Bitcoin Forum

I stated in another thread that breaking below $4 was my bottom line and I've shut down my miners for the time being (until difficulty drop + price increase).

I'm curious: What's your shutdown point?

This isn't a question of "being brave when others are fearful", it's just math. Depending on your electricity cost, you could spend $5 to mine a bitcoin that would only have cost you $4 to just buy.

I really have no shutdown point.

Im probably one of the lucky ones, as Im able to keep all my miners at work.  And my miners really didn't cost me anything either as Im able to put them on the books at my business.  Getting close to 2ghash/s now with the addition of my 4th miner.

I think as long as I can buy stuff with btc I will continue mining...

$1.80.  That is the electrical cost for my hardware efficiency, current difficulty, and my electrical rate.  Obviously that number would adjust based on difficulty.

Another way to look at it is my cutoff point is (diff/USD BTC price): 854,626.1111  or roughly 850,000.  If difficulty / price is >= 850,000 I quit.  In the wintertime maybe the cutoff is 1 million even (I can always use the "nearly free" heat).

I get "free" electricity for my small setup, so I have no real shutdown point.  However, my HDD died on my mining rig and right now I could care less that its not hashing while I order a SSD.  The price of a bitcoin is so low that now it's only for fun.  Paid off my cards a long time ago.

$1.80? Holy smokes! You must have super, super, super cheap power or something. My two mining rigs together pull about ~850w and at $0.091/khw + current difficulty, I'm only at $20/mo profit.

If price were to drop to $1.80, I'd be out $25/mo!


But that's the point I don't get. What's the fun? If you could just buy the bitcoins for less than it's costing you to mine them.

how can it be cheaper to buy than produce with free electric.

ITT: People make up electricity rates to convince others of quitting  ;D

Hope you are found out and fired. This is the reason why the price is so low. If all people competed evenly, then the price would be higher than currently but when some idiots like you get "free electricity" they cause the price to fall as they can afford to sell lower than the ones paying for electricity. Result : most of the miners paying get out due to such a low price and we are all screwed as the ponzi collapses.

Or  you must have some very inefficient cards and/or power supplies.  I built my rigs for efficiency.  80 plus gold power supplies 3x5970s (one of the most efficient cards in raw performance and likely the #1 efficient card in real world performance), single core underclocked 45W max semprons, USB drive, and AMD motherboard w/ everything in southbridge turned off (every watt helps).

 4 rigs w/ 3x5970 = ~2.2 to 2.35GH/s ea (plus water cooled workstation which now has 3x 5970s).  Get about 2MH/w from the wall across all 5 systems.  Actually it is closer to 2.15 MH/w but I have found the older rigs are slightly less efficient so I say 2MH/watt as a conservative "goal".

Current difficulty 7,255,634,282,020,860 hashes per block.
2MH/watt * 60 * 60 * 1000 = 7200000 MH / kWh

 7,255,634,282,020,860 /  ( 7200000 * 1000 * 1000 ) = 1007 kWh per block.  9 cents per kWh = $90.63 per block.  $90.63 / 50 = ~$1.80 per coin.

The three metrics that determine break even are:
a) system efficiency (how many MH per watt, highly efficient cards, good powersupplies, and watching overclocks to keep it above 2MH/watt)
b) difficulty (combined with a give us how many kWh per block)
c) electricity prices (varies some free to $0.44 per kWh)

I have a bunch of odd ball cards 5850s, 6950s, 6970s sitting in a box that I need to ebay.  With prices as low as they are and space being a premium I like a dense stack of only highly efficient 5970s. The hard part is finding more at reasonable prices.

Yeah, I understand your point, but it's not "idiots like me" that are the problem.  As I don't speculate, or buy and sell btc.  I simply take what I get from mining and actually find goods to purchase online.  Which helps the community in general.

If more people used their btc that way, the price wouldn't be this low...

I have none.

To me, Bitcoin is not a machine which converts electricity into dollars. To me, Bitcoin is

* An interesting research topic
* A charming community full of good spirits and ideas
* and, above all, a great chance for a structural change in the monetary system somewhere down the road.

Why should I let my personal greed allow to do damage to these interesting goals?

Moreover, I started mining at a time where it was not yet profitable. Why should I stop it now when it loses profitability?

Ok. I admit it: My utility bill was higher than I expected.  :-[

But I also learned a lot from the community and this is the price to pay.

And: I do not have to mine 24 x 7 on all my GPU cards (12 x 7 is fine as well), and in winter I have a clear preference how to produce heat.  :D

So if I'm pulling ~1550 from the wall for rigs and cooling and getting ~3120 Mh/s, I'm at ~2MH/watt right? Why does your difficulty number have more commas than the national debt?  At $0.149/kWh what price am I better off buying coins?

