I doubt that. First of all, hardware manufacturers seem to instantly convert bitcoins to dollars, for obvious reasons (its not like TSMC accepts bitcoins). And do miners purchase coins to buy their gear with? Highly doubtful, since most hardware manufactures take dollars too, so I suspect almost all bitcoin purchases would be from existing stashes, so the net effect of mining hardware business, if any, is most likely that more bitcoins are being sold on exchanges, not the other way round.

As for what will happen once mining becomes a large enterprise thing; there is no way to know whether or not these companies will liquidate everything they mine, or assemble a bitcoin stash. My guess is most will do a bit of both, it doesnt seem likely you invest millions in a large mine if you do no believe in the long term prospects of bitcoin.

As for current small miners that will no longer be buying hardware; that could also mean they have more funds available to invest in bitcoins, something thats likely a better investment than mining gear anyway. Either way, the impact of mining on the BTC exchange rate is generally grossly overstated. There are nearly 13 million bitcoins. Each day, only ~3600 are mined. In two years, only half that.

Either you cant read a chart or you are assuming current asics run at a point to the extreme left of that chart, which would also imply those other asics can be overclocked by factor of 2-3x. Here is hint: almost none can. KnC, HF, CT, bitmain, Bitmine .. you'd be lucky to hit advertised speeds, let alone 2-3x more.

Either way, welcome to my ignore list.

ITs not meant as promotion for BFL, Id be the last person to suggest you order anything from there. But the chart is interesting and relevant to earlier discussions about how you can scale power efficiency of every ASIC. Even if you take those numbers with a table spoon of salt, it nicely illustrates my point.  There is about a factor 3x difference in power efficiency depending what voltage/frequency point you pick. That spread is not going to be vastly different for any other bitcoin asic.

That doesnt make any sense. If people overinvested in mining, it isnt going to influence the exchange rate. Why would I sell my bitcoins lower because you (hypothetically) are out of a few tens of thousand dollars or dozens of bitcoins in unprofitable or undelivered mining gear? Getting screwed, whether its in BTC or fiat doesnt really influence btc rate. This is no different than when pirate's ponzi collapsed.

If there is an impact, it will be tiny, and probably work the other way. Those that bought these unprofitable miners may hoard their mined coins hoping to eventually break even if the price goes up. But considering how few coins are mined compared to how many are traded, its not going to make a big difference.

FWIW, this is what BFL published recently:

I have no idea what georesonance found near bangladesh, the pictures really are intriguing, and it might be some plane, but whatever it is, it is not flight 370. There is no way a plane can rest on the bottom on that ocean, while giving engine monitoring satellite pings and underwater black box pings thousands of miles away. But if authorities  dont follow up on it, conspiracy theorist will say its a coverup. May as well have a look whats on the bottom of the ocean there.

Actually, volume production of 300mm 28nm wafers is lower than estimated above. Down to sub $3000 range for high volume. Of course, bitcoin manufacturers are not yet touching the volumes of AMD/nVidia/Qualcomm etc, but there is also the fact that AMD/nVidia typically require more than a dozen metal layers, whereas Im guessing a bitcoin miner would need no more than 3. That also impacts processing time and cost considerably. If anything, $4000 per wafer sounds high to me if you are calculating the "end game".

Many of the other estimates are also clearly too high. A naked PCB for a bitcoin rig isnt going to cost $100 to produce (you can buy far more complex fully populated ATX motherboards with many more layers, connectors and components for only a fraction of that in retail) and a beaglebone black retails for $49 on adafruit, so no way CT is paying $100. VRMS do cost a bit, but caps and resisters and all that, we all know basically cost nothing in volume, no where near $100 per board

ALl in all, IMO the above BOM estimates are way, way high.

Sure it means something. It means if you post enough nonsense spam, you get paid more to add spam to your signature. Of course the thread about hot asian girls really could be the NSA .

Im sure some of these companies will continue existing as they branch out to different markets or products and most of them will probably end up mining themselves, either for their own account, like KnC, or reselling the hashrate, like BFL.

