 Show Posts
|
|
Pages: [1] 2 »
|
|
you don't take into consideration the increase in the price of bitcoin . . . if your electricity is cheap it is well worth it. even at $1 profit a day you are still making a hefty return on investment, and you have a video card at the end of the day . . .
|
|
|
|
Just thought I'd say, the difficulty jumped 78 percent. I predicted 75 percent. Not bad eh? XD Ugh, you BTC flag wavers are TOUCHY! It’s simple economics. If you can make a BTC worth 9 bucks for 25 cents, and the barriers to entry are very little, then other producers will keep entering the marketplace until the price equals cost, ie perfect competition. If you don't even understand this there isn't any point in talking further.
It doesn't matter how many "producers" are in the marketplace because whether there's one or one thousand, bitcoins are added to the supply at the same rate. 50 BTC/block, 6 blocks/hour. This is not true in the short run. If you understand how the system works, the difficulty is ALWAYS lagging growth. Currently, we produce about 13.33 blocks per hour. bitcoinwatch.com Besides, you are missing the point. Please go back and read if you wish to usefully contribute. It's funny that you mention the short run where in your very first post you said you wanted to look at the long run. It's you who is missing the point. Could you explain this? It’s simple economics. If you can make a BTC worth 9 bucks for 25 cents, and the barriers to entry are very little, then other producers will keep entering the marketplace until the price equals cost, ie perfect competition. You say that other producers entering the marketplace will cause the price to go down. Either you mean it will decrease the demand or you mean it will increase the supply. But regardless of how many producers are in the marketplace, bitcoins will be created at the same rate. Adding more producers does not cause the supply to increase and price to lower!Nope, I’m looking at the next two months. That’s short run. I don’t say other producers entering the market place will cause it to go down. Again, missed the point, go back and read. |
|
|
|
|
It's not. You just apparently have no capability to understand a simple concept.
|
|
|
|
Ugh, you BTC flag wavers are TOUCHY! It’s simple economics. If you can make a BTC worth 9 bucks for 25 cents, and the barriers to entry are very little, then other producers will keep entering the marketplace until the price equals cost, ie perfect competition. If you don't even understand this there isn't any point in talking further.
It doesn't matter how many "producers" are in the marketplace because whether there's one or one thousand, bitcoins are added to the supply at the same rate. 50 BTC/block, 6 blocks/hour. This is not true in the short run. If you understand how the system works, the difficulty is ALWAYS lagging growth. Currently, we produce about 13.33 blocks per hour. bitcoinwatch.com Besides, you are missing the point. Please go back and read if you wish to usefully contribute. |
|
|
|
Tell me how exchanging my work for dollars creates dollars (or at least gives them value, somehow) while exchanging my work for bitcoins does not.
... Your “challenge” is easily explainable if you understand the facts, I'm also interested in the answer to this question, could you please list the facts that explain your answer? Thanks. This is the complete OPPOSITE of what I said. Again, they both are the same thing, your value for a dollar is what you input to earn it, just like your value for a BTC is what you input to earn it. He is making an argument for argument's sake, not out of an attempt to understand. |
|
|
|
the thing is why are dudes flipping their shit about $9 a month in electricity?
Like I said, my calcs were based on the most efficient computers and at a rate of $.1 per kwh. So if they have more expensive electricity, and less efficient pcs, then that rate can easily go up by a factor of 10. Also, bear in mind, that's only for 1 BTC a day, so for people with farms and stuff, that will go up by however many BTC they're generating. I made the efficiency assumption because the most efficient miners will reap the most profits, so there is a huge incentive for market entrants to be efficient, esp as difficulty increases. The whole point is that in perfect competition, price equals marginal cost for the most efficient producer. The BTC mining market is converging toward a perfectly competitive market due to its size and low barrier to entry. So with all that in mind, the inefficiencies will be competed away. This is all in the long term, in the short term, who knows? |
|
|
|
|
Well the issue with having 10 mining rigs is the cost of capital. That would be like 8 grand. Few people have that kind of scratch lying around. Also, you'd probably make more money directly investing that 8gs than mining.
