All mining might be illegal/parasitic soon

[BubbleBoy]

I love that I'm simultaneously accused of making predictions that are both random and obvious
Yes the LargeCoin thing was announced, no they don't have anything to show for other than a Google spreadsheet. Not even a website. There's some controversy if the company that produces the first ASIC would sell it, it seems so damn profitable to seize the opportunity and become the top miner. Regardless if LCs become available for sale, I expect a huge difficulty rise in about 3 months - but only if the price stays over $10.

The part about 100:1 over a GPU is based on my technical insights and my day job, I've detailed the numbers in another thread:

There's absolutely no need to mimic the GPU, which is after all an array of generic cores. All you need to implement high speed SHA2 circuits are basic elements: logic functions, adders and registers. A 1 cycle/hash fully unrolled SHA2 design is in the hundreds of Kgates, so a 1GHz, 10 million gates chip can pull at the very least 20GHash/sec, possibly even 50-100. A single chip could be equivalent to all of "newly minted idiot's" hardware and a rackfull would rival the whole current Bitcoin network.

I'm obviously estimating the orders of magnitude, not exact numbers.

[Ookami]

int returnRandomNumber() {
return 4 //created by rolling a dice, totally random
}

[qed]

I love that I'm simultaneously accused of making predictions that are both random and obvious
Yes the LargeCoin thing was announced, no they don't have anything to show for other than a Google spreadsheet. Not even a website. There's some controversy if the company that produces the first ASIC would sell it, it seems so damn profitable to seize the opportunity and become the top miner. Regardless if LCs become available for sale, I expect a huge difficulty rise in about 3 months - but only if the price stays over $10.

The part about 100:1 over a GPU is based on my technical insights and my day job, I've detailed the numbers in another thread:

There's absolutely no need to mimic the GPU, which is after all an array of generic cores. All you need to implement high speed SHA2 circuits are basic elements: logic functions, adders and registers. A 1 cycle/hash fully unrolled SHA2 design is in the hundreds of Kgates, so a 1GHz, 10 million gates chip can pull at the very least 20GHash/sec, possibly even 50-100. A single chip could be equivalent to all of "newly minted idiot's" hardware and a rackfull would rival the whole current Bitcoin network.

I'm obviously estimating the orders of magnitude, not exact numbers.

How wrote that doesn't have a clue. There are too many "experts" in this forum tossing out numbers and previsions. There are several problems with the implementation just described and only a newbie will even think about it.

What about if Bitcoins for some reason needs to change encryption algorithm?

[BubbleBoy]

What is the relevance of changing the algorithm (effectively, an alternate blockchain) in the context of ASICs for mining the current blockchain ? Are you implying you can anticipate such a change and future-proof your device ? You do know what "ASIC" means do you ?

[blueling]

GPU miners have 100:1 gain over CPU, and ASICs have 100:1 over GPU. You need 10.000 CPUs to catch up to a single $50 ASIC, so it follows energy prices are not relevant, it's mostly best tech wins. Building a 100.000 or 1000.000 computer botnet is not free, and has a black market value higher than the equivalent ASIC mining. I predict ASICs will arrive in ~ 3 months if the price stays stable.

I read about the LargeCoin ASICs rumors yesterday for the first time. Before that I only heard about experiments with FGPA chips. Indeed if it worked - ASICS would become the primary (most cost efficient and thereby most effective) way of mining - mostly because they are more energy efficient compared to GPUs in Watts per GigaHash. Therefore I would not agree that 'energy prices are irrelevant'. Rule of thumb should be: More efficient machines will crowd out less efficient ones. As soon as a miner figures out that running costs are higher than the market price for him he has to stop mining immediately - even when he believes that the price for bitcoins might rise dramatically - buying at an exchange from somebody who is able to mine at lower costs would be more effective. If holding/investing in BTCs is not an option for such a sub-threshold-miner he has to invest in more efficient hardware or simply will go away...

Very efficient specialized hardware (compared off the shefs products available to the masses) in the hands of a single entity could have a significant impact on the bitcoin ecosystem. If nobody can catch up this entity could reinvest all generated coins into hardware until it would possess >50% of the network's computational power. This would then allow to dictate transaction fees by not accepting blochs of other miners because eventually the longest blockchain would be generated by machines of that entity itself.

If there will still be competition between a high enough number (>oligopoly) energyefficiency will be their primary area of optimization.

Regarding my original post I agree that it might not be possible to run a ASICs super-computer with significant power consumptions hidden in the corner of a youth center. Parasitic mining would make senes only with the latest generation of minig hardware (a factor of up to 1/10 might be ok - but if others have 100 times more effective machines it will not be worth making a profit of 1% of the energy costs paid by your boss).

[blueling]

Does the cost of gold reflect the amount of money it takes to produce one troy ounce?
Or could it be that it's scarce and has properties that have increased it's value over the centuries?
I have a great business plan for you: Go mine gold at $400 per Kg and sell it at $13,000. Why buy a gold watch or a gold bar when you can go straight to the source.

As far as I know the price for mining a single troy ounce currently is >500 USD. If it would be possible for everybody to dig a hole in their garden to mine an ounce with half an hour work it would be worth near nothing. It is pretty sure that you as an individual cannot effectively mine gold for less money then it is sold.

Could you please provide a reference for the 400 USD per Kg statement?

[Rob P.]

Does the cost of gold reflect the amount of money it takes to produce one troy ounce?
Or could it be that it's scarce and has properties that have increased it's value over the centuries?
I have a great business plan for you: Go mine gold at $400 per Kg and sell it at $13,000. Why buy a gold watch or a gold bar when you can go straight to the source.

