I had a friend run two ugly ass towers in a top of the line colo. It was so ghetto that his power button didnt work, so they had to press a power button inside the case to reboot it.
I told him I would be embarrassed showing up with that thing. Some of these miners would be much worse.
Ooooh his had one of the fancy power buttons built into the motherboard. I've had a few PCs in the past that I've had to short the pins on the front panel block with a screwdriver  Seriously though, my rigs WERE built for cheap but they are all still in identical cases with all of the front panel controls hooked up. They look pretty slick sitting all in a row... Of course they run far too hot to cluster them all in one part of the house so they're very seldom actually sitting in a row... |
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I'm always happy to listen to constructive criticism. Unfortunately that's not usually the kind of criticism I get Oh and on a side note, many thanks to stickystyle for spotting an error in my JSON feed. It's been fixed and you should have no problem parsing the data now. |
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Gotcha, I suppose it would make sense to treat the market more like a resonant circuit than any kind of normally distributed system - it is a sort of feedback loop after all. Of course I haven't used anything with the name "Lorentz" attached since college so I'll be out for a bit brushing up. Then I'll have to see if my mediocre PHP skills are sufficient to actually implement whatever my refresher course turns up |
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You're assuming the base value of 1 BTC is perfectly linear with respect to your log scale, which is probably not true. The system is a bit more complex than that but one of the primary forces behind the value of any currency is scarcity. The number of users joining the network is growing at a significantly faster rate than there are bitcoins being mined, which is to be expected what with mining being roughly linear (~7200 new BTC daily) and adoption being exponential. While log scales often make the rate of increase in exponential systems easier to look at, there are often trends so exponential that they graph as an exponential curve even on a log scale. The only way to make your line perfectly straight is to adjust your log scale to match the underlying equation exactly - and if anyone knew that equation he or she would immediately use it to become rich and thereby change it  I agree with andes, actually. The $31 peak we had was clearly a speculative bubble as the values within were well outside of practically any reasonable envelope you can construct. We had our bubble, we had our correction and now we're about back where we started. |
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Speaking of day-trading, if you look at the 20 hour SMA envelope and the volume bars, it looks like the majority of people (or large holdings) tend to BUY when it moves ABOVE the envelope, and SELL when it moves BELOW the envelope. Am I crazy in thinking that the smart thing would be to do the opposite? You know, that maybe people should be buying low and selling high? Is there some general theory that on the contrary suggests that once a chart drops 10% lower than it's SMA, that it's about to drop even more so you beter sell, or is it simply fear in people causing this behavior? Same goes on the other end of things. If you see it make a huge bounce, isn't it already too late to be buying?
I think what the previous poster was implying was that if someone sells 1 BTC successfully, thus adding a sale to the volume, someone else had to have bought 1 BTC from them, thus adding a purchase to the volume. In order for anyone to buy under the envelope there have to be people to sell under the envelope. Eventually those willing to sell beneath the envelope disappear and the price climbs back up. Econ 101. Oh and if anyone finds it to be a useful tool, I just whipped up a web site with a handy little reference bar (and a JSON API feed if anyone wants to try their hand at bot-making) that shows the 4-hour SMA, standard deviations and envelopes at 1 and 2 standard deviations from center. http://bitcoinreference.comEnjoy |
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Regardless of the problems with my implementation, merchants will not enter this marketplace if they have to change their prices daily - and in the current market, daily wouldn't even be often enough! There is no reason that anyone anywhere should pay 1 BTC for a shirt and then twenty minutes later see a price tag of 0.8 BTC and then 1.4 BTC twenty minutes after that. The issue still remains that this market is too volatile for real commerce and if the only people in the market are the speculators, who thrive on volatility, there will likely never be a sufficient decrease in that volatility to make this a worthwhile mechanism for most businesses to transact in.
I see a lot of people reaffirming that I've spotted a problem and telling me that my solution is stupid, wrong or communist but not a lot of people stepping up to do anything themselves. So until someone has a better idea and wants to implement it, stop complaining about my imperfect solution.