Also, another thing to consider is the difficulty increases, which means that 8 grand of computing power will be worth less every 10 days or so.
But yeah, that's exactly my point. The price makes no sense. Please go through the calculations yourself. The whole point of this thread is to arrive at a fundamental value, which very few people seem to want to do, they get offended.
To me, that's signs of irrationality.
|
|
|
|
wait producing a BTC costs only 28 cents a day?
I keep seeing a lot of miners talking about 1 BTC per day on average from the pools. right now thats like 250 bucks a month with today's pricing. their electric bills are only being affected $9/month in order to mine?
Right. I made the assumption that most of the hashing is done by the most efficient computers, assuming mining farms with 6990s produce a majority of the work. The factor is 2.5 megahashes per joule from the mining rig hardware comparison guide. So, if you want to downplay that factor, and say it's only 1.5, then multiply 28 cents by 1.66, so, about 47 cents. Even at 20 percent efficiency of what I estimate, that's about 1.50 per BTC, so the gains are at LEAST 6 bucks per BTC, or at LEAST 400 percent, per DAY. Which is insane, nothing gives you that return, ever, anywhere, which is why the gold rush to mine will continue to skyrocket and drive up the difficulty, AND/OR, there will be a price crash. |
|
|
|
You just made a fool of yourself. It’s called monetary policy. http://www.federalreserve.gov/monetarypolicy/default.htmAlso, you are dead wrong about GDP, here’s a direct quote from the Bureau of Economic Analysis: Real gross domestic product -- the output of goods and services produced by labor and property located in the United States. Source http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm the opening line. I’m tired of trying to educate you. You obviously have your mind made up and wish to stay ignorant. Do some research and learn about economics before you spout misinformation. Monetary policy is how they manipulate interest rates, which is not the money supply. You'd know that if you'd ever read the minutes of the FOMC meetings. Go find out why Bernake is called "Helicopter Ben". You might want to look into how GDP is actually calculated. I'll give you a hint, production is not part of it, but spending is. They could say that GDP is found by counting unicorns, but that doesn't change the math. What they actually do is much more important than what they say they do. Once again, you've done an excellent job dodging my direct challenge, so I'll issue it a third time. Tell me how exchanging my work for dollars creates dollars (or at least gives them value, somehow) while exchanging my work for bitcoins does not. The Federal Reserve does more than just “manipulate interest rates.” If you think that’s all they do, you’re just demonstrating your ignorance about the subject. http://en.wikipedia.org/wiki/Gross_domestic_productDetermining GDP GDP can be determined in three ways, all of which should, in principle, give the same result. They are the product (or output) approach, the income approach, and the expenditure approach. The most direct of the three is the product approach, which sums the outputs of every class of enterprise to arrive at the total. . . . You have a serious misunderstanding of economics and have repeatedly demonstrated your ignorance. If you can not understand the basics, you disagree with reputable, verifiable facts, then there is no point in me explaining this to you. There’s so many things wrong with your “challenge”. “Tell me how exchanging my work for dollars creates dollars (or at least gives them value, somehow) while exchanging my work for bitcoins does not.” Is the complete OPPOSITE of what I said. They both are the same thing, your value for a dollar is what you input to earn it, just like your value for a BTC is what you input to earn it. SIMPLE. What is so hard to understand about that? Your “challenge” is easily explainable, but obviously you aren’t interested in understanding, only arguing. |
|
|
|
|
Same issue here. The lowest I can downclock it to is 850. I think it has something to do with the voltages. If you look at the voltages, it the mem clock speed is 300 at 1, and then goes to like 950 at 1.17. So I think it is just a limitation of the card due to the voltage changes. 850 is the lowest I can go at 1.17.