When I lose power, brownout happens etc.

It isn't difficulty.  It is what difficulty represents.  Number of Hashes to make a block.

Difficulty * 2^32 = number of hashes per block.

Another way of looking at your numbers:

7,255,634,282,020,860 / (3120 * 1000 * 1000 * 60 * 60 ) = 646 hours.
It will take you 646 hours to find a block.

646 hours * 1.550kW =  1,001 kWh per block. (neto just about 1 MWh)  
Every block you find consumes 1,001 kWh of electricity.

10,01 kWh * $0.149/kWh = $149.
When you mine you are essentially buying a block for $149.  It doesn't matter if you buy it from the market or buy it from mining either way you are buying it.

$149/50 = $2.98.

If BTC are selling for MORE than $2.98 you should mine.
If BTC are selling for LESS than $2.98 you should buy.

In the winter you likely can reduce that by 1/3.  The energy consumed heats the house.  It likely isn't as cheap/efficient as using natural gas so we shouldn't consider it "free heat" but maybe "subsidized heat".  In the winter (if your rigs are in heated part of your house) maybe use $2.00 as the breakpoint.  In the summer if you need to AC to cool your house that adds about 30% additional electrical cost making your break even more like $4.00

So getting super complex.  The most efficient method to acquire coins.

In summer.  Price above $4 MINE.  Below $4 BUY.
In fall/spring.  Price above $3 MINE.  Below $3 BUY.  *if not needing to use AC or heat
In Winter.  Price above $2 MINE.  Below $2 BUY.

Of course when difficulty changes you will need to adjust but only the first number in the equation changes.  Number of hashes per block is simply difficulty * 2^32.

I think you have the BUY and MINE reversed.

Oops.  Yeah that would be the non-optimal strategy to maximize cost.

Fixing post.

Thanks, that makes sense.  I was at the same number, just got it a different way and was unsure it was accurate. 

I think I mentally came up with 3.50.   price per k/wh is only the base price, the elec company seams to have a plethora of other charges that get added in.

Yeah mine isn't really $.149, but that's what it averages with fees - granted some of those fees are fixed and would be paid with or without mining.

I, personally, like to keep my calculations "honest" -- after all, I wouldn't want to pretend my costs were lower than they were, and just "believe" I was making money.

Wouldn't that be stupid -- be making money in my own mind, but losing money in my actual bank account?

+1 to this really great calculation and clear explanation. I especially like how you give an extra 33% margin depending on heating/cooling. Well done, sir.

Nice Work! Thanks.

For me, I also like to add the capital investment into the calculation.
All the hardware should be paid off in 18 months in my opinion:
       That's the average time before hardware doubles in power and/or the price is cut in half.
        FPGAs will become commonplace and ASICs may be come common after that.

If you already had all the capital on hand before you joined the bitcoin venture, then it makes since not to think about it; however, in the future, in order to compete in mining capital investments will have to made by all specifically for mining.

I couldn't imagine anyone would still be into this for the profit side of things, You would make more money in a single day washing car windows at the local traffic lights than you would mining for a whole month.

So with that in mind the question about a cut off point is stupid, People will believe in there minds what the want to believe even if they have convinced them self they are making money. But I would say atleast 90% of miners are in it for the community and fun(if you can call it that).

How many hours of work does it take to run your miners each month?  I have 4 rigs running off usb drives which I haven't touched in weeks (except the whole DDOS fun and even that was maybe 1 hour of "work").   Now there is my 5th rig which is also my workstation that I tweak, modify, and change as a hobby of sorts but that is more a choice than a necessity.

Mining is more comparable to an investment than a job.  If I wash cars for 8 hours I get paid for 8 hours.  If it takes 8 hours per month to run and maintain the rigs I can get paid for 1000+ hours.

I won't be running my rigs for charity.  Maybe some miners will but not all of them will.  This is evident in the falling hashrate of the network.  So my break even point is very real $1.59 per BTC (modified by seasonal effect of heat).  When we hit that I will shut off my rigs.  If we go above it I will turn them back on.

At $3.50/BTC, my earning rate would be $0.91/day after power at 1.2Ghash. So needless to say, my miners will stay off for the time being  :P

I think the thing that's going to come to light is that without speculators driving the price, in a healthy system, the ratio of difficulty/price will keep mining a zero profit game. If anything, the market is just adjusting back to levels it can support without people pumping money into it looking to make a quick buck.

