Anybody else getting slaughtered by this latest difficulty?

[Kuber]

It was definitely on current difficulty 1379223, but, as already mentioned, could have been a display error due to the diff increase.
-> http://www.bitcoincharts.com/markets/

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[Yeti]

Yeah, I don't know why they don't reset that stat after a difficulty change. Takes at least 24 hours for the "network hashrate" to adapt after a difficulty change.

[AngelusWebDesign]

Then don't sell them if you believe they are undervalued.

If lots of people think like that it means that a large amount of bitcoins that people really want to sell is piling up. When you give up waiting the price will crash.

Price will collapse and 0 - 2016 blocks later so will difficulty. Unless BTC is deposed from some other inherent flaw in the long run this will only make mining more attractive to those of us who think BTC has a future in its own right.

More likely the efficient will crowd out the inefficient as gigahash miners become tera and peta hash miners.

Yes, because there's no limit to how much electricity a residence can use. 

Seriously, though, there's a limit to how much a residence can draw from the power company. Transformers in your neighborhood can only handle so much, etc. Remember, electric company engineers assume a transformer will be for 20 RESIDENCES, not businesses or industry.

Then there's the whole "use more than 90 KWh a day and we can bust your door down, and fine you $2,000 EVEN IF WE FIND NO POT".

I realize profit is profit, but nevertheless it's a BIG STEP to go out and rent office space for an operation. Even if it were profitable to do so, only 1 out of 100 people (if that) would actually do it.

Not everyone is willing to take this to the Nth degree.

[tanerlorn]

Its amazing that you would imply others are of lower intelligence than yourself when you ignore the very base and simple concept of:

It is impossible to predict future price
It is impossible to predict future price
It is impossible to predict future price
It is impossible to predict future price

So yeah maybe that 5830 will never make you $160. Or maybe it will make you $1600.

Would you ever be better off than if you just bought a suitable number of bitcoins for USD directly right this instant, though? If not, it's entirely pointless to buy one for bitcoin mining at that price.

Because when you buy a rig, many people see it as an additional hedge...If bitcoin goes to $0, they can still sell this rig for some amount of $. If they invested straight in bitcoins and that happened, tough luck.

Plus all the stuff Yeti says.

[Jack of Diamonds]

Yes, because there's no limit to how much electricity a residence can use.  

Seriously, though, there's a limit to how much a residence can draw from the power company. Transformers in your neighborhood can only handle so much, etc. Remember, electric company engineers assume a transformer will be for 20 RESIDENCES, not businesses or industry.

Then there's the whole "use more than 90 KWh a day and we can bust your door down, and fine you $2,000 EVEN IF WE FIND NO POT"

Single mining operations will never reach tera/petahash performance with conventional GPU's or even clusters in data centers with massive amperage.

ASIC boards will overtake GPU's in power efficiency by at least 2012-2013, if not earlier. Devices hashing multiple hundred mhash/s at a few watts will become the norm once GPU mining becomes infeasible & mining will continue.

Why? Because market conditions will make ASIC mining favorable. Even if 120 ghash/s will only create 0.45 BTC per day in 2013, a farm of circuit boards creating that amount of BTC per day will only draw maybe 1kW of power and cost a few hundred dollars.

Price per BTC will probably not stagnate at $17 at that point either, due to demand & immense difficulty of creating new blocks.

[hugolp]

Why? Because market conditions will make ASIC mining favorable. Even if 120 ghash/s will only create 0.45 BTC per day in 2013, a farm of circuit boards creating that amount of BTC per day will only draw maybe 1kW of power and cost a few hundred dollars.

120 gh/s to create 0.45 BTC in 2013 ?

I think you're waaaaaaay off:

    - right now, it takes roughly 1.5gh/s to generate 1 BTC/day

    - looking at the charts here:  http://bitcoin.sipa.be,
      the amount of online hashing power online grows roughly like
      this:

           - x10 every 3 months
           - x100 every 6 months

So, assuming ATI is capable of producing enough GPUs, 120gh/s to
get your hands on half a BTC is likely to happen around December
this year.

Merry Christmas !

But this is assuming same growth. And 120Gh/s for half BTC with GPU technology does not cover electricity expenses even at the cheaper rate of 8 cents Kw I think (I have not made the math really), so its not going to happen.

[Jack of Diamonds]

So, assuming ATI is capable of producing enough GPUs, 120gh/s to
get your hands on half a BTC is likely to happen around December
this year.

