miners: how are you going to react to the reward halving?

[stevegee58]

If the exchange rate is still $12.32/BTC on halving day I'll drop to $0.43/day.

Presuming you are like most other GPU miners and pay a normal electric rate (e.g., $0.15 per kWh) then your electricity for the rig will likely exceed $0.43/day.

But let's say it is break even.  You'ld rather pay $12 to your electric company for a month of mining which yields 1 BTC versus sending $12 to an exchange and getting your 1.0 BTC that way?

And if your electric bill comes in higher than the $0.43 per day, then you are paying above market rate to buy -- and you are going through the effort of managing a rig for free.

If it is a hobby, then call it a hobby.   But anyone mining GPUs for the purpose of profit should know right now ... in about 60 days the party is over. [Edit: Of course, there are other uses for your GPUs, but mining BTC for-profit is specifically what I'm addressing.]

I totally agree Herr Gornick.  It's really just a hobby and I'm already planning my next move with the GPU since I'm a programmer.  I've learned a lot about OpenCL programming and have some potentially profitable ideas I'd like to explore.

BTW, my kWH rate is $0.086 and the power draw difference between mining and idle is around 35 W.  Works out to around $0.07/day in electricity.
Why not just buy my BTC at an exchange?  Anonymity for one thing.  I mine and run my client behind Tor for maximum paranoia and I'd never bare my privates to one of these BTC exchanges.

[1714888926]

1714888926

[1714888926]

1714888926

[1714888926]

1714888926

[1714888926]

1714888926

[phelix]

please note that in June 2011 profitability halved within in a couple of weeks already - several times.

[The00Dustin]

The only thing miners are going to notice is pool fees will likely go up/pools will cease to be free.  The reward halving DOES cut pool operator income in half, assuming each pool loses speed proportional to their current share of the network.  This is because pool's earn [at neutral luck]:  Pool Fee * Pool Share of Network * 7200 BTC (daily production of BTC).  With the change, pool's will be earning:  Pool Fee * Pool Share of Network * 3600 BTC (daily production of BTC).

Couldn't an increase in transaction fees solve this problem?  Bitcoin was designed to run only on transaction fees in the extremely long term, so couldn't pools change the rules there if the latest daemon isn't going to already?

[stevegee58]

Couldn't an increase in transaction fees solve this problem?  Bitcoin was designed to run only on transaction fees in the extremely long term, so couldn't pools change the rules there if the latest daemon isn't going to already?

Isn't that the tail wagging the dog?  Transaction fees are for transactions, not mining specifically.  If mining were a significant enough fraction of all transactions I could see it but I don't think it is.

[Tittiez]

:O

[Graet]

Couldn't an increase in transaction fees solve this problem?  Bitcoin was designed to run only on transaction fees in the extremely long term, so couldn't pools change the rules there if the latest daemon isn't going to already?

Isn't that the tail wagging the dog?  Transaction fees are for transactions, not mining specifically.  If mining were a significant enough fraction of all transactions I could see it but I don't think it is.

yeah sorry, I think you are a little confused
transaction fees (paid by people when sending btc to other people/places) are paid to miners to include the transaction in a block specifically - that is how Bitcoin was designed
 

[eleuthria]

The only thing miners are going to notice is pool fees will likely go up/pools will cease to be free.  The reward halving DOES cut pool operator income in half, assuming each pool loses speed proportional to their current share of the network.  This is because pool's earn [at neutral luck]:  Pool Fee * Pool Share of Network * 7200 BTC (daily production of BTC).  With the change, pool's will be earning:  Pool Fee * Pool Share of Network * 3600 BTC (daily production of BTC).

Couldn't an increase in transaction fees solve this problem?  Bitcoin was designed to run only on transaction fees in the extremely long term, so couldn't pools change the rules there if the latest daemon isn't going to already?

TX Fees will not come even close to making the block subsidy make up for the reward halving.  Regardless of how big the network becomes, we will likely never see blocks of > 50 BTC again except when somebody screws up their transaction.

[The00Dustin]

TX Fees will not come even close to making the block subsidy make up for the reward halving.  Regardless of how big the network becomes, we will likely never see blocks of > 50 BTC again except when somebody screws up their transaction.