My shutdown point is $0, since I use my computer to heat my house.  :D

I hate to say it, but I didn't think bitcoin would fall this far given that there hasn't been a major theft recently. It looks like folks are just giving up. It's a shame because history shows us what happens when reason and progress fails. Bitcoin was a grand experiment in an egalitarian economy. Bitcoin, you either love it or hate it and while it's outlasted most marriages, every good thing will die. I wonder if anyone is developing a coin that works as a virus destroying computers? Now that is something our military-industrial complex would invest a great deal in resources to develop.

Keep in mind that trends often benefit bears in lean times, IE people who buy low often lose out in the short run and payoff in the long. I"m investing heavily now and I'll see great returns I believe.  If you are speculating, you're not an investor, you're a pig... Pigs get slaughtered.

Gut check folks! Welcome to sub-$3!  :o

jup lol i see btc drop like a rocket

It's a hard question to answer, because the difficulty certainly will follow the price,
Say at 2 mil difficulty, my shutdown point would be at $5,
but when we actually reach $5, the difficulty went down to 1 mil,
so the new shutdown point is at $2.5, since you're getting double the amount of coins.

right, but that only makes sense AFTER difficulty adjusts. so if you're losing money right now, you shouldn't be mining until difficulty adjusts lower where you'll be profitable again.

That's correct, but most miners don't sell their coins every minute in real time, so it's really hard to determine the absolute profitable cutting point.

difficulty adjustments don't happen that fast, but if a miner isn't selling their coins in a timely manner after mining them, they're speculating.

Actually I find that during such times as a lot of miners stopped, there is a good range of second hand graphic cards and other equipment at cheap prices which may help the existing miners cut their cost per hash.  It can be a good time for some, it can be a bad time for others.

Well my shutdown point... who am i kidding? I mine cause i have a decent gpu, i don't really have a shutdown point  :D

  The other variable is whether or not a person is mining solely for the purpose of bitcoin acquisition.  Some of us, believe it or not do so solely for supporting the network and view any coins we receive as a 'bonus' for doing so. I have personally sold 0 coins out of several hundred mined and have found ways to use/spend the ones I have gotten rid of.


  On the point of cheaper to mine or cheaper to buy. For anyone that had that mindset for the sole purpose of acquiring bitcoins. I would pray that they atleast know basic 6th grade algebra, as it is not exactly rocket science to formulate what it cost to buy equip, elec cost, etc verse what one could buy bitcoin for.

Actually people with free electricity is what's keeping bitcoin alive. Otherwise, bitcoin network would be too expensive to keep running. Each block cost a ton of money in electricity to produce if someone had to pay for the electricity.

No it doesn't I posted a long post outlining my exact electrical costs.  My electrical costs at current difficulty are $1.59 per BTC.  Today BTC is selling higher than that for any miner w/ electrical costs equal to me or less it is profitable to mine.

Another way to look at it is

Current difficulty: 1,486,600
MH/Watt: 2.00 (efficiency)

MHashes per Block =  (2^32)(1,586,00)/1000/1000
MHashes per Block = 6382321402

MH per kWh = 2.0 * 60 * 60 * 1000
MH per kWh = 7200000

kWh per block = (MH/block) / (MH/kWh)
kWh per block = 6382321402 / 7200000
kWh per block = 886.43

Break even electrical cost = (block reward) * (market price) / (kWh per block)
Break even electrical cost  = 50 * $2.40 / 886.43
Break even electrical cost  = $0.139

If your energy cost is $0.139 you are mining break even (@ 2 MH/W efficiency).
If your energy cost is > $0.139 you are losing money mining (@ MH/W efficiency) and likely should simply buy coins from more efficient providers.
If your energy costs is < $0.139 you are making money mining (@ MH/W efficiency) and likely should continue to mine and sell coins to less efficient users.

Obviously this doesn't include hardware costs.  Also miners with less efficient have lower break even electrical cost and those with high efficiency (FPGA) have higher break even electrical costs.

Your results are not typical though as your setup is... unique. I think you're going to have some delusional people here who will find reasons to keep mining a positive venture in their mind (yet not their wallet), but I agree with your pragmatic approach.

I'm at ~1.5MH/W efficiency (2x 5830's, 2x 6870's) and my money losing point is $2.46/BTC with my current electricity rate of $0.091/kwh. Luckily, my only money 'invested' was my first video card months ago, since that point, I've only used cashed out BTC/USD to finance my hardware, so at least it's all paid for.

Everything being equal, I think it's very safe to say that if someone hasn't made their money back on their initial investment in hardware, now might be the time to sell your equipment and break even/positive if you can. Depending on your efficiency/power cost, there's a good chance people are only making pennies per day.

