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Author Topic: Stability after ASIC deployment?  (Read 5094 times)
Korbman (OP)
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September 29, 2012, 10:45:52 PM
 #1

I've been thinking about this for a bit and now I'm wondering what the general public thinks...

After ASIC devices hit the market, we all agree that difficulty is going to increase. Though there isn't a general consensus as to how much, most people think between 5-10x the current difficulty. My thinking has been this: Once it gets to this new number, how often would it increase from there? Wouldn't the difficulty prove to be more stable while people run ASIC devices compared to GPUs or FPGAs?

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September 29, 2012, 11:06:12 PM
 #2

Once it gets to this new number, how often would it increase from there?

My guess ... it will grow pretty close to around however much ASICs are purchased from each day's mining proceeds.  Using this calculation:

 - 25 BTC/Block X 144 Blocks/Day X Current BTC/USD at the time.

So if there is a BTC/USD of $15, that means about $50K USD goes to miners.  So if 1 Thash/s costs $30K, then expect mining to increase over the long run at about 1.67 Thash/s  per day.

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Korbman (OP)
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September 30, 2012, 12:07:53 AM
 #3

Once it gets to this new number, how often would it increase from there?

My guess ... it will grow pretty close to around however much ASICs are purchased from each day's mining proceeds.  Using this calculation:

 - 25 BTC/Block X 144 Blocks/Day X Current BTC/USD at the time.

So if there is a BTC/USD of $15, that means about $50K USD goes to miners.  So if 1 Thash/s costs $30K, then expect mining to increase over the long run at about 1.67 Thash/s  per day.


That's an interesting way of looking at it, and I suppose it does make sense.

The way I thought about it was sort of like this: if, say, after 6 months the hash rate hit 150TH/s difficulty would be around 20,000,000 (+/- 2M). Even if another 1,000 people bought Jalapenos, the rate would only go up to 153.5...resulting in a miniscual 2.33% increase. We're seeing jumps of around, what, 7%+ every difficulty change? That would mean a 10.5TH/s increase from the 150...so either 10 people bought TH/s rigs (which seems likely), 263 bought singles, or 3000 bought Jalapenos..or some mix of those numbers. Either way, it'll require more people to invest in ASICs to make the difficulty move higher than it does now (for obvious reasons). It won't ever plateau out, just increase at rates vastly less than what we're used to seeing instead.

bobitza
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September 30, 2012, 12:27:16 AM
 #4

The level at which difficulty will stabilize will depend on many factors. I've been trying to estimate myself a possible stable level (aka slow growth or no growth) but I found no easy answer

I believe the following factors will greatly influence the difficulty:

1. Miners "tolerance" to the timeframe needed to recoup the initial investment
In other words, since ASICs are not good for anything else, once bought you just mine with them no matter what (see #2) even if it take 3 months, 6 months, 12 months to get back the money invested. However I think there will be a timeframe limit at which miners will just say "fvck it, I ain't buying a new jalapeno!". The longer the timeframe to recoup the investment the more risky it is: new technology might come along, current technology becomes cheaper, change in Bitcoin code, etc.

2. Electricity costs
I said no matter what, but any logical miner will not mine if the electricity costs are above the income generated by the ASICs. So, let me rephrase, no matter what ... except if electricity costs are above benefits obtained, doh.

3. Exchange rate
Between BTC and other currencies. Unless you paid for ASICs with BTCs, you will be impacted by swings in exchange rates. Unless you can pay your electricity bills with BTCs, you will be impacted.

To predict the stability level after ASIC deployment, imho, is to forecast the tolerance levels, the average electricity costs for the miners network and the exchange rate BTC-USD. Among other things ...

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bitboyben
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October 02, 2012, 08:16:56 AM
 #5

I'd have to define Difficulty Stability as the rate of difficulty change Pre-FPGA.

With that in mind I'd look at the MHs/$ rate.

With GPU it was arguably 1.7(my own rate) the ASICs are about 50
50/1.7 = ~x30

I think people will buy hardware until it stabilizes at that rate... maybe block halfing will keep it closer to half that (x15), but BTC price increases may bring it up...

Another option is ROI.
Dollars in to dollars out I think the ROI will settle in at 10 +/-2 months so long as there are no new quantum leaps in technology, again.

The one thing that has changed is that GPU miners were willing to risk a loss b/c they were earning a discount on new hardware that served more than one purpose.
ASICs have no value outside of mining. At least GPU farms have Assets worth $$. When difficulty stabilizes I don't know if I would put much value in owning ASICs

I think this is my new favorite BTC question.
Maybe a poll is in order at some point.

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bobitza
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October 02, 2012, 12:21:53 PM
 #6

Another option is ROI.
Dollars in to dollars out I think the ROI will settle in at 10 +/-2 months so long as there are no new quantum leaps in technology, again.

The thing with ROI is that some miners are not incorporating the big jump in difficulty in their calculations. Or incorporating a smaller number compared to what the stability will bring. Hell, maybe some new miners are forgetting the reward being halved around the time the first ASICs (are supposed to) hit the market.

That will make ASICs look like a good investment with a reasonable value of say, 10 +/-2 months for the time needed to recoup initial investment. A lot of pre-orders are in and when the "real" difficulty hits that ROI could jump to 12, 16, 24 months ...

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Korbman (OP)
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October 02, 2012, 02:00:32 PM
 #7

That will make ASICs look like a good investment with a reasonable value of say, 10 +/-2 months for the time needed to recoup initial investment. A lot of pre-orders are in and when the "real" difficulty hits that ROI could jump to 12, 16, 24 months ...

That could definitely be the case. And if that happens either the miners will stick it out for that long hoping the difficulty falls when others leave, or we'll see some hardware hit the market at a discounted price.

bitboyben
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October 09, 2012, 07:50:53 AM
 #8

Another option is ROI.
Dollars in to dollars out I think the ROI will settle in at 10 +/-2 months so long as there are no new quantum leaps in technology, again.

The thing with ROI is that some miners are not incorporating the big jump in difficulty in their calculations. Or incorporating a smaller number compared to what the stability will bring. Hell, maybe some new miners are forgetting the reward being halved around the time the first ASICs (are supposed to) hit the market.

That will make ASICs look like a good investment with a reasonable value of say, 10 +/-2 months for the time needed to recoup initial investment. A lot of pre-orders are in and when the "real" difficulty hits that ROI could jump to 12, 16, 24 months ...


Every time I get excited about my returns I remember that I forgot to divide that revenue in half... Then I kind of feel like Meh... Maybe I'll invest in ways to overclock my Jally

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