How will ASICs affect mining?

[SocomX1]

I'm new to Bitcoin, and really, the most important question I have right now concerns ASICs. Obviously there are people doing calculations and coming up with results like "I'm going to be making $125 a day solo mining!" using an ASIC rig. What they fail to take into account is the possible exponential difficulty increase once these things are shipped out. Does anyone know where I can find/have any legitimate information or insights on how much the difficulty of mining blocks will increase once the next shipment occurs? Thanks.

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[tHash]

The best estimate that I can give is as follows.

BFL is shipping two batches of 6000 chips, followed by the balance of 75,000, each running 7.5Gh/s

BFL says they have not yet sold all of the chips, but I am not so sure they haven't, it is in their best interest for people to think they will be getting more ROI than they will be.   Even if they have not sold all 75,000, they soon will.   

This will push the network to 563Th/s give or take.   This is only BFL however.   There are at least two other ASIC company's that will be deploying miners.   

Just figuring BFL's hashing power, a BFL single will be getting about .384 BTC per day, obviously less with other factors involved.   So, about $275 a month perhaps, but the difficulty will continue to go up.   ROI could easily end up being 1 year or more.   Could be less too, but there are too many variables.

[SocomX1]

Thanks. I'm also considering buying the BitForce Little Single SC, but I'm sure all the math that I've done to calculate potential profits are off. Some people say the difficulty will be going up by a factor of 30 once these hit the market. Who knows.

[hardcore-fs]

Problem is... there are too many idiots thinking life is free and money grows on trees.

try this:
http://tpbitcalc.appspot.com

And keep in mind that the current BTC price can go down as well as up....., so when you  work on your fantasy scenario work on a safety margin of about 50%.
That may seem high, but most large businesses don't consider doing business unless they are making at least 25% profit.

Also keep in mind that mathematical certainty is a hard task master, you make a mistake and you will get  zero forgiveness in return.

[efx]

Once the network has a decent amount of ASICs hashing, the ROI is not going to be pretty. You don't even need to do the math.


Basically, unless you ordered Avalon or have an early BFL pre-order, it's time to step back and cool off...You missed the asic boat. BTC is not the final evolution of cryptocurrency.

[SocomX1]

I'm hardly living in a fantasy world. If I was I wouldn't be asking this question. However, I have friends who think by pre ordering an ASIC rig, they'll be making thousands. I'm just hoping to have some fun with bitcoin. If I make some profit along the way, that's cool too.

[vyvy]

You'd need to get in early to make decent returns.  The longer you wait, the harder it will be to make money.  Add into that the possibility that the developers might change how hashing algorithm so that ASIC won't have a huge advantage that it's enjoying now and you might end up losing money.

If you're looking for something that'll be fun, get a GPU and you can do lots of fun things with it, but you won't make a profit.  ASIC is only an investment and there's really nothing else you'd be able to do with it unless you enjoy looking at numbers update.

[TehTDK]

So far I havent seen a drop in my BTC earnings from GPU mining. But at present I am debating jumping on the Jalepeno wagon from Butterfly labs, simply because they are not noisy . And because BFL claims a higher effeciency as in requirining less powerdraw as opposed to Avalon etc.

[NegativeNancy]

I'm hardly living in a fantasy world. If I was I wouldn't be asking this question. However, I have friends who think by pre ordering an ASIC rig, they'll be making thousands. I'm just hoping to have some fun with bitcoin. If I make some profit along the way, that's cool too.

This is exactly why these companies make so much more money selling ASICs rigs instead of mining with them. Impulse buyers. (Your friends, not you.)
I wouldn't participate in any of this "pre-order" nonsense...at this stage even if you eventually get what you paid for, the odds are against you breaking even. (In comparison with using the same money to buy BTC directly, anyway.)

[psjw4450]

Asics will help secure the network.

[shamaniotastook]

Asics will help secure the network.