On BTC-E chat I saw someone talking to a guy with 10 6950s that's been mining since the peak and not selling.  He's holding 150 BTC.  For those playing the home game, that's a minimum of $250 in power and $3500 in video cards.  And a current market value of $390 for his output.  IMO this is the norm.  Lots of miners are in this boat, and they will keep on mining until they simply can't deny they've lost money.  Might take hardware failure for that to sink in.

The high hash rates on deepbit confirm it.

If that's the case, he's not mining, he's speculating.

Sure, but shutting down your miners will do nothing to prevent achieving those goals. You are not even helping secure the network as one might think, because by keeping unprofitable miners running "for the cause", you are just driving up difficulty and driving out other, rational miners with higher efficiency or cheaper electricity.

Most miners who actually pay for electricity should shut down their rigs at this price point. It makes no sense to run them unless you expect the price to rise in the short / mid term (which is questionable). What is likely is difficulty dropping, so then just turn the rigs back on if diff drops enough.

I'm in the fortunate situation of paying a fixed fee for electricity but even in my situation I'm actually close to quitting because the value of the hardware goes down as time goes on. But the small profit I get right now compensates for that, barely.

I'm not expecting the price to go up in the near future but I'm expecting the difficulty to go down quite a bit, so I'm still hanging in there. For now.

And mining is indeed only one part of Bitcoin. My interest in Bitcoin is not going anywhere even if I have to quit my mining operations.

I'm speculating on a Namecoin hype short to midterm but I don't really employ and rig, just my desktop with a 5770 and a Llano APU. If the price trend continues I think people like me (lots) will be the major contributor to the hashrate in opposed to a few big miners.
And wo knows maybe some people will give up on bitcoin completely, as they should if they aren't into it's real adaptation as a replacement for fiat currencies.

The botminers may end up maintaining the network. Hopefully they won't kill the potential value of their own investment.

its getting close!!

4 of my rigs get more then 2.5 M/h  / watt, so I will leave those running .  but it is def getting close for the older rigs.

I might reduce my mining power but for as long as I take part in the the bitcoin community / economy I'll at least keep one miner active. I ran SETI@Home for  a long time and got nothing for it. No reason not to run a bitcoin miner if I believe in bitcoin.

hmmm 5970?

pls dont tell me you just bought them

3x 5970 is an unbeatable efficiency engine.

No need for extender cables, dual power supplies, or high end board.  Find a AMD board w/ triple spaced PCIEx16 slots (1,4,7).  Add 3x 5970, sempron CPU, 2GB of ram, USB drive running copy of linux & cgminer and a nice 88%+ effecient 1200W powersupply and you have about as efficient of a setup that you can get without going to FPGA.

Tonight I had a 5 min power outage so I was able to plug two of my 3x5970 rigs into kill-a-watts before powering them up.  ~870W, ~2150MH =  2.47 MH/W from the wall.

To those who believe sub $2/BTC energy cost is impossible even w/ cheap electricity .... check your efficiency (at the wall).  If you are not getting >2MH/W you need to adapt or power down.

When BTC was $30USD anyone could grab any random junk and be profitable even w/ $0.30/kWh power costs.  Those days are gone and likely never coming back.  If someday (a decade from now) BTC is $30USD it will be because we are at 10 million difficulty. 

Today you need to be lean & mean and that means 6+ GPU per rig. 

Yes, I just bot them from newegg at 399 each.   getting 2908 Mhsh at 1190 watts at the wall.   

here is a couple of pics.
https://plus.google.com/u/0/photos/112408294399222065988/albums/5658727447810944545

Now that this is sitting on my desk, I need to recalculate: https://bitcointalk.org/index.php?topic=40058.msg584606#msg584606 :D

It's mining right now at 250 MH/s and consuming exactly 17 W (measured at the board). Using DeathAndTaxes' terminology and $0.149/kWh, that's like buying a block for $17.75, or $0.35/BTC!

I guess that's my new shutdown point! :)

my shutdown point is $15. just wanted to say hi again from europe, where electricity actually costs money.

  That is the hottest thing I've seen so far this morning!! (wife still sleeping  ;) )

You can not define a shutdown point as BTC/$ and ignore difficulty.

Difficulty is of course indirectly related to BTC/$ but its effect is that long term profitability is not dependent on BTC/$ but only on your MH/$ compared to the rest of the world. As such that FPGA will likely be profitable for the foreseeable future no matter BTC price, and EU or other GPU miners with high electricity costs will never be profitable for sustained periods of time. At most during short windows of opportunity when the network hash rate and difficulty havent caught up with a higher price yet.

