btt

[creativex]

That's correct. With the network crossing the 1,000Th mark last evening it should become increasingly obvious that mining equipment is overbought. The huge number of pre-orders expected to come online in the next few months will make it difficult for anyone to see a positive ROI at current prices.

[Carnth]

That's correct. With the network crossing the 1,000Th mark last evening it should become increasingly obvious that mining equipment is overbought. The huge number of pre-orders expected to come online in the next few months will make it difficult for anyone to see a positive ROI at current prices.

<speculation>

At some point, something's got to give.  One of three things will happen:

• People will stop mining because of the unprofitably.
  This will cause the diff to either stop increasing or drop until an equilibrium is reached.
• The price of BTC will increase.
• Equipment will become cheaper yet.

Of course 1 and 2 are interrelated.

[iCEBREAKER]

That's correct. With the network crossing the 1,000Th mark last evening it should become increasingly obvious that mining equipment is overbought. The huge number of pre-orders expected to come online in the next few months will make it difficult for anyone to see a positive ROI at current prices.

<speculation>

At some point, something's got to give.  One of three things will happen:

• People will stop mining because of the unprofitably.
  This will cause the diff to either stop increasing or drop until an equilibrium is reached.
• The price of BTC will increase.
• Equipment will become cheaper yet.

Of course 1 and 2 are interrelated.

Don't forget

4.)  People will short mining stocks in the belief that none of them will be profitable and will all crash in share price.

[creativex]

That's correct. With the network crossing the 1,000Th mark last evening it should become increasingly obvious that mining equipment is overbought. The huge number of pre-orders expected to come online in the next few months will make it difficult for anyone to see a positive ROI at current prices.

<speculation>

At some point, something's got to give.  One of three things will happen:

• People will stop mining because of the unprofitably.
  This will cause the diff to either stop increasing or drop until an equilibrium is reached.
• The price of BTC will increase.
• Equipment will become cheaper yet.

Of course 1 and 2 are interrelated.

Agree. I'm not one of those decrying the death of mining...far from. However the huge number of pre-orders already in the system will allow mining to remain unprofitable longer than it otherwise would have as those making pre-orders with lengthy lead times are doing so with incomplete or incorrect information. The portion of these pre-orders that are not eventually refunded are a sunk cost and whether these pre-orders will make their money back for their purchasers or no will not matter. They will eventually see the blockchain so their owners will see a loss that's < 100%.

An increase in exchange rates will both allow older otherwise unprofitable equipment to remain on the blockchain longer AND increase the purchasing power of btc holders that wish to purchase mining equipment priced in fiat.

We know that equipment will become cheaper because we've seen nearly every manufacturer dropping prices recently. August bitfury > October bitfury; Sept knc > Nov knc; December CoinTerra >> January CoinTerra...etc. Manufacturer's margins will contract and those purchasing on the steep side of that slope are unlikely to ever see a positive ROI.

Cheers.

[guitarplinker]

Well I kind of see mining as farming - please excuse how random it is, I'm from Saskatchewan, Canada - pretty much the farming capital of the world.

Anyway, back in the day you could make a living off of a small amount of land. Now a days it's more and more bigger companies owning more pieces of land, and not many people can survive off of farming small time anymore, not like in the early 1900's.

However people who still own land (it's quite expensive as well, a quarter section goes for around $300k, a quarter section is equal to about 160 acres) seem to be renting it out to the bigger players and striking a deal with them, they get paid a certain % of the total yield of that land.

So, I predict mining will turn into how farming is now, except I'm not quite sure how renting land out to bigger plays will relate to mining, maybe smaller miners will rent their equipment out to bigger players for a certain % back? Who knows.

[Zakryze]

Well I kind of see mining as farming - please excuse how random it is, I'm from Saskatchewan, Canada - pretty much the farming capital of the world.

Anyway, back in the day you could make a living off of a small amount of land. Now a days it's more and more bigger companies owning more pieces of land, and not many people can survive off of farming small time anymore, not like in the early 1900's.

However people who still own land (it's quite expensive as well, a quarter section goes for around $300k, a quarter section is equal to about 160 acres) seem to be renting it out to the bigger players and striking a deal with them, they get paid a certain % of the total yield of that land.

So, I predict mining will turn into how farming is now, except I'm not quite sure how renting land out to bigger plays will relate to mining, maybe smaller miners will rent their equipment out to bigger players for a certain % back? Who knows.

I don't think this is a good comparison. Maybe when it comes to pools this would work in a way but why would someone who can assemble his own chips and miners rent smaller miners? That wouldn't be too smart. I think it will stay as it is right now: Those who produce miners will have preorders, mine with their assembled miners until the ROI is destroyed or at a small margin and sell those miners off. This is the most profitable way.

