$2.95 a day, but as the OP stated that gets reduced by a third every 10 days or so.  By the end of the month you're getting $1, not $3.

Oh we were.  The key difference now is that it takes almost 4 times more electricity and 4 times more time to generate a bitcoin.  If the price now reaches parity with late May, would you say everything is fine or that there is a problem?

Many people will never stop mining.  They live with their parents and don't pay for power, or stash the rigs at work and hope no one notices.  And then come the FPGAs, which achieve a hash per watt rate that no graphics card can ever match.  If BTC falls below $10 (and I think it will) the difficulty rate will still go up next week, and afterwards.

There are three broad groups of people who actually need bitcoins:

- The young, who don't have credit cards and maybe not even non parent controlled bank accounts but want to send someone money.  What better way than bitcoin?

- The embarrassed, who probably don't want payments to a porn web site appearing on their credit card statement.

- The 'legally challenged', who want to order illegal goods, pay for an illegal service or just want to move money with an added layer of obscurity (tax evasion, money laundering, etc).

The rest don't really matter.  Bitcoin will never be popular as long as it's a geek's toy, or used on the basis of libetarian ideals.  I expect the above three groups to drive bitcoin's adoption (or failure, if they're just not interested).

http://en.wikipedia.org/wiki/Dead_cat_bounce

We're probably seeing the end of it.

Why is the world's reserve currency the US$?  That's what the Allied industrialised countries agreed upon in 1944 with the Bretton Woods agreement.  The system ended in 1971 but by then the dollar was too important to world trade, so the defacto reserve status continued.  The USA was also the primary oil producer in the world (Japan went to war with the USA after the US blocked supply).

The US dollar has many problems, but no one really has a better system.  The Euro?  That's beginning to look quite fragile after little more than a decade.  Yuan?  Tied mainly to the US$.  Gold?  The only people advocating gold are the ones sitting on bullion bars talking their book.  The only thing that's certain is that bitcoin won't make any difference to world events.

$16 and falling on MtGox as I write this.  The 'island of stability' around $19 to $20 didn't last too long.  Those 25k stolen BTCs being unloaded today after being laundered over the last couple of days?  Dead Cat Bounce has had its run? ($30 -> $10 -> $20 -> sub $10 if that's the case).  Interesting times.

Difficulty increasing 50% every 10 days while the exchange rate is on a downward trend.  Anyone starting mining now must calculate out their machine and electricity costs with the assumption that in 2 months time they will be generating 1/10th the bitcoins they can do today, with the current exchange rate.  Making $1 per PC per day profit doesn't sound too exciting.

If you're using mostly or all second hand parts, go for it.  Otherwise it will never pay for itself let alone make you any money.

A stable price is welcome, but we must remember that difficulty went up 50% yesterday.  The price didn't budge.  There's no reason to believe the price will go higher when difficulty again goes up by 50% in a week's time.  Within the space of around 2 weeks a miner will be making less than half what they used to.

A friend of a friend said eh?  Possibly true, but apart from the dramatically higher hash rate there has been 0% evidence of the above presented.  If true, the hash rate should drop dramatically as that system becomes non-idle, and also I don't see it lasting too long before questions are asked about power usage.  Mining with other people's hardware and electricity is the sweetest deal.  Losing your job and endangering your career is however a bit of a downer.

As I thought in earlier posts, difficulty has gone up and the next step looks even larger, yet the exchange rate has not budged at all.  Difficulty is no longer tied to the value of a BTC.  The market is well supplied with BTCs.  Most miners are no longer required.  The speculator buying into the market has no care about hardware costs, cooling, electricity, etc. 

Yeah, anyone buying new hardware today to mine hasn't really thought the problem through.  They're wasting money.  Even those who have paid off rigs and are tempted to get another card are almost certainly throwing money away, unless they're happy to extract money at a rate of $1 per day per GPU in a month's time.  It's a race to the bottom and tragedy of the commons all rolled into one.

