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Author Topic: Newly minted idiot  (Read 7986 times)
Ruxum
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June 17, 2011, 01:53:33 AM
 #21

Or a betting man.  Maybe he thinks the price of BTC is going up to $100 (or $1000 for that matter). 

Risk is all in the eyes of the beholder...

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Synaptic
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June 17, 2011, 02:31:19 AM
 #22

Synaptic, I've been following your posts and threads over the past few days and I've observed that (1) you've got some reasonable things to say, and (2) that you say them with astonishing douchebaggery.  Chill out.

Not going to argue that observation.

Most of my posts are made quite far past the point of 20-24 hours sleep deprived, so it's not as though I can admit to wholly being about my full wits.

And, that I don't care about that fact, either.
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June 17, 2011, 03:06:38 AM
 #23

What a perfect illustration of the Tragedy of the Commons.

How?

A new farmer to the commons not adding a couple of cows, but an entire herd of them. In two weeks the commons will be that much harder to utilize for everyone. It is advantageous for each miner to add as many video cards as possible, but in so doing they make the difficulty increase, thus causing diminishing returns on everybody's cards and requiring more cards to keep the same level of income, causing a higher difficulty, etc etc. Unless price moves substantially, in a couple of months the difficulty will be so high that many will be mining at a loss. But that is how the game goes.

With the current difficulty progression, at best I am going to make *maybe* 200 more bitcoins in the next 3 months...and I am pushing 6 GHash/s.

I agree that is the dynamics of Bitcoin mining, but I fail to see how it is a Tragedy of the Common. That miners become more efficient is a desirable outcome.
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June 17, 2011, 04:50:55 AM
 #24

I agree that is the dynamics of Bitcoin mining, but I fail to see how it is a Tragedy of the Common. That miners become more efficient is a desirable outcome.

Short of a hardware paradigm change like cheap asics or fpgas, miners cannot get much more efficient. Adding a lot of mining rigs to your setup does not mean you earn a greater percentage of bitcoins vs costs, only that you earn more bitcoins in total. In the next few months someone with a pair of 5870s will earn only ~1 bitcoin per week. Only those with larger operations will be able to pull in any appreciable amount of bitcoins for their efforts. Large scale corporations will jump in (or be formed) with the sole purpose of mining, making the difficulty go ever higher, and causing a significant barrier to entry for anybody without sufficiently deep pockets.

The network's hashing power is already consolidating into a few pools. As more and more smaller miners give up due to the skyrocketing difficulty level and are replaced by the larger conglomerates the pools will be replaced (or completely populated) by those who can afford very large operations (governments, corporations, some wealthy individuals). The decentralized, peer to peer currency will be refined down to a handful of specialized data centers controlled by the largest mining organizations.

And that, imho, is the tragedy. For anyone that not in the top few mining operations, the commons will effectively be destroyed. Every new worker we bring online accelerates us toward this end. It is the way this game is rigged. Myself, I'll play for as long as I can, but within 6 months I doubt I'll have enough Ghash/s to be competitive.
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June 17, 2011, 04:59:58 AM
 #25

I forsee a lot of Distributed Denial of Service attacks in the future.

Consolidating pools is a pretty bad idea, but I suppose they will have to learn their lesson the hard way.

fortitudinem multis - catenum regit omnia
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June 17, 2011, 07:15:33 AM
 #26

Short of a hardware paradigm change like cheap asics or fpgas, miners cannot get much more efficient. Adding a lot of mining rigs to your setup does not mean you earn a greater percentage of bitcoins vs costs, only that you earn more bitcoins in total.

GPU miners can buy in bulk at discount prices. GPU miners can optimize their hardware for minimal price/Gh; think single industrial 12V power supply for all motherboards, no case/peripherals, centralized cooling etc. GPU miners can setup shop in jurisdictions with cheap electricity. GPU miners can learn OpenCL and optimize their client; if you have a 5770 shop you might learn 5770 internal hardware details and assembly for that critical extra 5% speedup. As in every business with low entry barrier, the margin is thin and only the most efficient survive.


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The decentralized, peer to peer currency will be refined down to a handful of specialized data centers controlled by the largest mining organizations.

And that, imho, is the tragedy.

