More people rushing in.

I'm sure a lot of people ordered hardware back when the exchange rate first jumped. Over the past week they've probably been receiving their hardware, configuring machines, and bringing their mining online. Meanwhile, popularity continues to increase.

We've all known that difficulty has been climbing at a rapid rate for quite some time now. These jumps shouldn't come as a surprise to anyone.

As for FPGA mining, it's been debunked many times already. FPGAs are good at what they do, but they're not magical.

GPUs, on the other hand, are really, really, really good at crunching lots of numbers in parallel. And they're relatively cheap.

Are you sure about that? We just had a huge jump in difficulty. If it continues, two weeks from now your bitcoin production for a given Mhash will be ~30% of what it was yesterday (before the increase). Even then, that value will only hold another 10 days before it falls again.

Not true.

Right after the difficulty is adjusted, 1 block will be generated approximately every 10 minutes.

As miners join the network, more power is thrown at the problem. With more power, block generation time goes down.

Thus, while difficulty is increasing, block generation time is lowest right before a difficulty increase.

Right now the network is doing 12.63 blocks per hour. Compare that the the 6 that it should be doing. After the difficulty increase, we'll be much closer to 6.

Well, kiba's post was edited after my reply. See my quoted segment for his original question.

Anyway, there is no right or wrong here. It's all speculation. Again, I'm not arguing which is right or wrong, all I've said is for everyone to be careful and keep your eyes peeled.

But again and again the mob mentality jumps on anything that isn't pro-bitcoin-going-up-forever and insists on explanations or proof or something. I can provide the same amount of evidence as everyone else as to the future value of bitcoin: NONE. I'm just pointing out that any posts about bitcoin value rising again and again here are welcomed with open arms, while anyone who says otherwise is immediately piled upon by the crowd. I haven't even said there is a bubble, just advised everyone to keep their eyes peeled, but I'm feeling the wrath of the forum anyway.

I've never said bitcoin is a bubble. All I said is that every time bubble is mentioned or something says the rise in price might be unwarranted, mob mentality kicks in and attempts to discredit, bury, or argue away the points.

Your comments here are a perfect example of what I'm talking about.

Surpass their bitcoin feeling? What does that even mean?

Honestly, I'd just suggest that everyone stay realistic and grounded here. There's an almost euphoric sense that circulates the forums every time the exchange rate goes up, and all logic seems to go out the window. Mob mentality crushes anyone who disagrees.

Bitcoin is a great concept. Just be careful and keep your eyes peeled.

I'm not crying wolf here.

My point was that I strongly believe that this e-mail was not sent with good intentions. The e-mail referenced this forum because it is a certain source of pro-bitcoin comments that the reader would immediately notice.

Your comments here are perfect proof: I didn't even suggest that this was a bubble. I just pointed out that we are flooded with pro-bitcoin arguments on this forum. I also said that every time the word 'bubble' comes up, people come out of the woodwork to insist it's not. Like clockwork, that's exactly what happened.

If, on the other hand, I'm wrong and the spammer in question had a noble intent, then I think we may have found the world's first and only selfless spammer. However, the lines at the end about how you need to come to this forum where the spammer (no forum handle given, unless it's 'wendel'?) is giving away his current bitcoin stash is the final nail in the coffin for me. Think about it, the closing thought is: Visit this heavily pro-rally forum and fumble through the pro-buying-bitcoin posts, eventually you'll find where I'm going to give you my money for free! By the time they give up on finding this free money giveaway, the idea is that they'll be frothing at the mouth to buy.

Sure thing, and I never argued otherwise. They can be indistinguishable though, and the spammer probably linked here knowing that this is where the most enthusiastic bitcoin believers hang out.

This is exactly what is going on here. The e-mail is full of useless information and references to the gold standard and lack of a central bank that are designed to get people riled up about how bitcoins are the answer. If they come to this forum they'll see all sorts of posts from people who insist bitcoin is going to take off, 'go parabolic', hit $1000 USD, etc.

Anyone who bought in to bitcoins has every incentive to get as many people hyped up about bitcoin as possible. The more people who believe it will just keep going up, the more buyers you have. More buyers == higher prices when you want to sell.

Just look around the forums and see how starry-eyed people are here. The number of threads about how bitcoin is just going to keep going up and up is absurd, and every reference to a bubble draws people out of the woodwork to attempt to smash the argument.



Pump-and-dump schemes for stocks are illegal. Pump-and-dump for bitcoin is much more of a gray area, due to the unknown and unproven status of bitcoin and bitcoin transactions in the court. Fertile ground for spammers and market manipulators, to say the least.

