Bitcoin Forum

Dunno if it's been just me, but the last few miner offerings over the past couple of weeks have been kinda "meh."  Advances in energy consumption have been made, yes, but the general tone I've been hearing is, 'we'll, why not get a bunch of antminer s1's right now for less?'

Plus the difficulty increase chart @ http://bitcoin.sipa.be (http://bitcoin.sipa.be) has been on a steady decline lately...

To be fair though, I haven't been following the ASICMINER securities thread... and the custom hardware thread has been looking like this:  http://m.youtube.com/watch?v=ZomwVcGt0LE (http://m.youtube.com/watch?v=ZomwVcGt0LE). 'cept, you replace 24 hours wif 2 weeks.   ::)

Wild guess:  difficulty increases over the next 10 weeks or so won't exceed 17.5% per adjustment period.

Any insight?  thanks.

This is merely the calm before the storm.

BFL, KNC, AsicMiner, and Black Arrow have yet to ship.  Expect late spring to mid summer to see the difficulty spikes.

+1

*It's gunna get ugly. 

At some point, everybody mining productively should be using state of the art ASICs, selling for slightly above production cost, and then the rate of increase should slow down to a Moore's Law increase rate or less. How far away is that?

About a year away.

like previous people said the difficulty increase has not been huge yet because the newer bigger 1th+ machines have not shipped yet. HOwever this is going to start occuring next month when bitmain ships the s2 1th machines. Once they start they will continue to ship every week or so and the difficulty increase will start shooting up. Once the competition joins in expect it to go up further. In my opinion a lot of the older machines will become unprofitable with the way bitcoin price is currently.

well even with knc neptunes hitting the market end of spring and the rest (with cancellations on neptunes i'd figure the most is 2000 units)
and the rest of the stuff ...BFL stuff while a lot and probably dumped in 1 month we are talking 600gh for most of their monarchs on ave
even with the super monarch.....1TH asic miners need to have a bunch which i guess is possible

but i mean really from end of spring till say middle of fall when i assume the next batch of equip preorders will arrive (hello 40th)....

i myself can't see much more then 10-15% difficulty change from end of spring till middle of fall when the next batch of equip
bounces out the door

and of course there is outdated equip falling off the other end of the ship even at 10-15% difficutly (ie my 555gh oct knc jupiter for example)

anyway I just see it in that light

(of course I am likely wrong due to blind self interest in that i have a very 1st of 10 or so customer service Neptune 3-4TH batch one yet
last one hanging on ...was a really bad winter in minnesota want to mine and play...kept me sane ...heh )

anyway what i'm going with now (i can refund this last neptune up till shipping) but likely this will be my last home unit...and the kNC Titan
scrypt miner is now no refund..so this is the last i'll be able to play this game with anybody me thinks...kinda liked this hedge but me thinks
refunding miners esp if they are 20k and commercial or virtual miners this fall ...that boat has sunk)

anyway again...just taking the oppisite view i've no idea? thoughts?

(on a side not BTC drops to 300 bucks the neptune is toast ...i'm sentimental but that would be silly)


er an again i refer you to the last column on this link ...the left chart on the bottom.....as the basis as noted above for my above
'guesswork"

http://bitcoin.sipa.be/ actual daily growth rate
ie bitcoin network actual speed GROWTH...

anyway comments?

Searing
 

i think it can go all from 10%-25% no one knows.

people how are willing to put money on it clearly think it will at least not slow down dramatically. They expect the difficulty to be >10B in less then 3 month. https://www.fairlay.com/bet/registered/new/bitcoin-difficulty-10b/

cool, thanks for your responses.

part of why I figured that the difficulty would slow down over that time period is a combination of the short-term price trend (which IMO seems to be largely motivated by many people just waiting for when legacy financial institutions start wanting a piece of the bitcoin action) with the relatively high cost of the upcoming generation of untested terahash ASICs (relative to what I think is the majority of current bitcoin enthusiasts who have only been aware of the technology because of the 2013 runups). 

'course, the next bubble could happen sooner than I anticipate, driving demand for ASICs... :shrug: 

so yeah, I guess my prediction is more based on the exchange rate more than anything else.  than again, i think I may be grossly underestimating the buying power & demand of the early adopters.

maybe it's off topic, but is there a noticeable trend in regards to demand for mining hardware among different generations of bitcoin adopters?  (is there even a way to place them into distinct groups, prolly delineated by time periods such as price runups or news events?)

all these questions abound since i've been thinking of getting another antminer while these bitcoins are soooo cheap. :)

+1 on the coming storm.  Friedcat is predicted to deliver between 400 and 1600PH.   We also have KNC, BFL, BlackArrow, Bitmine (plus other A1 gear), and now Spondoolies hardware coming online between now and August.  It's going to get really tough to keep up.

Asicminer reference:
https://bitcointalk.org/index.php?topic=99497.msg5025422#msg5025422

If you look at bitcoin.sipa.be short term hashrate charts, there are brutal hashrate spikes happening already now, some sites like currenthashrate.com reporting over 50 PH/s in shortterm window, so it's really hard to say if it's just variance or real power added to network. Every variance spike became eventually standard network hashrate and at 50 PH/s you are at diificulty 7 bilions, which is 60% from current point. Even next difficulty due to happen in 2 days seems to touch 20% again.

It is extremely hard to estimate anything here but for me it looks like storm is starting right now :)

Yes the Difficulty can go down and it has in the past, but it will most likely only be for one or a couple of difficulty changes before it will start rising again.

One possibility would be if for example a very large Bitcoin mining farm would be down for a longer period of time for example if there having technical difficulty or need to relocate to another country or sells the hardware because of electricity cost is making there mining less profitable or unprofitable.

Another possible could be if bitcoin price would make a relatively rapid and big change down in price(ex 10 000 usd/coin down to 2000 usd/coin) and it stayed there for several weeks/months sometime in the future when the "normal" hash-rate increase per difficulty-period is small(1-3%) that could lead to people in large numbers would stop mining or selling/relocating hardware to places/people/country's where electricity price would be lower or in some cases possibly even free.

