6 blocks an hour my ass!

[evlew]

I disagree that Angelus is trolling.  

Although we have all heard it 1000 times, I believe this to be useful information.  But apparently some people need to hear it again.

If you don't like it, your probably mad for other reasons

Those monthly income projections are so stupid. That's why you have people wanting to sell/return their mining hardware -- when reality comes a-calling.

disagree.

[evlew]

I disagree that Angelus is trolling.  

Although we have all heard it 1000 times, I believe this to be useful information.  But apparently some people need to hear it again.

If you don't like it, your probably mad for other reasons

Those monthly income projections are so stupid. That's why you have people wanting to sell/return their mining hardware -- when reality comes a-calling.

I disagree. If you put in .25 (or better yet, a number that would equal the remainder of the difficulty period) in the month field.


Then you have approximately what you can expect for the remainder of the difficulty period (BTC earned, not USD value)
Big Difference.

Then adjust difficulty to next anticipated level and calculate again for 8 or 9 days worth.  Then sum it up.  I feel that is the only way they can be used.  and its only for the amount of USD created, not the value.

[Departure]

when you start counting pennies as profit you know its time to rethink and leave the mining to the tight asses that spend weeks to gain that extra 1 cent profit(or mining farms where a single cent can make a difference)...

people with there crazy calculation are forgetting the real basics... supply and demand is what drives the value of bitcoin.. and because supply never gets any lower, it is always there X amount of bitcoins on the net.. it is NOT a consumable,and there for needs to become more popular to reduce the supply, even if complete mining halted there is still the bit coins in circulation and wouldn't effect that price at all if there was no demand.. Demand came from the media, now that fase is over the demand reduces but supply continues... hence the bitcoin will lower in value..

[clint25n]

I wonder... when people start dropping out of the race with their rigs, but yet media coverage results in more new people who instead use their existing single video card, I wonder how close difficulty will level off compared to electricity costs. We are all just hoping many rigs get turned off by their owners, but how many more thousands of new people will mine with what they have when they hear about bitcoin.

[Jack of Diamonds]

Difficulty increases are across the board, whether the new miner with one 4650, or the super miner with 20 rigs of 4x 6990s. Everyone will be affected the same.

No it doesn't. Assuming conservative price rises in the future per BTC, there is a difference between your earnings dropping from $20 per month to $1 per month, or from $19,500 to $975 per month.

For the guy with a 4650, he is just wasting his time in September. The guy with 20x 6990 is still earning way above the cost of electricity so it pays off to keep going for at least a month or two, maybe more.

because supply never gets any lower, it is always there X amount of bitcoins on the net.. it is NOT a consumable

Have you ever heard of transaction fees?
There is only a limited amount of bitcoins that will ever exist (21m) yet transaction fees slowly eat them up as well. Which means there will be less and less of it to pass around as the years roll.

[Meni Rosenfeld]

Have you ever heard of transaction fees?
There is only a limited amount of bitcoins that will ever exist (21m) yet transaction fees slowly eat them up as well. Which means there will be less and less of it to pass around as the years roll.

Transaction fees don't eat anything up. They're paid to the miners who then do with them whatever they want.

[Departure]

^^ exactly

doesn't matter what the bitcoin is spent on(transaction fee's ect..) it still is in circulation ... Hence the reason it is not a consumable, that transaction fee is still on the net and my point is there is more supply than demand right now, saying that the supply will never change it will always grow(upto 21000000) but the demand is only based on popularity, So can we now agree that the cost of mining has no effect on the price of the bitcoin?? getting this into your head as a fact will make everything else clear as mud...

[jjiimm_64]

well, I dont know home many blocks per hour has been found today,  but BTCGuild has NOT found one for almost 8 hours now... 

[gentakin]

well, I dont know home many blocks per hour has been found today,  but BTCGuild has NOT found one for almost 8 hours now... 

It's just a stats display error. The stats fail to update. I hope it will be fixed soon.

[supermine]

This discussion is very interesting, however falls short to taking into account the most important factor: Greed and the capitalist system. Almost all westerners were socialized in the context of capitalism, hence we think money is the only -true- thing that can make you rich. Familiy, Tradition, Christianity (if you're an atheist: putting others before you), all these things are important to us, but I think we can all agree that money is a tad more important to the most of us.