Between this spam e-mail campaign, the over-zealous "BITCOIN WILL ONLY GO UP" forum posts, and the recent bursts of block bitcoin buying that drove the price up in spikes (not smoothly), I think it's obvious that bitcoin, as it stands, is the target of some heavy manipulation.

It depends how much risk you want to shoulder. Whatever you do, run the projections for scenarios where bitcoin exchange rates plummet as well.

If you give him a fraction of the income, he's shouldering some of the risk as well.

If you give him a fixed amount, you're shouldering a lot more risk, but you also have increased upside in some scenarios as well.

If you choose fixed amount, don't forget that difficulty adjustments happen every ~10 days or so. A month from now, you don't want to be paying him the same rate that you're paying him today, unless exchange rates mysteriously keep increasing.

Give it about 12 hours, at least.

Although if the next difficulty jump is as large as the last one, it's going to be over 220K difficulty.

The projected difficulty isn't accurate right after a difficulty increase. Give it about half a day to settle down. Then remember that it will start climbing back up slowly as the network continues to grow.

This consensus is among avid bitcoin fans. If even these guys thing the TX fees are too high, then the general bitcoin-wary public will probably agree even more vehemently.

These people are the market. And if they think the TX fees are too high then they will just not use bitcoin. I don't think that's the kind of free-market adjustment that would do the bitcoin economy any favors.

18% is still going to give you way optimistic results, especially in the near term.

You cannot use anything other than 40% if you want realistic results. If you're going to extrapolate that far out and assume that increases will fall in the future to 18%, then you're going to have to modify the spreadsheet to have a 'difficulty increase' that decreases by a % every month.

8.6% for your difficulty increase values doesn't even begin to make sense in the current environment. You can't include the pre-GPU era and the pre-BTC/USD-runup era in your forecasts, as it was a different game back then.

The last increase was 30%. This increase is over 42%. The rate does not appear to be slowing down one bit.

If you had used 8.6% in your forecast 1 period ago (before the 30% jump), it would predict difficulty would be jumping up to 17.9% more (for the 2 periods) at this next jump.

Instead, after the 30% and 42% increases it will be up over 82%.

That's 82% actual vs. your 17.9% predicted. And every other increase will be on top of the increases in the near future.

Another example: 4 difficulty increases of your 8.6% yields a total difficulty increase of 39%.   4 difficulty increases at the current 40% rate yields a total difficulty increase of 384%. Even if growth cools off to 8.6% after these increases, that 8.6% is still building on top of that 384%.


In short: Any predictions must use the current difficulty increase rate for the near future, otherwise they are invalid.

Ahhh, the joys of being on the right side of a bubble. 

Hopefully your card is still under warranty. Be sure to read the manufacturer's fine print if you bought it used. Some times you'll still be covered. If you can contact the original owner and s/he's helpful, you'll have even better luck.

As mentioned before, your difficulty estimates are way, way off. Difficulty will jump over 42% in a matter of hours, and that's after only ~10 days at the current difficulty.

Your note suggests that you don't have difficulty rising very quickly because you believe it will be offset by purchases of faster cards. You're being a bit optimistic here, as the current 'GPU to have' for the bitcoin game came out in 2009.

But the absolute biggest indication that your model isn't realistic should be this: The barrier to entry for mining bitcoin is low relative to other investments or business ventures. You don't have to get a business license, find investors, etc. You just take a computer, load a generic program, and hit go. This doesn't take special knowledge, other than the knowledge that bitcoin mining exists.

In other words: If you can do something on a shoestring budget in your basement without actually even working for it, then so can almost every other hardware enthusiast on the internet. And as they discover bitcoin mining, they certainly will try. And this will rapidly drive the absolute profitability in to the ground.

What difficulty rise did you use?

Also, I'd strongly suggest that everyone run many different scenarios to see how each decision will fare across several cases. For example, don't forget to run scenarios in which BTC value falls slightly over time as well.

Very nice work. Thank you for sharing!

Some comments: The next difficulty jump is actually over 41%, not the 20% like the default in this model. This alone makes a massive difference.

Also, you might consider adding some fields (to both sides) for exchange rate fees. For example, the 0.65% Mt. Gox charges going each way, then any fees for moving your local currency into and out of the bitcoin ecosystem.

A field for 'pool fees' would be great for those mining in a pool like deepbit, where 3% of the take goes to the pool operator.

An 'uptime' factor is also a worthy addition, especially for anyone who plans on gaming a few hours per day. Even dedicated systems may only get 98% due to connection issues, pool disruptions, etc.

Again, excellent work!