A third possibility would be that large amount of obsolete mining equipment would end there life as seasonal dependent heating devices replacing/backing up existing electrical heaters witch could then lead to that difficulty could see some decrease in the spring/summer period if the majority of those miners is located on the northern hemisphere.

that is what has me stumped....as the network grows it becomes harder and harder to hit a 15% to 20% of network growth each diff change..cause the network is getting bigger and obsolete equip is .falling off the other end of the difficulty ship.....esp with price drop imho..I'm guessing of course...but can't see enough 'umph" in the present crop of miners (late spring early summer) to pop it up that high..again likely wrong.....now if your talking this FALL 2014 yeah i agree with everything you say....with the next product go around generation... (likely 40TH for 20k then) BUT imho with Neptune pop'ing out at end of spring..the amount of units needed  i don't see happening exp at a 575 yo 600 usd btc rate ..a lot of those quys who got Neptune (any batch) have pulled their orders or at least their 'extra' 2nd order (easy to be brave of was till titan with knc in they refund) or so the folks are crying about on the knc Swedish miner thread on bitcointalk.

I supposedly have 5K of BFL money refund coming back on the upgrade of my April 2013 stuff to a monarch .forced to upgrade or get 65mm bricks i might add....i thought that money was lost for sure...but ..6 months late they sent an email i can take a refund or get a 1th card instead with another 600gh card at end of que...yeah right ....i prefer to jump off the bfl boat with the 5K life preserver.....so feeling brave on my last knc neptune order (delusion)

anyway part of the reason I'm hanging on to my 1st batch neptune (with refund option) I really really wanna believe......

but anyway the current delusion I'm going with this week anyway

Searing

Man that's huge. This would take the difficulty to roughly ~200 billion, give or take a few billion.

It's also utter nonsense.  Asicminer has on the order of 500 KW of hashing capacity in Hong Kong.  If they meet their power targets, that would let them deploy 1 Ph/s of gear.  The rest would have to be sold.  There are no buyers of hashing at today's difficulty and $4 / Gh/s.  To sell even 10 Ph/s prices would have to be under $2 Gh/s.  And Friedcat's history suggest he prefers to optimize for $ / Gh/s rather than total revenue.

The well of fools willing to pay any price for hashing has been drained, mostly by Friedcat himself.  Your customers can't buy from you again if you cut their throats the first time. Friedcat may sell a lot of gear, but he'd have to be giving it away to sell 40 Ph/s in the next few months.

is asicminer still mining with their first gen asics ? Or they sold them to customers already ?

I have to agree; I was thinking we might have a few sets of 10% increases, but it looks like another 20% coming, and more on the way.

Not sure where all this power is coming from. I guess it could be antminers. Whatever the case, I'm looking at turning my 65nm equipment to "max efficiency" mode by June and probably shutting them down by August.

Side thought: If transactions don't pick up then bitcoin is going to have a problem. With more Tx fees, the difficulty problem would be somewhat mitigated. Doesn't seem to be happening.

those 1TH dragon miners - china does something well and thats mass-production. those things are just starting to flood the market

The limit on difficulty is a combination of hardware efficiency and BTC value. At $600 BTC, 28nm tech has a very hard time reaching ROI when the difficulty goes over 100B. 65 and 40 nm tech limits out much lower, so regardless of how much hashpower ships the 20% increases every 11 days are only going to continue for 3-6 more months, or until BTC value jumps again.

I personally think we will see 20 to 25B by mid-July, then BTC will go on another run.

Given all the ants everyone has bought in the past month, this is actually not bad at all...

Bitcoin Difficulty:   4,250,217,920
Estimated Next Difficulty:   5,006,352,807 (+17.79%)
Adjust time:   After 11 Blocks, About 1.4 hours
Hashrate(?):   41,271,164 GH/s

*said everyone back in NOVEMBER.


This is the constant cycle, everyone is on the sidelines waiting for the next big thing. ASICs were revolutionary, everything else has been evolutionary. I'm not convinced the next big jump is ever right around the corner. I mean, maybe by now I'm wrong, eventually time is against me and I will be wrong, but correct me if I'm wrong everyone was supposed to have 1th/s $400 Black Arrow shit in February- what happened to all that hype? Whole time people have been waiting I've been mining, opportunity cost is a real cost.

Well yeah. Technically I cheer at every delay and boo at every chinese clone. Because I'm thinking of numero-uno here now :-)

We'll see what happens.

tl;dr - my mind tells me that short term price (fueled by bad news & the long wait for the insititutional whales to come to the rescue) & marginal performance improvements to untested ASIC hardware will result in lackluster demand for mining hardware in the next few weeks, slowing difficulty increases.

my gut feeling tells me that the desire to corner the market of future BTC income by smart money will result in unprecedented hashrate increases, and that I should just sell my antminer right now.

and i'm probably gonna follow my gut on this one.

----------------
the long version:

What I think about, much like the way bitcoin is still in its' early adopter phase & hasn't hit its' "NASDAQ IPO" moment where the market cap approaches something like Apple or Google (whereas it would now be considered a micro-cap OTC), is the fact that these 1TH machines are relatively new and haven't been extensively tested by the general public for longevity, whereas Bitmain, ASICMINER & BFL have track records that move units en masse regardless.  plus, $3.5K to drop on such tech doesn't come easy for most, i'd think.  then there's the fact of BFL shipping their soon to be obsolete units two weeks from now, and ASICMINER... ehh, we'll see, I guess.  For the time being, it seems that Bitmain is where ASICMINER used to be some months ago (for now) with relatively inexpensive gear that ships ASAP. 

not only that, but r/bitcoinmarkets seems to be short-term bearish and long-term bullish, mostly waiting on the development of regulated exchanges & financial instruments which will take a few weeks [if not months] at the very least.  Given the price stagnation and the negative press stemming from recent crypto exchange hacks/failures, I don't think that there are too many new people at the moment interested in mining.

however,

I think that I may be severely underestimating the demand of existing & current prospective miners to corner the future supply of BTC, considering how bullish everyone is in general.  Also, after the legacy financial institutions start buying into bitcoin en masse, it wouldn't be hard to envision companies ('specially publicly traded ones) creating ASICs on a mass market scale, 1TH for $500 at your local Target store.  Also (maybe a bit off topic) considering the relative success of such an altcoin such as Dogecoin [as niche as the scrypt mining scene is right now], I could also envision a flood of SHA-256 equivalents also boosting the demand for said ASICs.  How long that would take, I dunno.  But considering how relatively easy it is to work SHA-256 miners as compared to tuning a video card just right, I think it's inevitable.

this perspective is coming from a person relatively ignorant of bitcoin stuff outside the U.S. though, so take all of this with a grain of salt.

http://www.vnbitcoin.org/bitcoincalculator.php

This calculator predicts a 99,416,291,020 difficulty by year's end. They assume a 14.55% increase every cycle. Is this really a possible scenario? With predictions like these, no ASIC hardware will break even.

