Of what scale?

The bitcoin network now employs about 50% of the combined capacity of the TOP 500 supercomputers on earth?

How do you know what a dollar is worth?

True, but if this happens quadruple your mining equipment as fast as you can. Some other jurisdiction will pick it up.

Here are the assumptions I used.

BTC is still in its infancy. If successful it will most likely replace the entire world's currency supply. There is almost not believable way that doesn't sound arrogant or deluded to put the price into perspective once this happens. It might be akin to a land grab in the old west, but with the land values rising to their fair value in a matter of years.

Between now and then one of the following will happen to the price.

1.It will collapse for a while. This drives people out and pushes difficulty down, it has happened before and might very well again. Typical causes might be a negative court ruling in the US or some other jurisdiction. In the long run BTC will probably survive this since not every place on earth is likely to make it illegal and due to its nature, if not every place on earth has it illegal, it will have value everywhere.

So you mine easy for a while and hold the BTC and maybe conduct some of your own business in BTC. Waiting for the value increase to resume.

2. It will stabilize. If this happens only the rigs with high Mhash/Watt are worth investing in. This would have to persist for very long to be a concern. FPGA rigs might become very attractive here and become the norm. This is bad for me, as I'm investing in a GPU miner.

3. It will continue to rise in a relatively uninterrupted fashion and S curve to it's true value, which if it succeeds is a number difficult to wrap one's brain around when compared to $10. In this scenario miners keep piling in, increasing difficulty but are rewarded by increasing prices. This is equivalent to betting that if you can get some number of BTC in the future at the future price AND a machine that will give off bitcoins for some extended period after that point, it is worth more than simply converting all that cash into Bitcoins today.

Bitcoin's rise so far is due mostly to small amounts of speculation and people who want to see the currency system replaced who are investing their spare change. We're probably only getting started.

Whether it happens tomorrow or in 3 years the key is to remember it will happen suddenly.

True, despite my desires to the contrary the greenback refuses to die
However I am rejecting debt based currency. I will still trade in it but I will not save in it or one of it's derivative products (CDs, bonds, stocks (maybe someday), mutual funds) I'm sure to a greater or a lesser extent you are too. We want to leave fantasia and never come back.

If there is however a currency crises and/or the tropical fruit has impacted the rotary cooling device then the current banking system will sheer apart and BTC even at it's current level of development will be a much better option.

It's hard to tell. I'm from South Africa and the man residing over the Reserve Bank here during the financial crises is now working for Goldman Sachs. He was sent for "economic training" by them in the 90s. Governments might not be able to push for co-ordination but their owners can. They already have the world on global debt based fiat currency and are consolidating that position into SDRs from the International Monetary fund. The mere fact that they convinced every country on earth to abandon gold or sovereign money (with very few exceptions) should give us pause.

But I'm harshing my own buzz ;-) I hope they respond in their normal sluggish way and one morning we just wake up and the Chelsea buns are in mBTC or uBTC.

Go von Mises!

To be able to transact in BTC a view dollars need to be replaced with BTC. There are 33 trillion USD and so far only 6 million BTC. The total currency supply is worth only 60 million USD at this point.

There are almost $100,000 for each American. We don't really know the size of the BTC investors and merchants yet but unless there are only 60 then some of the value of BTC is understandable.
(I get to $100,000 by dividing the currency supply into the US population and then applying that ratio to the BTC supply I get 60)

Generally when currencies collapse the is first a hoarding of a sound alternative before day to day trade move from the collapsed currency to the alternative. Bitcoin is seeing an influx of early adopters and will probably continue rising for some time

LSD resellers really don't help our case much.

It always pains me to see the logic that somehow connects Bill Gates' wealth with a squatter camp's squalor.

"Bill is richer than them all, they are all poor, the connection is obvious!"

There is undoubtedly an exploiter class but I think liberals have taken an unduly simplistic view of this.

Corporations are not a feature of a truly free society. Corporations provide limited liabilities to the individuals who run them. Limited liabilities are rights granted by government, it is not inherent in free-market capitalism. It is in fact opposed to it. So please stop referring to the evils corporations commit due to limited liability and calling it the results of the free market. Libertarians HATE the idea that a corporation can be let off the hook by a government judge or legislation for damage to the property, lives and health of others.

Agorism has a useful model on this. They divide capitalists into three catagories.
Good => Venture capitalists, entrepreneurs, risk takes (Steve Jobs, Mark Zuckerberg)
Neutral => Holders of capital, no real ideology
Bad => Those who use government power, fraud or violence to raid the public

Both liberals and libertarians agree that the rich who are obviously rich because of government help need to have their privileges removed. Unfortunately liberals attempt to do this by introducing taxes and regulations on all the capitalist classes indiscriminately. Libertarians also do not make enough of a point that there is a dangerous kind of capitalist, the ones who are willing to manipulate legislation to their benefit.

I hear a lot of really troubling talk out there;

Mainly it boils down to;
1.The speculative nature of Bitcoin
2.The possibility of having Bitcoin declared illegal somehow
3.Concerns raised from not understanding the value of a limited money supply.

