Bitcoin Forum

Can anyone explain to me how it’s possible to keep going up in Diff by 30%?

At some point in the near future (2-3 months) the dominant machines will be 2-3Thash but the total number of those machines will be lower than the total number of ASIC blades, USB miners, and random BFL miners that have not burst into flames.

What is the speculation on difficulty?  In two months will it be a battle of the "Haves" and "Have not’s" with regard to Thash machines?  Will this be the end of the "bedroom" miner?

I am just interested in some banter about where you think the diff is going with TerraminerIV and Hash fast coming online and do you think their supply of machines will be enough to disrupt the diff for the small time miner?

The bedroom miner is dead. Not literally I hope, but yes, 2014 will see the beginning of industrial-scale mining and the end of home mining.

Unless the btc price falls back to $50 of course and then god knows what will happen ;)

I don't think so, millions of miners with free electricity will be able to mine much more efficiently than a mining farm. That is the reason eventually mining companies will not make their own farm, since that cost too much electricity and generate too much heat, and the worst is that those equipments will quickly become a burden due to rising difficulty

How important electricity costs are depends on the bitcoin price, which is an unknown. As for generating too much heat, the new Gen3 mining equipment due out in Spring from ASICMINER is extremely energy efficient using liquid immersive cooling. They can pack tonnes of chips into a very small space and the power consumption is <0.2W per G.

If you can think you can compete in your bedroom or wherever you get "free" electricity, good for you. But industrial scale mining will be a reality by mid-2014.

Free electricity?  I would love to see the face of your landlord when he sees the bill from your 2 Neptunes hashing all day :)

In Russia "free" electricity is rather common!
BTW, no single industrial-scale miner will ever be able to compete with a nerd keeping his miner in the basement connected to "free" electricity!   ;) ;D

Yes they can. Because they produce the chips for a fraction of what they sell them for.

No nerd will be able to keep his machine running 24/7.
No nerd will be able to get the same deal on the price of the miners a huge buyer.

And by that "free" electricity , you mean
http://waterheatertimer.org/images/kesc2.jpg

Just compare these two scenarios:

1. 1 million users, each one running bitfury's USB miner, electricity can be ignored, 2GH per user, that is 2000T hash power

2. A big mining farm, 1000 machines, 2TH each , same total hash power, but the electricity and cooling cost, together with rent of the hosting location etc will cost them a fortune to mine coins. If the difficulty is enough high, sooner or later they will be forced to shutdown due to cost higher than mining income (they can simply buy coin instead of mine)

However, if the mining farm sold those 1000 machines to many customers, they will easily collect enough coins through their sale. But the miners who receive those 1000 machines might not be able to mine that amount of coins during its life time. This has become the norm in ASIC mining era, almost no one have ever get their bitcoin investment back by purchasing ASIC mining rigs

So it is always better to sell the mining rigs to millions of users, and this will also increase the decentralization of the network

Yeah , in theory
In reality we have people using their usb miners as keyholders :).

TheWoodser, The BTC that are mined are earned by those who're doing the best work securing the Bitcoin network and the operating costs of mining should continue to be proportional to demand.

You do realize bitfury make a big profit on USB miner right? What if bitfury, or another company like bitfury, mines themselves. Their hardware costs would be 10% to 30% of the people they sell to.

And the idea that everyone running USB miners is getting free electricity is total nonsense.

But free electricity is somewhat common, I have a handful of friends who pay a 'fixed' electricity price included in rent in Scandinavia..

Right, so you have a handful of friends who are paying a fixed electric charge until the landlord sees the actual bill and changes the deal or kicks them out.

That leaves 999,999,995 people running USB miners to explain where they get their temporarily free electricity from.

Most people don't calculate their electricity charges cause its paid by their parents which is really wrong...

Right now the only people that can profit from this is those that can manufacture themselves. They build immediately and start mining it immediately..

Oh, you mean those millions of miners with free electricity AND free hardware surely?

I love where this topic is going.

The great points I see are the manufacturers ability to make cheap chips....and mine them making the most profit margin.  I would say that commercial power (in the US) costs more than residential.  Especially, in the case of a data center.  The data center also, has to recoup the UPS, cooling, and redundancy costs that a home user might not account for.  Where is the trade off between paying to be "live" during a blackout and recouping the costs of a generator??

