 6 months will be more interesting and possible more extreme than the last 6 months. All the hardware currently running will be rendered worthless as diff jumps to the 7 to 10b range. I think in the next two to three months a 20 to 30% jump in 8 days will look good compared to the jumps on the way. When the 1TH + start shipping I predict a depressing 50 to 70% jump every 8 days.

The question is what is after that. Will everyone start scrambling for the 10TH system or will mining be devastated as almost now one makes any money and things level out at 10 to 15b difficulty.

Their are sum good posts trying to predict if it is even possible to manufacture hardware to get us to 10b dif.

Bitcoin mining is one of the few examples I am aware of where we get to watch a global unregulated market from the start. I am very interested to se how it all works out.  The one problem the OP and maney, maney others have pointed out it is designed so that almost now one wins but people with an inside advantage. It would be like if insider trading was not only allowed in the stock market but encouraged. The little guy has no chance at all but who is to say they even should. The world is not set up so everyone can win and I would say it is impossible for everyone or even most to win.  

Yes, except for all the months where they don't double:

Let's look at
                 October         :             140 * 10⁶
                 November     :             360 * 10⁶
                 December     :             700 * 10⁶
                 January          :           1400 * 10⁶



Some months it might go up by 70% some 180% but on average, we can say it doubles.  And sure, this trend has not always been here. 

It's easiest to see between December and January.  The red line touches the dotted lines for the other value.  Although these values are not for difficulty, they have the same kind of scale.

Doubling every month, except for all the months where this is not true.

You are correct. The only thing that would change you math is if BTC go up in value or difficulty levels off. Difficulty leveling off is unlikely and if BTC goes up you would be better of if you just held bitcoins. But mining is fun if you have the money to burn and it is a way to support the cause. But get rich quick not so much unless you are a manufacture or can get big hashing power before everyone ells.

Look at the difficulty graphs.  They have been doubling every month.   The amount of coins you can mine is inversely proportional to the difficulty.  Rather than think of USD exchange, whether up or down, think about the prices in BTC.

Suppose you spend 1.0 BTC for the rig.  If it earns you 0.5 BTC from a pool in the first month, then in the second month it will earn you 0.25 BTC.  After that, 0.125 BTC.  Then after that one sixteenth of a bitcoin and so on.  The sum of this series is 1.  Further buying a rig for x amount of bitcoins is the same as running x number of machines that cost 1.0 BTC each.  Generally speaking, If your rig is not going to earn more than half of its price [edit:  in the first month] when you have it working, there is no point in considering the costs after that.  mining with said rig is a losing investment.  

If your rig earns more than half its value in a month, then you can think about exchange rate and electricity operational costs.  Consider the CPU time cost, you may need to upgrade your computer or get another dedicated one.

sdp