Isn't it more likely that the difficulty rise will slow down a bit at some point? If I understand this correctly, a 99 billion difficulty would mean that the network's total hashing power would be 20 times what it is now by year's end. I find that hard to believe. Thoughts?

Difficulty growth RATE is slowing down for the last 5 months:
http://bitcoin.sipa.be/growth-small.png

We were waiting for several new 28nm hardware manufacturers, and they failed or were delayed. Now something started happening - Chinese manufacturers with some new chips?

I doubt the difficulty will go down in the next 3 months if anything its going to start increasing more rapidly with all the newer miners coming out

https://bitcoinwisdom.com/bitcoin/difficulty

Bitcoin Difficulty:    5,006,860,589
Estimated Next Difficulty:    6,147,100,851 (+22.77%)
Adjust time:    After 1465 Blocks, About 8.9 days

i just got 23.89 percent in 8.6 days sheesh

(why i dumped my neptune...too much too fast for ROI imho with a 320 usd elec rate / month not to
mention a/c etc this summer

now say august i can see a big 'stall' and flatline on difficulty esp with the price drop and china news this week and IRS rules in usa etc

this is because KNC and others are already 'in the works on current gh farms/plans etc)  but who would be dumping $$$ in to that NOW
with the current news (ie knc wants 3 large gh farms....that may go down to 2 or 1 with recent events imho)

but for the next 3 months or so whatever was started for gh farms at 800 btc will continue at 100btc if it is that bad ...if for the
deductions on loss and such if nothing else

imho thou ..but yeah august sept could be flat as helll with no high end eguip alt or btc in sight or at least what a personal miner could afford

as always my view feel free to correct me and such..(i've no pride i mine bitcoins in my bsmt i'm so sad)

Searing

Yep, this is going to be brutal. And I don't even see much new stuff coming out, so when the big stuff hits, oh well.

But it points out a truth: As long as there is a difference between electricity price and bitcoin mining profit, there will be more miners sold. However with the price drops in bitcoin overall and the cost of miners, one can easily run into a place where there is no proverbial "air" to breathe. Buy stuff with care.

Part of the reason I gave 40gh (my 20gh Jally, a 10gh jally, and two 5gh units) to my son was to teach him this very important lesson: Don't run a business at a loss. When the cost of electricity exceeds the profit from the miners, he will shut them down no matter how much he loves them.

I will follow with my 900gh of Singles. Never run a business at a defined loss.

C

No one knows about future. If there is only little new devices, then it may be healthy...

Not necessarily.
If bitcoin price is stable and difficulty keeps increasing, sooner or later, people with less efficient equipment and high electricity cost will shut down their machines. The difficulty will then drop, until it reach an equilibrium.

Sort of. Problem is this could also be the ultimate "dollar auction" where people have to mine continiously to cover and minimize their losses.

C

I think we are slowing down. the last jump was fed mostly by the huge output of 1TH machines coming from china based on the A1 chip, as well as the new spondoolies machine. Asicminer is right around the corner with its new chip too.

we might see another jump close to 20% as all these flood the market, but after that we should continue the trend of 16% and lowering per jump. My estimate is that by september we will have jumps averaging around 10-14%

https://bitcoinwisdom.com/bitcoin/difficulty
Estimated Next Difficulty:   10,457,675,910 (+18.12%)
Adjust time:   ...about 6.8 days

Looking like a pretty good prediction as it looks like it might be 14B to 18B by mid July.

If the price of BTC does not rise before the time 25B arrives, any home miner not running at 0.5 watts per GH will be worthless - income wise.

At 40B without a price shift in BTC, a 1TH/s 28 nm miner will mine 0.01257 BTC a day ( $5.52 USD ). After cooling, storage and power costs, this will leave about $0.80c

For a home miner this would be ridiculous, but for hosted mining this would represent a 15% profit margin. Enough at least to maintain, and slowly increment rather than exponential incrementation that we are seeing now - as many businesses can and do function at a 15% profit margin.

As for the price of BTC, my guess is the primary trading of this cryptocoin at the moment is done by the mining communities desparate to recover their capital purchase costs, and manufacturers dumping their earned BTC on the market. Until we see the day where I can go into town and buy some BTC the same way I can buy cell phone credit, i.e. have a shop worker hand me a till receipt / paper wallet with $20 BTC credit on it, and until the day an E-Bay that is BTC only becomes as big as EBay itself becomes established, and/or someone creates a prepaid cellphone that only takes BTC as credit, then don't expect the price of BTC to go anywhere but slowly go down.

For those that have invested their life savings into their home mining operations, this is a lesson in the nature of the beast, small independent business venture getting captured by large bank funded cronies, then having the swamp drained by them - capitalism at its finest.

Here you find predictions for the difficulty mid June and by the end of the year.

https://www.fairlay.com/event/category/bitcoin/difficulty/

The percentages are "upper bounds" since someone else is willing to put money on the opposite event.
Thus if you think one of this percentages is still too small you can make money with it...

I don't think it's *quite* that bad, however this next jump should be my last with the 65nm BFL gear. After this I will power things down for the summer and see if there is an uptick in the fall when I need heat for my room again. :-)

C

Make hay while the sun shines.