As long as you don't hijack the well established term "tragedy of the commons", it might be a tragedy in some sense. The "tragedy" of the economy of scale where only large corporations can survive. It happens most everywhere these days, think Walmart, but it's also associated with progress and brings the prices down by mass production and standardization, improving access to industrial goods for the average man.
It remains to be seen if Bitcoin security model can survive a single corporate miner with cost optimized 45nm ASICs. A superficial game theoretical analysis suggests it can't, the most efficient miner will drive everybody else off the market because hashing is perfectly fungible and there's no way to compete on product differentiation, just on scale and efficiency.
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June 17, 2011, 07:45:59 AM
 #27

I really gotta stop coming here. This sounds like a community full of haters. Who gives a shit how much he spent on his investment? Why is he an idiot? Is it cause hes about to smoke half of your rigs? Really can't we just say "nice" and move along, instead of over analyzing his 10k investment (which is joke money to people who have it) and saying how stupid he is?

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Synaptic
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June 17, 2011, 02:16:24 PM
 #28

I really gotta stop coming here. This sounds like a community full of haters. Who gives a shit how much he spent on his investment? Why is he an idiot? Is it cause hes about to smoke half of your rigs? Really can't we just say "nice" and move along, instead of over analyzing his 10k investment (which is joke money to people who have it) and saying how stupid he is?

Y'know the $10k was an illustration that even if he got an INSANE deal on all that gear it's still a huge, huge gamble at this point.

He probably paid retail, there's a fucking newegg box there.

That means he probably actually paid closer to $25-30k, and that's just on the hardware.

He obviously rented office space, too.

Electricity.

Time.
semarjt
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June 17, 2011, 02:45:20 PM
 #29


wow, maybe you are jealous? or just a rude child? I can't tell which.
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June 17, 2011, 02:54:39 PM
 #30

A superficial game theoretical analysis suggests it can't, the most efficient miner will drive everybody else off the market because hashing is perfectly fungible and there's no way to compete on product differentiation, just on scale and efficiency.

So, let's extrapolate that out - ASIC comes along and drinks the GPU milkshake...  He's getting block after block a day, how soon before that person(s) can start naming the price?  How long before that (as I understand it) million+ dollar investment gets paid back?

Am I missing something?  "Bad" for GPU miners, but not all that apocalyptic to the Bitcoin economy as a whole.

I realize you're not saying it'll be bad for bitcoin - just thinking it through out loud.
BubbleBoy
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June 17, 2011, 03:23:52 PM
 #31

A little math: 50BTC*6/h*24h/day*20$/BTC*30day/month = 4.320.000$/month (dimensions check). This is the total size of the monthly mining pie until 2013, at current BTC prices.
Even if you don't earn much the first few months, just by merely increasing the difficulty up to the point where GPU can't compete, you are quickly putting them out of business. Especially if you are so effective they don't get to recoup electricity, and so have no chance of recovering the sunken hardware cost. If they are rational they will go offline and wait for better times, if not it will take some time to convince themselves they are wasting money.

Once you get a big chunk of the revenue stream and reinvest it in hardware, there's little chance for anyone to catch up. The only reason why investors are not doing this is the high volatility of the BTC price, there's no way to know you can recover the high fixed costs of designing an ASIC and the custom boards. Once that happens, it's bye bye GPU, the market will be dominated by a few (one) ASIC miners.

Assuming one entity does control more than half of the hashing speed, it's anyone guess what might happen. Common sense suggest it will not use it's new double spend capabilities for it will drive people off Bitcoin and endanger it's substantial mining revenue. In any case, the security model of Bitcoin will no longer work.
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June 17, 2011, 06:03:49 PM
 #32

The first ASICs would probably be GPUs modeled after the 5970 with the unneeded modules stripped out and extra SPs packed into the freed up area. Also, going down to a 20 nm process would allow for more transistors and less power. I could see a small US-based startup company with 2-3 million USD funding, 2 chip designers, 1 board designer and a couple of lab techs. coming up with this optimized GPU/ASIC in about 9 months. You basically need to figure out how to do all the brain work yourself and outsource the fab and packaging as efficiently/cheaply as you can.

An end product with 4 times the hashing rate of a 5970 and consuming 25% the power is very conceivable. That would just be the first cut.

The barrier to entry is not so high so you would probably see more than one company do this.

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June 17, 2011, 06:08:29 PM
 #33

The first ASICs would probably be GPUs modeled after the 5970 with the unneeded modules stripped out and extra SPs packed into the freed up area. Also, going down to a 20 nm process would allow for more transistors and less power. I could see a small US-based startup company with 2-3 million USD funding, 2 chip designers, 1 board designer and a couple of lab techs. coming up with this optimized GPU/ASIC in about 9 months. You basically need to figure out how to do all the brain work yourself and outsource the fab and packaging as efficiently/cheaply as you can.

