Also everyone is forgetting the REASON that BTC was artificially high was because people had to buy BTC to buy ASICs.  Since the price drops, buying ASICs is not a good idea, so nobody buys BTC, so the price drops..

I ran some rough numbers on "exchange rate for a sane ROI" for miner marginal costs

https://bitcointalk.org/index.php?topic=251347.0

it's not pretty.  hopefully i'm wrong.

Essentially, ASICminer has such an advantage over everyone else that they can keep investing and making a profit if the exchange rate drops to 10-20$, but for regular plebs the exchange rate has to be at least 40$ if not 90$ to make ROI.  ASICminer will eat you alive

oh, and you can't get refunds on most ASICs

I would not be at all suprirsed to find out that the majority of USD going into BTC was just to purchase ASICs (Avalon chips, Avalon Batches, their assembly, etc).

Since the market is so grim, nobody wants to buy those anymore.  The transient money flowing in (just to buy miners) stops, and $:BTC falls because it was artifically high due to the few select vendors (Avalon, etc) only accepting bitcoins

this is also why asicminer requires BTC to buy his hardware.

It forces you to buy his coins at a higher price, and then he sends you hardware.. which is less and less of a good idea as the exchange rate falls when nobody is buying mining hardware

tl;dr - bitcoin only used to buy bitcoin miners.  vicious circle

Traded for USD?  I'm not talking about BTC<->BTC.  We're talking about people buying coins with $.  It sounds like 2.3M were the number of transactions on the blockchain, which is a meaningless number.

and even USD -> BTC doesn't mean much if you can just reverse it. What we need is the amount of $ flowing in, but nobody knows that except Gox

Also the whole "hashrate vs price" argument only applies when it was straight GPU miners.  That was a completely different ballgame, since

1. costs to entry were an order of magnitude lower (if not outright FREE)
2. cost of electricity was very, very significant.
3. marginal costs of hardware were the same for EVERYONE.  
(It was an even playing ground, since AMD was the one who made the chips and charged an equal middle-man fee to everyone.)

You assume all miners have the same intention of coins.

GPU miners held coins.

ASIC miners sell coins.

The market is so small that the 3600 coins per day mined has a massive effect on it.

People liquidiated tens of milions of $ to buy asics.  They need that money back.  

GPU miners actually held coins, and they were fighting the price of electricity which placed a cap on difficulty.  GPU miners on several occasions turned off their gpus because the price fell and it cost them money to mine

ASICs being so much insanely efficient, even at the max difficulty, electricity costs are only a few % of revenue.

ASICs never turn off.  The difficulty would have to be 100x higher for electricity costs to be more than revenue.  or the exchange rate would have to be insanely low -- like single digits.

The issue is that ASICminer is a company designed to make $, they don't care about bitcoin, they don't want to hold it.  and they can easily muscle everyone else out, and unless they stop selling, $:btc will not go up.  They are fighting a war on the marginal costs and benefits versus everyone else, and nobody can compete.

What do you think would have happened if every single coin that was mined over the last 6 months was sold?  Price would have never exceeded 50$ or so.

25 coins per block, 6 blocks per hour, 24 hours per day = 3600 coins per day

3600 coins per day * 70$/coin = $252,000 of inflation (printed money) per day at the current exchange rates

The market couldn't bear the 100$+ exchange rate (aka $360,000+ per day) so it is readjusting to account for it.


I don't have the numbers offhand, but trading volume has fallen dramatically with MtGox troubles and elsewhere.

The bigger problem  is this : the vast majority of people bought BTC because they thought it would go up, that it was an investment.  As the price drops, that becomes less and less true.

Yes, only the avalon chips are really easy to predict (since you can see all the BTC that went to the address) so the rest is kind of a guessing game which creates a large range

however as you can see, with the insanely cheap marginal cost that ASICminer has, the $/BTC range drops

I ran the numbers and they are depressing

https://bitcointalk.org/index.php?topic=251347.0

reserved

Nature abhors a vacuum

Economics abhors a magic machine that prints money.

Here's what the network will look like at the end of 2013.  Here's what the exchange rate will be set (forced) to by ASICminer and the few others fighting over ASICminer's scraps dumping their coins desperately trying to claw their way to make ROI

Incoming hashrates:

ASICminer = 800 - 1000 TH
Avalon Chips = 300 TH
Avalon Batch 2 = 30 TH
KNCMiner=  200 - 400 TH
BFL = 100 - 1000 TH

Hash rate : 1430 TH/sec - 2730 TH/sec

Difficulty : 203396803 - 388302987


If ROI is fast (i.e. meets 100% ROI in less than a year) because exchange rate is good, difficulty will go up to compensate as people want to buy magic money making machines

if exchange rate is sane, difficulty will not go up because ROI is normal, i.e. one year.  This is what is happening now.  This is what will continue to happen.  So let's see what the exchange rate will be to make ROI sane @ 1 year


Marginal rate for plebs to buy hardware (KNC miner) : 17,500$ per TH/sec.