ASICs only help secure the network so long as they are operated by competing individuals...if too many ASICs were to be held by a small group, this could very easily lead to 51% vulnerabilities...of course, the developers won't allow this to happen, and miners aren't generally interested in 'controlling' the network as much as profiting from it. Nevertheless, my point is that in different circumstances, ASICs actually represent a potential security threat...something to consider

~shaman

[shamaniotastook]

This really is insane. I just can't help but wonder, when Satoshi first set out on this adventure, did he envisioned a future world where relatively few individuals and organizations fork out over $29K USD to mine...or did he envision tens-or-hundreds-of-millions of miners all someday collaborating in a free global system? Unfortunately, the proof-of-work difficulty adjustment algorithm was the equivalent of pushing a car's accelerator all the way to the floor with a stick, and then punching it in drive! now that they've done ASIC, maybe someone next will come up with a satoshi quantum miner running as a service in the cloud

http://www.wired.com/wiredenterprise/2012/02/dwave-quantum-cloud/

seriously...what's next i have to agree with efx who wrote: "BTC is not the final evolution of cryptocurrency. "

[aznmonky]

is the asics the reason for the major value increase of the bitcoin?

[shamaniotastook]

is the asics the reason for the major value increase of the bitcoin?

ASICs are just one variable in the equation. There are other market forces that have just as much influence. There has been a lot of press lately, and now the world didn't end in 2012 everyone is looking for what's next...BitCoin is getting more and more attention and new money is coming in. More and more developers are expressing interest every day, and the stakes are not only very real, but it's just a fun technology if you're a geek. Nevertheless, after more than 4 years, BitCoin has around 100K users at most, globally. You know how many users Facebook had after four years? The fact is Facebook was EASY to adopt, whereas you need balls of brass and a PHd to work with bitcoin...but that is changing, and overall BitCoin will continue to progress, but to really break through, something new will have to tip the balance...of course, that's why i'm here

[nobbynobbynoob]

The fact is Facebook was EASY to adopt, whereas you need balls of brass and a PHd to work with bitcoin...but that is changing, and overall BitCoin will continue to progress, but to really break through, something new will have to tip the balance...of course, that's why i'm here

(emphasis mine)

I beg to disagree, except maybe with the "balls of brass" part. Bitcoin does require a modicum of intelligence to get involved with it, but it's hardly rocket science. Cryptoscience, yes. It's akin to one not needing to understand the intricate inner workings of an internal-combustion engine to be able to drive an automobile.

Of course, that killer app that opens up Bitcoin conveniently at "dummy level" has probably yet to emerge. That said, blockchain.info seems to be doing a reasonable job...

[phasor]

Asics will help secure the network.

Can you elaborate on this? I don't really see just how ASICs would help make the network stronger just because the total network hashing power would be higher. To get 51% at this hashrate it would take a HUGE amount of hashing power that no one would really be interested in spending  a huge amount of money on all the equipment and if the governments or banks or whatever would have a serious intent on taking down Bitcoin they would be able to do it even if the hashing power was 100x higher then now.

In my opinion ASICs add no security or anything of value. Only people who can afford to put a lot of money in mining will make money with Bitcoin mining when they come out and only the rich will get richer, so to say.

[mokahless]

I'm hardly living in a fantasy world. If I was I wouldn't be asking this question. However, I have friends who think by pre ordering an ASIC rig, they'll be making thousands. I'm just hoping to have some fun with bitcoin. If I make some profit along the way, that's cool too.

At this point, they can't reasonably expect delivery until July, at least. By then, by my guess, the hashrate should be at least 300-400GH/s. This would be their starting point. Optimistically, the network growth should have become constant by then. So by my guess, 13-18 BTC/day. This will last for 14 days and decrease. The decrease will happen every 14 days. These are based on my calculations around the information I've gathered about Avalon, ASICminer and BFL. (20+40/12+72/55+??) and BFL_Josh's claims on delivery if you pre-order now.

I am assuming that all companies can get their initial products shipped/operational by the end of March and will be building and shipping additional units at a more gradual pace after that.
Assuming BFL ships all their chips by the end of the year and everyone else in the game doubles by the end of the year, we are sitting at just under 900TH/s on Jan. 1, 2014.
So let's say an eventual decline from 13BTC/day to 6BTC/day, by year end. Let's assume they get it late July: so ~11 target periods. Lets say 50TH/s increase per target period from 400 to 900
T1 -189
T2 -168
T3 -151
T...
T11 - 84

=1361 BTC = 37563.6 USD before power cost at current exchange rate
So, assuming you paid in BTC, you could expect to earn all your BTC back by end of year. If you didn't pay in BTC, you can only hope the exchange rate holds up to what it is now.

This is my take, since I am bored at the moment. But I am also tired, so my calculations could be off