You can totally define a shutdown point of BTC/$ because calculating that REQUIRES you include difficulty. Otherwise you wouldn't know how many BTC you generate per watt.

I still don't buy into the idea of FPGA being the future due to the astronomical startup costs when compared to CPU. I think the current CHEAPEST solution commercially available out there is somewhere in the range of ~$200 for 100Mhash? Even at lower difficulties, it would take FOR EVER just to earn back your initial investment, let alone make profit beyond that (assuming bitcoin doesn't recover back to $10).

Hmm? Where exactly do you see watt or difficulty in "my shutdown point is $2 per BTC" ?

In theory bitcoin mining can be profitable at $0.02/BTC and unprofitable at $200/BTC with the very same rig and the very same electricity cost. It all depends on difficulty and therefore, all the other miners.

You're right, we should say that it is our shutdown point at the current difficulty. Even better would be to define the ratio of difficulty/price, but you would have to recalculate the ratio all the time.. On the other hand, the USD/BTC price is plastered everywhere so you can keep tabs on it easily. When the diffficulty changes you just have to scale your shutdown point (in USD) by the same amount.

E.g., if the difficulty rises by 10%, my shutdown point in USD/BTC goes up by the same amount. My $0.35 shutdown point would go up to $0.385. You only have to recalculate this every two weeks.

When the payment arrives for my videocard. So, next week at latest.

I will shut down when an uncorrectable flaw is found in one of Bitcoin's algorithms, making it unusable.

+1

I will shutdown when I am driving a car that runs on burning money.

This is a great answer.

btw, I just received my third elec bill.   It was lower by 500 dollars because I used more electricity...  Don't you just love capitalism, I got cheaper electricity by killing more trees :)

So, as long as I keep all the miners humming, my shutdown just went down to the mid 1 dollar range.

The day that my cards blow out.
Seriously, Winter=Free heating
Summer=some nice internet moneys

It's Stupid things like this that start wars. You fucking got billed Five Hundred dollars less, BECAUSE you used MORE power? So you moved into a different "payment" "bracket"
Thats just fucking stupid.
Just, Fucking Stupid.
I can see where that was created from tho "Use more Powerful tools to build shit and help our government and we'll charge you less"
But seriously, That is a fucking Waste of They're own money, Why the fuck did they LOWER your bill by $500,
Lets play with this, Just for shits

(All math below has no Real stats)
You pay 200/mo for power
You get a mining farm, Wich should bring the cost up Alot
So lets say that it'd cost you an extra 300/mo to run the farm.
So with the farm, And your house, Your spending 500/mo.
Now lets pretend that the "bill bracket" Is at 600,
If buddy turns More Miners on, Bringing his bill upto 750/mo
Then he gets slapped with a -$500 price change
Making him pay 250/mo
$50's/mo for the Entire mining farm.
Even though the farm is Raping electricity out of the grid at What Should be a pricy amount, It's not, Because he swapped "brackets" It became Cheeper by $500 for him to Use more electricity.

Fuck You, Capitalist, Why are you Raping the Planet and lying? What you say is utter bullshit.

I call BS.

I find it equally dubious.  Generally electricity is priced in tiers not retroactively.

So for large customers (generally not residential) it may be something like (hypothetical numbers):

0 to 1000 kWh $0.10 per kWh
1001 to 3000 kWh $0.095 per kWh
3001 to 5000 kWh $0.092 per kWh

I mean if the claim is true why wouldn't companies simply waste power to lower their cost.  Rig up a huge number of resistors and simply turn electricity into waste heat.  Free money right.  Imagine massive electrical consumers (like say aluminum smelter).  If their bill was x and they could make it <x by wasting electricity they would build the infrastructure to do so.  Simply rig giant blocks of restistor put them on the roof and "burn off" enough electricity to lower their bill.

So power company consumes more resources, gets closer to peak limit of the high capacity lines, and gets less revenue in the process?

On edit:
Giving the author of the claim the benefit of the doubt maybe the power company switched to seasonal pricing and his lowered bill had nothing to do with amount of power consumed.  I know 1 OCT my electrical rate went down about 15% as the power company switched to "winter" pricing.

No kidding, This guy is just lying, Fucking sick of trolls

my shutdown point is only when bit coin someday dies.  I have it going while I'm not gaming, like I did with folding@home and, before that, SETI@home.
 
This at least gives me some return on investment. ;)
 
I'm only running for the cool concept of bit coins, and to maybe buy an upgrade to my gaming rig.
 
