Difficulty drop

[sharky112065]

What most people here are forgetting is that the price of Bitcoins will probably go up due to supply and demand.  Less supply with same demand = Higher price. Now a lot of people will sell some of their coins to pay for ASIC's which will probably keep the price down for a while, but as soon as people start hording again the price should go up. I could be wrong, but that's my opinion.

[Keefe]

Currently, it seems network hashrate stabilizes around 2 TH per $1 market price, for example currently 22 TH and $12/BTC. When the market was around $5 for a while, hashrate stabilized around 12 TH. After the new hardware is out in mass and the block reward is halved, I expect the new normal to be 40 TH per $1 market price. At $12, that's ~500 TH. If the market goes up to $20, expect hashing to increase to ~800 TH within a couple months. Hashing increases do seem to lag price increases though, so while the market is going up, mining is more profitable (if you don't compare to the profit of simply buying and holding the currency).

[regular]

We should do a poll to see what percentage actually buy BTC and hold for value.  Mining makes more sense initially to me since you have actual hardware.

[Keefe]

I saw mining with GPUs as a safer bet than buying and holding bitcoins, even if it often didn't make much more profit than holding bitcoins. Because even during the crash from $32 to $2, difficulty dropped so I was able to profitably mine most of the time, and for a short time when I couldn't, I simply shut off the GPUs and didn't lose. And if the price had kept plummeting, I'd have sold the GPUs to gamers without losing nearly as much as an investment in the currency would have. In other words, while the price was going up, mining was profitable, and while the price was going down, mining was either profitable or neutral.

Of course ASICs will change that, and miners will be more exposed to the risk of currency failure.

[Meatball]

I saw mining with GPUs as a safer bet than buying and holding bitcoins, even if it often didn't make much more profit than holding bitcoins. Because even during the crash from $32 to $2, difficulty dropped so I was able to profitably mine most of the time, and for a short time when I couldn't, I simply shut off the GPUs and didn't lose. And if the price had kept plummeting, I'd have sold the GPUs to gamers without losing nearly as much as an investment in the currency would have. In other words, while the price was going up, mining was profitable, and while the price was going down, mining was either profitable or neutral.

Of course ASICs will change that, and miners will be more exposed to the risk of currency failure.

Yeah, that's for sure.  Back when I was big into GPU mining I made about half my initial investment back through selling BTC and got back about 60% of my original cost on gear reselling everything, so I made out ahead a bit.

Now with ASIC's, there's basically little resale value unless you can find another miner willing to take your gear.  I'm sure it'll be a lot harder to resell the specialized ASIC's than the general GPU/motherboards.

[Epicblood]

I don't really mine for the money, so I will just keep on mining :p
then again, I cant mine atm as I fried my mobo... :/

[abeaulieu]

I saw mining with GPUs as a safer bet than buying and holding bitcoins, even if it often didn't make much more profit than holding bitcoins. Because even during the crash from $32 to $2, difficulty dropped so I was able to profitably mine most of the time, and for a short time when I couldn't, I simply shut off the GPUs and didn't lose. And if the price had kept plummeting, I'd have sold the GPUs to gamers without losing nearly as much as an investment in the currency would have. In other words, while the price was going up, mining was profitable, and while the price was going down, mining was either profitable or neutral.

Of course ASICs will change that, and miners will be more exposed to the risk of currency failure.

Yeah, that's for sure.  Back when I was big into GPU mining I made about half my initial investment back through selling BTC and got back about 60% of my original cost on gear reselling everything, so I made out ahead a bit.

Now with ASIC's, there's basically little resale value unless you can find another miner willing to take your gear.  I'm sure it'll be a lot harder to resell the specialized ASIC's than the general GPU/motherboards.

Yup most of these ASICs will have a close to zero resale value if the BTC market crashes. I think BFL mentioned that they had to lock down the chip so it cannot perform generic brute-force on SHA-256 encrypted data (because of export limitations).

[dserrano5]

SHA-256 encrypted data

Care to elaborate on this?

[abeaulieu]

SHA-256 encrypted data

Care to elaborate on this?

I'm not sure what you would like me to elaborate on. Bitcoin block generation is based upon the SHA-256 encryption algorithm. The ASICs and any mining equipment is performing this same function to produce hashes and check to see if it is a winning hash. SHA-256 is also used to encrypt data and passwords...

[mrb]

SHA-256 is a one-way hashing algorithm, not encryption algorithm.

If you encrypt N bytes, you get N bytes out. And it is possible to decrypt these bytes back to the original value.
If you hash N bytes, you always get a fixed-size hash as output. And it is not possible to compute the original value from the hash (well, unless you bruteforce), hence the name "one-way hash".

[abeaulieu]

SHA-256 is a one-way hashing algorithm, not encryption algorithm.

If you encrypt N bytes, you get N bytes out. And it is possible to decrypt these bytes back to the original value.
If you hash N bytes, you always get a fixed-size hash as output. And it is not possible to compute the original value from the hash (well, unless you bruteforce), hence the name "one-way hash".

Good point. Thanks for clarifying mrb.

[joshv06]

What do you guys think is up with the Bitcoin rise? We just hit 25,000 Ghash, up from 20,000 Ghash just 2 months ago. I'm not making as much coins now

[rupy]

I think that's FPGAs, but the gold rush of bitcoin is soon to be over. I will miss the crazy rigs and shared experience of something truly innovative. Now it's proving times for BTC; either it goes into stable growth (=only investors use it), skyhigh (=it reaches the sheeple and usage explodes, this would of course really be a problem because of diskspace (atleast for me I'm on SSD)) or bitcoin will be seen as a blip on the history of currencies as prices collapse and only a few ASIC fanboys keep mining.

I'm just not convinced (difficulty = price) is 100% solid.

The only buyers today are speculators, as time go dire they will need to selloff (like everyone will sell everything) to pay for rent and food. Only those that survive without selling might see BTCs true value at the end of the current civilizations currencies.

But back on subject; I think we will indeed experience the difficulty drop I was talking about in the first post. ASIC won't be delivered before block reward halving, and prices are going down... So all those GPUs falling off must show, only ~4000 blocks left now, or what do you think?

[Syke]

What do you guys think is up with the Bitcoin rise? We just hit 25,000 Ghash, up from 20,000 Ghash just 2 months ago. I'm not making as much coins now

Looks like nice steady growth. Mining is profitable, so miners are increasing capacity and new miners are coming on board.