Excel Miner Model

[Kinnardian]

Hi All,
I am working on developing an excel model of a mining firm for my Bitcoin Economics Class: http://skl.sh/WafPAR

https://docs.google.com/spreadsheet/ccc?key=0AiFV__KVZG8UdEs1c2RRTy00VHo4aWVPU3R3VTBIMGc#gid=0
Can we make this into a collaborative project?

All the best,
Kinnard

[1714172006]

1714172006

[1714172006]

1714172006

[Meni Rosenfeld]

Bitcoin Mining profitability depends on ... of course, in this case, how many people join the pool.

Not sure what you mean by that.

In this model three cases are considered where the difficulty grows quickly, very quickly, and very very quickly in the DownCase, Case, and UpCase respectively.

Looks to me the other way around - in the DownCase the difficulty grows very very quickly.

Furthermore:

In all cases it seems the revenues drop too quickly. Increases in difficulty are due to hardware advances and BTC rate appreciation. The part related to the exchange rate doesn't affect the dollar revenues. Hardware advances are mainly due to Moore's law, which is about x1.5 per year. There can be some rapid growth until the ASIC transition completes, but after that x10 per year is way too much.

Mining has fixed expenses depending on only the hardware and method used. It seems you modeled the profit as exponentially decreasing, where in fact the revenues are exponentially decreasing and from those constant expenses should be subtracted.

[Kinnardian]

Bitcoin Mining profitability depends on ... of course, in this case, how many people join the pool.

Not sure what you mean by that.

In this model three cases are considered where the difficulty grows quickly, very quickly, and very very quickly in the DownCase, Case, and UpCase respectively.

Looks to me the other way around - in the DownCase the difficulty grows very very quickly.

Furthermore:

In all cases it seems the revenues drop too quickly. Increases in difficulty are due to hardware advances and BTC rate appreciation. The part related to the exchange rate doesn't affect the dollar revenues. Hardware advances are mainly due to Moore's law, which is about x1.5 per year. There can be some rapid growth until the ASIC transition completes, but after that x10 per year is way too much.

Mining has fixed expenses depending on only the hardware and method used. It seems you modeled the profit as exponentially decreasing, where in fact the revenues are exponentially decreasing and from those constant expenses should be subtracted.

This document was (lazily) adapted from another I used for pooled mining. That should be gotten rid of.
You are correct, they are reversed.
The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

[Meni Rosenfeld]

The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

It will probably be more than that. But it will also have a different shape than steady exponential growth.

[Kinnardian]

The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

It will probably be more than that. But it will also have a different shape than steady exponential growth.

The time period will probably be more or the growth factor of difficulty will probably be more? It will precede in waves with each new shipment of ASICS, but how can I model that?

[Meni Rosenfeld]

The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

It will probably be more than that. But it will also have a different shape than steady exponential growth.

The time period will probably be more or the growth factor of difficulty will probably be more? It will precede in waves with each new shipment of ASICS, but how can I model that?

The growth factor will be more. It will probably be rapid, fairly linear growth for a few months (up to x10 maybe?) and then for the rest of the year it will grow to about x20 of the original amount. This assumes constant rate, a changing rate will cause the difficulty to adjust proportionally with some delay.

[Kinnardian]

The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

It will probably be more than that. But it will also have a different shape than steady exponential growth.

The time period will probably be more or the growth factor of difficulty will probably be more? It will precede in waves with each new shipment of ASICS, but how can I model that?

The growth factor will be more. It will probably be rapid, fairly linear growth for a few months (up to x10 maybe?) and then for the rest of the year it will grow to about x20 of the original amount. This assumes constant rate, a changing rate will cause the difficulty to adjust proportionally with some delay.

So you expect linear growth where difficulty =10*oriniginal_difficulty for the first few months and then where difficulty=20*original_difficulty after that? That's fast.

[Nachtwind]

I have a bad stomach feeling about this.. you assume that a month is a single unit whereas i would rather see the smallest unit in this plot should be a diff-period. Especially since you are guesstimating difficulties..
If ever such a thing happens as a asicminer the first few diff-periods will be most interestering as you will only have the starting difficulty for a few days - at the most. If you put like 50% of the current network hash into the network the difficulty in the first 10 days would just explodeand you'd have to deal with totally different figures (probably exponential diff growth at the start, linear growth in the middle, stagnation or even lowering later on). Also you have to take into account that most certainly once the asics ship the price will tank due to discouragment of GPU miners. Maybe there will also be several outages of pools that either cannot handle the speed brought upon them through asics or that were taken down through botnets that cant keep up their profits anymore and will force asic-unfriendlyness...

[Meni Rosenfeld]

The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

It will probably be more than that. But it will also have a different shape than steady exponential growth.

The time period will probably be more or the growth factor of difficulty will probably be more? It will precede in waves with each new shipment of ASICS, but how can I model that?

The growth factor will be more. It will probably be rapid, fairly linear growth for a few months (up to x10 maybe?) and then for the rest of the year it will grow to about x20 of the original amount. This assumes constant rate, a changing rate will cause the difficulty to adjust proportionally with some delay.

So you expect linear growth where difficulty =10*oriniginal_difficulty for the first few months and then where difficulty=20*original_difficulty after that? That's fast.

I meant difficulty = 10xoriginal after a few months, and = 20xoriginal after a year.
This is all speculation, of course.

[Kinnardian]

The original was specifically developed for the ASIC transition, would you say that difficulty increasing by a factor of 10 over the year after the first ASICS come online is realistic?

It will probably be more than that. But it will also have a different shape than steady exponential growth.

The time period will probably be more or the growth factor of difficulty will probably be more? It will precede in waves with each new shipment of ASICS, but how can I model that?

The growth factor will be more. It will probably be rapid, fairly linear growth for a few months (up to x10 maybe?) and then for the rest of the year it will grow to about x20 of the original amount. This assumes constant rate, a changing rate will cause the difficulty to adjust proportionally with some delay.

So you expect linear growth where difficulty =10*oriniginal_difficulty for the first few months and then where difficulty=20*original_difficulty after that? That's fast.

I meant difficulty = 10xoriginal after a few months, and = 20xoriginal after a year.
This is all speculation, of course.

of course.

[centralplan]

Hi All,
I am working on developing an excel model of a mining firm for my Bitcoin Economics Class: http://skl.sh/WafPAR

https://docs.google.com/spreadsheet/ccc?key=0AiFV__KVZG8UdEs1c2RRTy00VHo4aWVPU3R3VTBIMGc#gid=0
Can we make this into a collaborative project?

All the best,
Kinnard

https://docs.google.com/spreadsheet/ccc?key=0AoeSaFetN6hTdG5zY0tkeHdVWnY3cnNrZlM1SXhiYUE#gid=1
Maybe this help you.