Demand / Production imbalance

[CookTing]

We're currently heading in a direction where mining is becoming very profitable again.   When bitcoin goes up, so does mining, and so does the difficulty factor.

The problem I'm seeing is that demand has HUGE growth potential, but production does not (due to hardware availability).   We're already seeing shortages in some of the most favored GPUs.   What happens when the price doubles again and production tries to scale to match?   Will we start seeing huge markups on ATI GPUs?

I think we're within a few months of creating a global video card shortage.   This will be interesting...

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[zhalox]

I agree, and I am also looking forward to AMD (ATI)'s rising profits as I am an AMD shareholder

In addition, I eagerly await the HD 7xxx series cards 

[BitLex]

actually, production doesn't have anything todo with availability of hardware, the number of miners, or the difficulty,
production is fixed at currently ~7200BTC per day, with a growing network-hashrate the difficulty just rises to keep production at that level.

production does in no way scale to match the demand, that's what the coin-price does. 

[k]

i think he is talking about gpu hardware production not bitcoin production.

[CookTing]

actually, production doesn't have anything todo with availability of hardware, the number of miners, or the difficulty,
production is fixed at currently ~7200BTC per day, with a growing network-hashrate the difficulty just rises to keep production at that level.

production does in no way scale to match the demand, that's what the coin-price does.  

Yes, poor phrasing on my part.   What I meant is that I think the hash rate is going to hit a wall at some point when we've run out of GPUs, but demand will continue to rise.


Edit:  As an example of what I'm talking about, try and find an ATI 6990 or 5990 online that is available for shipping...

[koin]

What happens when the price doubles again and production tries to scale to match?   Will we start seeing huge markups on ATI GPUs?

less efficient gpus including nvidias are still plentiful and now, a little more profitable.  when those are gone, maybe there will be fpgas or asics: http://forum.bitcoin.org/index.php?topic=9047.0

[Dhomochevsky]

Saying that Bitcoin mining will deplete the GPU stores is like saying that a free wine tasting will deplete the reserves of a winehouse. AMD produces GPU's in the TENS OF MILLIONS. Mining currently employs cards in the tens of thousands, over the hundred thousand mark AT BEST. That's several orders of magnitude under the current card production. Mining doesn't even dent the reserves, the reason some cards are unavailable is because everyone buys them for gaming, not because a few buy them for mining. Bitcoin's popularity and the difficulty growth have quite a long way to go before they become noticeable in AMD's stock price. This has been discussed many times before though.

[Raulo]

Saying that Bitcoin mining will deplete the GPU stores is like saying that a free wine tasting will deplete the reserves of a winehouse. AMD produces GPU's in the TENS OF MILLIONS.

All the GPUs, including low-end laptop chips.  I believe the high-end GPU shipments are in tens, maybe hundreds of thousands. Anybody has a precise figure?

[FreeMoney]

Saying that Bitcoin mining will deplete the GPU stores is like saying that a free wine tasting will deplete the reserves of a winehouse. AMD produces GPU's in the TENS OF MILLIONS. Mining currently employs cards in the tens of thousands, over the hundred thousand mark AT BEST. That's several orders of magnitude under the current card production. Mining doesn't even dent the reserves, the reason some cards are unavailable is because everyone buys them for gaming, not because a few buy them for mining. Bitcoin's popularity and the difficulty growth have quite a long way to go before they become noticeable in AMD's stock price. This has been discussed many times before though.

That isn't a complete explanation at all. It's like saying we ran out of food because everyone uses it to eat. The chip companies surely knew that people were going to be gaming, you need another fact to explain how they guessed too few. It makes much more sense to over guess because the marginal cost is way way less than the average cost.

[k]

Saying that Bitcoin mining will deplete the GPU stores is like saying that a free wine tasting will deplete the reserves of a winehouse. AMD produces GPU's in the TENS OF MILLIONS.

All the GPUs, including low-end laptop chips.  I believe the high-end GPU shipments are in tens, maybe hundreds of thousands. Anybody has a precise figure?

I was previously thinking about the same topic http://forum.bitcoin.org/index.php?topic=9047.msg134217#msg134217


I had found this article from a Google search saying the Q1 sales #'s for add-in-boards were ~19m and games enthusiasts constitute ~9m sales/year of graphics cards http://jonpeddie.com/publications/add-in-board-report/

The increase in the netHashPerSecond over the last difficulty level was ~1.86 Thash/s. Just to break that down, I assumed 440 Mhash/s for a 5870 card, so that works out about 4300 5870 cards added to the network. That's over a period of ~8 days. If that was constant over a year, we're talking close to 200,000 5870 cards a year. (I know they don't make those cards anymore, but this is just for illustration.)
Currently total nethash of 4.4 THash/s = ~10,000 5870 cards. So the last increase was massive.

High end gamers ~9 million cards per year. At the moment bitcoin is a small drop but it's increasing rapidly. The question is will the growth continue as fast as it has been. Then there's FPGAs and ASICS to consider but I think that's still a long way off.

here's the graph, using the 5870 card metric (440 MHash/s)

[NetTecture]

Saying that Bitcoin mining will deplete the GPU stores is like saying that a free wine tasting will deplete the reserves of a winehouse. AMD produces GPU's in the TENS OF MILLIONS. Mining currently employs cards in the tens of thousands, over the hundred thousand mark AT BEST. That's several orders of magnitude under the current card production. Mining doesn't even dent the reserves, the reason some cards are unavailable is because everyone buys them for gaming, not because a few buy them for mining. Bitcoin's popularity and the difficulty growth have quite a long way to go before they become noticeable in AMD's stock price. This has been discussed many times before though.

That isn't a complete explanation at all. It's like saying we ran out of food because everyone uses it to eat. The chip companies surely knew that people were going to be gaming, you need another fact to explain how they guessed too few. It makes much more sense to over guess because the marginal cost is way way less than the average cost.

They did not guess to few. Production capacity is not cheap in setup. New stuff sells hot. No sense in upping production capacity if it is not sustainable.

Not every economiy is mining. if you set up a fab fror billions, you need to keep it busy for YEARS to make back the investment, not just a couple of months. So, chip production capacity is quite constant, even when new chips come out.

[IIOII]

AMD did not plan their production capacity with BTC mining activities in their mind. But nonetheless they've clearly planned to sell all their production to their identified market. So if scalability is slow there can be a supply shortage of cards even if the unexpected sudden increase in demand is just a few %.

Another factor may be dealer's stockpiling - no one wants to have more cards in stock than can be expected (from prior experience) to be sold in a given timespan.

[evoorhees]

I think this can be explained by the fact that, on margin, bitcoin mining is making a large impact.

While it's true that millions of GPU's are produced, it's also true that large companies have quite precise calculations for demand and production. They always try to produce exactly the number of cards that will be purchased at the market price. So, a change in demand, even if small in relative terms, may still have a large marginal effect on inventories.

This is why GPU's are going out of stock, even though btc mining is maybe a "drop in the bucket."  You can expect ATI will be reviewing such things and adjusting production accordingly.