But even those that will close their doors, will probably sell their IP before doing so (assuming its a reasonably competitive design), so anyone holding it can place an order with TSMC to produce another batch of wafers should demand increase again.

First of all, congrats davejh, you seem to be getting it now .


Whoever happens to still have a miner or mining operation. Keep in mind that as long as its operationally profitable, it doesnt make sense to turn off those machines, even though they may never ROI. And you will most likely see tons of those, in fact you already see them now, miners who will never make a BTC denominated profit, but keep mining to minimize the loss.


As above, difficulty is not likely to ever drop (assuming constant BTC value), as that requires miners to actually be turned off. Thats never going to happen on a large scale. Once we approach the point of marginal profitability, ie, mining revenue is barely above electricity cost, sales/deployment will pretty much grind to a halt, but there is still an incentive to keep the existing infrastructure running.

Before you mention reward halving, that will already be factored it when making the purchase/deployment decisions.

So what? Bitcoin isnt dependent on miners or its manufacturers being profitable. All bitcoin needs is that those miners actually run, and that is guaranteed.

That said, i would expect the most power/cost efficient mining operations to be able to extract a small operational profit on average, but anyone who thinks this is a long term goldmine (excuse the pun) doesnt understand mining or is betting on BTC appreciation - which we all know can be profited from much more easily by just buying BTC.

Seems like you even went below 0.4W/GH at the chip level. Not bad for your first ever asic design (IIRC) on an obsolete process and nearly one year ahead of the competition. Cant wait to see what you will do on a more advanced process. Havent kept up, is something upcoming ?

That said, wouldnt waste my time trying to talk sense to "jimmothy". Logic is lost on him.

The latter is kinda obvious, since this mining is a zero sum game.

As for the former, they figured that out looong ago. As did I. Before the first asic was even announced I predicted the dynamics of virtually free to produce GH (especially compared to FPGA's and GPU's of that time) could only result in plummeting prices and skyrocketing difficulty for years to come, and it would have to happen at a speed that would result in a BTC denominated bloodbath for nearly all miners, and it gave perverse incentives for overpromised preorders. I was ridiculed by miners drooling over the prospects of dozens of GH for only a few thousand dollar or a few hundred BTC. I kept clear, shut down my GPU farm never ordered as much as a Jalapeno and watched the onslaught.

Several years later, perhaps confused by the BTC price spike, most people still dont seem to get it.


Yep, except if you want to make it realistic, new entrants will not be able to achieve a positive ROI. Almost no asic miner ever has (BTC denominated), and very few paying list prices ever will.

Thats only true for end users who are paying OEM's enormous gross margins. Those margins serve partly to pay for the substantial NRE, partly because they can get away with it because difficulty is still so "low". BUt dont let that confuse you. If it helps, look at KnC's datacenter. How much are they paying for their equipment? Its not going to be anywhere near $2/GH, I guarantee you that.


No, its not the cost. Its the producers gross margins. A year ago we paid $50/GH for preorders, today we are below $2 for immediate shipment and that is despite bitcoin appreciating ~5x. What changed ? Difficulty, and little else, considering I happen to be comparing 65nm (BFL) and 55nm (Bitmain) products here. If you calculate GH cost in function of BTC price / difficulty, you will see that barely budged at all.

We are not anywhere near the bottom yet. Prices will keep dropping as difficulty skyrockets as long as gross margins are still phenomenal and manufacturers have therefore no incentive to scale down production. You cant predict whats going to happen without acknowledging this reality.  



Nope.
Its clear that cointerra or HF wont get the same pricing as AMD, but even if you double AMD's wafer price, you will find their margins are stunning. Lets do some math. Hashfast golden nonce has 4 81mm² dies in an MCM. That works out to (4x) 185 candidates from a 300mm wafer. How much does HF pay for a wafer? Industry standard volume pricing for 28nm today is in the ballpark of $2500 per wafer. Keep in mind that AMD/nVidia/etc chips regularly need 15 or more metal layers, whereas Im guessing a bitcoin miner would need no more than 3. That alone should pretty much close the price gap with AMD, but lets say despite that, HF pays $6000 per wafer. Thats $32 per GN candidate. Add a few dollar for packaging and yields (which should be very high given the redundant nature), and there is no way they should pay over $40 per chip. The PCB will cost too, lets say thats also $40. And lets add $20 in operating margin and to get a nice round high end ballpark of $100.