Price of BTC if set by plebs

Low diff: 49$
Max diff: 93$

Marginal rate for ASICminer to buy hardware : <10,000$ per TH/sec.  We'll be conservative and use 10,000$.  In reality it's probably closer to 5,000$, which means halve these numbers.

Price of BTC when set by ASICminer

Low diff: 11$
Max diff: 21$


Asicminer controls the price of bitcoin.  They are the reason the price has dropped.  It is impossible for anyone to get ANYWHERE near their level of efficiency except the ASIC designers themselves.  All of who currently charge an order of magnitude more for their chips than they actually pay for them.  ASICminer can get their chips for pennies on the dollar compared to you, and pays next to nothing for their industrial electricity.

There is nowhere near enough demand to buy coins to make up for the massive amount mined and dumped on a constant basis.  The exchange rate will continue to plummet until the value of dumped coins actually meets the amount of money flowing in for goods and services (practically non-existant at this time.)

And as the price drops nobody who isn't an idiot will consider holding coins as an investment

TL;DR - Unless YOU are ASICMiner, or you got an ASIC already (Avalon Batch #1) - You are screwed.  No, don't buy coins either, the price is going to keep dropping.

Oh, bonus points.  They EASILY have enough hardware to 51% the network.  They could break 75%.

Yeah so looking over cooling options, it seems the most efficient would be, if possible, sandwich waterblock between Klondike boards, ideally between two K64's, to minimize # of blocks required.  But the heat from 128 chips to a common block might be too high.  Might be better to do K16x2 or K64x1

You may have to make tradeoffs for efficiency vs overclockability as well (i.e. switching frequency).  It's currently at 600khz (300 - 1500 khz is the range of possibilities).

Likewise i think the power inductor (0.36uH, <1.8mΩ) also leans more towards efficiency than ripple current

this might be more complicated though.. trading transient response for voltage stability and (lack of) noise

Um, i'd seriously question that even a ~10% increase in the efficency of the buck converters would have an impact on ROI anytime within the next.. 5 years.  ROI versus electricity, besides being a complete non issue for what appears to be quite a while (i'd say at least 1-2 years.  More important is the exchange range and difficulty) -- is basically dictated by the efficiency of the ASIC in terms of Hashes/Joule.  The buck converters that feed them are only a tiny part of the loss, and only what, 10% of the total power dissiptation of a K16?]

That makes sense on the buck converters though.

What i would argue is far more important is maximizing the GH/sec / $ for these units.  I'm investigating a watercooling setup and final Gh/sec / $ (and electrical usage) for a watercooled setup versus an air-cooled setup.  But for an overclocked watercooled setup, some changes are required (higher voltage [or ability to increase it], and higher current output, and/or less chips per board, as well as possibly more decoupling capacitors)

Hm, what was the reason for seperating the outputs from the two buck converters on VDD1/VDD2, was it in case their output voltages were unequal?

I was thinking about modifications to allow higher current/voltage for overclocking (with sufficient cooling) - simplest would seem to be adding a third regulator.  If they're kept separate, could be accomplished by splitting 5/5/6 chips onto VDD1/2/3

So you would need to both increase the voltage and increase the output current capacity is what you are saying?  I'm not familiar with the Avalon stock design, so I wasn't sure if you could modify anything beyond the clock frequency

Are those smooth holes for the water channels with threads on the ends so you can mount the fittings/etc with the threads, or threaded all the way through? 

Looks like 15mm(?) of threads

This was only true before the existence of ASICminer meant that they can leverage their massive economicies of scale, essentially free electricity costs (compared to joe blow), and huge solomine hash power / extra hardware to control the market

They pay fractions of what you pay for

1. $ per TH/sec hashing power (they can setup 1TH/sec for less than 10,000$.  Try to meet that anywhere else)
2. Electricity

Price will drop to a point such that ROI on an Asic miner exceeds one year.  Supply & Demand dictates that any such get rich quick scheme will cause a massive influx of hashing power and selloff of coins.

If the cost of electricity cannot set the baseline for sane-return-on-investment, then competition between dumpers will set the baseline for sane-return-on-investment by plummeting the exchange rate.