I'm not familiar with your pool, but operating under the assumption that you keep the transaction fees, and that your pool fees aren't already really high, the bolcks don't have to come near to 50 BTC for you to leave the pool fee structure alone and make the same BTC amount per block.  For instance (simple math, not based on any specific pool), with a 1% pool fee, you get .5 BTC per block, so transaction fees would only need to be .5 BTC higher in total per block for the pool to continue to make the same amount.  Obviously there are lots of different fee structures and payout structures and competition will matter more than what amount a pool has made historically, but >50BTC blocks only matter if you pay transaction fees out to miners and take your cut only from their payout.  Also obvious, but not yet relevant, is the fact that eventually transaction fees will be more than generation amounts, and miners will be very unlikely to let pools keep them.

ETA: A block with 50 transactions each having a .01 fee would meet the requirements in my example above.  I don't really keep up with all of this, but .01kB is recommended in the Bitcoin GUI, and 50 transactions isn't a massive number for a block.

[Raize]

But anyone mining GPUs for the purpose of profit should know right now ... in about 60 days the party is over.

If I'm reading my stuff correctly, and I think I am, at the present cost of Bitcoin, I will still be making ~$1.14 per day with my GPU rigs, minus electricity after reward halving. Of course, I get pretty cheap electricity. I plan on continuing to GPU mine, probably over the winter while it can help heat. For those that can, most of it is written off as a business expense as well, so the revenues for GPU mining will still be there, they just won't be anywhere near the value of FPGA and especially ASIC.

Also, remember that at $30/coin, Bitcoin was even profitable for CPU miners back in June 2011. Not by much, but it *was* profitable. It was this refusal to price based on the new GPU miners that really cause the price to skyrocket. I know people said it was due to people "hoarding" Bitcoin, but I think it was a refusal of old CPU miners to sell that cause the spike. Finally one of them did, which caused the price to decline, and the rest followed suit.

[Frequency]

I let my gpu,s run as long as they make btc,s     and will see what will happen, or the price or difficulty will change, but I hope in the long run the made coins will pay it self in about 3 years from now so i am thinking in a long term, maybe next year i will turn around to asic if they are for real,...and dropped in price vs needed ghase vs difficulty..i adjust to the market even when blok reward is halving.  

[lunchb0x]

I personally will keep my rig on as a heater this winter and then shut it down for good in the spring.

[firefop]

If the exchange rate is still $12.32/BTC on halving day I'll drop to $0.43/day.

Presuming you are like most other GPU miners and pay a normal electric rate (e.g., $0.15 per kWh) then your electricity for the rig will likely exceed $0.43/day.

But let's say it is break even.  You'ld rather pay $12 to your electric company for a month of mining which yields 1 BTC versus sending $12 to an exchange and getting your 1.0 BTC that way?

And if your electric bill comes in higher than the $0.43 per day, then you are paying above market rate to buy -- and you are going through the effort of managing a rig for free.

If it is a hobby, then call it a hobby.   But anyone mining GPUs for the purpose of profit should know right now ... in about 60 days the party is over. [Edit: Of course, there are other uses for your GPUs, but mining BTC for-profit is specifically what I'm addressing.]

No - everyone was making statements like this when btc was 5.50 with lower difficulty. halving the block reward is effectively the same as halving the price of btc. People are were still mining at 5.50, and 2.50, and 0.02.

Minor point, pools may need to charge higher fees.

Major point, tech change - ASICs coming out, what if you're lovely BFL SC single is only netting you $120 per month (40x difficulty) - extreme example, but thats the only uncertainty in btc right now, the potential for asic mining to kill the hobbyist aspect by making gpu mining pointless, thus killing demand for btc in general.

Personally, I think we'll see a 10 or 20 times increase in difficulty once asics saturate the market... which probably won't make gpu mining die entirely, if it comes with the price increase expected to go along with the halving, you might see people running gpu farms for another year or so.

[Stephen Gornick]

Personally, I think we'll see a 10 or 20 times increase in difficulty once asics saturate the market... which probably won't make gpu mining die entirely,

Sure, there will always be people willing to mine at a loss (which might occur when they don't run the calculations and realize it is long past time to power down, or because they think they are "helping bitcoin" or for whatever reason.)

with the price increase expected to go along with the halving

[Edit: Perhaps] we're already at the expected price increase (from $5ish to $12ish)  It could nearly double, yes, and that would mean GPUs are just as profitable then as today when the block reward drops (presuming difficulty doesn't change.  That's a big if).