                                                                                       Bitcoins (1Gh/s)
Days      Date        Difficulty   Change   Hash Rate      per Timeframe
5     24.05.14       8853416309      18        63375223   0,000056800
14   07.06.14     10447031245      15        69712745    0,000050990
14   21.06.14     12014085932      15        76684020    0,000046968
14   05.07.14     13816198822      15        84352422    0,000040844
14   19.07.14     15888628645      15        92787664    0,000035518
14   02.08.14     18271922942      15      102066430    0,000030887
14   16.08.14     21012711383      15      112273073    0,000026860
14   30.08.14     24164618090      15      123500380    0,000023357
14   13.09.14     27789310804      15      135850418    0,000020312
14   27.09.14     31957707425      15      149435460    0,000017663
14   11.10.14     36751363539      15      164379006    0,000015360
14   25.10.14     42264068070      15      180816907    0,000013357
14   08.11.14     48603678281      15      198898598    0,000011616
14   22.11.14     55894230023      15      218788458    0,000010101
14   06.12.14     64278364526      15      240667304    0,000008784
14   20.12.14     73920119205      15      264734034    0,000007639
14   03.01.15     85008137086      15      291207437    0,000006643
14   17.01.15     97759357649      15      320328181    0,000005777
14   31.01.15   112423261296      15      352360999    0,000005023
14   14.02.15   129286750490      15      387597099    0,000004368
14   28.02.15   148679763064      15      426356809    0,000003799
14   14.03.15   170981727524      15      468992490    0,000003303
14   28.03.15   196628986653      15      515891739    0,000002873
14   11.04.15   226123334651      15      567480913    0,000002498
14   25.04.15   260041834849      15      624229004    0,000002172
14   09.05.15   299048110076      15      686651904    0,000001889
14   23.05.15   343905326587      15      755317094    0,000001643

Table by fubly

Antminer S1
- 180 GH/s
- 360w
- 15c a kW
- $440 USD per BTC
_________
  $1.29 a day for power costs

07.06.14 - $3.82 at 10447031245
05.07.14 - $2.88 at 13816198822
02.08.14 - $2.18 at 18271922942
30.08.14 - $1.65 at 24164618090
27.09.14 - $1.25 at 31957707425

If this pans out as the graph estimates, then mid to end of Sept, an Antminer S1 at current figures, will be done for.

The retail price of these S1's things should be set at about 28 days ( or 2 shifts in difficulty ), worth of mining, currently its about 42 days. Basically most miners are reinvesting all of their mined coin into hardware expansion, the net result will be a pile of miners and PSUs that cost more to run than what they are worth switched on.

What I think I need to do is not buy any more, let these 6 ants mine their way to their eventual death by difficulty, and take the BTC between now and then and have a good time...maybe buy something other than miners with the BTC. Food for thought anyways, will see how this next month pans out...( spoken like a true mining addict )

taipo,

Totally agree.  Especially if you have to buy more PSU power to turn them on.  I am sitting on 11 S1's and that's it for me.  AORN the diff. looks like it will take another big jump this week (over 15%) and that's just too much for an S1 to ROI.

Gotta sideline adding power for a bit.

In august when diff is 30 billion difficulty

One thing to factor in is at the moment a lot of the hashrate is coming from small miners like myself (running just 3 Ants). As the difficulty increases the power usage will become cost prohibitive and many will stop (i'd expect) that would be fore anyone running under 1th or so. I'd imagine this accounts for a fair amount of the overall rate. I can't imagine this not balancing itself like any market does. The hashrate CANT increase forever unless the BTC does as well...

There are many other companies and farms mining secretly also. Like knc bitfury asm cointerra and chinese independent  companies etc.

asicminer chips are just now getting out into the wild - its likely some of these companies are premining with the chips and/or building private farms before they focus on public sales (hashratio.com for example, which seems to have mimicked the S1 design, but can probably achieve 300-400GH in the same power/footprint

When you're a huge mining operation - and there are hundreds of these operations now, and you have committed millions to an operation that is in effect, depreciating every 12 - 14 days, you do not have much other choice but to expand with every spare cryptocoin you have left - and hope every other player eventually gives in or you yourself will go to the wall.

Mining operations big or small are probably attempting to expand their operations by 15% every 2 weeks to keep up with the rising difficulty, thus leading to a further 15% rise...

Doesn't take a crystal ball worker to figure this one out, we've already seen this happen in every other arena of supply / demand.

Hashrates will continue to rise and rise...its a case of who blinks first...usual case, biggest bankrolled operations will win.

SO what you're describing here is a dollar auction. Heh heh. That's a fuuuun game.

The original idea was a good one, Satoshi probably did envisage this type of arms race of sorts, but I can see this turning from an ASIC arms race into a rather dirty cyber war if enough large corporations get involved and the future of their corps are staked on profits from mining and profits flatline to the point multi-million operations are running at a loss.

Some of that is probably already happening now, but I think we have yet to see anything that comes close to how bad it is going to get.

On the contrary I think mining operations will be dying down by end of Year.   The only ones standing will probably be the ones run by the asic chip manufacturers themselves.  Because there will come a time soon where they cant sell below their cost and that is when difficulty is so high buyers dont want to pay the high prices for the machines that dont roi and are better off buying the coins.

I see BFL bankrupt soon, Cointerra is late to the game, as is Bitmine, Black Arrow.  Spondoolies is good tech but too expensive.  KNC will go private.

I'm with you on the timeframe...before the 'blinking' begins, i just don't see it dying down, but rather peaking, and then sloshing between the balance of the cost to run and profits as the fiat value of BTC bounces around, the type of balance that can only be maintained by large mining operations who have the least amount of overheads - which as we assume, is the asic manufacturers themselves, but also any operation that has managed to get bankrolled rather than the mine and build method. But as in anything, its just a guess.


BFL will probably just get rebranded under another name, and shift their focus like most ASIC miner manufacturers to cloud hosting, hash reselling if they haven't already done so already.

Yes cloud hosting and others have said before that market forces will centralize mining for the most part.

It'll be on an upward scale, I'd buckle up and get ready for it.  ;D

100 Petahash hitting soon

How long before 1 exahash? Probably somewhere around the 100B range or more?

Using any of gazillions calculators out there like http://www.asicminersguide.com/bitcoin-calculators/ will tell you that 1 exahash will cause the difficulty be at about 140 billions. But that will be pretty long road  ;)

Who can even mine at those difficulty levels.