I recently started to accept Bitcoin as a merchant, and it was the same day BTC went from 18 to 31 and then dropped off pretty low against the USD due to heavy sales.  So what I did was making the order processing partially automatic; the customer select Bitcoin during checkout in the online shop and gets information how to proceed in the order confirmation email automatically. When we receive an order I browse through the recent currency trade stats/graphs for the past days and reply with an offer via email which is time limited depending on how big the BTC currency fluctuations are against US Dollar. This is also a good way to get experience with BTC, and maybe at a later stage implement fully automatic handling. In addition to this, in a way to even out the BTC currency losses when customer "gets too good rate", we keep some of the customer payment in BTC (eg. like 50%), and exchange the rest to USD. Since I believe the Bitcoin will increase in value against the USD eventually, even if it takes a month of swinging up and down, half of the customer payment will then increase enough to cover any losses we had at the time of purchase. To survive as a merchant these days you have to improvise and adapt, this is nothing new for us. I think the people worried mostly about currency fluctuations are miners here in the forum, funny that they seem so concerned about merchants. My advice; when the the rate drops down, stick with your Bitcoins, don't panic. Hasty decisions are rarely good. I've just updated the site (and API feed) with new code. It now displays the most recent price, a four-hour moving average price and the standard deviation for that same four-hour span. I'm suggesting that merchants list their items at the low end of either the 68% or 95% (1 or 2 standard deviation) brackets since that's the lowest value BTC is likely to swing to before you get a chance to cash out. For investors, buy when the market is more than 1 SD under average and sell when the market is more than 1 SD above average (use other tools and knowledge obviously, but this is something worthwhile to put in your toolbox). Similarly, miners should hold coins until value is above the 1 SD range (or above the 2 SD range if you're really patient) to sell. Finally, the standard deviation itself can be used as a tool to measure market volatility - a high standard deviation indicates a high degree of volatility while a small standard deviation indicates a rather stable market. I'm doing my data-gathering now to determine what a "good" SD (as a percentage of variance from baseline) is for this particular market and I'll be developing an implied volatility algorithm from that in the near future. Enjoy |
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Keep in mind that a normal apartment circuit is fused at 15 to 20 amps. This means you can only put 1725-2300 watts of power on one circuit, which probably won't be enough to run your rigs AND a 12,000 to 13,000 BTU AC unit. I've got a 9,000 BTU unit and it eats about 1,000 watts so you can probably count on 1,300 to 1,450 watts for the range you're looking at. That's basically the entire safely sustainable power draw on an entire circuit. It's potentially dangerous (but sometimes unavoidable) to solve this problem with extension cords. If you do, don't cheap out; get at least 14 gauge cords (lower number is better, best available is usually 12 but those are usually spendy). figure out how many watts your equipment pulls, divide that by 115 to find amps and make sure the cord you get is rated for at least that many amps. Preferably you never want to put any circuit under more than 80% of its maximum safe load. Also, it's meant more for server rooms than living rooms, but I've found this to be a good guide in the past: http://www.openxtra.co.uk/articles/calculating-heat-load |
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I skipped the thread, but hopefully someone has pointed out that what you're suggesting is a cartel. You're the millionth person to invent such a thing. They sound great in theory, but they don't (generally) work.
The reason is that it's profitable for people to cheat the cartel and therefore, inevitably, someone will. You're trying to resist the natural forces of the market.
Cartels can work when they're made up of a very small number of people (the handful of controlling interests in OPEC, the only two gas stations in a small town, etc) and/or when there are effective methods to punish cheaters who must be traceable. Bitcoin mining is almost the perfect example of a scenario in which cartels can't and won't succeed.
Yeah you shouldn't have skipped the thread, lol. That may be how this all started off but I'll admit when I'm wrong. I did the math, I ran the numbers and I figured out not too long after the original post that it was highly unlikely I'd ever get enough of a power base to pull such a thing off. I've shifted focus on my site. I'm working on extracting data from the blockchain that, combined with data from the MtGox API, might be able to give a meaningful prediction of BTC/USD value expected for a given period of time - something like an exponential moving 24-hour average but smoothed or modified by factors not necessarily available directly from MtGox. For example, I should be able to correlate transaction volume from the block chain to transaction volume as reported by MtGox and sizable differences in volume may be noteworthy predictors of dark pool action. I plan to spend the next week in deep analysis and hopefully can come up with not just a more accurate price index for this market than the standard analysis tools might provide but also EMAs for the standard deviations such that we can try to predict the likelihood of market movement in a given direction and make the most intelligent trades possible. I feel pretty certain that people following their natural instincts can stabilize this market over time, but that time might be shortened by smart traders having good data and THAT is what my efforts have now been turned to. |
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When the day comes that I can pay my electric bill in BTC then I'll be able to do all of my accounting in BTC and no exchanges will be necessary. Until then, I need a reliable way of finding out whether my mining operations will be profitable today and it might be nice to know roughly how profitable, too.