It might happen to the cryptocurrencies that those people leading bigger assets rent rigs or hashing powers from others but that is the only possibility i could think of. Not everything occuring in the natural world can be transferred to bitcoins and vice versa. (just my 2 Satoshi)

[BitCoiner2012]

Well I kind of see mining as farming - please excuse how random it is, I'm from Saskatchewan, Canada - pretty much the farming capital of the world.

Anyway, back in the day you could make a living off of a small amount of land. Now a days it's more and more bigger companies owning more pieces of land, and not many people can survive off of farming small time anymore, not like in the early 1900's.

However people who still own land (it's quite expensive as well, a quarter section goes for around $300k, a quarter section is equal to about 160 acres) seem to be renting it out to the bigger players and striking a deal with them, they get paid a certain % of the total yield of that land.

So, I predict mining will turn into how farming is now, except I'm not quite sure how renting land out to bigger plays will relate to mining, maybe smaller miners will rent their equipment out to bigger players for a certain % back? Who knows.

I don't think this is a good comparison. Maybe when it comes to pools this would work in a way but why would someone who can assemble his own chips and miners rent smaller miners? That wouldn't be too smart. I think it will stay as it is right now: Those who produce miners will have preorders, mine with their assembled miners until the ROI is destroyed or at a small margin and sell those miners off. This is the most profitable way.

It might happen to the cryptocurrencies that those people leading bigger assets rent rigs or hashing powers from others but that is the only possibility i could think of. Not everything occuring in the natural world can be transferred to bitcoins and vice versa. (just my 2 Satoshi)

Think of it this way - the value of the old farming land increases, therefore raising the barrier of entry to newcomers (IE people interested in mining, previously CPU or GPU accessibility was common place, ASIC is thousands bare minimum, barring the USB paperweights). The large entities have capital, or acquire it, or source it from smaller farmers who would traditionally harvest the land. Now the land is too expensive for traditional and small farmers to acquire it or the cost of business has risen to a point where scaling economics make more sense (again, GPU vs ASIC..).

It made sense to me, though not exactly the way he concluded it.

However, I do disagree with one point of analysis. As with the small family farmer, the small miner is slowly edged out of the field. Similarly, I do not see "small miners" renting anything to larger entities, rather if anything, they will find other methods to distribute their hardware to turn profit (like ASICMINER's "franchise", allowing a small farmer to get a piece of the pie if they grow the potato on their land, etc). A bit inverse.

[creativex]

Considered Motion:

bASIC-Mining management shall be authorized to sell mining equipment deemed to be approaching the end of it's useful service life. The proceeds from any such sale shall be applied, in it's entirety, toward the purchase price of more efficient mining equipment.

[freedomno1]

Considered Motion:

bASIC-Mining management shall be authorized to sell mining equipment deemed to be approaching the end of it's useful service life. The proceeds from any such sale shall be applied, in it's entirety, toward the purchase price of more efficient mining equipment.

Agree
Having the bitcoin available once a unit is nearing the end of it's useful service life will help to improve Basic's hardware.
Similar to depreciation on the mining equipment having the cash is useful.

And woot to the bitcoin network hitting 1 Petahash now its easy to calculate network percentages in Terrahashes for a while  
1.435% going up to 2.235%

You are one order of magnitude off, it's 0.1435% going up to 0.2235%

I need to check my decimals thanks
(Need to proofread more)

@ Creative With regards to mining,  agree that we are definitely not dead but seeing dropping prices assuming for difficulty increases.
http://decentralizedhashing.com/bitcoin-mining-equipment-table/
(That and we can just watch the PMBs having the ability to increase hashrate efficiently is vital)

@guitarplinker link=topic=130982.msg3169169#msg3169169 date=1379367949]

I just think of Friedcats franchising model if that makes sense.
Others are farming the hashrate and the owner of production takes a share of the revenue earned.
This allows the owner to increase their production while not taking on the unnecessary cost of maintaining the equipment.
From that viewpoint almost seems like a Feudal system with bitcoin mining.

[JimiQ84]

Considered Motion:

bASIC-Mining management shall be authorized to sell mining equipment deemed to be approaching the end of it's useful service life. The proceeds from any such sale shall be applied, in it's entirety, toward the purchase price of more efficient mining equipment.

I am up for this, but is it already necessary? I thought that Avalons are profitable (energy wise) until difficulty around 3-7 billion.

[guitarplinker]

Considered Motion:

bASIC-Mining management shall be authorized to sell mining equipment deemed to be approaching the end of it's useful service life. The proceeds from any such sale shall be applied, in it's entirety, toward the purchase price of more efficient mining equipment.