Whats the market price for their EVO board? $1888. If you buy 5. And are gullible enough to beleve HF will ship that in June.  Note that I didnt forget cooling, it comes without cooling, much less a PSU.

Low production volume isnt a factor in current pricing. It will become a factor once prices drop another order of magnitude, at which point, bitcoin asic volume will have become non trivial even for fabs anyway.


28nm has been mature for quite some time. MCMs do cost a few dollars, but think why they are using them. If it were cheaper to use 4 smaller dies, wouldnt they? MCM packaging apparently is cheaper than what it costs to mount the chips and coolers. That says it cant be much.


Thats not someone's decision that will drive that. ITs the market that will drive that. Who's going to pay $2/GH if difficulty is 10x what it is today? No one. And likewise, what bitcoin asic manufacturer is  going to prefer not selling anything at all over selling a $100 PCB for $200?





Cooling just increases your electricity costs.

You moron, S1 and S2 use the same chip. So of course S1 is capable of achieving similar efficiencies if you underclock and undervolt them just like in the S2. Thats the whole point. The difference is that S1 by default uses a clock and voltage setting that results in ~2W/GH at the wall while for S2 they picked a point that roughly cuts that by half.  

Which only shows your assumptions cant be right. Ultimately mining is converting electricity in to bitcoins, you would expect a near linear correlation, not a 40% increase for a 1000% decrease in elecricity rates. The only thing preventing that from being truly linear is hardware amortization. YOu must have quite unrealistic assumptions for those.


? The fact you would need more chips to achieve better efficiency doesnt again reduce the efficiency. IT does increase cost, but not compared to todays market prices, only compared to todays marginal production costs.


Im not sure you understand how mining hardware pricing works. Only two factors really matter; miners (as in end customers) breakeven point or perceived breakeven and manufacturer breakeven (on marginal costs). Currently these two are several orders of magnitude apart. As a result, miners are being sold for prices that miners perceive as potentially profitable. BUt that price point is linearly correlated with difficulty, so those prices will keep going down, way, way faster than Moore's law, at a speed limited only by manufacturing capability, until prices approach marginal production costs of the most efficient vendors. Now you can debate what those are, but asicminer claims $0.2/GH wafercost and my guess is that larger MCM 28nm devices are at least 2-4x cheaper per GH.


Actually, I dont agree Electricity cost will become the biggest single factor IMO

For a ballpark guess, lets take $0.2/GH as marginal hardware production cost and 0.5W/GH efficiency. So each TH would cost $200 to produce and draw 500W. 500W @ 3 cents per KWH (including cooling, overhead) = ~$131/year.

$200>$131, however we are looking at the "endgame" here, and therefore hardware prices will stabilize and their value loss can be written off over several years. If you just amortize over 2 years or assume a resale value of 50% of the purchase price, electricity has become the biggest factor.


If by device you mean the asic itself, then obviously that can be done easily. If you mean a complete rackmountable miner, then obviously not, but in 6 or 9 months, no one is going to be selling miners in fancy enclosures with touch screen LCDs. Look at KnC's datacenter, or bigmegapower; naked PCB's on "ikea" shelves. Thats how it will look.


Now thats something I and I presume everyone else will agree with. No one ever expected a monthly hashrate doubling to continue perpetually.

I like the chart, but I cant agree with your assumptions. IN particular electricity costs. Average electricity costs are irrelevant, what matters is lowest electricity cost (where mining is feasible). Because that is where mining will relocate, and places where electricity price is substantially higher, miners will have to shut down. Here is a read for you:

http://www.spokesman.com/stories/2014/apr/26/northwests-cheap-power-drawing-bitcoin-miners/

A map comparing energy rates led them to Central Washington, where hydroelectric dams churn out electricity that costs industrial customers less than 2 cents per kilowatt.

