Bitcoin Forum

The problem I see in the near future for Bitcoin is that the best hardware that presently exists will soon (months?) be inadequate for mining at existing price levels.  Meaning that buying a Radeon 6990 will not even net you back a worthwhile amount of money (or any) at existing price levels.  As there will therefore be added a tremendous amount of downward pressure on the market at the same time that only more demand for BTC will be able to counteract.

The other built in failsafe to this scenario is the 'transaction fees' that miners and clients can charge in order to process transactions.  Well this presumes a robust economy with people actually trading in goods and services and not what the actual Bitcoin economy looks like.  Look at the charts there is not much movement, and how much of that is even really exchange for goods and services?  Most the value that BTC has gained in USD over the past many months is of a purely speculative nature.

It was a different world when you could get any crap laptop and make 50 bitcoins a day or even a week for the potential gains were much higher for a much lower amount of 'capital investment' (ie, crap laptop that you weren't using anyway), but now with the introductory capital costs being so high with so little returns I don't see a way out of this, which is unfortunate.

I believe we'll have a large shedding of miners soon as the difficulty chews up all but those that are running the various levels of hardware.

Next we'll see another exodus when it hits a competitive level at the level of the highest existing hardware.

Then another one when people who are the enthusiasts (those who tweak every little setting for maximum efficiency) start bowing out.

This may already be happening.  And this combined downward pressure (assuming that the miners sell their BTC when they leave the system) will cause even the highest efficiency miners to question if they want to continue to mine at a loss.  As we've seen it only takes someone with about 4% of the supply of BTC to completely crash the price to $0.01, that is the kind of downward pressure compounded with the lack of liquidity that can be brought to bear.  For example, if one of the primary founders has thought of this problem as I have and would rather try to 'cash out' than hold on and potentially see the project survive it might actually set this 'bomb' off.  There will be plateaus in this process as the difficulty goes down as people are exiting but the overall trend is the same.

I've already sold all my BTC at a loss and am not planning on buying back in, so I'm not hear to start a panic.  I haven't spent the last 2 months organizing meet-up groups for Bitcoin, spending hours a day on this forum and researching bitcoin and money theory and economics and talking to all manner of people about it to try and kill it.  You can take or leave my word on that, it doesn't matter to me.

However the only way I see out of this is:

1) Either to have the client for BTC radically improve so those non-techy can use it (????)
2) Have another wave of users come in and buy BTC (not likely)
3) Develop a custom ASCI that does the hashing, it is unknown if this could even solve this problem for long (very unlikely)
4) Expand the use of BTC as an actual median of exchange as more movement will equate to fees which will better insure the integrity of the network (dependent on the client and other factors)

If there is some glaring thing I'm missing as part of this equation please let me know.

mining shall not be profitable!

it should run at 0-cost and 0-profit.

just earning enough to keep your rig going.

when mining is profitable(the price goes up or the difficulty goes down), more miners will come and make mining unprofitable.
when mining is unprofitable(the price goes down or the difficulty goes up), miners will leave and make mining profitable.

its simple supply and demand.

stop crying about it.

+1 Kokjo

As less robust miners drop out, the difficulty will go down, thus making it more profitable for those who remain.

The network will find an equilibrium, and it will be very much survival of the fittest (or most efficient).

Bitcoins weak link is the other side of the deal. We need to find a way to make the object a bitcoin is exchanged for non-reversible or more certain.


bitcoin is just like cash. Fraud with cash happens all day every day. It's not the cash that's the problem. it's the other side of the deal.

i do not understand what you mean.

bitcoin can't be counter-feit.

I believe you're mistaken.  Mining is much more profitable now than it was back when you could mine 50 BTC per day on a crap laptop.

niemivh you are right, mining will not be profitable in the future.  Bitcoin is the only commodity in history that has a GUARANTEED REDUCTION in rewards by 50% every few years until returns drop to ZERO.  Then you are depending on transaction fees which have no guarantees that they will be significant.

What i mean is the currency side of the transaction has no problems. It's on the other side.

If I trade bitcoins for widgets, it's the delivery of the widgets where the fraud occurs not the bitcoin side.
Same with cash (unless counterfeit).
Fraud with bitcoin is occurring with the delivery of whatever is traded for the bitcoin whether it be a product or electronic credits.
The ability to defraud is very asymmetric.
Bitcoins value will skyrocket is this issue is solved.

Apparently you didn't understand anything of what I said.

I'm saying that with the best hardware on the market mining will still be unprofitable soon unless:

1) Better hardware is soon released
2) The price goes up

Neither of these seem probable, hence why I'm reporting it here.  Posts like yours don't make me feel any better about the long-term outlook of Bitcoins.

