Who is dumb enough to believe the $30 spike was based on genuine fundamentals?  The price crashed from $30 to $10 within 2 days.  That is not a sign of a healthy and rational market.  It was based on new speculators piling in.  "Hey, the price is going up.  Time to buy more!"  I hope many people got burned at the $30 price.  It's not to sound mean, but believing bitcoin's price should follow an exponential curve is very silly.  By the end of the year one bitcoin would buy a nice car.  Everyone on this forum would be a millionaire.  Fantastic.

How is that easier than using a credit or debit card?  The merchant would have to wait up to an hour to have the bitcoin confirmed, and then maybe another hour to transfer it to MtGox.  If the price has moved down in those two hours, email the customer to demand more bitcoins.  If the customer refuses then wait another couple of hours for the bitcoins to be returned to the customer.  It's creating new problems while solving old ones.

Someone with access to a million PCs, with maybe 10% having good graphics cards, could easily create more hashes than anyone else.  If that would happen they could do one of the following:

1. Be a nuisance on the network.  With 50%+ hashing power they can deny everyone else's transactions.

2. Generate more blocks than anyone else, but there is a limit until the next difficulty level is reached.  The network would auto adjust at the next difficulty increase.

3. Related to 2, someone could do this for lols: use a million PCs to hash and drive the difficulty level ridiculously high until the next 2016 block reset, then turn off their botnet.  Difficulty could be driven into the many millions, placing electricity costs much higher than the return per bitcoin generated.  Difficulty is only reset when the next 2016 blocks are computed.  With a difficulty level high enough, it could be a very long time until it could fall.  Anyone attempting to trade the price up would be driven back down again by the botnet owner selling his new BTCs.

$20.  It'll be quite a long time (if ever) before that price is happening again.

It consumed 450w (pretty efficient), so about 10.8kWh per day.  At 25c/kWh that's $2.70.  It generated around 0.5BTC per day (15% less after today's difficulty increase too) so $6.25 per day.  I have to use BitPiggy to withdraw funds as there's really no other way to do it in Australia.  They slice around 15% off BTC's price (the weak US dollar impacts here too) and often don't have funds available.  So let's say $5.30 income per day. 

$2.60 profit seems pretty good, but remove income tax from that too.  Now it's $1.95.  $700 of hardware churning away to produce $1.95.  Still a profit, but not exactly stellar.  $1.65 after today's difficulty increase. 

The final complication in the calculation is that power here is tiered.  The more you use the more additional kilowatts cost.  Having one PC burning through 300kWh per month puts my bill into a higher bracket for each additional kilowatt, so I would be paying around 27c/kWh to power other appliances.  Cooling costs haven't been factored in as the waste heat (nicely warms up a room) isn't a problem right now due to the season.  Come summer time however and that $1.65 profit per day would be lower still.

A whole bunch of people have just discovered they won't get rich by doing nothing while their PCs consume vast quantities of electricity.  That's a powerful incentive to mine less, which in turn will lower the price as people who already have bitcoins and are ready to give up will dump what they have left.

I turned off two 6950s today.  At the current price (and with the weak US dollar) I was breaking even on costs.  If the price falls to $11 then I'd definately be making a loss on every bitcoin generated.  There are many people (mainly in the USA) who get very cheap electricity and apparently pay no tax on income, so they're happy to mine even if the price hits single digits.

And the faster they convert to their nation's preferred currency, the faster bitcoin will fall in value.  Speculators and investors would see keen interest to sell as a signal that the price is going down.  They then wait for the price to fall.  Those people using bitcoin for real commerce are no doubt vastly outnumbered at the moment by miners and speculators willing to sell.

I'm watching bitcoin's price with interest as it falls through the $14 and $13 marks.  It's still going, at around $12.50 as I write this.  It may be partly related to the long weekend in the USA.  Bitcoin's price has historically fallen on weekends.  But something feels different this time.  Everyone expects the cycle to occur, and when it becomes common knowledge it's almost by definition not going to happen again for the same reasons.

Some of the most capable minds working for IBM can make a computer that plays chess or Jeopardy very well.  We're a very long way from computers that have a true concept of self.  An ad hoc network put together by a bunch of people running open source software to compute SHA hashes is about as far away from self awareness as my toaster.

I tried telling a few friends and family members about bitcoin.  All had the same two comments: Why does it have any value?  And... It sounds like a scam/pyramid scheme/etc.  I gave up.


Referring to people as sheep isn't likely to win you any friends.  The number one problem with bitcoin is that there is so little that one can purchase with it.  Apart from Silk Road, there doesn't seem to be a compelling reason to use bitcoins.  The only other group of people happy so far are the tax avoiders and money launderers.  I'm just waiting for the first media article stating pedophiles are using bitcoin to trade material.  Any day now.

It's not quite over yet.  If someone releases an efficient FPGA design on an affordable board then power costs won't matter at all.  FPGAs consume a lot less power per Mhash than any graphics card available today.  I recall reading on another forum section that an 80Mhash/s design is available and consumes only 10 watts of power, but requires a $600 development board.  40 watts for 320Mhash/s handily beats my 6950 which is about as fast and requires over 200 watts per card.