|
|
|
|
Ok, I feel kind of dumb. With the 4850, I just updated the drivers (including latest SDK) to the latest version, and the problem went away, and I got even better performance. So, update your drivers if you get this.  |
|
|
|
Assuming all else stays proportionally the same as the status quo the following is an attempt at an evaluation of BTC value: - Total current network hash: 3.913 Thash/s (Source: http://bitcoincharts.com/ ) - Assume typical economical miner's hash : 300 Mhash/s (Source: http://bitcointalk.org mining forums) - Stand to be corrected - Assumed estimate of total economically mining machines: 13 000 approximately - Assume $1000 capital cost per economically mining machine, gives a total network capital cost of $13 million - Depreciating asset capital cost depreciated over a five year term, gives $2,6 million capital cost depreciation per year. - Expected Return on capital investment per year (assume 20% - high risk investment), gives $2,6 million return on investment cost. - Running cost: electricity, assume 0.5kWh power consumption per machine, at $0.15/kWh assumed average worldwide cost, gives 13 000 x 24 x 365 x 0.5 x 0.15 = $8,5 million total yearly electricity running cost - Running cost: rent, salaries, etc, assume just 100% (reimbursing the average miner on a machine only $1000!!! per year!!!! in salaries and rental space) yearly on capital cost, gives $13 million - Maintenance cost, assume 2% yearly on capital, gives $0,25 million. - Bringing us to an assumed total yearly cost to business for the Bitcoin network of $26,95 million. The network generates a total of 50BTC roughly every 10 minutes at present, thus 10 x 6 x 24 x 365 = approximately 525 600 BTC per year. The total cost per BTC generated securely and maintaining the network at present will thus be approximately $26,95 million divided by 525 600 = approximately $51.27!!!! Is it a small price to pay for the owner's rights to secure entries in a global digital cryptographic key accounting system - which subsequently allows the owner of the rights to transfer some/all of those rights securely? Now this cost of $51.27 per BTC is for maintaining a network difficulty of 244139.48158254 ( http://blockexplorer.com/q/getdifficulty ) at present. When more BTC mining machines are added making the network more secure and difficulty increases ( http://bitcoin.sipa.be/ ) but the bitcoin generation rate remains unchanged - this will result in an increase of BTC securing/generating cost. Maximum difficulty never to be reached is 2^224 ( https://en.bitcoin.it/wiki/Difficulty#What_is_the_maximum_difficulty? ) EXCELLENT! I like your way, I took this and changed some of the assumptions, and got a value of $9.08 per BTC. (You made a calculation error with yearly BTC, 50 BTC generated 6 times an hour 24 hours a day 365 days a year is 2,628,000 BTC per year. That 10 in the formula should be a 50, so your analysis would give about $5.13). Anyhow, this does not take into account growth rates. So obviously this will change. But it’s a great start. |
|
|
|
Which is exactly what i'm saying for BTC. The value in BTC is the work input: the electricity. That is the only fundamental value for BTC, atm, because nobody is using BTC for actual goods or services. When people do, then we can assess some value. But right now, the price is completely speculation/expectation driven.
I don't want this to degenerate into an argument of semantics. We can all agree that the value of a currency is what you will trade it for, and over a wide enough population, that value becomes more accurate. It is also possible for the few to drive up prices unrealistically via speculation by ignoring fundamentals. Look at the housing bust, the dotcom bust, ANY bust.
I'm trying to get at the underlying fundamentals of BTC, which nobody seems to want to approach b/c they feel it's an attack on BTC, which it is not, I think we can all benefit from fundamentals.
You are completely wrong. It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value. If you don't even understand this there isn't any point in talking further. Ugh, you BTC flag wavers are TOUCHY! It’s simple economics. If you can make a BTC worth 9 bucks for 25 cents, and the barriers to entry are very little, then other producers will keep entering the marketplace until the price equals cost, ie perfect competition. If you don't even understand this there isn't any point in talking further.Ok, if you want to get into monetary policy, then sure, the Fed is responsible for the amount of circulation. They increase or decrease the amount based on a number of factors, but ultimately the GDP, i.e. the collective work of the US. So yeah, your work creates dollars.