1.The speculative nature of Bitcoin
Fiat currency is deathly ill. It is issued on the basis of debt and cannot be paid back unless inflated into oblivion. It enslaves both borrowers and savers. Perhaps one way of looking at the meteoric rise in the price of BTC is to instead view it as the process of replacing fiat currency with sound currency. This has happened over and over with gold and silver and often happens between currencies that are hyperinflating and currencies that are still stable. First the good money is hoarded, to the point where there is enough in reserves to replace the bad money. BTC has a VERY limited supply relative to the USD. If the USD alone was to be replaced with BTC the price would likely be around $5,500,000 per BTC (yes 5 million dollars). The price when replacing all fiat currency is mind boggling. The current rise is simply the educated early adopters climbing into something brand new. Many bitcoin holders have basic training in Austrian economics and that is what piques their interest in BTC.

2.The possibility of having Bitcoin declared illegal somehow
Doing this would be a legislative nightmare. What exactly would they make illegal? Trading BTC for other currencies? Trading goods and services in BTC? Owning BTC? Mining BTC? Running the client in support of the network? Accessing a website with a Javascript miner?
My point is that it would be difficult to pull off successfully even in a hostile environment.
Most likely a smart legal step would be to focus on the first question and make trading for currency illegal. However in the absence of the other controls this would prove futile. Imagine for a second an exchange running in Switzerland trading Francs and Euros for BTC. If they as simply listed the calculated USD price for BTC this would give the US market a pricing on BTC and enable widespread internal and international trade in the US. Exporters would be able to charge daily updated prices in BTC and would be able to horde at least some percentage of their income in BTC. Internal markets could accurately price their goods and services in BTC in the absence of a local exchange.
Importers might even begin to put pressure on the law makers since outside producers might insist on BTC payments.
The above might not seem extremely alluring now but under a deflationary collapse or a hyperinflation access to a stable pricing mechanism will be invaluable.
Furthermore, so much as one liberal jurisdiction will effectively provide anyone in with a BTC account in another jurisdiction with the equivalent of a secret Swiss bank account.

3. Concerns raised from not understanding the value of a limited money supply.
Lots of these arguments seem to stem from some belief that by manipulating the currency supply somehow people will be made to behave in a productive reasonable or charitable fashion. It does however ignore the rights of the productive party to keep what they make.
Bitcoin enforces the idea of property ownership very well. What you produce you keep, no-one gets to take what you've made. Mining is a mild violation of this principle in that it rewards those who guard the money supply by initially debasing it. I'm not sure what the long term side effects will be of this but it's better than any other system we have so far. It's also a very minimalist intervention that is needed to introduce currency into the Bitcoin economy.
All in all limited money supplies are good. If you produce earlier, rather than later, your eventual reward increases thanks to deflation. Deflation will eventually stabilize. People will once more see the virtue of saving. Entrepreneurs will not unwittingly be suckered into unsustainable segments of the economy due to artificially low or high interest rates. As a result progress should be much faster as resources are aligned along the needs of real people.

Buying bitcoin now will yield only the increase in price at whatever future point they are spent. Buying a miner now will yield the miner, the cost of the miner in bitcoin at some future point and whatever bitcoins can be generated cheaper than power consumption for the lifespan of the miner.

Also mining is a far more resilient means of investing in BTC since mining share goes up when price falls. Remember the war for a widely used alternative currency is far from won, and probably will have some bumps along the way.

Hey guys,

I've requested the quote for the mining rig me and a friend are putting together and I'm real stoked.

I did however come across a post in the economy section that called us miners rubes for mining instead of just buying.

I don't have the exact figures but given the increases in difficulty and the decreases in bitcoins mined, even with the increasing price, isn't it better for us to just buy and hold than to build mining machines?

We're laying out about $2600 for the rig, its pretty cool imho and there are other benefits, but I keep thinking there might be a smarter way. Among the other benefits are that I don't have to go through the capital control / tax issues of my country if I mine.

What have been your experiences of this if you are a long term miner? (buy vs mine (?) )

Thanks guys, that's already very useful.

I need to decide between a nice Phenom , a cheaper Phenom and a Sempron.
The machine wil need to double as a light weight server and office PC.
Any advice in that regard?

Hi,

What is the effect of GPU mining on the PC's responsiveness to other applications?

The machine is going to have 2x6990s in it and will most likely be running windows.

Will there be any noticeable difference between a Sempron, Phenom II dual, quad or six core CPU on computer responsiveness?

How does latency affect the mining process? You finish a block but in the same period someone else finishes the block and reports it before hand?

What is an acceptable latency and to what point do I measure it?

Hi guys,

Is there a significant effect that either latency or bandwidth has on group mining?

That pic is quite inspiring
What mother board did you use for that setup? I'm looking at the http://www.msi.com/product/mb/890FXA-GD70.html
Will that cut the mustard?
Also will a Sempron work fine or will it cause some sort of bottleneck?

Thanks mrb,

what do you mean by clamp-meter, electric multi-meter?

Also, I assume single GPU cards take less power, correct?

Awesome thanks,

Have you done that successfully or something very similiar?

Hey guys,

No I'm just getting really conflicting advice.

Folks tell me stuff like 1200W is the minimum you need to drive a 3 card rig and that standard cooling will not cut it.

It's really expensive equipment and I don't want to go blow something or burn something out or waste time.

In your experience, can you run 4x6990s in one box, can you power it and can you cool it without an electrical engineering degree?

On the linux/windows issue, I'm assuming you can just not use more than 4 GPUs at once but that windows will work fine if you need to boot into it.