This however assumes two things: that someone will make publicaly available a cheap FPGA board, and the software to make it work.  If someone gains a huge advantage by employing FPGAs to hash then I don't expect them to cheaply share their knowledge or design.

I've been mining for a while now, but am about to sell most of my hardware (6950s, etc).  Keeping the most efficient PC running as it has paid for itself.  The question for me in regards to whether or not to continue mining was that keeping $1200 of hardware pumping out $5 a day after costs didn't seem like a brilliant idea.  The hardware is likely to depreciate almost as fast as I'm making bitcoins.  Few gamers will care about a 6950 next year.  Counting on a bitcoin's value increasing some time in the future is risky.  Difficulty has increased over 100% in the last few weeks yet the price has actually fallen.

One of my dual 6950 PCs burns 300kWh per month.  Sure it's still profitable, but using so much power for so little return seems like such a waste of resources.

Cheap 6950s on eBay if anyone wants them :-)

Yes, that's quite common.  Many people in the USA believe the dollar is backed by gold, or at least the gold at Fort Knox.  No one has independently checked on the Fort Knox stash since the 1950s, so who knows how much (if any) is still there.

There are three things backing the US dollar:
1. Trade in oil.  Need to have dollars to buy it (although that's now less so than in the recent past)
2. USA is the world's largest economy.  You'll get dollars for your goods.
3. Guns.  Lots of guns.  With nukes on top.  World's best military buys a lot of respect.

Oh, okay, that clears it up.  One of your other posts stated using US dollars in Indonesia for any transaction resulted in jail.  One would assume if using US dollars was illegal then holding them would be as well.  That's at least the case in North Korea.

Jail time for using US dollars within a country?  I remember the Communist Bloc in the 1980s, where ownership and trade in US dollars was illegal.  Problem was, many of the Communist Bloc's currencies were non convertible on international markets and the economies of those countries suffered greatly.

The real reason for making US dollar trade a criminal act was for the government to hoard the dollars for its own use to buy essential imports.  It had nothing to do with the US dollar being low quality or unsuitable for trade.  There was an idealogical vein in there too.

Indonesia banning the use of US dollars is Indonesia's loss, not the USA's.  Just imagine what current owners of US dollars inside Indonesia are supposed to do.  They've instantly been turned into criminals.

It's a reasonably common theme on bitcoin forums for someone to state they get free electricity because they're on a fixed contract, or that power is charged per building and not apartment therefore if one person consumes enormous amounts of power it doesn't matter.

Someone, somewhere, has to pay for that power.  If the building manager notices the power bill increasing then he or she will amend your rent to pay for that power.  It might even happen long after you stop mining.  Power is never free.

Very much so.  Imagine buying something in bitcoin at a cash register: "Please wait sir, I need at least 5 confirmations on your transaction.  It will only be another 5 minutes..."

Computers dropping in price would be a problem if you had to buy one now and spend 25 years paying it off.  Computers are a very special case completely uncomparable to housing.  15 years ago I bought a 1Gb hard drive for $320.  A 1000Gb drive costs around $60 today.  Try to get that sort of improvement in land size or house features in housing.  It's physically impossible.

Getting back to the general gist of the thread, most Australians are still in a massive state of denial when it comes to housing.  'It's different here', we tell ourselves.  The average price of housing in Sydney is over $500k.  Note that an Australian dollar is worth a lot more than the US$ (AU$1 = US$1.07, was AU$1 = US$0.60 3.5 years ago).  It's not uncommon for Australians to leverage up 7 to 1 income to house price ratio just to buy anything.  I myself recently purchased a small house on a 350m2 block for $300k.  And that was quite cheap.

We don't have non recourse loans here like some states in the USA, so the bank will keep chasing defaulting customers for money.  There is no 'jingle mail' here.  First home builders get a $15k bonus from the federal government, but at least half that is handed back to the state government in stamp duty.  That $15k comes from the pockets of other taxpayers to keep boosting house prices ever higher.

If China ever stops consuming minerals and other resources at its current pace, I recommend Americans grab a beer and a deck chair and watch the Australian housing market implode.  It'll be quite a show.

Bitcoin miners massively overestimate their influence on the ATI GPU market.  At most, it's 1% of ATI's sales.  GPUs are mainly used for displaying graphics, playing games, and doing scientific computations.  Bitcoin is a mere rounding error in the overall scheme of things.  Even if every miner quit tomorrow we wouldn't see cards being sold off for half price.

If people want the old generation 5xxx cards there is a problem in getting stock (obviously), but in Australia we have no problem getting as many 6950, 6970, and 6990 cards as required.  Is Australia siphoning all the stock headed for the USA? 

Bitcoin is barely a blip on ATI's radar.  They sell far more to the OEM market.  Second is the enthusiast market for gaming.  Then comes the Stream (and CUDA for nVidia) market for scientific computing.  Bitcoin brings up the rear.  The current hash rate is equivalent to 36,000 non overclocked 6950 cards.  I'm sure ATI ships millions of GPUs per year.  A few tens of thousands isn't worth worrying about, especially for something like Bitcoin where users may lose interest.

Some people may be "scared" and trying to get out, or maybe can just extrapolate into the future a month or two and see we won't be doing anything really useful with bitcoin.  It's also a survival of the fittest game.  The fittest get their electricity for 10c/kWh or cheaper, or just steal it.