If folding@home ever started paying similar payouts, I'd probably go back to it, since it's also helping to advance medicine. :)

My cutoff point is when I got the electricity bill in, noticed I would never even make half of the extra amount due to mining with bitcoins. Sold 2 out of 3 of my 6990's and keeping 1 for gaming, and mining just for fun and to help in small way for community. 1 6990 gives me 400mh, it still costs me in electricity but not as much as when I was running 3, Every thing is good in moderation including bitcoin mining, My moderation was to mine on 1 card only and still feel okay about helping the bitcoin grow.

Mining "for fun"/at a loss does not help the network. Blocks get generated at a steady, consistent rate no matter how many people are mining thanks to difficulty adjustments. If anything, people mining "for fun" or at a loss are hurting the network by keeping difficulty higher than it needs to be.

Due to the recent difficulty drops combined with the price settling at ~$3.20, I re-enabled my mining rigs since I'm back to an acceptable profit margin after energy costs.

Explain.

The higher the difficulty the more hashing power it would require to gain 51% control of the network.  The purpose of the network isn't to provide you coins.  The purpose of the network is to keep the currency secure without the need of a third party.

The "block reward" is a subsidy because transaction volume and taxes are currently insufficient for the network to pay for itself.


Higher difficulty = stronger network = stronger Bitcoin.

Although mathematically possible, I disagree that this is a threat.

For a single entity not currently in the network to take over 50% of the hashing power, they'd need to bring ~8.5Thash/sec to the game. I don't think, even using a botnet that one could achieve those numbers.

For a pool to hit this, obviously it'd have to be premeditated in that they wait for the users to push them over 50%. But Miners have the power to make sure hashing power is distributed among the pools.

Honestly, your equation should be:

higher distribution of computing power = stronger network = stronger bitcoin.

And that is difficult why?
Because of high difficulty and large number of miners.

If marginal miners quit what happens to aggregate hashing power?

lower difficulty = lower aggregate hashing power = greater threat of 51% attack.

I never said Bitcoin is vulnerable @ 8.5TH/s but those advocating that we need lower difficulty are essentially saying "we need less network security".


Distribution is important but that is a different (but related) issue.

There was nothing wrong with my quote.  Higher difficulty = higher aggregate hashing power.
That is a good thing.  From a network security standpoint how does lower difficulty help Bitcoin?  While it may help you (and me) personally to earn more coins that isn't the point.  The coins exists and incentive to keep the network strong.

I still disagree that this is as big a deal as people are making it out to be. Even if total network hashing power were to drop by 50%, a single attack vector would require 4.2Thash/sec to gain the magical 50% hashing power required to cause trouble on the network. So there's two points to be made there:

- 50%+ control of network only allows the attacker to essentially stop transactions + reverse transactions they send.
- their control of the network would only be through the next difficulty increase which could possibly net them 50,000 bitcoins if they were able to hold the 50%+ control/block generation

It's my opinion that this type of attack would cost too much to coordinate for a single entity, and as a community we can prevent it from happening by a malicious pool owner by making sure we distribute hashing power among pools. There's not much to be gained by this type of attack vs. the cost/effort involved to exploit it.

In an ideal/healthy bitcoin system, difficulty/hashing/price are self-regulated to the point where mining is barely more profitable than just buying coins.

So I think we just have a difference of opinion here on the impact/risk/probability of this type of attack. And that's OK :)

Only?  Would be like saying I have this machine that if you put in a dollar two dollars come out.  However it only doubles money so likely there is no value in it.



That wasn't the statement you corrected though.

Is the network stronger or weaker if difficulty is lower.  I never said it was a huge risk. It isn't much of a risk (at this level of difficulty) because difficulty IS high.   Higher difficulty makes the network stronger.  That was my statement you had a problem with.

Saying it isn't a risk because difficulty is strong is like saying: "We have a lot of cops, so crime is low.  So why have so many cops.  We might as well fire 90% of them because the risk of crime is low."  ;D

That's not how the attack would work. A person in control could reverse transactions THEY send and also prevent block confirmation. So a correct analogy would be:

"I sent you 100 bitcoins then a couple minutes later they disappear from your wallet because I reversed the transaction." Bitcoins aren't being created/destroyed, just recalled.



Since difficulty is tied to hashrate, and the attack vector I'm talking about is the only risk the network runs into when it has low hashrate/difficulty, I think we're still talking about the same thing.

Not in the mood to argue, just disagreeing. Respectfully.