You are completely 100% wrong on all points. The Federal Reserve Bank has nothing to do with the amount in circulation. (Go here if you'd like to know what they really do) GDP has nothing to do with work. (It measures spending ONLY) Work has nothing to do with dollar creation. And while I'm at it, this is wrong too: It just doesn't make sense economically to spend BTC today when you know tomorrow it will be worth 15+ percent more. I'm sure people HAVE used them for goods and services, but not in this current environment where we're seeing at least a dollar a day increase in value. First, no one knows what anything will be worth tomorrow. And second, people do things all the time that don't make sense economically. By the way, I would really like to get back to your insane (and I mean that clinically) notion that one currency is worth its production value, while another is worth its exchange value. In particular, I'd really love to hear how exchanging my work for dollars creates dollars (or at least gives them value, somehow) while exchanging my work for bitcoins does not. [edit: fixed misplaced quote tag] You just made a fool of yourself. It’s called monetary policy. http://www.federalreserve.gov/monetarypolicy/default.htmAlso, you are dead wrong about GDP, here’s a direct quote from the Bureau of Economic Analysis: Real gross domestic product -- the output of goods and services produced by labor and property located in the United States. Source http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm the opening line. I’m tired of trying to educate you. You obviously have your mind made up and wish to stay ignorant. Do some research and learn about economics before you spout misinformation. |
|
|
|
Over time international transfers should be big. Doing those with banks can be really inefficient.
Not to mention that the FBI has largely managed to shut down the online gambling (poker and sports) payment processing infrastructure this side of WU and direct bank wires (and even then sending enough WUs to the tropics can get one blacklisted...). (IMO, there's still a reluctance on the part of the Caribbean/Costa Rican sportsbooks that basically depend on the US market to jump to bitcoin, perhaps because most player accounts are USD denominated etc. and they don't want the hassle of managing bitcoin trading ... there may be a business opportunity for someone who wants to move to the tropics and set up a payment processor to aggregate and manage the trading of BTC for USD and vice versa for the books). I'm down.  |
|
|
|
|
It just doesn't make sense economically to spend BTC today when you know tomorrow it will be worth 15+ percent more. I'm sure people HAVE used them for goods and services, but not in this current environment where we're seeing at least a dollar a day increase in value.
|
|
|
|
I'm trying to get at the underlying fundamentals of BTC, which nobody seems to want to approach b/c they feel it's an attack on BTC, which it is not, I think we can all benefit from fundamentals.
I don't think it's an attack on Bitcoin. I'm not sure I agree difficulty is going to increase by 100x in two months. I do think it's going to increase a lot though. I dunno. Look at the current growth rate of computing power, last I checked it went from 4 percent growth rate per day to 8 percent per day. PER DAY! And as profit margins increase due to price increase, more people are going to join. I assume a LINEAR growth rate for my calcs. I think 87x in 2 months is conservative. BTC is blowing up. It was on NPR yesterday or the day before. Once it hits CNBC . . . XD who knows? I mean what's the pop of BTC users now? Who knows? 6.34mil BTC in the econ. What's the average wallet size? Any stats on that? I'll guess 50 BTC, maybe? So we have about 100k users of BTC. I mean, this growth rate can easily keep going, and even accelerate for a while, which means a difficulty increase of at least 75 percent every round. Those are the assumptions I used in my calcs when getting there. I know it's not perfect, but I think it's a good conservative estimate. |
|
|
|
5. It becomes more expensive to replace (i.e. difficulty goes up, electricity goes up, etc.) I don't really agree with the argument that difficulty doesn't influence price (only the reverse) and I believe I could show that formally, but I don't have time to write it down.