The one twist I would put on that is to figure profitability in BTC instead of your government issued currency... You will be much better off in the long run. True, you do have to account for exchange rate for those inputs payed for in local currency, but instead of converting your Bitcoin to Dollars for that calculation try converting all your other costs to the the Bitcoin exchange equivalent. You might be shocked to find out that your costs are actually going down! I already do. |
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When the day comes that I can pay my electric bill in BTC then I'll be able to do all of my accounting in BTC and no exchanges will be necessary. Until then, I need a reliable way of finding out whether my mining operations will be profitable today and it might be nice to know roughly how profitable, too.
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True, but they have a really handy API and I don't feel like re-inventing the wheel at this exact moment. Eventually yes I'd like to start parsing the blockchain myself and not be reliant on BE, but until I've at least proven my math I don't want to re-write that amount of code. Of course if anyone has a code snippet or knows of an application that will let me peruse my local copy of the chain and perhaps run some basic analysis that'd be more than welcome too |
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Exactly right, that's what my current work is all about, knowing what the work is worth. You can't "refuse to trade coins below what the work is worth" if you are legitimately missing that data. Give me a bit to find some math that matches the data and we'll all know what the work is worth. You're just going to get buried in the rabbit hole. What you want to do is to define your parameters: How many hours can you put up with being distracted from family and community? How long do you think the money you make should last? How much loss of purchasing power and earning power are you willing to sacrifice for exchanging into fiat? How much personal energy will you have left to be active in what you care about? Work is worth what amount of time you have to put into it aside from other things you need to do. Time is worth what you could be doing with it and how much more time that will take if you are distracted. Money is worth whatever amount allows you to live at those parameters above. Labor is a commodity. Work is not. Let's start acting like it. Rather than suggested price, it should be reference price, window of variation that will not interfere with the above, the change in value of the fiat as well, and whether the price is moving in the wrong direction. All this tweaking needs to include the tweaking by central banks. And what we really need are trade recycling patterns. Using the same BTC 5x to buy a car by cycling them through the community. That's how you get stability. Exactly: "How many hours can you put up with being distracted from family and community? How long do you think the money you make should last? How much loss of purchasing power and earning power are you willing to sacrifice for exchanging into fiat? How much personal energy will you have left to be active in what you care about?" [emphasis added] That valuation is going to vary widely. These are the kind of questions one might ask when deciding whether to accept a job offer. The data I'm trying to come up with is a reasonable estimate of what that job might pay with a shelf life of more than 20 minutes. I also believe that if people are aware of a reasonable, expected average then they are more likely to trade around it. If you recognize what the current valuation of a commodity should be and see that it is actually trading significantly higher, you might recognize a bubble more rapidly and responsibly sell. Enough responsible selling will suppress the bubble without causing drastic market corrections. The same works in reverse - if you recognize that a commodity is under-valued at the moment, you would certainly be best served to buy some and then re-sell when it becomes correctly or overly valued again. The big problem that I think we've come to an agreement on is that factors like MtGox's dark pools, unmonitored black/gray market exchanges and transactions etc. make it very difficult to determine proper valuation of bitcoin as an asset. Thankfully we all have the ability to peek directly into the block chain and attempt to extract data from the transaction database itself. This is what I'm currently attempting to do (or what I will be attempting to do once blockexplorer comes back up). |
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Rather than suggested price, it should be reference price, window of variation
Then I guess bitcoinreference.com is an appropriate domain But in all seriousness, yes I intend to work out something volume-based from what I can mine out of block explorer's API. Speaking of which, anyone else having trouble getting to block explorer right now? |
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Stability comes from anchoring to productive transactions.
The right way to do this is to take the gains, be productive, and refuse to trade coins below what the work is worth.
Stability does not come from numbers. It comes from valuation in terms of work.