[firefop]

We're already at the expected price increase (from $5ish to $12ish)  It could nearly double, yes, and that would mean GPUs are just as profitable then as today when the block reward drops (presuming difficulty doesn't change.  That's a big if).

oh I hadn't thought so...

pure speculation on my part of course, but I'm expecting to see ~25% increase in price within a week of the halving. For the simple fact that some people will shut down small mining operations and imho the bigger mining operations tend to sell less of their earned btc.

[Stephen Gornick]

We're already at the expected price increase (from $5ish to $12ish) 

oh I hadn't thought so...

pure speculation on my part of course, but I'm expecting to see ~25% increase in price within a week of the halving.

I edited my post, as that is pure speculation on my part.  I don't know if it is priced in or not.  I was just relaying how when the exchange rate was $5 the argument was that as people consider the block halving, the exchange rate should double.   And I was just trying to make the argument that perhaps this has already occurred, is priced in, and won't be going up further just because the halving is about to arrive.

[Frequency]

If the exchange rate is still $12.32/BTC on halving day I'll drop to $0.43/day.

Presuming you are like most other GPU miners and pay a normal electric rate (e.g., $0.15 per kWh) then your electricity for the rig will likely exceed $0.43/day.

But let's say it is break even.  You'ld rather pay $12 to your electric company for a month of mining which yields 1 BTC versus sending $12 to an exchange and getting your 1.0 BTC that way?

And if your electric bill comes in higher than the $0.43 per day, then you are paying above market rate to buy -- and you are going through the effort of managing a rig for free.

If it is a hobby, then call it a hobby.   But anyone mining GPUs for the purpose of profit should know right now ... in about 60 days the party is over. [Edit: Of course, there are other uses for your GPUs, but mining BTC for-profit is specifically what I'm addressing.]

No - everyone was making statements like this when btc was 5.50 with lower difficulty. halving the block reward is effectively the same as halving the price of btc. People are were still mining at 5.50, and 2.50, and 0.02.

Minor point, pools may need to charge higher fees.

Major point, tech change - ASICs coming out, what if you're lovely BFL SC single is only netting you $120 per month (40x difficulty) - extreme example, but thats the only uncertainty in btc right now, the potential for asic mining to kill the hobbyist aspect by making gpu mining pointless, thus killing demand for btc in general.

Personally, I think we'll see a 10 or 20 times increase in difficulty once asics saturate the market... which probably won't make gpu mining die entirely, if it comes with the price increase expected to go along with the halving, you might see people running gpu farms for another year or so.

yes and then there will be created asic farms.. ..i don t see a problem at all for miners..big or small, the ones with the most money will still gain the most assets and shares.. but that will always be that way...but i do think allot of small miners are counting themselfs to rich thinking there pre orderd 50ghas device makes them quick money..it would today but it wouldnnot next year when deliverd....IF ever deliverd..

It s going to be an exciting next half year in miners land, block halving, ASIC delivery, total hash power due to testing  ect.ect....

[DoomDumas]

As a miner, Im investing some more, and I'll always be minning, even if it turns to be unprofitable

[firefop]

It s going to be an exciting next half year in miners land, block halving, ASIC delivery, total hash power due to testing  ect.ect....

Absolutely. The really brilliant thing about the ASIC release timing... is that it's very close to the halving. If bitcoin survives (and I expect it to) there won't be much instability for 4 years. . . That's plenty of time even for non-technical investors to measure ROI and decide to invest... and the more people with vested interest (especially venture capitalists) the sooner we'll get a mainstream produce like a POS (point of sale) system that could really make bitcoin thrive.

Imagine if we you could do global money transfers via bitcoin through some device at your local 7-11. That would make a killing for whomever developed and the transaction fees would legitimize mining even without a block reward.

[Isokivi]

I will continue mining aslong as the profit exceeds: 1. the power costs
                                                                    2. the deappreciation of resale value of hardware, factoring in the unlikeley occational breaking.

I guess for me this means something like under 7million difficulty and an ~12,5$ exchangerate for gpu's

...and something like under 20million diff at 12,5$ for fpgas.

[Mobius]

Those interested in immediate profit will upgrade to asic, those interested in long term investment will continue to mine, even at a loss (@current rates)