To the OP point, my shutdown point was $4.75. Sold two rigs and kept the last one that has dual 6950s. Crossfired them and now have a kick ass Battlefield 3/COD MW3 machine. Will keep it to mine when I'm not gaming. Dual use is the only profit to be gained with coins so low.

Might I also add that the global hash rate is one way for the miners to vote on how much BTC is worth.
That is huge unintended benefit of mining that many fail to recognize.
If half the miners got up and quit, the price/BTC would defiantly go a lot lower.
The perception that mining follows price is an argument of "what came first, the chicken or the egg?"
As bitcoin continues to mature the relationship between global hashrate and price will become more apparent.

In the future, Bitcoin mining will not be a get rich scheme - it will essentially pay for itself + very little extra.
With patience, it could pay a lot more if the miner holds onto the coins as Bitcoin's value has the potential to rise over time.

Difficulty and price was never chicken or the egg. Miners never voted on what btc is worth. They must decide if it's profitable mining by first looking at the price compared to current difficulty and their electricity rate. If is it profitable to mine in you location based on that then you mine. If it's not then you would get a better price from the market offerings. Explain to me how you can do this backwards as in chicken or the egg? If you are thinking hoarding, that is different. That has to do with miners feeling more confident about the future price and not selling immediately putting themselves at risk to possibly gain more.

It's always been one way. And huge people quitting mining or jumping in to mine does not change the btc generation rate. It just changes how many people will have to share the same amount of btc being generated every day. And bitcoin mining was never get rich quick scheme. It's had a short run of couple months from Apr to June rally with large profit margin followed by now 5 month long decline which narrowed it back down to almost nothing. It was just more competitive way to get bitcoin than buying at market price at different junctions of bitcoins history depending on your electricity rate. 

Getting close to shutting down my miners again. Lower difficulties at $3 was nice.. but sub $2 would hurt.

How you guys fairing?

Well good news is difficulty has fallen by 1/3rd since this thread began.

So current difficult = ~ 1.2M
Hashes per BTC = (difficulty)*(2^32)/(50 BTC per block)
Hashes per BTC = (1,200,000)*(2^32)/50
Hashes per BTC = 103,079,215,104,000
MH/s per BTC = 103,079,215

At 2.5MH / W
kWh per BTC = (MH per BTC) / (MH/s per W * 3600 seconds per hour * 1000 watts per kw)
kWh per BTC = (103,079,215) / ( 2.5 * 60 * 60  * 1000)
kWh per BTC = 11.45

At $0.09 per kWh
USD per BTC = (kwh) * (electrical rate)
USD per BTC =  (11.45) * (0.09)
US per BTC = $1.03

Still $2 BTC would suck unless we see a significant difficulty decline as electricity would be eating up over half of gross revenue.

On edit: To be more universal anyone can calculate their electrical cost of production with this formula.

Electrical Cost per BTC = (electrical rate)*(difficulty in millions)*(2^32)/ ( 50 * (MH/W) * 3600 * 1000)

Simplified (23.86 is magic number which is simplified result of other conversion factors)

( Electrical Cost / BTC ) = (23.86) * (electrical rate)*(difficulty in millions) / (MH/W)

Example:
( Electrical Cost / BTC ) = (23.86) * ($0.09)*(1.2) / (2.5)
( Electrical Cost / BTC ) = $1.03

I would like to point out, that most people are getting MUCH, much less than 2.5 MH/W.

I'm getting 1.75 MH/W on average, including the cost of fans (though I haven't calculated it perfectly yet) and all my cards are 58XX series! All the people using 6XXX cards are going to get much less. (And let's face it -- 58XX cards aren't exactly available at Best Buy these days...) Though it's possible most of the 6XXX crowd were among those who quit in the last couple months...I'd be willing to believe that.

2.5 MH/W is what a couple (?) guys are getting, who sold their previous rigs and bought 5970's to create "maximum efficient rigs". But most of us did NOT sell our rigs and buy 5970's when they became available recently.

IMHO if you are not off by now you are either stealing electricity or the most efficient miner alive.

Well there isn't anything requiring you to get 1.75 MH/W or worse.  The question of thread (and re-asked by OP) is what is YOUR shutdown point.

Efficiency is king in any commodity based business. Yes generating bitcoins is the perfect commodity based business.

The price/difficulty factor will be set by the median network efficiency.  Given some % of network involves stolen hardware and free electricity that makes efficiency even more important.

A couple questions on your 1.75 MH/W
Running linux?
Using a thumb drive?
Using a Sempron?
Turned off onboard audio, SATA, USB3.0, RAID, etc on MB?
Using high efficiency PSU?
Underclocked CPU & RAM in BIOS?