An end product with 4 times the hashing rate of a 5970 and consuming 25% the power is very conceivable. That would just be the first cut.

The barrier to entry is not so high so you would probably see more than one company do this.
If such a point does come along that it is actually profitable and reasonable for a company to do this, we'll all be so rich it wouldn't matter for us.
n0m4d
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June 17, 2011, 06:22:38 PM
 #34

A little math: 50BTC*6/h*24h/day*20$/BTC*30day/month = 4.320.000$/month (dimensions check). This is the total size of the monthly mining pie until 2013, at current BTC prices.

....

Assuming one entity does control more than half of the hashing speed, it's anyone guess what might happen. Common sense suggest it will not use it's new double spend capabilities for it will drive people off Bitcoin and endanger it's substantial mining revenue. In any case, the security model of Bitcoin will no longer work.

Why would the price stay stable?  If it does - why wouldn't more than one group be pursuing this at the same time?

I don't see that it follows that the security model would be broken.  A big stack of confirmations is still a big stack of confirmations...  Unless you're talking about this ASIC entity keeping a whole other blockchain in the wings to swap in at some point...

Perhaps I have an inordinate amount of free market in my eyes.
Phil21
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June 17, 2011, 06:29:30 PM
 #35

The amount of fail at math here is pretty awesome.  You guys can't even come up with a number resembling anything remotely close to what this gear actually cost, and you think you can predict future profitability for this guy?

Hint: newegg gives distributor pricing to large accounts.  Hell, 10 seconds of google and you'd figure this out.  You are not likely to get much better pricing unless you are buying in lot-sized quantities directly from AMD (which you can't, because you're a hater posting on the bitcoin forums Wink  Having made buys similar to this from both Newegg, their competitors, and directly from distributors like MALabs, Ingram, etc. I can say the discount off of most high-volume items is negligible at best.

This also is pocket change for many folks who run tech/R&D consulting groups - an interesting investment from the geek side, hire a couple high-schoolers to put it together for you, spend a night or two scripting your installs/pool/whatever and then let it run for a few months without ever having to touch it.  Pay said high-schoolers to come by once a day and swap out any dead gear.  

Free money, or not - but very little effort or work required to start a relatively risk-free investment.  It fails and you lose every single dollar you put into it (not likely)?  Guess what, you just reduced your tax base for 2011 with a nice sized write off.

Many folks also have blank lab space - just like this - to do projects a lot like these (I have one, but not quite this size).  Given some personal knowledge of this specific situation, I'd say this is some guy with disposable income who finds this sort of thing fun, and happened to have most of the infrastructure handy and unused so it was convenient.

Basically I'm saying more is spent on a fun weekend in Vegas quite regularly, and this has hell of a lot better chance of payback than that does!  Plus, it's a lot more fun to some people Smiley

Edit: spelling
Synaptic
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June 17, 2011, 06:33:48 PM
 #36

The first ASICs would probably be GPUs modeled after the 5970 with the unneeded modules stripped out and extra SPs packed into the freed up area. Also, going down to a 20 nm process would allow for more transistors and less power. I could see a small US-based startup company with 2-3 million USD funding, 2 chip designers, 1 board designer and a couple of lab techs. coming up with this optimized GPU/ASIC in about 9 months. You basically need to figure out how to do all the brain work yourself and outsource the fab and packaging as efficiently/cheaply as you can.

An end product with 4 times the hashing rate of a 5970 and consuming 25% the power is very conceivable. That would just be the first cut.

The barrier to entry is not so high so you would probably see more than one company do this.
If such a point does come along that it is actually profitable and reasonable for a company to do this, we'll all be so rich it wouldn't matter for us.

Lol, yep.

Have to be trading steadily at $100+ prices for anyone to justify building and producing an ASIC.

And like someone else mentioned, IF an ASIC is ever created, you sure as fuck aren't going to get one, because it will ALWAYS be more profitable for the ASIC producer to simply mine with every ASIC they produce for EXACTLY as long as it would be profitable for you to buy one for mining.

Anyone thinking they're going to get an ASIC without directly investing in their development and production is fooling themselves. And 90% of us will never have enough $$$ to invest in ASIC in any meaningful amount that someone more serious would be willing to put up.