I remember the pre-Yahoo! days, when onliners used a mouse mover plugin for NetScape to generate ad views, earning below 20 bucks a month out of it. For many of us, BitCoin Mining is no different - we perceive it as a money generator. So, as long as there is even 1 cent/h to be made out of BitCoin mining, miners will keep coming in, until it is unprofitable for all of us. This day will come very soon - my feelings tell me in 4-8 months.

In my opinion the single group of people that will keep mining then are people who see the true value behind BitCoin Mining: Ensuring a safe, federalised, pro-privacy currency, that will be another small wheel to make the world a better place. Just my 2 cents.

--
https://identi.ca/wikiterms

[talldude]

There are a lot of people here crying about the difficulty increases, but at the same time all the difficulty increases before haven't hurt profitability. The reason why is because they have been large enough to drive the price up.

Difficulty has no effect on price. A high price will induce people to come into the market, but a high difficulty will have no effect on price.

The only thing that drives price is demand, since supply is essentially fixed at 6.something million coins right now.

[bcpokey]

There are a lot of people here crying about the difficulty increases, but at the same time all the difficulty increases before haven't hurt profitability. The reason why is because they have been large enough to drive the price up.

Difficulty has no effect on price. A high price will induce people to come into the market, but a high difficulty will have no effect on price.

The only thing that drives price is demand, since supply is essentially fixed at 6.something million coins right now.

Not exactly "fixed". 7200 new BTC are generated every day. So every 9 days 1% of 6.somethng million coins are added to the supply. Miners are still somewhat a part of the game as they are dropping a relatively large amount of coin to market all the time (whereas the bigboys holding a majority of the coin are sitting on them, like mr. 500,000 bitcoins to be stolen and sold off on mtgox)

[talldude]

There are a lot of people here crying about the difficulty increases, but at the same time all the difficulty increases before haven't hurt profitability. The reason why is because they have been large enough to drive the price up.

Difficulty has no effect on price. A high price will induce people to come into the market, but a high difficulty will have no effect on price.

The only thing that drives price is demand, since supply is essentially fixed at 6.something million coins right now.

Not exactly "fixed". 7200 new BTC are generated every day. So every 9 days 1% of 6.somethng million coins are added to the supply. Miners are still somewhat a part of the game as they are dropping a relatively large amount of coin to market all the time (whereas the bigboys holding a majority of the coin are sitting on them, like mr. 500,000 bitcoins to be stolen and sold off on mtgox)

It's 0.17% of current outstanding amount generated per day right now (about 12k per day currently since we're moving at ~10 blocks an hour). That's why I said essentially fixed - the supply is not shifting at any appreciable rate to cause any kind of effect on price. And in a few hundred blocks difficulty will ramp up dramatically.

[proudhon]

Interestingly, if you average the total number of blocks since the genesis block to now it comes out to about 6.14 blocks/hour.

[SchizophrenicX]

Thats what the difficulty adjustment is meant to do. The inflation rate is kept constant. And thus further proves the point that difficulty has got nothing to do with exchange rates. The supply unrolls in a fixed expected rate. What was meant by 'fixed'. However the exchange rate is driven by demand.

[ribuck]

Interestingly, if you average the total number of blocks since the genesis block to now it comes out to about 6.14 blocks/hour.

The initial difficulty was originally chosen so that the expected block rate was well under 6 per hour, because there was no need to generate a lot of blocks until there were a reasonable number of transactions.

You really need to exclude all of the "difficulty=1" blocks from any calculation of average blocks per hour.

[Fjordbit]

Thats what the difficulty adjustment is meant to do. The inflation rate is kept constant. And thus further proves the point that difficulty has got nothing to do with exchange rates. The supply unrolls in a fixed expected rate. What was meant by 'fixed'. However the exchange rate is driven by demand.

So your thesis is that the fact that it takes $8.6M worth of computer equipment running maybe around 5.4MW to generate 300 btc in an hour has no bearing on the price than if it were just a $100 computer with a $56 card running at 60W. Sounds logical to me!