I just feel that of the total mining power out there, a majority of it will be in the minorities hands... (the 80/20) rule.  80% of the hashing will be done by 20%....In BTC's case it could be more like 95/5.

As far as the free power thing, I know of guys that are in the military living on base that have either free or almost free access to power.  Not everyone with free power is living in their parents basement.  ;D

Not only is it "wrong", it also shows the disparity between "home miners" and "industrial-level" miners. People used to write computer games in their basements. Now they are written by 200 people in offices. Things change.

We will see, when the mining income drop below electricity cost, who are still running their rigs ;)

You seem to forget that industrial-scale miners can get free or almost-free electricity too. Many Southern-European industries are moving to North Africa because Government gives them free electricity.

If free electricity is needed for big corporations to be competitive, then big corporations will have free electricity. That's how capitalism works.

Nothing is "free" in this world. The governments must want something back in return if they are giving electriicity away - like lots of taxes ?

Mining equipment will continue to become more powerful and efficient, but most importantly the ever increasing competition will make them cheaper.  So in six months you may be able to get a 3-5 TH miner for the $1500.  I do agree though, that the current exponential rate of increasing difficulty does not incentive the average miner to reinvest BTC in upgraded hardware..

No. Just foreign investment. You rent the land (for cheap) you rent local workers (for very cheap) you pay your taxes locally (ridiculously cheap) and you get a huge load of benefits, among which free or almost free electricity.

The point is that believing that "home miners" will be more competitive than industrial/pro miners is delusional. If you understand how capitalism works you know pro miners will always squeeze out amateur ones.

Well I certainly agree that pro miners will squeeze out amateur ones. That's why industry is massive and people doing stuff at home isn't

I really can't understand where next 32% difficulty rise in 13 dyas will be coming from if there have been no new mining rigs shipped.
Last batches were shipped by KNC and Technobit in the end of November.

Next shipment of rigs wil be done by Hashfast in the beginning of January. Then Bitmine, Cointerra and Black Arrow will join beween the end of January and March.

So where the hell is this next high 32% difficulty coming from????

Also even with increase of the number of rigs staying at the same technological threshold (chip efficiency limitations) there should be slow down in difficulty increase.
What happens is the opposite. It is still growing exponentially.

It doesn't make sense.

I very much doubt there have been no mining rigs shipped since end of November. I know people bringing rigs online all the time.

Also struggling with this "Also even with increase of the number of rigs staying at the same technological threshold (chip efficiency limitations) there should be slow down in difficulty increase."

Its just about network hash rate. The more chips that are running, the higher the rate will be. Clearly lots more chips are being added daily, and also at ever increasing hashrates.

You don't have to believe me, just look at the network hashrate increase.

Yes I watch network hashrate every day. I know it's increasing but that's my point.

You don't have to believe me, just look at the network hashrate increase. That's my point. Even with such network hashrate jumps teh difficulty shoudl exponentially decrease but it seems to be rising steadily at the same pace. There hasn't been any sudden technoogical advancement in chip performance so even if number of hashing chips grows the diffculty should increase should slow down until there is new more efficeint technology instiruduced (even much faster chips).

By the way, do you have any ideas where recently plugged in rigs may be coming from? Some larger companies introducing their own bespoke rigs maybe?

yes but 1000 new cointerras (2TH each, 2PH total) going online while the global hashrate is 70 PH will increase the difficulty by 2.86% while the same 1000 cointerras will increase the difficulty by only 2.2% while the global hashrate is 90PH.

so to keep growing with 30% per 2 weeks there have to come exponentially more miners, which is unlikely to happen. altough i have to say i'm amazed that the hashrate is growing this fast.

If the hash rate is increasing, the difficulty will not decrease, let alone exponentially decrease.  

The differences in the process used by Avalon (110nm) and now (28nm?) is tremendous so there has been a large advancement in the chips this year let alone comparing with last year.  Even this fall the number of ASICs using a smaller process is large. I agree that eventually the performance increases per chip will slow, but we're not there yet.  

Difficulty increases will slow when most miners are running 28nm process or smaller chips.  Like the shift between CPU and GPU - there was a huge increase, then a leveling off.