At 20 Billion there will be alot of used miners on ebay starting.

https://www.asic-hardware.com/product/lketc-dragon-miner/

$1700 (3btc) for 1TH.
I think it will mine back that 3btc in 3-4 months.

Example Mining Operation:
- 100 TH/s,
- 50 x 2 TH/s miners, $5000 USD each, $250,000 hardware investment
- plus hosting costs

At the old difficulty of 10,455,720,138 a mining rig of 100 TH/s would have been minting 4.81 BTC per day on avg. After the latest rise of difficulty ( 11,756,551,917 ) that will drop to something like 4.278 BTC per day. But our fictitious mining operator saw this coming and worked out what that equated to in miners, and ordered another 6 x 2 TH/s miners which will arrive around about the time of the next difficulty rise or just before.

The total fiat value every 14 days for this rig is about $42,000 at the current USD conversion of $640, of which our operator has to turn $30,000 back into their business to keep up with the hashrate and increased hosting costs.

Meanwhile smaller miners that have traditionally made up the bulk of the BTC network, will blink first and drop off, followed shortly by anyone not expanding their rigs to meet the difficulty increases.

Every difficulty jump, the gap between the upgrade cost and total minted coin closes. At some point unless there is a serious improvement in hashrate / kW, those two will come close enough together that these large mining operations will cease expanding to stay ahead of the difficulty rise. Some will fold, others that have financial backers will stay up.

By then they will be the primary producers of hash on the network, and the difficulty factor will peak and stabilise.

You can get a sense of the hardware upgrades by looking at the miner stats for instance at Eligius. Most large operations show a hashrate increase just before or at the same time as the difficulty jumps.

A  Big chunk of the profits being mined are re-invested into more equipment to offset the rising hashrate.  But the initial investment is not 100% recouped.

Mining bitcoins at home, for people who are capable only of low investments, is almost ended because of the small or null ROI they can have.

s1gs3gv's law:

"As long as bitcoin represents a useful form of wealth storage for the wealthy the price of bitcoin will adjust such that decentralized mining remains profitable."

The next leap looks to be a big-ish one...

Bigger than the last, most likely yes. But not biggish enough to be inbolded on https://bitcoinwisdom.com/bitcoin/difficulty

The network peaked at nearly 100 PH just before the last rise in difficulty, then plummeted, and is now just over 82 PH. Unless it comes back, or a lot of other hardware comes online, this could be one of the smallest difficulty increases in recent memory - or even a slight decline.

Why did nearly 20% of the network go offline? Any speculation?

No hardware went offline. It was just 'luck' in generating new blocks. I saw payouts from ghash pool about 30% over average on that spike.

It probably didn't (although there's no way to be absolutely certain) - the statistics of mining mean that short term huge positive and negative spikes can and do occur. There was a much bigger one a few weeks ago that had me go and look at this in a little more detail. Even over a 2 week period it's quite likely that we'll see +/- 5% changes in the difficulty even if the total hashing rate stayed the same.

I put the 2 writeups here:

http://hashingit.com/analysis/16-hash-rate-headaches
http://hashingit.com/analysis/17-reach-for-the-ear-defenders

It could be that manufacturers are doing burn in tests. Big mining operations are ordering to keep ahead of the diff. So it could be a timing thing, 20 PH is ordered, burn in test takes place, miners are shipped and arrive at their destination just before the next diff rise, meanwhile in anticipation of the next, large mining ops order more, more burn in tests, more peaks just before the change.

If you go through the Eligius contrib list, you can see this rising in hash power just before diff changes in most of the medium to larger mining operations.

20PH is alot!  I dont think any one manufacturer has that on hand right now to test.

Agreed. 20ph would require what, 20 megawatts of power? That's kind of a lot.

1gh=1kw. 1000gh=1ph=1mw.

Thanks for the links. I'm well aware of the "luck" component of mining, and I know there's a lot of statistical noise out there, but the nearly 20% drop really puzzled me.

There's no way to know the true cause, of course. Maybe Friedcat (or someone else) was testing a batch of new equipment before shipping it. Or maybe it was just a huge statistical deviation.

It particularly struck me because I've noticed that recently (meaning the last 10 or so difficulty increases) the reported network hash rate tends to peak/spike a day or two before the next difficulty increases, then drops off again - almost like some big players are trying to game the difficulty rate. The hash rate picks up again after the difficulty increase.

If that's really just statistics noise, there seems to be a fairly reliable pattern to it. But this time around the hash rate peaked around 2 days before the next difficulty adjustment and then kept dropping. It's back up to ~88 PH/s now.

I'd wondered about the same thing which is why I started to look at the stats. Certainly there have been spikes just before a difficulty change, but equally well there have also been ones earlier in the cycle and 4 changes ago the hash rate hardly changed for days at the end of the cycle.

I didn't publish the numbers but I did run simulations for the variations over 24 hours. At a constant hash rate we'll see a +10% spike every 10 days and a -10% spike every 10 too. Given that during our last difficulty change we had a 12.4% difficulty change then 10% at the end of the cycle is larger (in absolute PH/s) than 10% at the start.

I found the perception of a problem tends to be emphasised by looking at linear rather than log charts. The log charts show that the magnitude of the swings is pretty constant.

https://blockchain.info/charts/hash-rate?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=1&address=

With current mining hardware it seems unlikely that anyone would build a facility that would enable short term bursts of mining - as a strategy that wouldn't make a lot of sense. Doing this would incur a lot of expense in terms of power and infrastructure and if the aim was short term gain then the hardware would be run up to the point where the difficulty changes rather than dropping off a day or a few days before.

Some follow-up analysis: http://hashingit.com/analysis/29-lies-damned-lies-and-bitcoin-difficulties

A tip sent, for your article, time and effort to help us understand that, as you say: "what happens in the course of hour or even a few days; those numbers, tantalizing as they may seem, are largely meaningless. They are the lies among the truth that only becomes apparent over a much longer timescale.. "

I disagree. at-home miners have a few big advantages:
1) free space (garage, basement, shed, etc). larger miners have rental locations and costs as such
2) "free" internet
3) 'free' wintertime heating (a large location will still be fighting to keep cool even in the winter)
4) no oversight or employee costs

IMO, mining at home can be more profitable than it is running a medium-sized farm. Ive personally had to move 8.5kW of my gear into a rental agreement to access enough power and space to run it outside the house. To go any bigger I am looking at a $500-1000/month rental elsewhere plus whatever costs are involved in adding AC/wiring/transformers to make it a useful space.

a lot also comes down to power costs, and anyone who pays less than $0.15/kWh has significant advantages over miners in many countries and US states

Thanks  :)

At least 1 person understands...