Mining becomes unprofitable, miners leave, difficulty goes down, mining is profitable again. Thats how it works.

3) Difficulty goes down.

There are all good reasons for BTC to exist and grow, it's more of the element of it hitting a wall with existing purchasable hardware that is the problem that I'm trying to point out.

Depends on what you mean by soon.  We have months of marginally profitable mining for people who already own their rigs.  And for people who do not pay for power mining should be a money maker for a long time.

Funny that you ignored the part of my post that covered that.  Mining difficulty doesn't go down beyond a certain point in each difficulty of the block chain.  I'm talking about a near future when even a lower amount of miners doesn't pan out to the level of difficulty and capital requirement required to start mining bitcoins.

Let's not dismiss the fact that mining was never really profitable until recently.  Early adopters basically had to eat the cost of their H/W and electricity.  If we return to an "unprofitable" state once again, that's fine with me.

Idk, probably over the next months to a year.  Something like that.  I know that mining with my 6970 is nearly already unprofitable.  Also depends how rapidly the technology advances but the difficulty of Bitcoin greatly outpaces Moore's Law, and that is the problem that I'm talking about.

I didn't forget that.  I mentioned it and brought up that that wasn't the only problem.

I think the echo chamber is on overdrive in here.  The Bitcoiners are starting to believe their own propaganda.

The question is, with the entry costs now being much higher to even mine at a potential for gain, how many people will be flocking to buying the next and greatest video cards to mine at a loss for the foreseeable future?  A lot easier to mine with a old computer rather than a $2000 rig, the potential returns are much higher if you didn't have to buy any expensive equipment in the first place.

Will add .02 BTC later lol

So? Whats the big deal if we lose a few Terahashes? Network security is well above what it needs to be for the current market cap and exchange rate. And merged mining will increase mining profitability in just a few months by allowing people to mine on multiple block chains at once with the same hashing power.

so what would you have said to the miners in the beginning when they were paying for electricity -

and bitcoins were trading for 8 cents - with no buyers?



if they had listened to you -

bitcoins wouldn't be roughly $14 dollars now...



you're not factoring in faith.

early adopters had faith in bitcoin's future -

you don't.



so you did the right thing by leaving.

more for the believers.

What are you talking about?  Bitcoin does not have a guaranteed reduction in rewards.  MINING bitcoins does.  The two are completely different.

niemivh, the simple solution to this "insurmountable problem" is to mine your coins and wait til they're valuable enough to cover your HW cost and THEN sell them.

Niemivh,

You seem to be assuming that all miners will immediately stop mining and abandon bitcoins if their efforts momentarily become cost prohibitive. Just because you did does not mean some won't hold out until one or more variables change, causing profitability to once again increase.

In other words (just as others have tried to point out), miners who can't or won't mine due to its lack of profitability make it more profitable for those who continue.

Faith is nice, I guess, but if the fundamentals of Bitcoin were based on a faulty foundation it wouldn't have mattered.  That was then, this is now.

Nobody seems to be addressing the fundamental concern I'm raising here.  Not surprising, that happens all the time here.

And you think the price is going to be going up or even staying the same if miners sell their gains and equipment?  How you figure?

Aren't addressing the large buy-in cost that exists now, will increase past the point of Moore's law soon, and also that this was not the case for the past 2 years.

When did we see this?

Actually I didn't assume that.  But I am pointing out a trend that I believe we are already witnessing, the slow decline in price from after the period of great volatility that apparently has no end in sight.  I'm wondering if this could break into a full scale 'run for the exit'.

Please read my post again if you care to debate what I'm actually trying to convey rather than what you've quote mined.

No idea.  I'm guessing some time in 2009?

The MtGox hack was a sell off of a single account with about 4% of the entire BTC volume.  This isn't a point to say that this was a legitimate trade or anything like that, but it did show that there wasn't enough of a countervailing force (liquidity) to absorb that sell off.

Leads me to believe that if any other person with 100k in BTC were to even sell it off via a darkpool it would cost more downward pressure in the market than we are already experiencing.

We didn't...


Nope. Why don't you read up on that one again?

Yes it was.  Before GPU mining came along, in order to increase your hashing power, you had to buy more CPUs, which meant an additional mobo/PSU/memory/etc.  And back then top of the line Core i7s were (still are) more expensive than 6990s... yet people still did it.

dood!

you sold all your btc according to your post.


and you think btc is fail.




so stfu already and leave.

This...

Granted.  I'm out of here for this and other reasons.

Opposing viewpoints are not tolerated on a forum that pretends to promote 'freedom' and 'liberty'.  Only freedom and liberty to chant the dogma into an echo chamber of other ignorant drones who literally have never read any history book that didn't massage their already preconceived notions.