Is it possible the big equipment manufacturers are currently producing, testing, and "mining while the mining's good" with your prepaid-for machines?
That could explain the network hash rate increase, which I suspect could mean the big hash rate increase we are expecting Q1/Q2 could be already be being averaged in.
However, a quick glance at the network hash rate http://bitcoinwisdom.com/bitcoin/difficulty
Shows that we have experienced/are experiencing a significant hash rate decline.  Why? I have no idea.  Guesses: Any combination of China's policy change, rise in ddos attacks, bitcoin price volatility, and seasonal/holiday fluctuations.  I hope that trend continues for a little while.

Chinese police attacking mining farms  ;D

Difficulty increase will only taper off because of economics, not technology. Technologically, this is a *very* young industry. By economics, I mean .... when it stops becoming economically viable for people to produce / buy the kit, because nobody is making money (now?)

Also, most if not all the profit from mining hardware comes off the resell of the machine..

There is always the possibility of the existence of private mining enterprises not geared towards the consumer market. If you wanted to invest heavily into bitcoin (like multiple millions) buying coins is impossible without slippage. So assuming you had the technical ability you could just make yourself some serious hardware and mine like hell.

Of course there are. Not everyone sells their mining kit off to consumers. Several business models exist.

Cointerrra has officially released/shipped jack shit so far. Of course it doesn't mean they are not exploiting the network now using customer's miners pretending they are not in production process yet - it is self evident and intrisic for monetary system that priority is profit and human and envirnmental well being is secondary. You cannot trust anyone in current fiat monetary based system as lack of trust is the ingrown trait within cyclical consumption/planned obsolesence/consumerism profit focused monetary system. Cointerra has been releasing vague news for months - all brought no coherent data but barren information. It all have looked like automatic response to competition's news updates - suspicious. Something is not going smooth with Cointera and they seem to be too afrafd to admit their failure. Hashfast, Bitmine and Black Arrow seem legit. Hashfast is in the process of shipping fist batch soon and Bitmine/Black Arrow are also quite legit because they have a lot experience and have acquired trustful chip manufacturer contacts after they already released and provided miners before deadtime in the past.
Anyway...
At the moment Hashfast is leading releasing miners within next 2 weeks followed by Bitmine and Black Arrow.
And yes, I agree that until all manufacturers reach 28nm technologial limits of their chips, difficulty should not stop exponentially growing. You are right

A major factor will be human greed same as the fiat bankers we are trying to replace  with a btc system

If company A makes a rapid discovery ,they can manufacture the first  few batches and profit while telling customers
they are "coming  soon " or " not ready yet " ........

if they can get a  month or more mining with faster chips and then deliver the first handful to the public

then do the same  with every subsequent batch shippping say 10% of manufactured  units out and putting 90% to
work in a private farm

rinse and repeat until all customers have their cards ,they will have made a shittonne of extra profit in those few months
keeping everybody waiting

The vast majority of this discussion is completely missing the point of what the OP is bringing up.

His question is what machines out there are actually raising difficulty this much right now.

None of the next gen machines batches are out yet. Are there enough 55nm Bitfury chips out there being placed on privately-designed PCB's to produce these numbers?

The OP said there was no new mining equipment being brought online at the moment, and therefore couldn't understand the difficulty rise. This is self-evidently wrong.

It never ceases to amaze me, the number of people who appear to be involved with bitcoin mining and yet don't seem to have grasped even the most basic understanding of how the mining/minting process works.

Well you are welcome to enlighten me then :-D

Why would you get involved in mining and not want to enlighten yourself, it isn't like the information is secreted away in the dark recesses of the net or impenetrable to mere mortals.

The landlord will never know.  The people who have free electricity live in apartments where each apartment is not individually metered.  If it were individually metered, the landlord would make them pay for their own electricity.  The landlord might notice his electric bill increasing for the complex and be irritated about it, but will probably not be able to figure out which unit is causing the rise, and realistically probably won't suspect that it's any individual unit. 

This will change over the next year or so, probably quite dramatically.  Additional electronics producers will continue to move into the mining ASIC market, attracted to the fat margins.  This will drive prices and margins down, meaning more TH/s at even lower prices.  This will continue to translate to increasing difficulty until the market is close to saturated, which, if Bitcoin continues to grow, will still be several years out.

