To an extent. Remember though that there are a fair number of irrational people out there, and the issue of the "dollar auction" is one to contend with.

IE: If you go below Capital investment+electricity/rent/staff costs then you are losing money on your farm, but you're losing less than if you just turned it all off and tossed it in the trash. Negative return but still logical. If you go below elec/rent/staff and still mine then you are insane and need mental help. :-)

Um. I remember good old FTP software well, boy that was a fun ride.... :-)

No problem at all, mine like hell and enjoy your returns. Hopefully people that follow your lead and advice will come back to thank you. :-)

And happy holidays!

Really? So tell me what the rate of return is on some of these mining farms (on average, include *all* in a given class, and don't make it "people with an in with equipment makers). Remember you can cherry pick a ponzi to show amazing profits as well, so be sure to include all of them.

Um, it doesn't matter if you have one miner or a million. If the cost of electricity is more than the amount the unit can hash (don't forget to multiply by .3 for the cooling!) you will run at a net loss. If the cost of electricity plus investment costs is more than the unit will make in an operating lifetime, you will not make a profit. Economies of scale have some value, but oddly enough the profit per miner on a single guy's miner is probably higher than the ppm for a farm where they have to pay higher electrical rates and the cost for cooling, space, etc.

Now, if you add *VALUE* then that is a very different story. I made a good profit in mining not by running my one little jalapeno at 5gh in August 2013, but because I boosted it to 20gh then 24 with my own brains and skills. I added value. If you build a new super chip you can make money selling the equipment, and possibly make good profits mining, but that's because your design added value to the universe.

Sorry I really get *VERY* annoyed at the concept that mining is "free money". Too many people have been fucked over by that. The more people that get into it, the lower the profits because the mighty profits are 25 bitcoins every 10 minutes spread across *all* of the miners. That don't change. And the more people who go in with expectations of a negative return simply turn a queen's race into a dollar auction.

Never play "dollar auction" by the way. :-)

It won't. The price of gold from 2000-2008 went up because inflation was going up. Even though it was "hidden" inflation, it could not hide from gold. That is why the price of gold really didn't change much with the whole "printing of money" party in 2008-2010, that paper money went to fill the hole that the M3 implosion created.

If they had not done TARP and all that crap, we would have had massive deflation, and the price of gold would have dropped to 300 or so an ounce.

It's an interesting thing to reflect on, the fact that the inflation all happened under Bush in 2000-2008, but it was masked by the financial shenanigans. News can lie, but gold can't :-)

Yup, a perfect marketplace. Irrational one as well, people are going to buy even the S5's and mine at a loss :-)

Ok, we're back in the queen's race. Where everyone has to run and run faster to stay in place.

That "bullshit" is basic economic facts. It's ok, this is good to know and adds to my understanding of "why things are". I mean you realize that if you think the price of bitcoin is going up it's easier to just buy the stuff than mine...

Me, I mine because I am too god-damn lazy to figure out how to buy it. Such is life. :-)

It's an economics thing: Bitcoin mining is what we would call a "perfect marketplace" with what is pretty close to perfect competition. According to Wikipedia this is:

    Perfect market information (Yep, Bitcoin is that)
    No participant with market power to set prices (Correct, it's a pure commodity)
    Non intervention by governments (They can try :-)
    No barriers to entry or exit (With mining "contracts" and cheap hardware this is so)
    Equal access to factors of production (We all have power and math)
    Profit maximization (Everyone is going for max profit)
    No Externalities

The best you can hope for is "normal profits" which is just enough to keep people in the business. Once again WP has it right:

This attribute of perfect markets has profound political and economic implications, as many participants assume or are taught that the purpose of the market is to enable participants to maximize profits. It is not. The purpose of the market is to efficiently allocate resources and to maximize the welfare of consumers and producers alike. The market therefore regards excess profits, or economic rents, as a signal of inefficiency, that is of market failure, which is to say, not achieving a Pareto optimum.

That is *exactly* what mining is doing. Any excess in short term profits will be met by more people entering to hash. So if you go in thinking you will make a "lot of money", it's probably not going to happen :-)

The best that happens is you make opportunity profit, which is just enough to stick around instead of saying "fuck it" and doing something else. However that's in an irrational market. Think about how many people go on about "martingale" betting "systems" and you will realize that the market is not rational.

It's still fun to do. What is concerning me though is that if mining power is concentrated in a few locations, govts can start to apply pressure on those locations and knock bitcoin out of whack. From a govt point of view, the fewer miners, the fewer (but larger) farms the better. This happened with ISP's (so much easier for the NSA to put a tap in a big ISP pipe than a lot of little ones).

I worry it will happen to Bitcoin. I really do.