The incredulous nature of the average user here is starting to rub off on me, I'm off to greener pastures.

To those who will listen take it or leave it.

We'll see who is right.

Hopefully people who don't need their rigs any more will sell them...at a discount :)  Actually I did seriously considered this when I decided _not_ to build a rig.  And I suspected that a ramp-up in the manufacture of cards may overshoot demand.

I use a space heater sometimes.  I may as well be mining due to the nature of the laws of thermodynamics, but a space heater is currently much cheaper than a mining rig.  (Then there is the noise problem I suppose.)

Look  i know we seem impolite, but we have heard this again and again and again and again from almost day 1. It gets bothersome after the 100th time and after the 1000th time we get a little short tempered. When something new is brought to the table we debate and come to our own conclusions, you have brought nothing new to the table, your just rehashing a point we have all heard 10 times today alone. We sound like an echo chamber simply because we have already debated this with the guy before you and the guy before him and so on and so forth. I apologize on behalf of this form but i really cant blame them for being like this after dealing with the exact same questions brought up every 10 minutes each time the author believing that he was the first one to see this terrible problem, and reiterating that we are en echo chamber simply because we reached a consensus the first time someone asked this question. 

Yes this is right, but near future is a mischarecterization. Weak security followed by sabotage followed by collapse will take decades to come to pass. 2nd mischarecterization is hardware quality. Much more important will be what you are paying for electricity. Some people have it for free. Others as low as 5 us cents per kwh. These people will be the medium term miners.

Right now i am still mining. Bubble guarenteed to burst in decades can remain inflated for decades.
People might see the light with regards to proof of stake before the disaster occurs. Then the bubble would not need to pop even in decades.

I thought they had fictitious bitcoins in MTGOX's system. They basically credited themselves a gazillion bitcoins that didn't really exist and sold them.

I agree that the forum is a troll's nest, but what is your end game with starting this thread? Did you think that everyone would be like, "Yeah, dude, you're totally right. We're all out!" or what?

You sure used a lot of words to say 'I hate you guys I'm not playing anymore!'.

I will admit the conditions for survival in the multi-decade outlook are specific, but it is possible. If we get enough transaction volume transaction fees of less than 1/10th of a cent per transaction can add up to many times the current network security.

I will keep my mining rigs running no matter what.  I'll completely cover the electricity costs if needed (provided I have a job to pay) at full loss.
So, there is no cost problem for me personally such as pointed out by the OP.    

We must do something to change/replace this central bank monetary system that is destroying the western world.  If bitcoin fails, then something similar but better must be created to replace it.  Bitcoin may not be the best possible thing, but please tell me a better avenue available.  Bitcoin is way more important than any monetary benefit, at least to me anyway.

Not only should this thread be in "Mining", but there is the overlooked aspect of miners whose gear is completely paid off, so they don't really care as much about margin compression from difficulty or price.

Anyway, I love the delicious irony of threads started by people who say they have no vested interest, but presume to tell everyone exactly how things are going to be. Is it just an ego thing?

That is an awesome attitude, and is the same thing I do.  Sure, it may not be considered profitable at every moment, but I believe in the technology and I believe prices will rise.

Seriously. I am also blown away that people consider the power bill to be a huge hindrance to someone who is established and employed. $100 a month is about the cheapest hobby you can find, short of picking up shinies you find on the street. Makes me think that there might be a huge chunk of users here who haven't entered the real world yet.

Don't worry guys, a new breed of hardware is on the way  :)

What I would like is something in the form factor of a heating element which could be threaded into a water tank.  A couple of high current wires, and tough cable with a female RJ45 is all I want to see.  Actually, throw in a serial port on the cable as well maybe.  The whole thing should operate at something north of 100 C and shut down automatically if it got much hotter than that.

Can you do it?

I love it when people wait until mining is finally profitable to post these "zomg mining is no longer profitable" threads.

SPEND $10K TO BUILD A SYSTEM THAT WILL MINE 700 BTC/DAY WITH BREAK-EVEN TIME OF 12 YEARS





OMG YOUR TWO $110 5830'S WILL TAKE 60 DAYS TO PAY OFF! MINING IS NO LONGER PROFITABLE

You can immerse any computer component into a water tank - just make sure the water has been purified to remove the conductive minerals.

Huh?
Any references to back this up?

+1

It is pretty well known that water itself isn't a conductor.

http://en.wikipedia.org/wiki/Electrical_resistivity_and_conductivity

The table gives a rho value of 180,000 ohms per meter for deionized water.

But deionized water doesn't like to stay deionized.  You'd be better off using Flourinert (http://en.wikipedia.org/wiki/Fluorinert).