Well I have obviously tried and I may have missed something although I have been into btc for a while. There is still a lot to learn

If you criticize you should provide some hints for the source where to find more info in the subject to make it easier for me.

Critcizing without offering a solution has no value. It brings nothing

There's me thinking you were being sarcastic.. just goes to show.

Ask me a question if you're just wanting to make me do a test or head over to https://en.bitcoin.it/wiki/Main_Page for a starter.

Maybe I'm a romantic but I thought part of the allure of btc was that anyone could do it, and it makes so no one has a disproportionately large amount of hashing power. Now everyone is just greedy because t he price went up so there are farms of rigs. What about putting a max limit on the amount of hash that can come from any one ip address?

I already asked you a question which you ignored.

You said "most basic understanding of how the mining/minting process works"

So if you think that I don't understand how it works you are welcome to explain it here what you think I don't understand and where did I make a mistake and why it is a mistake.
So far you hafve brought no coherent criticism. Just vagule criticised without explaining what is inccrect nad what I dont' know.

As I said crtiicism is pointless if not backed by coherent information.

A lot of people will run their rigs until it is no longer physically possible for the rig to mine BTC because they are investing/betting that the price of BTC will rise far beyond any resources they have used for the miner, power, et cetera. They aren't worried about the electricity cost, per se.

Now that we are on full custom ASICs we are done with the multiple order of magnitude increases in efficiency.

From here on out advances in mining hardware will be bound by Moore's law, doubling every 18 months so, as die shrinks and incremental architecture improvements are achieved.

I would expect that by this coming summer (Northern hemisphere) we will be able to purchase equipment that will not be obsolete nearly as quickly as we see now.  

Which, of course, is dead wrong. That is not how capitalism works at all. Especially when it comes to the level of bitcoin mining by a joint venture of Matsumura Fishworks and Tamaribuchi Heavy Manufacturing Concern.

I believe you are right.  Going from CPU to GPU had a similar ramp and then slowed until the ASICs this year.

You are being romantic :)

Sound sensible. Be nice to purchase equipment that isn't obsolete by the time you take delivery of it ;)

lol, no, just no.

Remember what BFL did? They RAISED their prices Spring2013 and delivered (albeit very late) lower hashrate and higher power costs.

Remember, its a free market. If someone bids up a miner on ebay and immediately pays after winning, thats actually how much that miner is worth.

Not everyone is sophisticated in their knowledge of and approach to BTC mining. Sadly, many people see it as a get rich quick scheme.

Although, I kind of appreciate these people who calculate the ROI for their ebay miner in fiat, because: they mine at a loss or breakeven. Admirable.

"OMG BFL Monarch Cards shipping Nov/Dec2013 Im gonna be printing up dem internet webmoneycoinz like hotcakes next month! Yeehaw!"

*checks out with a few Monarchs and picks up a Jupiter on ebay* (cause this buyer is impatient, and they just raised his VISA credit limit)

Surely natural selection has to get rid of the "ebay Miners"? People can only max out their credit cards once. Or do we have to wait for them to max out the 2nd + 3rd cards ;-\

There must be people not doing th math an paying these crazy prices for Ming. And just to mine at a loss probably. I think they must think btc price is goin up again. But can it go up and up forever?

no

only until it represents the majority of the value on the planet, at which point it will be constrained by the size of the global economy

OK we're at cross purposes, I never initially replied to you though you've clearly chosen to make it so. I have made no comment on anything you said before your reply steering the conversation to being about yourself. I'll refrain from further comment since we're clearly on a different page.

Yes that was my presumption as you posted your reply shortly under my post. Anyway you are right. It doesn't matter

So what's your best guess at hashrate added to the network by March 31?


10 phs? 25phs? 50? 75? Difficulty increases of 1.4bill, 3.5bill. 7bill, 10.5 bill respectively?

I've seen so-called "conservative" predictions of 5.5 billion difficulty thru end Q1 2014, which implies about 30 petahash.  And potential tapering at some point.  Sound reasonable or no?