Or maybe, just maybe, it's all related.

(numbers based on 9603.45 GH/s, $900/GH, .56 KW/GH)

[talldude]

Thats what the difficulty adjustment is meant to do. The inflation rate is kept constant. And thus further proves the point that difficulty has got nothing to do with exchange rates. The supply unrolls in a fixed expected rate. What was meant by 'fixed'. However the exchange rate is driven by demand.

So your thesis is that the fact that it takes $8.6M worth of computer equipment running maybe around 5.4MW to generate 6 btc in an hour has no bearing on the price than if it were just a $100 computer with a $56 card running at 60W. Sounds logical to me!

Or maybe, just maybe, it's all related.

Let's get causality the right way here.

Why is the price of a coin what it is currently (around $15)? Because someone wants to buy the coin for that amount of money, and someone is willing to sell for that amount of money. That is THE ONLY reason the price is what it is. It is the intersection of the supply and demand curves that gives you this price level.

Supply is not moving (well, it's ever so slowly increasing) so the ONLY thing that can affect price is demand. If no one is willing to buy at $15, the price of a BTC is not going to be $15, it's going to be something less.

The reason that we see difficulty being correlated (note, not CAUSING) with price is that as the price goes up, there is an incentive to enter the market to make money. The cost of the computer equipment necessary to create a bitcoin does not have any impact on the value of a bitcoin - the causality works only the other way around (price determines amount of computer equipment). Or rather, I should say that the expected price of bitcoins is the determining factor, since future price is not fixed.

[Fjordbit]

Let's get causality the right way here.

Why is the price of a coin what it is currently (around $15)? Because someone wants to buy the coin for that amount of money, and someone is willing to sell for that amount of money. That is THE ONLY reason the price is what it is.

The reason that we see difficulty being correlated (note, not CAUSING) with price is that as the price goes up, there is an incentive to enter the market to make money. The cost of the computer equipment necessary to create a bitcoin does not have any impact on the value of a bitcoin - the causality works only the other way around (price determines amount of computer equipment). Or rather, I should say that the expected price of bitcoins is the determining factor, since future price is not fixed.

Sorry, but no. It's an equilibrium that sits on those three things (cost for a GH/s of mining power, price of btc in $, difficulty). What we have seen recently is price driving difficulty, but difficulty rising above a certain threshold (determined by a ratio of price and cost of GH/s) can cause rising price to cause an alignment to the ratio (because nothing in the market is making cost of GH/s lower in that ratio). This has happened clear twice as far as I've seen, and is probably happening again with the 50% increase soon.

It is the intersection of the supply and demand curves that gives you this price level.

Supply is not moving (well, it's ever so slowly increasing) so the ONLY thing that can affect price is demand. If no one is willing to buy at $15, the price of a BTC is not going to be $15, it's going to be something less.

I'm just going to quote from another post of mine where I was talking about the exchange price at $200/btc and $5/btc.

"Something to note is that there is a bit of a difference in demand in these two scenarios. People don't have a demand for btc, they have a demand for the transaction. Let's say they want to use btc to buy a spot troy oz of silver ($36.25). In the first case they need .18 btc, in the second case they need 7.25 btc. Even though the real demand is the same, the nominal demand for btc is higher when the price is lower."

People keep confusing nominal demand for real demand, and I don't get why.

And another thing, an increase in difficulty represents a relative increase in cost to the miner (in both operational and opportunity costs). An increase in costs to the supplier translates into a rightward shifting supply curve. Remember supply is btc as a function of dollars, so higher doller costs means lower btc supply.

[Hunterbunter]

I have yet to see anything at or below 6 blocks an hour... how is the network supposed to create 6 blocks an hour when it seems to average way above that.. did I miss something?

The rate is always subject to the total hashing power of the network; the 6 blocks an hour is only a guideline for the system, to slow down inflation. If the 6 blocks/hr didn't exist, we'd have either mined all the bitcoins possible already (initial difficulty = 1), or not have mined them for a very long time (initial difficulty = very high). How many come out per hour doesn't really matter, as long as they're evenly distributed to a large population (one person isn't getting all of them).