Bitcoin Forum

So, if these ASIC from BFL are as advertised, or even half of what is advertised, GPUs will quickly become a hot brick burning money when it comes to mining bitcoins. 

There are other coincurriences out there I have noticed.  What do you think would be the best coin to mine with GPUs once bitcoin is no longer profitable for gpus?  Seems like mining another coin could be profitable, and all the gpus could just switch to another coin and help bring up a coin to being something worthy.  Im sure a lot will make a shift to a new coin instead of selling off all their hardware.  Bitcoin was a risk that was worth pennies at the time, just like these other coins, just that bitcoin miners already have the hardware.

Though I don't know much about these other coins.  I ordered some ASIC if they do pan out.  If they do pan out, Im hoping I can keep a similar BTC per day ratio in mining and then switch my GPUs over to the next best coin to mine and hope that it becomes really profitable.

Read this:
Alternative Block Chains : be safe! (https://bitcointalk.org/index.php?topic=42465.0)

My opinion: Stick with Bitcoin and perhaps Namecoin. Everything else is just a type of pump 'n dump scam coin created to try and get people excited about being an "Early Adopter"... they have no other purpose.   

I use pooled merged mining currently.  Will the BFL ASIC's be able to also mine namecoins, or just the bitcoins?  Maybe my gpu's can stick on merged mining, but mainly be there to get namecoins if those ASICs can't mine namecoins. 

The "merged" part of merge mining is done in the "miner" (software).   For the case of mining pools it is the pool server which generates the getworks (and constructions the block header to be compatible with both chains).

At the hardware level the hardware is simply hashing a number.  It  has no concept of what that number represents and thus there is no obstacle to merge mining.

BFL asics should be able to merge mine.  You could mine litecoins with GPUs.

Well, GPU's are very programmable.  The ASICs not so much.  From what I have been reading, if the hash algorithm for bitcoins changes any bit by say a potential shift to SHA-3 (especially when SHA-2 gets compromised) the ASICs are then worthless.  I have no clue if all these other coincurriences (namecoin in this case) uses the same hash algorithm as bitcoins.  If it is the same, it should then be able to merge mine or mine other coins so long as the software is there to support it right?

In order to merge mine the primary chain and the alt chains need to have the same hashing algorithm.  If Bitcoin were to change to a new algorithm it could no longer be merge mined with SHA-2 chains.  We likely will be using SHA-2 for some time.  Nobody can predict the future but SHA-2 is well researched and cryptologists have spent a lot of effort looking for flaws.   If a flaw is found in SHA-2 25 years from now and Bitcoin moved to SHA-5 2 years after that it doesn't really matter.  All current GPU and ASICS will be long obsolete anyways.

I think the impact of the hashrate on the value of a crypto-currency is    negligible, well, you could argue "The more computing power behind it, the more secure a currency is", thats of course true. But it normally goes like "the more value, the more people will mine ergo the more computing power", not the other way around. Nobody would they "Well, litecoin, yeah… but they don't have enough computing power backing up the crypto-security." If a buch of people start to mine litecoins, titcoins or whatever no one will start to buy like crazy. They will just mine pretty worthless coins without making an impact.

i see litecoin is good. i will be look for litecoin invests. these should show when asics hit

How is the difficulty of mining controlled?

It's controlled by the network hash rate.

litecoin has a strong chance of making it methinks

litecoin still has a small following. so might be good to join in early too. thanks for the info

Due to there currently being very little ASIC builds available or being used based on the fact that the current suppliers of them have been slightly over optermistic with there expected delivery times means that its still a waiting game to see what happens.

I know that from personal experience designing & building ASIC hardware can easily take 1 - 2 years depending on its complexity and can cost anywhere from a few hundred thousand to millions of pounds.

So its just a matter of time to see who comes through first.

The next best coin after bitcoin would probably be either namecoin or litecoin. Although it remains to be seen whether there is a need for either of these

Litecoin is almost as profitable as bitcoin for me, except for the extra electricity I'd have to pay.