Just checked it today, seems to have dropped significantly in the past few days.

Totally agree with this.

1) In most places to rent and operate in a zoned business space you need a business licence.
2) Most times you have to register with the US state tax authority. I would have no idea if BTC yields count as revenue for tax purposes.
3) Doing any kind of electrical mods, of course you need permits. If you leave the space, you will have to pay to put the space back in it's original condition.
4) Most places since you are not a retail operation, this might be something that has to be in the correct industrial zone.
5) Space lease agreements want you to sign up for at least 5 years and some sort of liability insurance maybe required.
6) Finally, industrial settings could have pretty noisy power due to electric arc welders, rf generators and big inductive loads being switched on and off.

Until the new miners actually are released I still believe our jumps will be a bit lower than usual. I think for the next 2 months no huge increase. But thats just my opinion. When spoondolies and knc get their new miners out i think it will have a big jump but until then nothing unusual.

Steve

What exactly is a big jump these days?

With a difficulty of 11,756,551,917 or an average network speed of 84.157Ph/s to make another 20% increase you'd need the network to run at an AVERAGE of 100.989Ph/s.

That would mean that over 15Ph/s would need to come online in under 11 days.

Every increase we have from hear on out only makes it that much harder for another 20% jump to show up. They are most likely in the past.

Having said that, 10% seems to be the new normal for a while longer.

thats my hope. most of my mining calculations in the last ~month assumed a 15% starting change and decreasing until its in the 7%/jump range sometime around november.  Hopefully we get there even sooner though :)

Appears to be another 14% coming up. Crystal ball says 13.99% and rising slightly
https://bitcoinwisdom.com/bitcoin/difficulty

At the diff levels and current btc price now Asic equipment needs to be priced $1000 per TH to have any Roi for miners.

You mean "break even". ROI stands for "return on investment". If you earn one satoshi (or $0.01, if you prefer) over your electricity costs, you will have a return, but you will not break even.

Sorry to be "that guy", but that's a pet peeve.

Because its an investment, I am assuming most people want not to lose money.

It is a losing investment until it breaks even at least.  Thus the roi really stands for "positive".

Perhaps a better way to phrase it is positive roi.  proi?

not true.

For hardware that you could have in-hand by the end of this week, fair price per terahash IMO would be:

2w/GH:  $0.70/GH - $0.90/GH
1.5w/GH:  $0.80/GH - $1.10/GH
1.2w/GH:  $0.85/GH - $1.30/GH
1w/GH:  $1.10/GH - $1.60/GH
0.75w/GH:  $1.50/GH - $2.25/GH

The range sybolizes the premium paid for models with better build quality or included power supplies. (for example the SP10 at 1w/GH is a better product than the Bitmain S2 kit at 1w/GH, and worth ~$200 dollars more)

Mining will soon happen primarily in areas where electricity is cheap. Those paying >$0.20/kWh will see little or no profit compared to those mining at <$0.10/kWh - perhaps as much as 20% of the hardware price

But manufacturers are way off your estimates.  By the time they reduce to that diff will be 20 B

So lets assume .16 to .20 electricity.

I agree above .20 electricity is almost done.

Sad to say but I consider anything under 15% not a huge jump. I noticed the network hash rate was going up and down a lot the past few days I was hoping for only 11% but I think I am going to be disappointed.

Steve

lets hope together  ;D

Heard all this before with the change from GPU > FPGA > ASIC 1st gen >ASIC rd gen (now)

I am still chugging away profitably using captial invested at the GPU stage. You just need to have a profitcable business plan and stick to it. I may not be getting 1000% ROI p.a. but 200% is still pretty damn good.

why dont we steal the electricity... :D
its 0/kwh  :D

There will always be people with free electricity that can compete with the datacenters, and enthusiasts and supporters.

such as....????

Such as established businesses, for example a web hosting company or similar, that buy and run miners as a way of writing off some of their profits, even to the point of running their businesses at a loss. They can afford to continue adding large piles of miners to data centers even though it costs them a pile of real cash for the equipment and power.

At the end of the day they run the books at a loss, very little if any tax to pay, even run their miners at unprofitable levels, because at the same time, there is no comeback on them as to where the BTC would go to...

Relevant proposition someone just submitted for your consideration:

https://www.betmoose.com/img/136.png (https://www.betmoose.com/bet/bitcoin-difficulty-will-drop-more-than-10-in-2014-175)___________

Bitcoin difficulty will drop more than 10% in 2014 (https://www.betmoose.com/bet/bitcoin-difficulty-will-drop-more-than-10-in-2014-175) Options: Yes (https://www.betmoose.com/bet/bitcoin-difficulty-will-drop-more-than-10-in-2014-175#1) | No (https://www.betmoose.com/bet/bitcoin-difficulty-will-drop-more-than-10-in-2014-175#2)

Who buys hardware these days?

I last bought Antminer S1s a couple of weeks ago. Now I expect them to break even ... barely. And at some point I must undervolt. A lot of work for a few bucks.

S2 is ~$2100 and takes three months to pay back assuming no electric cost, no difficulty increase and stable BTC price. I cannot understand why anyone would buy. You may make it back only if the BTC price increases but then you'd anyway be better off buying BTC in the first place.

You may just get your huge jump yet. 14.3% and rising.

sure aint looking that way

https://bitcoinwisdom.com/bitcoin/difficulty

It is going to *squeak* under there...

C

Mining difficulty has been slowing down but i think it might ramp up to just under 20% with all the new miners coming out. I dont think we will see the huge 30% increases anymore until some brand new revolutionary design comes out.

[ takes out crystal ball and places on table - stares deeply into the globe ]

I am a firm believer that it will keep going up in leaps and bounds until the big players 'blink'.