180 kOhm/m sounds impressive, but if you look at the sub-mm distances of the electronics on your motherboard, you'll see the resistance reduced to less than 180 Ohm.
Doesn't look impressive anymore at all. :)
And the dielectric constant of water, wouldn't it mess with the capacities of the datalines on the mobo? Practically messing up the timings?
I'd be very wary of using demineralised water to immerse my mobo or GPU in.

And Edit:
From your source (http://en.wikipedia.org/wiki/Fluorinert):
"Fluorinert may be harmful if inhaled and care should be taken to avoid contact with eyes and skin. No health effects are expected by ingestion of Fluorinert, however. Use should be constrained to closed systems and reduced volumes as fluorinated oils have a very high global warming potential and a long atmospheric lifetime."
YUK!

And Edit 2:
You got me with your 180 kOhm/m :)
Actually it's 180kΩ.m, which comes from Which translates to your mobo as: Two traces with a distance of between them, and with an area of the sides facing each other equal to (guesstimate) in demi water will present a resistance of
Now, THAT is impressive to me. :)

What exactly is destroying the Western world regarding it's banking system?  I want specifics. 

Seeing as nobody is actually refuting my point, which is that Moore's Law and the difficulty of the block chain have an intersect point, past which the amount of people mining will radically decrease - unless: either BTC prices rise or 'traffic' increases on the network due to more actual economic activity.  That is the postulate I've presented and yet 90% of the people posting on this thread don't seem to realize that, even though it was in the original post.

Is it that the reading comprehension level on average is very bad or that the "cult-of-bitcoin" makes you unable to see any logical arguments that may threaten Bitcoin?  If you act without regard to reality it doesn't hurt reality, it only hurts yourself.

I made this prediction when it was well above $13, now it is past $10.

When it hits $5 will you admit that I was right or...?

How about $3?

Both those prices are soon to arrive, I hope that Bitcoin can survive somehow, but it's not helping for so many of you not to admit that these problems exist.

Your an idiot, that is all..

no you are. if you refuses to see the power of the market you are dumb.

+1

As long as prices stay above $3.50/BTC and keep pace % wise with difficulty, people should be able to turn a profit with GPU mining (depending on power costs/consumptions).

So barring prices not keeping up with the next couple difficulty increases... or the price dropping substantially, mining will continue to be profitable.

Next time use the search option. This was my answer in another thread saying exactly the same as you said (yes, you are that original):

Oh God. It's the reincarnation of LardyCake (https://bitcointalk.org/index.php?topic=25460.0).

Please go on already and leave.

Right there with you. The hate for fees and control will drive this technology. Also a lot of miners I am sure are like me and work in IT. I pay for my system to sit there idle all day so I turned it into a mining rig. It keeps me entertained while working too as I work from home so I can monitor and tinker where I see fit. Would I mine at a loss? I would for some time because I believe in it and my first mining rig was already paid for before I got into mining. I netted over $1000 in my first month with an average of 1.5 Gh/s. I even hit a solo block in July on 750 mh/s in the first 2 days when I was down to one 5970! For me its going to be sometime before I am mining at total loss since I profited so early.

The latest market gyrations are not birth pangs my friends.  They are death throes.

This came sooner than I expected, nevertheless I DID predict this crash and it's preceding decline.  We are seeing the beginning of the end.  Hopefully this whole project will propel some people into the direction of political activism as that is truly the ONLY solution to our present woes.

Am I getting 'phantom pwned' again?  Am I the 'other guy' in reference here?  In reference to 'my terms' at least I can define what I'm talking about.  Unlike yourself to which my challenge of stepping out of the realm of phrasology with your favorite term "Free Market" into real tangible understanding that comes with terms defined remains unfulfilled. 

Err... Did you not read the part of my original post when I said that the level of usage in terms of an actual means of exchange IS NOT large enough to make it up to the mining network in terms of fees on transactions?  It's unfortunate, but it's true.  By the way you don't even directly address Moore's Law in this post.

People are either showing their cognitive dissonance or lack of critical reading capacity when it comes to addressing what might be a fundamental flaw in Bitcoin.  It's like you guys don't want to be aware of these problems.

I wish as must as the next person that we aren't all on the Titanic but it certainly looks like we've hit and iceberg and are taking on water.

I had to get out of the lifeboat and come back to watch all the panic and denial regarding the collapse that's occurring.  Yet most are such cultists here that even though my predictions and foresight proves stunningly correct the plugging the fingers in the ears and chanting 'la la la' continues unabated.

Macabre?

Perhaps.

Why would the Dow crashing and the S&P tanking and Bank of America collapsing propel people into political activism?

Oh wait... you were talking about the US economy right?

The euro is next :)

From a currency perspective, the Euro is first. The US Dollar follows that.