I was looking at the litecoin sites this morning and the ones listed on the litecoin site seemed to be recently shut down. I couldn't quickly google any exchanges and the software for mining on windows didn't work out of the repository I found it on.

I assumed that litecoin had died.

Did I miss something? Got a link for a miner?

Litecoin seems to be mostly dead, for reasons stated in the wiki, but to summarize:

1) the launch was rocky at best. ie claims of being 100% cpu only, while later proven not-much-so. suspicions of authors mining in advance etc.
2) it does bring very little in terms of competition with bitcoin.

For real competing blockchain, IMO it is necessary something like:

1) Mining must be provably profitable only on modern multi-core x86-64+PC architecture. The PC must be superior against anything to come for at least several years. That probably means utilizing the cpu far more than mere hashing, perhaps 3/2 SAT or other NP-complete/hard problem set?

2) Almost instantenous confirmation (let's say new block every 10 seconds). A lot of protocol redesign will be probably necessary.

Once ASIC mining will be monopolised by selected few who will be able to manufacture at 65/45nm (network at hundreds/thousands terahash), the pressure to move hashing back into common hardware will start to build up for new chain to survive.

So far only commodity FPGA hardware (and its asic hardcopies) are used, probably 90nm, which is still about 10-100x times slower than truly asynchronous ICs manufactured by state of the art process.

Why would it be a monopoly?  Monopoly tend not to survive in free markets and there are no real barriers to entry other than NRE costs.  While the NRE costs are substantial if there is enough money to be made mining competitors will jump in.  If there isn't enough money to support competitors than the chain is a economic dead end anyways and the monopolist is likely the one taking the biggest loss.

Selling shovels to gold miners has traditionally been more profitable and less risky then mining for gold.  BFL understands this and future players will too.  The turn around on capital is much faster and ROI% much higher.  The equipment seller offloads all the difficulty, future price, better competitor offering risks on the miner.  All that makes it much easier to project cashflow which makes it easier to get venture capital funding. 

What about timekoin?  It is a newer protocol but the concept of everyone having exactly the same potential to earn (everyone only has 24 hours a day) is pretty intriguing.

Never heard of timekoin..... of to google I go :)

Why not litecoin?  I think litecoin may be fairly succesful.

I read in a post somewhere it'll be succesful if people use it as a micro currency.  SO all small bitcoin trasnsactions would use litecoin.  As bitcoin gains value then micro transactions will cost more.  Also, bitcoin was not made to be used for microtransactions.  Instead of the huge transaction fees people would use litecoin.

Why take the risk of using another (unstable) crypto currency? Chances are that you can sell your GPUs and buy less power hungry FPGA/ASIC solutions (like the japaleno). Unless your using really old videocards selling those should cover the cost of the new hardware, while you'll save on power consumption for future mining. The only issue with FPGA/ASIC solutions is that outside of the Bitcoin mining business it has very few applications, so selling it could be an issue if the Bitcoin collapses. On the other hand, value actually increases when you sell them in an active Bitcoin economy due to the current waiting time of 2+ months...

Timekoin is as much as cryptocurrency as Lifters are useful jet engines.

The technical description is far and between, peppered by naivete of a php-mysql web developer.

It makes repeated statements the coin generation is "fair" (whatever that may be), but from reading the source code it appears to be vulnerable to simple sybil attacks much like torrent swarms. Every new "node" gets coins at increasing rate, and there is nothing stopping people running thousands of nodes on a single computer, in tandem with a proxy botnet...

To sum it up, most technical people dismissed it even more "batshit crazy" than solidcoins....

https://i.imgur.com/VHgUr.jpg

To put it into your analogy, youre not selling shovels, but gold mines. Likely some where gold ore veins are 100x more rich than commonly found anywhere else.

So, what follows is ballparks, but quite likely wild-ass speculation if we're to assume BFL are ROI driven rather than unicorn pixie dust people make it to be.