For now they are just staring at each other, going tit for tat, matching hashrates to the difficulty changes. Meanwhile the cost to mine edges closer to the bitcoin rewards mined.

When the cost to mine reaches the point that there is not enough cash left over to upgrade and match the rise in difficulty, and pay bills and workers, then the difficulty rises will drop to a few percent every 14 day revolution and may even stablise.

But the new order of things will be something like the running costs being at about 85% to 90% of total mined bitcoins.

When it gets to that level, it won't change without something catastrophic happening politically, or to the tech or the network itself or the algorithm.

So if you have an Antminer S2 lets say the diff is at 65,000,000,000, BTC at $600, and its costing you about $4 USD per day to run, then you will be mining about $4.70 USD a day with your S2.

This is because the big players, eventually with their 1 PH/s racks would also be paying about $4000 USD a day ( at a guess ) to host those miners while earning a guesstimation of about $4700 USD in BTC per day.

If the value of BTC rises then large miners will afford to acquire even more miners pushing the hashrate and difficulty up and the $$$ gap between cost to mine and reward remaining about the same.

This is pretty much how the game is played everywhere else, in mining BTC it is no different. In particular its the way that China competes in business because many of their businesses can operate at thin profit margins, much thinner than anywhere else.

Eventually manufacturers in China will be the primary producers of miners, and most bitcoin will be mined there, and much of the BTC supply to the market will come out of China.

Around the world, many businesses could still run mining operations as a means of writing off profits, running their businesses at a loss and pocketing the Bitcoins themselves, however dubious that may be, that would be the only way to eventually compete, or at least, stay in the game and make something from it.

Any cartel of large mining operations in China could possibly do some damage to the world bitcoin economy if that all eventuates.

A quick look back at how OAPEC wielded supply during the Yom Kippur War is a good indicator of how supply can be used politically.

Except we don't need bitcoin to fuel our cars or heat our homes.

Until recently, mining has been a pre-order game. Many of the PH systems that are going online now were ordered 6-9 months ago. That money is sunk, so the investors are going to try to get at least some return from their equipment, although the BTC price has fallen by 50% in dollar terms. Moreover, you can be 100% certain that these facilities have access to the cheapest industrial power around, so they will be on the grid for a very long time.

Sure we dont at the moment, but that piece above is a long term crystal ball speculation of what one possible future could hold in a world now running on the bitcoin protocol in the same way we buy packets of data, and access to TCP/IP without even thinking about it.

The difficulty acts a bit like a reserve bank in a sense, driving the cost of hashing up so no matter how much hash power there is, the flow of currency minting remains constant.

What happens if a bulk of the hashing power is in the hands of a cartel with central political objectives, after we arrive at that point where the cost of matching their hashing power is only possible by a well resource state government.

A cartel could create a lot of havoc around scarcity, once Bitcoin is implemented world wide as a quasi internet currency protocol.

Ell Oh Ell.

R U Ar MiuzD

Estimated Next Difficulty: 16,182,431,779 (+20.20%)
https://bitcoinwisdom.com/bitcoin/difficulty

Crystal ball says the difficulty is going to leap this time, meanwhile the value of BTC is teetering. Anyone have an opinion on that? Or is it still early days on making a call on the potential next leap.

Some of the hashrate that popped up towards the end of last diff surely came from the people who got busted for withholding blocks from pools, add some pools having decent luck the last few days and this diff increase wasn't that bad. Coming month might be the worst we have seen in a while though with KNC shipping, Bitmain releasing S3 and BFL actually delivering something (in two weeks!).

At current diff/btc price we are at the stage when more and more of the network will be taken offline as well, I bet a large part of the early Avalon/Asicminer miners are already taken down and next victim will be all the old BFL gear, wont be a noticeable slowdown until all the S1s start becoming unprofitable however is my guess.

We could really use your crystal ball on our site - we have a few bitcoin mining bets up but no one seems to really know anything :P

Also - my prediction is that the difficulty will rise until it's matched up with the price - last I checked miners could still profit at a $140 coin (this was 2 months) so they're probably up to ~$250 a coin now in terms of difficulty increases..

Damn near perfect analysis! The only thing I would add is the lag between 'preorder and delivery'.

Because of the extended period of time between preorder and delivery, we may actually witness the point where BTC mining becomes unprofitable for everyone. 100s of PHs could theoretically be preordered and when they are finally delivered, online and hashing, even the most efficient mining operations could be in the red.

I honestly fear that we are dangerously close to this point now. There is a LOT of hashing power coming online in the next few months. I've stopped buying new gear because of this... and also because I keep tripping breakers and my house is effing hot! Lol.

I sure hope that mining difficulty will stabilize at some point. But if it's a lot of hardware to be yet delivered soon, we have to wait for that a while.

There's currently no end in sight to the preorder cycle. And already, with 8 days to go before the next difficulty adjustment, we are looking at a 20% increase. And that will likely continue to grow. 35% wouldn't be an outrageous guess at this point.

We're still dealing with hardware that's using 1W/GH at the wall.  With 1, maybe 2 process levels to go I think we have a long ways to go before seeing 0.4W/GH which will of course come in huge DC configurations made for the big farms who will buy them at 1k orders.  I don't think we'll see a regression until the 2016 halving.

I think retail demand for asic machines is dropping causing manufacturers to do more pre orders for commercial customers so they have a bigger chunk for r and d.

Think I agree with DrG here.  I seriously doubt there will be any kind of serious slow down daily network growth rate til at least middle of 2016.  Perhaps not even then if bitcoin is over six or seven thousand dollars a coin.

Mining difficulty needs to now be replaced with profit margins in the minds eye of those trying to understand the continuous rise of the hashrate, which is the real issue here now that mining has become the plaything of early adopters, the rich and the well resourced.

Example: the current profit margin of a miner with 1 TH at 1gh per watt at 0.15 per kW is about a 67% profit margin, give or take variances in cooling costs and kW costs.

When that profit margin across the board gets down to 15%, the hashrate has to stabilise, with the odd burst happening every time the value of BTC rises, or there is a improvement in the TH/kW ratio, until the profit margin returns to 15% again.

There is no profit margin now.  Is more about how much of a loss.