I will give you that. The numbers by themselves do nothing. But it does require the ability to make sense of them to arrive at a meaningful valuation. Be productive and all that... But know the true value of what you produce. Exactly right, that's what my current work is all about, knowing what the work is worth. You can't "refuse to trade coins below what the work is worth" if you are legitimately missing that data. Give me a bit to find some math that matches the data and we'll all know what the work is worth. |
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OK I think I have some good data sources and sound math to work with now, give me a few days to figure out a proper volume/price ratio with standard deviations and make sure the calculated curves fit within some reasonable distance of reality and I'll bash out some code to produce new improved numbers which should update with every block instead of every difficulty change - much better resolution |
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@chodpaba: I agree that darkpools are frustrating and bad for the market. The whole system was built on the concept of "open but anonymous" transactions. Since those dark pool transactions still require a transfer of BTC between accounts, perhaps we could combat this by using blockexplorer to compile the total BTC transaction volume for a given day and find some correlation to average price for that day which fits? That would almost certainly be a more accurate measurement than what MtGox chooses to give us via the API, though considerably more complicated to gather data on Of course we could also vote with our feet and just start using TradeHill. I have the feeling there will be a fairly meaningful migration once TH's API becomes available... Now that would actually make your website useful. If you could compile and present raw market data in a way that is easily accessible, and so flatten the availability of market information to all players, it could go much farther toward achieving your stated aims. All right, consider it done! Well... Give me some time to write the code and figure out how/where to keep it running without hammering my poor little shared hosting box and THEN consider it done! |
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Oh, and that's if you're lucky enough to have a 100A main breaker. If you live in an apartment (like me) or an old house, you might get stuck with 50A (like me) or 60A main breakers, so cut that in half. I pop breakers all the time  |
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@Angelus: There is also an upper limit to how many rigs the average miner can sustain. Not many people are mining out of data centers right now and believe me you start running out of available electricity after a point. Assuming ~400W for a decent rig and ~1300 BTU/h of heat that will need to be removed via additional air conditioning at average efficiency levels, we're talking ~550W per rig. If you're lucky and live in a house or a decently large apartment you might have a 100 amp main breaker, meaning ~11,500 watts are available to your entire house. Roughly enough to power 21 rigs if you had no other power consuming devices to run and no other heat producing devices to cool off. According to the US Dept of energy the average U.S. household consumes ~14,000 kWH per year, which works out to about 1600 watts at any given moment, averaged out. That leaves enough room for 18 rigs if you're average and I'm guess most miners were above-average power consumers long before bitcoin existed. There is an essential upper limit to any mining operation. Most are not willing to lease a separate space to expand operations so once they hit the power/heat ceiling they are unlikely to continue expanding. To this end, yes some portion of the difficulty increase will always reflect old miners buying new rigs but I'm willing to bet that the better portion of it is new miners. Also, old miners couldn't buy new rigs without demand for the currency which I still believe is coming from growth of the network more than speculative demand (especially now that the $31 bubble popped) @chodpaba: I agree that darkpools are frustrating and bad for the market. The whole system was built on the concept of "open but anonymous" transactions. Since those dark pool transactions still require a transfer of BTC between accounts, perhaps we could combat this by using blockexplorer to compile the total BTC transaction volume for a given day and find some correlation to average price for that day which fits? That would almost certainly be a more accurate measurement than what MtGox chooses to give us via the API, though considerably more complicated to gather data on Of course we could also vote with our feet and just start using TradeHill. I have the feeling there will be a fairly meaningful migration once TH's API becomes available... |
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How about this, then... I've agreed before that speculation within certain bounds is good and CAN have a stabilizing effect, but that much of the speculative trading that is occurring today is doing little more than creating unsustainable bubbles and profiting from both their rise and their crash. What if we find a way to create a reasonable valuation of 1 BTC, perhaps an exponential moving 7-day average or something. We publish this information in an easy to find easy to use manner and suggest that people buy when the market dips more than a small amount below and sell when it climbs more than a small amount above. This would still be a profitable trading scheme, though riding the bubbles and crashes is potentially moreso. The major benefit to this scheme is that if enough people trade around a reasonably estimated average price for a given day, their trades will help correct the trading price back toward the average. Given enough users and enough time this should lower the obscene variances at least enough to make it usable without being pegged to a fiat currency in a much shorter timeline.
I would have no problem with this kind of a system and it doesn't have any of the dramatic components people have complained about before - no controls or demands, merely information and education as well as a set of recommendations that can be profitable for those who follow and are good for the market as a whole. Given a bit of time I could whip something like this up from MtGox's API feed fairly easily. Questions/comments/complaints?
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