It is more acutely felt by small p2pool miners because of the nature of how p2pool works.  As more hash rate gets added to p2pool, the difficulty of finding a share goes up.  Those with small hash rates are affected because they might go for days without finding a share - and no share means no payout.  It's precisely the opposite problem found in other pools where the greater the hash rate, the less the variance for the individual miner.

Bitmain shipped out the first batch (well, b8) of S3+?  Wow... 10 days early.  Nice job Bitmain.

Huge farms get hardware at significantly lower rates than a regular consumer can.  KnC, Bitmain, Cointerra, etc all manufacture the hardware as well as run their own farms, as well as sell cloud mining contracts.  They make lots of profit.

Yes, only 4BTC at the end of the year, and that's assuming 10% increases in difficulty.  Like I wrote, if you assume 15%, you're still trying to recoup your initial investment by year's end (you're at negative 27BTC).

It's simply math and any online calculator worth the name does the calculation for you:
As that difficulty goes up, your earnings correspondingly go down.

Let's take a look at some real calculations for those 100 S3s (assuming 450GH/s each)...

Earnings per day right now: 25 / (27428630902 * 2^32 / 45000000000000 / 86400) = 0.8251BTC
Earnings per day at next difficulty (10% increase): 25 / (30171493992 * 2^32 / 45000000000000 / 86400) = 0.7501BTC
Earnings per day at next difficulty (10% increase): 25 / (33188643391 * 2^32 / 45000000000000 / 86400) = 0.6819BTC

...

Get it?  Your income goes down every time the difficultly goes up.  Your calculations assumed little to no increase in difficulty.  0.8251 * 365 = 301, you got 292.

EDIT: Let me give you a real world example of decreased earnings.  I received my very first Antminer S1 on 4/2/2014.  I overclocked it to 200GH/s the instant I turned it on.  On 4/2 of this year, that 200GH/s expected to earn me 0.02009BTC a day.  If I still had that S1 today, that very same 200GH/s would expect to earn me 0.003667BTC a day.

1) There is no such thing as free electricity.  Somebody is paying for it, or has paid quite a bit of money investing in generation capacity.
2) To run those 100 S3s you're going to need access to a constant supply of at least 50kW of electricity.
3) You need to remove the heat generated by those devices
4) Your calculations are off.  At 10% difficulty increases, at the end of a year you will have made approximately 4BTC profit.  At 15% difficulty increases, you're still 27BTC in the hole at the end of the year.  These assume 0 electricity costs, which I have already addressed in point 1.

No problem.  Additionally, I wrote a guide on how to get p2pool up and running on a Mac natively.  It's geared towards using MacPorts, but you can substitute HomeBrew if you prefer.  Here's the BTC one:

1. Download Bitcoin-Qt and install (http://www.bitcoin.org)
1.1 Let it sync either directly from the network, or by downloading the latest bootstrap.dat torrent
2. Open a terminal window and using your favorite editor like vi or nano, create ~/Library/Application Support/Bitcoin/bitcoin.conf and enter the following (please, please, PLEASE do NOT use the values I put in for the user and password. Make up your own):

server=1
rpcuser=SOMEUSER
rpcpassword=SOMEREALLYGOODPASSWORD

3. Install Xcode and Xcode command line developer tools
4. Install MacPorts and do steps 4.1 - 4.5 in a terminal window
4.1 sudo port selfupdate
4.2 sudo port install python27
4.3 sudo port install py-twisted
4.4 sudo port install py-argparse
4.5 sudo port select --set python python27
5. Get the p2pool software. Again using your terminal window go with either step 5.1 or step 5.2.
5.1 For just Bitcoin/Litecoin: git clone https://github.com/forrestv/p2pool.git
5.2 If you plan on setting up a node for other alt coins, get Rav3n's fork of the p2pool code: git https://https://github.com/Rav3nPL/p2pool-rav
6. Once your Bitcoin-Qt client has finished synchronizing, restart it so it will take your bitcoin.conf file into account.
7. In your terminal window, change directory to p2pool, or p2pool-rav depending on which you chose. For example, on my system, it's located at ~/Mining/p2pool or ~/Mining/p2pool-rav
8. Run p2pool node software (this is for Bitcoin): ./run_p2pool.py SOMEUSER SOMEREALLYGOODPASSWORD

That's it. You should now be running a local P2Pool node.

Also, here's the command to execute in the terminal to start p2pool, connect to some nodes and merge mine some coins (along with explanations of each command):


nohup - no hangup. Keep the process running even when you shut down the terminal window.
run_p2pool.py - start the p2pool node
--give-author - a percentage to donate to the author of the p2pool software. If you do not pass this argument, the software will by default donate 1%.
--merged - merge mine with the following coin
http://USER:PASSWORD@IP:PORT - the username, password, IP address and rpcport of the coin you're merged mining
-a - instead of paying to the default wallet, pay fees here
SOMEFEEADDRESS - the address to pay to
-n - connect to this p2pool node
http://IP:PORT - the p2pool node to connect to
-f - charge users this fee percentage to mine on your node (0 - 100)
BTCUser - the user specified in bitcoin.conf
BTCpassword - the password specified in bitcoin.conf
> /dev/null - write standard console output the trash
2>&1 - write error console to the same place you're writing standard console (trashed)
& - run the process in the background

S1s are notoriously difficult to get solo mining directly against a wallet.  it has to do with the old version of cgminer they use, high queue settings, trouble dealing with the protocol, etc.  Got any other miners you can try (like an old USB stick or something)?  There's always the option of setting up your own pool (MPOS pools are pretty straightforward to setup) and just point your S1s to the pool.  Since you'd be the only one on it, it would be solo mining.

Here's an idea for your .conf file:

Then when you configure your S1...