I just can't help but thinking that with the new larger machines coming out...that its gonna be a game of "Haves and Have Nots"

There can only be a certain supply of the fast machines, those machines will smoke check the average user, but they can't come out fast enough to flood the entire market.

it only keeps going up as more mining power is added. if people stop adding rediculous amounts of power to the pool then the difficulty will drop. there were gentlemen's agreements proposed about things like this a while back. They go as far back as the transition from cpu to gpu.

https://bitcointalk.org/index.php?topic=12.msg54#msg54

you should tell this guy about the "gentlemans agreement "
by febuary he plans to have 15% of the hashing power  when he opens his new mining farms

http://ecreditdaily.com/2013/12/bitcoin-mining-iceland-hot-market-cooling-anytime/

Gentlemen's agreements? We aren't in the 19th century any more. Be nice if we were, but the Queensbury rules no longer apply.

satoshi may be a genius but he really misjudged human nature there :) not everyone is as unselfish as him. in fact, mostly everyone is not, such people are a rare exception. no gentlemen's agreement can ever work where money and more than two people are involved...

Lots of miners plan to have 10% to 20% - it doesn't work out for any of them. Its called competition.

this dude is no ordinary miner
you should have a look at the mining facility  he has built already in iceland near the artic circle
its pretty ingenious ,he uses the  an air intake from the ice under the building to keep the machines cool
and he gets his power generated  from cheap natural sources as well

seems to be a smart guy and he plans to build more of these  in differnt parts of the world next  year and
already got the funding for a new one in texas opening in feb

Cool. But 10% to 20% will be *serious* money in 2014, however cold your native land :)

i know ;)
*serious* money ,cant wait :)

If this eventually ends up at it's logical end,it'll mean that industrial miners will own a large amount of bitcoin and it'll lose it's appeal. As stated earlier in this thread,if a transition like basement-programmers being put out by large companies,won't bitcoin become inherently useless? I mean,people buy games and other goods and services which are made by corporates because of their addition to one's quality of life. What value does bitcoin have going for it?

come on ,not this shit again
if you cant see the value  in the bitcoin network you should probably find another  forum to troll  on

He may plan on having 15% of the networks hashing power but that will drop daily unless he keeps matching what other people are adding to it + 15%

Do you think there is any appeal in mining bitcoins using CPU? It's either you mine it on your cpu and nobody else knows about it, or it becomes a multibillion dollar industry and you don't mine it on your CPU anymore. Can't have both. It is and always was an arms race where the fastest came first and the rest would have been much better off just buying coins with the money wasted on hardware.

ummm

near instantaneous global transfer of value

no counterparty risk

decentralized transaction ledger secured by the most powerful computing effort ever achieved by humans

somewhat anonymous when used correctly

gee, I don't know...who would want that?   ::)

Also as to where all the new rigs are coming from:
BITMAIN shipped out a thousand or two of their AntMiners, they are going to be shipping out even more USB miners
btmine has some new ones in a groupbuy
people are still making rigs with the chips they bought.
Bitfury has miners in stock
ASICMiner is doing their thing and constantly adding to their own farm.

Hehe.. that's actually kind of funny -- a cartel of sorts -- let's do like OPEC, and we'll all agree not to run more then 10 TH/s to make live easier for each other, and then we'll all cheat by selling our oil off-books .. er.., I mean running our extra hash through a separate pool from a different IP etc.. :-)  -- I'm in!!

Not sure how you get from "How bitcoin is mined" to "what value does bitcoin have going for it?"

Its just the method of production. Consumers don't care where their coins came from. Neither do I really, as long as the network is protected. Do you know where your coins came from?

How uses one USB-slot all the time for an USB-Miner, to mine maybe 10Cents a day. And who's computer is running 24/7?

Well, I think there are not much company in the world capable of build 28, 20 nm chips... track their sell invoices and you going to get an idea how much diff can grow in the future.

You are right. But they can build many many many of these chips - each new chip adds to the difficulty.

There's still a limit on how much power a "residential" customer can draw.
Either they are limited by their breakers or limited by their electric utility's distribution system.

Personally, I expect knc's neptune to be at the limit of what someone can run as a hobby.

To go further, we either need more power efficient chips, the infrastructure to generate our own power, our look into co-location hosting

That's exactly what I've been saying, and exactly what will happen in 2014. Industrial-level mining.