Still even at 2.0 MH/W (1.75 is just pathetic) and $0.09 electrical cost we are talking $1.30 per BTC.  Anyone who tries can build a rig more efficient than 1.75MH/W.  If you aren't trying then given there are no barriers to entry price is going to move below your production cost.

Or you are willing to wait a long time for returns.

I'm running an average of 3 GPUs per system, all Linux (except one machine which has to be Windows XP).
One thumb drive; the rest are hard drives. All but 2 systems (used for other things) have a single 2 GB RAM stick.
A couple 80+silver PSUs, the rest are 80+ bronze.
All of them have the extra mobo crap turned off; that's easy stuff.
I'm using AMD Athlon II CPUs. Yes, a Sempron uses even less, but it is also (even more) worthless when it comes to resale time. An Athlon II doesn't exactly suck electricity -- especially when it's not running 100%. I'm not CPU mining.

When I built these systems, MH/W efficiency was NOT my only concern. I was also quite concerned with MH/$ at the time. And motherboards with more than 3 PCI-E slots were much more expensive than the $50 and $70 mobos I could get with 3 slots. I was concerned with payoff time. Same for PSUs. Most of my PSUs are 750W, which can handle 3 cards. A 1200W, which can handle 66% more cards, costs about 100% more. Didn't seem worth it to me.

I'm still a bit glad that my most expensive card is a 5870 -- worth around $230 new. Those 5970's are going to be *extremely* hard to sell used, considering they're worth $500. Any gamer with $500 for a new video card is *going* to buy a new card. End of story.

I bought them mostly used (4 new when Newegg did their sales) for an average of $350 a pop.  Lots of gamers can't afford top of the line.  I would have no problem unloading them for $300 right now.

Of course higher efficiency means I don't need to unload them.

You can't both admit to not caring about efficiency and then complain about how low efficiency means you are close to break even.
Efficiency is king (unless you are using stolen hardware and/or free electricity).

I understand you're argument; you bought most of your hardware recently and are in it for "the long haul".
But the same argument could be applied to FPGAs -- why not go all out and be king of efficiency?
It's basically your strategy on steroids. Spend even MORE money for an even MORE sure-fire ability to beat the competition.

I haven't bought any new hardware in months. That's why I don't own any 5970s. And I'm too old (with a family, kids, job, etc.) to mess with selling all my rigs and starting over with "more efficient" ones. The price of BTC just doesn't justify the time I'd spend.

I'll admit -- I spent some time back in May/June learning about BTC, setting up rigs, researching cards, etc. but back then there was good money to be made. I would never spend that kind of time now just to earn a few bucks a day (assuming 6 GH/s worth of rigs). Fortunately, I learned about BTC & set up my rigs when BTC were worth much, much more.

I'm actually big into efficiency. I just have to balance it with my other requirements (time, money, etc.)
Before Bitcoin, my whole household used about 13 KW/h of electricity a day. I know all the tricks to save electricity.

Believe me, if it were easy, I'd upgrade all my rigs to be more efficient. But I can't spend any time "tinkering" in my Bitcoin room these days; the $3 or $4/day just doesn't justify much time spent.

Funny you said that.  My goal for 2012 is FPGA.  No reason to shutdown the GPU rigs though (until they are no longer profitable).

BTW.  No need to sell entire rigs.  I simply swapped out a hodgepodge of GPU (6950, 6970s, 6870s, 6850s) for what I found to be the most efficient setup (3x5970).  It really didn't cost much out of pocket as for some reason the 6950 junk sells at a premium and the 5970s at a discount.  I don't understand it but I was happy to take advantage of it. 

FPGA will be essential for all miners but it likely will take some time.  The price of bitcoin for mining is pretty much meaningless. Bitcoin could go to $30 US tomorrow and as long as miner's felt confident that it was sustainable you would see difficulty rise until the same people who are break even @ $3 USD are break even at $30 USD.  Knowing you are more efficient than the median miner is a comfort.  The price of bitcoin doesn't really matter.

OK so then people with cheaper electricity are pretty safe then ;D.

Well when you production cost is $0.00 it is kinda hard to lose money.

When I'm doing it for profit I can't be bothered when the price is under $4 at the current difficulty, but right now it's getting cold so I'm just switching on as much as I need for heating.

I've got 3 miners, two of them gives 2.7 MH/W and one 2.4 MH/W at peak efficiency measured for the complete system at the wall. If I want more heat it's less, though. Unfortunately I've spent a lot of time testing different combinations of software and settings to get that result and I would be shooting myself in the foot if I just gave it away.