As far as I know the price for mining a single troy ounce currently is >500 USD. If it would be possible for everybody to dig a whole into their garden to mine an ounce with half an hour work it would be worth near nothing. It is pretty sure that you as an individual cannot effectively mine gold for less money then it is sold.

Could you please provide a reference for the 400 USD per ounce statement?

Oh, and the "average person" can't mine Bitcoins either.  They do not have the technical knowledge to get a mining rig up and running.

[royalecraig]

Wht does it matter if the network is run by Botnets, well, it means all the remaining bit coins will be held by very few people, then we will be back in central bank territory.
The original poster is correct, when mining begins costing serious energy, parasitic mining will be viewed as stealing energy, then how will people mine.
Either by parasitic illegal mining, botnets etc, or by collaboration, I don't think many individuals will be able or even willing to mine.
The parasitic miners will end up owning significant shares of BTCs, yet the original intent of Bitcoin was that BTCs should be widely distributed, not into the hands of a few.
The webpage mining facilities are a way that people can collaboratively agree to mine legally, and also ensure BTCs don't end up in the hands of a few.

 

[Jack of Diamonds]

OP is not a troll, just wrong. Trolls seem to abound in 500+ posts category.

GPU miners have 100:1 gain over CPU, and ASICs have 100:1 over GPU. You need 10.000 CPUs to catch up to a single $50 ASIC, so it follows energy prices are not relevant, it's mostly best tech wins. Building a 100.000 or 1000.000 computer botnet is not free, and has a black market value higher than the equivalent ASIC mining. I predict ASICs will arrive in ~ 3 months if the price stays stable.

Please, stop writing random numbers.

Hey, it's the economics subforum.

People pull stuff out of their ass.

[blueling]

There seems to be the misconception that faster hardware could generate more coins. But this is only true in so far as you might be able to get a bigger share of the fixed daily production of 50 * 6 * 24 coins that are generated on average. Lets say I would have a super-computer which could generate 20% of the current bitcoin network procossing power in Hashes per second.. but the cost for operating it would be much higher than what the expected amount of solved blocks/bitcoins would cost at an exchange. Then I would not power up my super node but start buying BTCs from a cheaper producer.

Currently the electricity costs for mining a BTC are lower than the price payed at exchanges like Mt. Gox. But already today the profit margin is different for systems with different efficiency rates and also depending on the price for electricify which a 'legal' miner has to pay. We will very likely see in the next couple of month if not faster, that the profit margin for current GPU hardware will go towards zero. And the important point here is that it is not possible to buy a faster GPU that is less energy-efficient to increase the profit margin - if you cannot improve the efficiency of your system or find a 'provider' electric power who is cheaper .. you would loose money continuing to mine with your inefficient (sub-threshold) system.

Therefore: Speed alone (hashrate) does not help you. A 'legal' miner can only make profit (and e.g. generate the money for his/her rig) when he is using hardware that has a kW/h per GHash efficiency above a certain threshold.

Viewed differently: Imagine the daily 'production' of ~7200 coins would be worth 100.000 USD at Mt. Gox and that price would stay constant. At the same time the number of miners would increase until a saturation plateau is reached. If all miners would daily convert their coins (not acting as traders/speculator) an ever increasing fraction of the 100.000 USD would go to the suppliers of electric energy...

[Rob P.]

The "illegal" mining you mention isn't terribly profitable.  Most university, lab, school, and other large computer "labs" don't have the horsepower and certainly don't have high end graphics performance necessary to mine effectively.

The university I attended had plenty of computer labs full of mediocre computers for people to write papers. I agree these would be poor mining networks. But most universities also have very large, very powerful computers which are used for things like computing quantum chemistry or nuclear physics. Would these large computers be good at mining, assuming you could sneak the mining program on without the administrator noticing?

And as a student if you got caught misappropriating those resources for something like mining, you'd be expelled (most likely).  Happened to several people using computer resources for their own purposes, Bitcoin mining would be even worse, because you're not folding proteins, you're making money for yourself.

USC (and others) have specific policies against it:
http://web-app.usc.edu/scampus/1100-behavior-violating-university-standards-and-appropriate-sanctions/

"11.35
Theft (or attempted theft) of property or of services within the university community; possession of stolen property regardless of origin; or misappropriation of university resources."

[grue]

And as a student if you got caught misappropriating those resources for something like mining, you'd be expelled (most likely).  Happened to several people using computer resources for their own purposes, Bitcoin mining would be even worse, because you're not folding proteins, you're making money for yourself.

USC (and others) have specific policies against it:
http://web-app.usc.edu/scampus/1100-behavior-violating-university-standards-and-appropriate-sanctions/

"11.35
Theft (or attempted theft) of property or of services within the university community; possession of stolen property regardless of origin; or misappropriation of university resources."

I'm not mining, I'm just testing the vulnerability of the SHA algorithm, it's for a paper i'm writing.

[urtur]

The university I attended had plenty of computer labs full of mediocre computers for people to write papers. I agree these would be poor mining networks. But most universities also have very large, very powerful computers which are used for things like computing quantum chemistry or nuclear physics. Would these large computers be good at mining, assuming you could sneak the mining program on without the administrator noticing?

And as a student if you got caught misappropriating those resources for something like mining, you'd be expelled (most likely). 

And if you are a scientist who run the models in that lab as your daily routine? Or if you are the lab supervisor?