You are assuming 10x that price.

Secondly you are incorrectly factoring in asic "improvments". THere are two factors that matter, price per GH and watt per GH. The first one doesnt need Moore's law to improve dramatically from where we are today. ALl thats needed is difficulty going up further, and prices will come down proportionally. We are no where near asic manufacturing costs yet, in fact today marginal production cost of these chips is so low, that its irrelevant, they might as well cost nothing. Asic alone, I estimated HF golden nonce elsewhere at $0.04/GH in wafer production and packaging cost (assuming they can hit 800GH with their rev).

As for watt/GH; also there we do not need Moore's law to get a doubling in 2 years. THe very same asics being sold today almost certainly have the possibility to be downclocked and downvolted to achieve that doubling (or more), be it at the expense of performance per chip. ALmost all miners sold today are being run and sold at the top end of the voltage/clock shmoo plot, which is evidenced by the fact that they typically barely overclock at all. To see what changing of voltage and clock can do, look at Bitmain S2, which is the exact same chip as in the S1, but is twice as power efficient. Im willing to bet KnC, HF, CT, etc can easily double their power efficiency too on their existing designs, once that trade off becomes worthwhile. But since electricity cost is only a tiny fraction of most miners cost, and pricing of hardware is far more dependant on hashrate than power efficiency, it doesnt make sense for 28nm designs today. Doesnt mean they cant.

Maybe if you tried reading a bit more carefully, I wouldnt have to repeat myself over and over. How many times did I explain that to increase power efficiency you have to lower the voltage? Didnt I specifically say "Got a link showing that power effiency does not increase quadratic with voltage?"  Now, where in your first link does it show they changed the vcore? Nowhere. for whatever reason, that poster only changed the clock.  Did he not have access to the vcore settings, did he not bother trying, is it a firmware or PCB issue preventing him from changing it, I dont know nor do I care. In no way does it refute my "theory".

As for Bitmain, I never said they could achieve <0.6W on a 55nm design. Given that they already claim 0.68W/GH at the chip level, they probably can, but only I gave them as an example of doubling power efficiency without as much as a chip revision, simply by lowering clocks and voltages from near the top of the schmoo plot to somewhere lower. The same will work for your GPU, for your CPU (both of which will in fact do this automatically when mostly idle) and for pretty much any asic with programmable clock ever created because its a direct result of effects inherent to CMOS technology combined with Ohms Law.. If you dont believe me, see if I care.



My god you are dense. You are the only one who ever claimed that the only reason KnC is moving to 20nm is to achieve <0.6W/GH. Everyone else understands that 20nm, if ever they get it working and yields become reasonable, should provide lower production cost per GH as well as better power efficiency.

Underclocking alone indeed does "diddly squat" to power efficiency. The key is lowering the core voltage. If core voltage can not be raised/lowered to achieve higher speed/better efficiency, that generally hints at a design flaw. I have no idea whats going on with bitmine specifically. Got a link showing that power effiency does not increase quadratic with voltage?


I dont, because I never made that claim.


If you dont understand the difference between NRE and per GH production cost, there is not much I can do. Not that $10M sounds realistic to me, for a chip as simple as a bitcoin miner. Its not going to have 15 metal layers like a highend CPU or GPU. Id be surprised if it has more than 3, maybe 4.

Your ignorance of laws of physics doesnt change them. Every one with some experience over/underclocking CPU's and GPU's would be well aware of the range and impact of  core voltages.

As for why they arent doing it yet; it doesnt make financial sense yet. Hardware prices are still far too high, electricity cost is still utterly marginal for most large customers. Pricing is done per GH, cutting that in half to get better power efficiency doesnt pay off now. Fast forward 6 months and you will see.


Because 20nm should also be cheaper to produce per GH, due to the increased transistor density. Not that I  (ever) expect(ed) a 20nm part before late fall, but thats another story.