We already have enough bitcoins and miners in the system to satisfy all the speculators' needs.  The only group of users currently employing bitcoins for real world goods and services are on Silk Road.  Everything else (web hosting services, etc) are just fluff.

The people who got in early into bitcoin are the richest of them all.  I bet they loved the exponential run up in BTC's price.

MtGox was DDoSed yesterday, which partly explains the low volume.  The other is that the speculative frenzy has died down.  We're not seeing a mad climb to $30 or a panic fall to $10.  Less people interested in participating at the moment.  To be honest, I prefer it this way.  An exponential rise in BTC's value only helps speculators while running a high risk of destroying the fledgling BTC economy.

It's important to look beyond the cost of power when considering a mining rig.  It has to be cooled.  Where I am it's winter right now, so the waste heat is being put to good use.  But come summer time and 35C weather I will definately not be mining.  Don't forget air conditioning costs.

People keep looking at the current difficulty level and make calculations based on that.

$40/day at 567,000 is $26/day when difficulty resets today.  So far the difficulty rate is on a long exponential upward trend.  Inefficient miners will bail out but efficient rigs will stay and even increase.  Someone who mail ordered hardware is likely to receive it and start mining in the next difficulty bracket.  Then come the FPGAs.  Difficulty is resetting every 10 days or so.

In 20 days time you'll make $17.  In 30 days $11.  In 40 days $7/day, etc.  Maybe BTC's price will keep rising to compensate (and make the people hoarding $1 BTCs smile ear to ear as they dump).  Maybe the difficulty rate won't climb so quickly as people see it's pointless making a $1000 investment that might possibly pay for itself within 3 months if everything goes very well.

Nothing grows exponentially over the long term.  Either difficulty will taper off, or the BTC/USD exchange rate will.  Don't bet on both climbing hand-in-hand just because they have done so over the last couple of months.

Waiting for BitPiggy to come back online.

In my experience the service was pretty fast and the rates not too bad.  About 15% below the current MtGox price.  While BitPiggy is down I've been selling BTCs on MtGox and have money in Liberty Reserve, but I haven't found a way of getting that money into my Australian bank account.  The LR service requires engaging a third party money transfer company to move the cash, but upon inspection of some of these companies I'm quite hesitant to do it.  Some of them have web sites that look like they haven't changed since 1997.

Judging by recent real world history:

- Hedge fund buys in
- Market goes up, the proletariat is excited and also profits
- Hedge fund manipulates the market for own gain and greed
- Market crashes, everyone takes a loss
- Hedge fund cries to government and gets a bail out with the proletariat's money
- ...
- Hedge fund buys in...

Next difficulty level is around 845,000 and will probably go over a million in 10 days time.  Whatever BTC per day rate you have will be halved within 2 weeks, and probably halved again by early July.  Will the price go up to compensate?  Well, the difficulty is only relevant to miners.  Speculators who bought their BTCs at $1 a few months ago, or $10 on Friday, aren't going to care how expensive your power is or how little return you get for a $600 6990.  

The only way mining is proftable right now is:

- You bought the gear a month or two ago, and it has already paid for itself

- Or, whatever BTC you generate now you intend to keep.  Not worth selling for $20ea as you're looking for more.

On the last point, be aware that there are a lot of miners in the same boat.  We saw the BTC price fall 66% within 2 days.  Could you hold out and not sell up?  At least if you buy the hardware and BTC crashes again you get to keep it.  Speculators are left with large losses.

It seems like an ideal place to practice manipulating a market.  If someone is guilty of pumping and dumping BTCs as we saw last Friday, who is anyone going to complain to?  Is it even illegal to manipulate a BTC market?

That's a very good point: search for ways to make BTC useful (ie. trade for good and services).  So far we have seen one place where it really makes sense to use BTC, and where traditional credit card based facilities fail: Silk Road.  Without BTCs being useful for real good and services there is very little to support the current BTC/USD exchange rate.  The rarity of BTCs doesn't matter to anyone who does not need them.