True true, and due to the magic of arbitage it is simply impossible to make profits mining. I keep telling people that and they just don't seem to get it. You may have a short term advantage for a bit as you roll out a new technology but because the cost of entry is low someone else will build the same thing and profits will go back to zero. It is a pure and simple zero sum game(*).

It's weird. Right now I'm guessing people overshot and are now taking losses. You can mine at a loss for a bit, but since power costs are real you eventually either have to pay for it or come up with a ponzi scheme. Most people will drop out, the schemers will keep difficulty artifically high till it collapses and things drop.

That might be what's happening here. Time will tell....

(*) There might be a way out with transaction fees, I'm not sure because as the fees go up more people mine and you're back to a zero-sum problem. Hm.

In the absence of a major disruption it tends to be pretty accurate. Still, a 5% drop is not going to erase the 10-20% runups we kept having every 2 weeks. That was beyond crazy.

Will be interesting to see what happens. Aside from all the ponzi scheme "cloud mining" things imploding, has there been any news about major mining farms going away/under/whatever?

Actually gold does have a tangible value (you can squish a bug with it) while bitcoin has no inherent value (the solving of SHA256 hashes is specifically pointless). Given that we are in a near-deflationary economy (in the US and in Switzerland) it's not doing a whole lot.

Thank you. I did what I could, since the FTC receiver wasn't doing.... well much of anything. It was the best I could do under the circumstances.

That said, I just heard that BFL is sending out RMA responses and such, so as a result I am out of business. Hurray!

Now I get to think about what I want to do next. Not sure, need to think about that. Maybe the question is how can I help the home bitcoin mining community?

Hurray! I am out of business!

Although I have got one of the 700's running at 50% power on your nastyfans blog along with the 300, I would recommend RMAing these two as well and sending me the shipping label. I can send them back with a polite little note explaining why they look kinda weird.

Glad to hear that BFL is doing right. Really glad to hear actually. Now I need to figure out what to do with my life. Maybe take up trap shooting or something.

I think the problem is mining farms with 2-3w/gh equipment were holding on for a bit but now can't mine at a loss. Couple that with very little real capacity coming online and diffciulty goes down.

I wonder if the "new chips" will be real, will come out on time, or are just more vaporware. There is a difference between what a chip can do in a lab as opposed to on a real world system.

Well, the 300gh unit is back up and running, but with a slightly higher error count than normal. 15%, normally I see 2-5%. It's also a tiny bit slower, 280 or so instead of 300. Most of the errors are on the front chip but it's purring along and mining for the owner.

The two 700's are a different pair: One of them is running with one of it's two chips normal, the other 100% errors. Checking the FETs I see the voltage is a lot lower on that side; either the whole chip is toast or all of the FETs on that side are damaged. Or a *low* side FET failed, but that would create a hell of a hot spot. I may hook it up to the scope this weekend to see if the gates are all smooth or if one channel is odd (pointing to an intermittent FET).

The second one is dead. Removing the FETs I found that the PCB under the FET itself was burned in two places on both sides. Nothing spectacular, just a <1mm pad had vaporized under the FET. Result is I can't put a new one on, I did a quick try swapping in 17506 FETs but they can't hold 350gh a side without blowing up. They can hold 250, so I may rebuild this one as a 500gh unit.

Or I will have them RMAed with BFL. The water blocks on all of them share a common thread: Leaks or serious weirdness in the front block. I haven't see this on other units and the guy has other Monarchs that are fine. This miht just be a case where a bad batch of cooling blocks leaked over time, which then caused the chips to overheat with spectacular power draws and interesting results.

The 300 held because when it heated up the damage was minor. On the 700's one knocked out a side, and the other ran till the FETs failed hard. Not unbelievable.

Interesting. Well, I'll try replacing the FETs on the left side this weekend to bring the one unit back to normal, and will then try lower speed FETs on the other one and drop the voltage to the point where it will run at 500 or so. That should do it.

In any event since I am experimenting at this point on my own time, flag, and dollar I will stand behind my work personally: If I have to donate a SP20 (same 1.7th) to make things right I'll do that.

Mining here. Will probably spend a bitcoin on stuff for the business before the end of year. But no super cool makerbot for me; I must hodl.

Well, I'm not a legendary, but I sure can test and do odd things with Jallies.... :-)

If you want me to take a look at your miner and put it through it's paces, let me know. I've got tools to measure power, factor, heat, what happens when you drop it in a bucket of water, how easily it comes apart, etc. :-) If it's got open software I'd really have a good time.

It could be interesting to futz with something different.

What, you're not giving your kids and relatives bitcoins as presents?

That's right little Johnny! That paper entitles you to bitcoins! NO WAIT DON'T POST A PICTURE OF YOUR PRESENT ON FACEBOOK!!!!!!!! AIEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE!

Ahem.

That girl?



HODL