1th asic at 1watt/gh needs to be priced at 1100 to break even.  There are no machines there now. The lowest in Stock is 1450 1th.  So now best market deal is lose 30%

And if ordered now, it will arrive just in time for the next difficulty adjustment. Which is currently at +20% (and rising quickly) with just 7 days to go.

67% profit, yeah right.
no money to be made anymore.

Thats how miners that have established rigs are viewing it.

Cost of purchase, ROI are the musings of those looking at getting into bitcoin mining, those trying to talk others out of doing so and those depressed at not having made anything from mining other than buying a crap load of paper weights.

Yes there is no money to be made anymore for new startups who do not have financial backing, and for those that did not expand their rigs ahead of the difficulty shifts.

Some people are making a crap load of money, hence the hashrate, but all are struggling to make the same amount of profit turnaround, and add enough equipment every 2 weeks or so to either maintain their current incomes or to even try to increase them.

Within about 5 to 8 more 15-20% shifts in difficulty, this 67% figure will be about 10% to 15% and therefore beyond the ability for established mining farms to be able to easily add miners at a level staying ahead of the difficulty changes.

Equilibrium will come, but at the expense of many.

Estimated Next Difficulty:   16,847,110,142 (+25.14%)
Adjust time:   After 1264 Blocks, About 7.3 days

@ taipo, where do you get that 67% from?
source please

Don't hold your breath on this one.  Hashrate is going to continue this crazy hike for quite sometime imho.

Over the past year diff jump is average 18.5% something like that

Just remember that if part of the reason for the recent difficulty hike is bitmain testing S3's, when they go to sell them the difficulty doesn't increase more. Hastrate is only changing hands and not being newly produced.

Its probably a combination of them testing the s3 and KNC testing the Neptunes as they are starting to ship now.

This logic doesn't make sense to me, and what do you think that will be done with these s3's and neptunes after they will be shipped? They will get plugged by their buyers so the diff. won't go down/stop increasing anyway.

It wont go down, because for every one they sell to customers they will make 2-3 for themselves.

That's quite what i'm trying to say...it will just simply continue to go up.

Yeah the only thing stopping any manufacturer from having 100PH/s available for sale is space for the miners and their own power plant - you know one of these companies will buy a coal based one sooner or later  :o

It will be most interesting at about 50 b difficulty when manufacturers can't build under the cost to make the machines and run the electric to positive roi.

Source: Taipos small test mining rig, power bill and calculator


Precisely, and if the diff keeps going up in leaps and bounds, we will get there much sooner than has been predicted.

Certainly there's more headroom than there was in the system a few months ago. I ran some predictions back in April and they were thrown into somewhat chaos within weeks because the cost per GH/s and the BTC:USD prices both changed dramatically. One makes hash rate more cost effective, the other provides more scope to pay for it.

I'm not sure that there's anything very specifically magic about 50b, but that's certainly a level at which a large amount of the hardware providing the current hash rate has probably become totally obsolete.

With a 15% difficulty increase we'll hit 50b pretty quickly. 15% is approximately 12 days per 2016 blocks so to get a 3x increase would take 8 difficulty changes, or 96 days. That would put us sometime around early October

I think the reason why 50b is a marker other than it being a nice round figure, is because many believe that at 50b, any miner not at 1TH/1kW will be out of the game. But also around that time frame many of the 0.5kW per 1TH miners will be coming online as well, for example the Spoondoley SP30 if they keep to their timeframe.

According to Hoyle, the next quantum leap will be somewhere between 25% and 27%.

We've already seen people retire their block eruptors.  I have 10 BFL SC Singles that I retired earlier this month.  They would still generate a profit since I have some free electricity, but I am thermally limited and my scrypt rigs make more per watt than the ASICs do.  The Avalon Batch 1-3 and AM blades will be turning off soon as well.  Of course difficulty won't drop because you need 20-50 of these low end devices to match just 1 Cointerra 1.6TH/s

It is at that point a 1 TH miner at .5 watt efficiency will roi about .28 BTC, with average electricity.

Problems with pricing machines?

I guess if I were a manufacturer of lets say, a miner which we will call V1, I would run a survey of say the top 500 regular customers or that miner, trace back their BTC payments to their wallets, and from their wallets to their mining pools, and pick from those, all the users that mine on Eligius ( for example ), database as much intel as I could about their mining habits because their stats are public. Database their hashrates, increases, BTC mined, and what percentage of that BTC the average miner of that bunch spent to order my miner.

I would already know at what point the difficulty my miner would cease being profitable, and time the release of my V2 model to coincide with lets say a month or two before that time period, give or take a few weeks.

I could easily work out to a small percent of error, just how much my own customers would be willing to pay for the V2 miner with greater hashrate, less power usage, and the pressure of the V1 becoming unprofitable.

So if that were true, that could be one explaination as to why some of the more on to it manufacturers are timing the release of their 1w/gh or less miners to fall within the July / August period.

But as to the issue of problems with pricing, few of the more dependable manufacturers have gotten that wrong, seems the prices they put up are the ones their loyal customers are willing to fork out for.

Some indication why the difficulty is about to make a quantum leap.

http://oi57.tinypic.com/adyoux.jpg

http://blockchain.info/pools?timespan=24hrs
http://oi57.tinypic.com/11kiefs.jpg

I read somewhere that Friedcat was going to ship enough chips to add 30 TH to the network this month, 70 next month, and 100 in August. That's in addition to KnC and the others.

If that's really the case, we ain't seen nothing yet.

Wow, so basically it's just like last year with Avalon out of the picture.  AsicMiner takes over the show with chips everywhere haha

I think I have an idea and have observed on my own rigs over the last few months but what effect does diff have exactly on payout. If diff increases by 20% is it exactly 20% less payout? or is it proportional?
My own observations, be they anecdotal at best, seem to show diff in crease doesn't have as high an effect as it first seems.

When the difficulty increases by 20% then your hashing capacity is now effectively 100/120 of what it was. You'll see 83.3% of what you did before.

As noted above simply take (old dif) / (new dif) to see how much less you will earn.  You shouldn't look at day to day earnings, however, because those can swing off from the expected averages quite a bit based on pool luck.  Over the 2016 block interval it should be close assuming the pool doesn't have a tremendous variability during that time.