• ✓ Sell hardcopy fpga asics (initial investment is cheap, like $50k, there are dozens of vendors already), to build trust and spread hype
  
• ✓?The first batch of truly ASIC hardware preordered is capable of running at 10THash, ie less than 50% of network.
• Once you have the next-gen asics completed, abuse mine with your 40% hashpower for a while. This will most likely happen at block# 210000 to cover the fact in the ensuing panic. The profit might be as high $500k-$2M.
• Assume you'll be able to cash out $1M, just by outpacing other mininers for a while and immediately selling off during shortage. This will probably cover large chunk of investment into pure ASIC core.
• Now, you've successfuly monopolised mining market because you were first to pull off this scenario. Because everything else than your ASIC core is useless, market will closely follow your pricing model.
• At this moment, it makes sense to sell your hardware at prices right above the profit line of mining with it yourself. This price is highly inflated due to bitcoin shortage introduced above.
• A challenger might appear in the 45nm or 32nm fab process, but you have a good jumpstart to keep your monopoly just by upgrading the fab process. Competitors have to design their core from scratch.

Once again you make more money selling shovels then mining yourself.

BFL could do that and make a couple million USD over the next year or they could sell the rigs and make a couple million USD on day 0 and now the miners take all the future risk.
6 months later they can then can cut their prices 50% and sell another couple million of the same rigs at half the price.
6 months later they can then they can cut their prices 50% again and sell another couple million USD worth of  rigs at 25% of the original price.
6 months later they can then they can cut their prices 50% again and sell another couple million USD worth of rigs at 12.5% of the original price.

If some competitor comes along they will be looking to maximize the return on their huge NRE so while each company may have to reduce their prices somewhat a price war hurts both companies and it is the miners who benefit.  The markup on the actual chip (not design, NRE, etc) but the actual chip is 10,000%+.  So years and years from now BFL could be selling the same chips (now maybe 1/20th of the original price on day 0).  Eventually they move to a new process (i.e 45nm) and start the game all over again.

It is much more profitable to sell shovels and anyone who has enough funds to be in that position already knows that.

Market-wise your points are valid, assuming they do have that long term foresight, but you've missed one of my arguments - the initial shock of 50-100 times more hashpower is unprecedented.

My assumption was to initially use the hash-power to cover their NRE asap (we're talking 2-8 weeks after 25btc drop to avoid public outrage). They already have the money from preorders, remember? The chips must be manufactured in huge batches to be cost effective.

Another point is to drive the cost of mining in a controlled manner. Under your scenario, they'll equip 10% of miners and create huge demand ripple in the 90% who are out of the league now. My naive economic ignorance calls for *huge* price increases, to avoid more obscure pre-orders. This might be indeed more profitable than stalling the delivery by their mining, but only under the assumption their production will be *continuous* which I somewhat doubt.

Oh, or maybe some more preorders and months-long deliveries, for you know what :)

Either your or mine way, you'll end up with something akin to Intel (historically), until AMD and Motorola shows up :)

Note that I'm not implying that intentions of BFL are evil, on the contrary. Who's first to the market, and with good PR, wins, as it should be.

A lot of people have problem with entire ASIC scenario though - because up until now bitcoin was more or less commodity hardware (FPGAs are reprogrammable after all :) and thus not that *much* of waste of resources.
(Pure energy-efficiency appears to be opposite, carbon footprint of manufacture is unknown...).

Now the market is cornered into producing pretty-much-useless-except-bitcoin-which-also-get-obsoleted-fast-by-innovation machines, just because the task to be solved is strictly matter of dedicated silicon, rather than household items which can serve multiple purposes.

scrypt/bcrypt is *far* from perfect, but solving tasks suited for CPUs with high memory bandwith seems to be an alternate step in a nice direction - far in the future it's nice to have competing big CPU manufacturers, rather than clendestine asics (which are *years* behind CPU architectures anyway). It moves forward whole general computing, not just bitcoin mining.