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June 17, 2011, 06:38:19 PM
 #37

I don't understand what the big deal is...he has about 70 5770's that I can see and/or estimate, and even at pretty high overclocks he will be pushing around 16.8G/hash. You guys act like he is going to disrupt the whole network with his rigs coming online. Maybe I'm not seeing something here, but it doesn't look like those numbers are that crazy. And yes I know I can't see everything in the picture, but neither can any of you.
Synaptic
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June 17, 2011, 06:48:47 PM
 #38

The amount of fail at math here is pretty awesome.  You guys can't even come up with a number resembling anything remotely close to what this gear actually cost, and you think you can predict future profitability for this guy?

Hint: newegg gives distributor pricing to large accounts.  Hell, 10 seconds of google and you'd figure this out.  You are not likely to get much better pricing unless you are buying in lot-sized quantities directly from AMD (which you can't, because you're a hater posting on the bitcoin forums Wink  Having made buys similar to this from both Newegg, their competitors, and directly from distributors like MALabs, Ingram, etc. I can say the discount off of most high-volume items is negligible at best.

This also is pocket change for many folks who run tech/R&D consulting groups - an interesting investment from the geek side, hire a couple high-schoolers to put it together for you, spend a night or two scripting your installs/pool/whatever and then let it run for a few months without ever having to touch it.  Pay said high-schoolers to come by once a day and swap out any dead gear.  

Free money, or not - but very little effort or work required to start a relatively risk-free investment.  It fails and you lose every single dollar you put into it (not likely)?  Guess what, you just reduced your tax base for 2011 with a nice sized write off.

Many folks also have blank lab space - just like this - to do projects a lot like these (I have one, but not quite this size).  Given some personal knowledge of this specific situation, I'd say this is some guy with disposable income who finds this sort of thing fun, and happened to have most of the infrastructure handy and unused so it was convenient.

Basically I'm saying more is spent on a fun weekend in Vegas quite regularly, and this has hell of a lot better chance of payback than that does!  Plus, it's a lot more fun to some people Smiley

Edit: spelling

You're absolutely right about the fail math.

I really have no idea about the actual value.  I glanced at the pic and took a wildly inaccurate assumption at the lowest possible price for the pile of shit I saw.

Still doesn't invalidate the point I was trying to make. With the timing of this cutesy little "Just some casual mining" post, it's pretty safe to assume this was an impulse buy based on the astronomical $30 high.

I'd really like to be able to ask this guy how he feels about his purchase with Mt Gox going practically flaccid.  And it's not a bunch of insane trading driving the price down right now...it's people pulling out massive amounts of USD value from the market over the past 72 hours.

It looks like people are scared, and rightfully so.

The guy who bought this gear is probably pretty scared too. Smiley
finack
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June 17, 2011, 06:59:26 PM
 #39

With the timing of this cutesy little "Just some casual mining" post, it's pretty safe to assume this was an impulse buy based on the astronomical $30 high.

Pretty sure you're reading waay too much into what you know. AFAIK that pic came off twitter and was reposted and titled on reddit by someone unrelated to the venture.

I don't know if what this guy is doing or not doing makes much sense. I do know that mining represents a form of the prisoner's dilemma and that game theory suggests that other miners should discourage this behavior. So I don't put too much stock in what people say about the practice on the Internet. Those that suggest it's a good idea either probably don't know enough about the economics or don't understand enough about their own position to know they should discourage it. And those that suggest it's a bad idea likely understand that they should say that whether or not it's true.
Synaptic
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June 17, 2011, 07:04:45 PM
 #40

With the timing of this cutesy little "Just some casual mining" post, it's pretty safe to assume this was an impulse buy based on the astronomical $30 high.

Pretty sure you're reading waay too much into what you know. AFAIK that pic came off twitter and was reposted and titled on reddit by someone unrelated to the venture.

I don't know if what this guy is doing or not doing makes much sense. I do know that mining represents a form of the prisoner's dilemma and that game theory suggests that other miners should discourage this behavior. So I don't put too much stock in what people say about the practice on the Internet. Those that suggest it's a good idea either probably don't know enough about the economics or don't understand enough about their own position to know they should discourage it. And those that suggest it's a bad idea likely understand that they should say that whether or not it's true.

Right again. It's all just assumption on my part.

And you bring up a point that's right on target too; I was really just trying to discourage this behavior for people thinking of entering in at that level of commitment this late in the game.

Hell, that pic could potentially have been from months ago, I really have no idea.

Just a (somewhat tenuous, surely) platform to launch an argument from...
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