Assuming your miner is running on 192.168.1.11, then your URL is 192.168.1.11:9335
user name is WKCuser
password is awnv983whtewnsdkSDOF2d

First... LOL at the coin.  I checked it out... "bank while you wank".  HAHAHAHA!!!

Next, you might find more help in the alt-coins forums.  Out of curiosity, what miners are you trying to point to your wallet to solo mine?

Except the S3+ is not available to start right now.  You have to take into account the fact that you won't get it until sometime after the 20th of this month.

If you believe the majority, then it's an infinite amount of time since no mining hardware purchased right now has a prayer of making back the investment.  Of course you could disregard the majority vote and do your own predictions to see where it gets you.  A lot is dependent upon a number of factors, which I explained in the other post you made asking about this here: https://bitcointalk.org/index.php?topic=775825.msg8744119#msg8744119

Because most every mining calculator predicts that you will never mine enough coins with the S3 to make a profit.  Ultimately it's your call on what you wish to do; however, most would advise you to take the money you were going to spend on a miner and use it instead to buy BTC directly and hold.

You'll need dedicated mining hardware.  You also need to realize that to maintain a steady income, you must constantly add hashing power to your mining operation to deal with the difficulty adjustments.

You need to do a ton more research.

Here's a start...

Info
Official p2pool site: http://p2pool.in
This thread: https://bitcointalk.org/index.php?topic=18313.0
P2Pool wiki: https://en.bitcoin.it/wiki/P2Pool
Setting up merged-mining (Ubuntu): https://bitcointalk.org/index.php?topic=651819.0
Single script setup of p2pool node with all supported merge-mined coins: http://bitcoin.kyros.info
Original p2pool merge mining setup thread: https://bitcointalk.org/index.php?topic=62842.0
Comparison of p2pool, Eligius and BTCGuild: https://bitcointalk.org/index.php?topic=416933.0
Relay Node: https://bitcointalk.org/index.php?topic=766190.0

Source Code
Forrest's original p2pool source: https://github.com/forrestv/p2pool
Rav3n's fork (lots of alt coins): https://github.com/Rav3nPL/p2pool-rav
Roy7's vardiff patch: https://github.com/roy7/p2pool/commit/71121fa79016db7679ca0dcbf4328d9c9d51c97d
Matt Corallo's Relay Node: https://github.com/TheBlueMatt/RelayNode
Matt's fork of p2pool with relay node built in: https://github.com/TheBlueMatt/p2pool

Front Ends
Extended Front End: https://github.com/hardcpp/P2PoolExtendedFrontEnd
Justino's "Punchy" Front End: https://github.com/justino/p2pool-ui-punchy
roy7's p2pool node status: https://github.com/roy7/p2pool-node-status
Norgan's: https://github.com/norgan/p2pool_fancy_front_end

Other
HunterBunter's web-based donation page: http://blisterpool.com/p2pdonate
Node finder: http://p2pool-nodes.info
Historical p2pool mining info (pretty inaccurate): http://p2pool.info

Your explanation made me think of Jurassic Park when they were sitting in the trucks by the Tyrannosaurus paddock... the power has gone out and the kids start digging through stuff...Tim pops up wearing night vision goggles.

Gennaro - "Hey, where'd you find that?"
Timmy - "In a box under my seat."
Gennaro - "Are they heavy?"
Timmy - "Yeah"
Gennaro - "Then they're expensive.  Put them back."

The answer to that question is what I wrote in my final paragraph.  It depends on how long the hardware continues to function.  People are still running hardware that's over a few years old.

That's a very hard question to answer because it depends on so many things.  As the first reply mentions, cost of power plays a large factor in determining the life span of a miner.  Most people would agree that a miner becomes useless when it costs more to run than it can produce in coins.  Therefore, as your power costs increase, your miner's lifespan will decrease.

Another factor to take into consideration is difficulty.  Since difficulty changes are unknown, it's hard to determine how long a miner remains viable.  Just like with power, the smaller the adjustments in difficulty, the longer your miner lives.

You can also factor in alternate coin mining.  Sure, it may become unprofitable to keep your miner working on BTC, but it might make sense to mine a few other coins before sending the hardware to the recycling bin.

Of course, all of these answers are based on the assumption that your definition of a miner's lifespan is driven by profit.  If profit is not a concern to you, and you simply want to mine coins to support the network, then your miner's lifespan is as long as the hardware functions.

Are you looking for the technical details of how mining works, or do you just want the high-level explanation of it?  A lot of good information has already been provided in this thread, so help us to help you.  What don't you understand?

That's why I don't typically compare mining to playing the lottery.  You can win in the lottery by matching X of Y numbers.  You can't partially solve the block of BTC.

It would most certainly not imply that a solo mining pool is a fraud.  I'm not sure how you drew that conclusion from this discussion.  Is it likely that I will solo mine a block of BTC?  Nope.  Is it likely I will win the powerball on Wednesday?  Nope.  Doesn't mean I won't pick up a ticket for a couple bucks and try anyway.

EDIT: It is not a combined effort of shares that solve a block.  It is a SINGLE share that does it.  Each time you're attempting to find the solution, it either works or it doesn't.  Flip a coin.  Either it lands on heads or it lands on tails.  It can't land on both at the same time.  Each flip of that coin has absolutely no relation to the flips before it, or the flips that come after it.

I think I found your confusion.  There is no such thing as "the pool wins the block".  Either miner 1 or miner 2 had to have solved the block.  Your scenario 1 is in reality your scenario 2, minus that "pool wins the block" stuff.  If both miner 1 and miner 2 are mining with equal hashing power and equally submitting shares, then they've each contributed exactly half the work necessary to solve the block.  Therefore, they're each going to get 12.5BTC.