I don't agree with that argument either. It seems perfectly reasonable to me that an increase in difficulty drives an increase in price. After the difficulty doubles, bitcoins are twice as hard to get by mining. The nominal price should double, for the "real" price to stay the same. Furthermore, higher difficulty indicates greater network strength/security, and like a price increase, also represent more investment. So is difficulty the only price driver or one of many drivers? Deconstructively, what does difficulty represent? Time to get a block, which is what? Electricity. What other price drivers are there? Demand for bitcoins. Which is based on what? Right now I think the demand is based on investment speculation/expectation. Am I missing anything? |
|
|
|
Ok, if you want to get into monetary policy, then sure, the Fed is responsible for the amount of circulation. They increase or decrease the amount based on a number of factors, but ultimately the GDP, i.e. the collective work of the US. So yeah, your work creates dollars.
No, that work creates value that gives the dollars meaning. Which is exactly what i'm saying for BTC. The value in BTC is the work input: the electricity. That is the only fundamental value for BTC, atm, because nobody is using BTC for actual goods or services. When people do, then we can assess some value. But right now, the price is completely speculation/expectation driven. I don't want this to degenerate into an argument of semantics. We can all agree that the value of a currency is what you will trade it for, and over a wide enough population, that value becomes more accurate. It is also possible for the few to drive up prices unrealistically via speculation by ignoring fundamentals. Look at the housing bust, the dotcom bust, ANY bust. I'm trying to get at the underlying fundamentals of BTC, which nobody seems to want to approach b/c they feel it's an attack on BTC, which it is not, I think we can all benefit from fundamentals. |
|
|
|
By your definition the dollar is worth nothing. Absolutely nothing. Too bad it's not true.
The argument is dubious. *sigh* No, a dollar is worth exactly the amount of work you put in to earn it, it is also worth the amount of goods you can trade it for. The underlying value of the dollar, and any currency, is the amount of work you will spend to earn it. Currently, the work for a BTC is the electricity input. You don't do anything to mine BTC, your GPU does. So, a bitcoin that I mine is worth the cost of the electricity used to find it (production cost). But, a dollar isn't worth the cost of the paper it is printed on (production cost), it is worth the amount of effort that I put into getting it from someone else (exchange cost). Why is a bitcoin valued at the cost of production, while the dollar is valued at the exchange cost? A dollar IS valued at the cost of production. How do you produce a dollar? You work for it. How do you produce a BTC? You work for it (mine it). The difference is that with a dollar, you personally spend your time and effort, and with a BTC, you spend electricity. They both SHOULD be valued on production, but BTC clearly is not. My work creates dollars? Well shit, does that mean the Secret Service is going to come after me? Because I'm pretty sure they think that dollars are printed by the Bureau of Printing and Engraving. Or, if you expand the notion of "dollar" to include checkbook money (accounts in a database) then a little research will easily demonstrate to you that electronic dollars are created out of thin air by bankers. Ok, if you want to get into monetary policy, then sure, the Fed is responsible for the amount of circulation. They increase or decrease the amount based on a number of factors, but ultimately the GDP, i.e. the collective work of the US. So yeah, your work creates dollars. |
|
|
|
Ok, so what is a legitimate expectation of future value? I posited a reasonable expectation in 2 months to be about 25 bucks for cost. If the multiplier of 32 remains the same, this means in 2 months BTC will be 800 dollars? I don't think so. I mean, I'd love it to be. I'm long on BTC, but I just don't see it happening.
It depends what expectations are going to be in two months. I don't want to be too circular about it, but unless you base your analysis on value going all the way out, you can't really remove future expectations from the equation. Some have made the argument that there is a potentially long growth curve ahead for Bitcoin in terms of usefulness. If it captures even a small portion of funds transfers, or even just a good share of the underground economy that could be a lot of value compared to now when it's all pizzas and alpaca socks. We can all agree that it's based on expectations. I think it's anybody's guess about the long term future. The short term? I'm going to make a guess in two months: 50 USD. I would not be surprised if it was 100, but conservatively, I say 50, based on an extrapolated growth rate, and a multiplier of cost to price ratio of 2. Once the difficulty starts getting too crazy people will not mine as much, but it will still continue to grow, because difficulty increases lag behind growth rate. Anyone else? |
|
|
|
|