I think it's a good motion. Would make more sense for the long term to sell this equipment, plus the sooner it's sold the more bASIC might be able to get for it. More efficient equipment would be awesome too, lower power costs, more profit!

[almwaysa]

May I add to the motion that priority of selling goes to shareholders?

[Caesium]

May I add to the motion that priority of selling goes to shareholders?

Depends how creativex plans to sell it. If at auction, I vote no for this addition, it will restrict the price we can achieve.

[well.attenuated]

creativex,

Do you have any plans (and funds) for further mining purchases, something beyond bitfuries?

A 55% increase in hashing power (800 GH/s) for the whole month of October doesn't look quite adequate considering the ongoing difficulty surge. Should we maybe sacrifice dividends in short term to secure more mining equipment (28nm, preferably)?

I know I am not creativex, but I'll answer anyway. If you look at the official spreadsheet - https://docs.google.com/spreadsheet/ccc?key=0ArTS7AD--9SWdDNfb0lRNElqS1k1eGRoWEw2TGM4NlE#gid=0
you'll see we have 703 BTCs at our disposal for new purchases. creativex has wisely chosen strategy to wait out price war and order the cheapest and most efficient hardware possible. Bitfuries are just a tip of iceberg.

Am I reading the sheet wrong? It looks like we have ~240 BTC (cell B3) cash on hand for new purchases.

[JimiQ84]

creativex,

Do you have any plans (and funds) for further mining purchases, something beyond bitfuries?

A 55% increase in hashing power (800 GH/s) for the whole month of October doesn't look quite adequate considering the ongoing difficulty surge. Should we maybe sacrifice dividends in short term to secure more mining equipment (28nm, preferably)?

I know I am not creativex, but I'll answer anyway. If you look at the official spreadsheet - https://docs.google.com/spreadsheet/ccc?key=0ArTS7AD--9SWdDNfb0lRNElqS1k1eGRoWEw2TGM4NlE#gid=0
you'll see we have 703 BTCs at our disposal for new purchases. creativex has wisely chosen strategy to wait out price war and order the cheapest and most efficient hardware possible. Bitfuries are just a tip of iceberg.

Am I reading the sheet wrong? It looks like we have ~240 BTC (cell B3) cash on hand for new purchases.

B9 is correct cell to read. B3 is only reinvestment fund, but we have saved some funds from IPO

[well.attenuated]

Am I reading the sheet wrong? It looks like we have ~240 BTC (cell B3) cash on hand for new purchases.

B9 is correct cell to read. B3 is only reinvestment fund, but we have saved some funds from IPO

Cool, Thanks

[creativex]

I am up for this, but is it already necessary? I thought that Avalons are profitable (energy wise) until difficulty around 3-7 billion.

Hi JimiQ84. While you're correct that our Avalons will remain profitable for some while yet, I believe selling them before there's a huge influx of gen 2 gear and applying the proceeds to newer gear could prove more beneficial to shareholders in the long run.

Consider that one 3 module Avalon hashes at approximately 80Gh/s. This is approximately 20% of the hashrate of a bitfury 400Gh/s kit. The current cost of the bitfury kit is just under 62BTC. 62BTC * .2 = 12.4BTC or 4.13BTC/Avalon module. I believe if we can sell our Avalons at a price = or > 4.13 per module we'll improve our long term prospects. This situation exists due to the coming pricing pressure facing hardware vendors.

Cheers.

[JimiQ84]

I am up for this, but is it already necessary? I thought that Avalons are profitable (energy wise) until difficulty around 3-7 billion.

Hi JimiQ84. While you're correct that our Avalons will remain profitable for some while yet, I believe selling them before there's a huge influx of gen 2 gear and applying the proceeds to newer gear could prove more beneficial to shareholders in the long run.

Consider that one 3 module Avalon hashes at approximately 80Gh/s. This is approximately 20% of the hashrate of a bitfury 400Gh/s kit. The current cost of the bitfury kit is just under 62BTC. 62BTC * .2 = 12.4BTC or 4.13BTC/Avalon module. I believe if we can sell our Avalons at a price = or > 4.13 per module we'll improve our long term prospects. This situation exists due to the coming pricing pressure facing hardware vendors.

Cheers.

Thanks, you got me there. That sounds very reasonable.

[runam0k]

Very sensible, as ever. When is the motion going up?

[MilkyLep]

I also agree this motion would be a wise move for bASIC especially considering the BitFury fueled network increase we have already witnessed.

You guys catch the latest KnC update? Expecting more than 400 gh/s per Jupiter is exciting news. I hope they can tackle the assembly of unit and soldering or chips in the coming weeks.