If price doesn't rise in the hundreds of dollars then it wont happen until FPGA/ASIC boards are released.
Assume a Radeon 5850 gets around 300mhash/s at 225 watts. That's 90,000 watts of constant power consumption for 120ghash/s

If electricity costs about $0.10 per kWh,
you are spending $216 dollars per day to generate 0.45 bitcoins.

If the price of 1 bitcoin is below $480 ($216 for 0.45) nobody is going to mine them on GPU's.

[Mousepotato]

But this is assuming same growth. And 120Gh/s for half BTC with GPU technology does not cover electricity expenses even at the cheaper rate of 8 cents Kw I think (I have not made the math really), so its not going to happen.

Well, if you're going to assume that growth will be the same, then the BTC value will double every 3-4 weeks as it has done in the course of June alone.  Assuming worst case scenario (4 weeks) that puts the BTC value at $1088 per BTC by the end of December (based off $17 by the end of June). 

Thus mining will still be profitable.

[Yeti]

Come on, people! Mining will always be profitable! If it won't be profitable anymore (for a short period of time), people will drop out like they did with Namecoin mining and the difficulty will drop. Thus making it profitable again. Somebody will always be mining, otherwise who would include your transactions into the blockchain?!

Whether it will be profitable for the Average Joe is another question. In the long run, when prices are more or less stable (2-3% variance on a "bad" day), only the most efficient will be mining.

[btcvc]

My main concern is that the people buying bitcoin don't value them in the same way as we, the miners, do. To a daytrader, it doesn't matter what the difficulty is as long as they can sell high and buy low.

This part of the thread is absolutely central. People have to realize that unless there is something tangible that they can buy with bitcoin easily, daytraders will be the ones who determines BTC's value. We have to get sites off the ground that are accepting BTC for actual goods and services, or else Bitcoin will always just be a version of Forex with less transaction fees.

[CydeWeys]

Well, if you're going to assume that growth will be the same, then the BTC value will double every 3-4 weeks as it has done in the course of June alone.  Assuming worst case scenario (4 weeks) that puts the BTC value at $1088 per BTC by the end of December (based off $17 by the end of June). 

Thus mining will still be profitable.

The only guarantee is that it will remain profitable for people with pre-existing hardware and free electricity.  People who pay a lot for electricity may find it no longer profitable in the not too distant future, and people who would have to buy hardware up-front to start mining with now are already finding it unprofitable.

[Sjalq]

Then don't sell them if you believe they are undervalued.

If lots of people think like that it means that a large amount of bitcoins that people really want to sell is piling up. When you give up waiting the price will crash.

Price will collapse and 0 - 2016 blocks later so will difficulty. Unless BTC is deposed from some other inherent flaw in the long run this will only make mining more attractive to those of us who think BTC has a future in its own right.

More likely the efficient will crowd out the inefficient as gigahash miners become tera and peta hash miners.

Yes, because there's no limit to how much electricity a residence can use. 

Seriously, though, there's a limit to how much a residence can draw from the power company. Transformers in your neighborhood can only handle so much, etc. Remember, electric company engineers assume a transformer will be for 20 RESIDENCES, not businesses or industry.

Then there's the whole "use more than 90 KWh a day and we can bust your door down, and fine you $2,000 EVEN IF WE FIND NO POT".

I realize profit is profit, but nevertheless it's a BIG STEP to go out and rent office space for an operation. Even if it were profitable to do so, only 1 out of 100 people (if that) would actually do it.

Not everyone is willing to take this to the Nth degree.

That's what I meant, not everyone is willing to take it to the Nth degree but some folks are. They will be the ones building ASICs, installing solar, living next to the plant or whatever they find economical. They will be fewer than the current crowd but operate most of the capacity.

[gigabytecoin]

No, actually.

I have found a way to circumvent the difficulty.

I can still mine at a difficulty of 1 if I want to, but I don't.

[ghxost]

No, actually.

I have found a way to circumvent the difficulty.

I can still mine at a difficulty of 1 if I want to, but I don't.

Ehh, how can that even be possible?

[Yeti]

Sure, if you wanna be alone in your blockchain...

[Rob P.]

People have to realize that unless there is something tangible that they can buy with bitcoin easily, daytraders will be the ones who determines BTC's value. We have to get sites off the ground that are accepting BTC for actual goods and services, or else Bitcoin will always just be a version of Forex with less transaction fees.

I just bought a 5830 for BTC.  It should pay for itself in about a month, and I'll buy whatever I can then.  It's already happening and, really, buying things other than t-shirts has really only begun to be possible in the first part of this year.  So, just give it some time.  As a miner, I know time seems to go VERY slowly, but really, things are changing incredibly quickly in the community right now with innovation and services coming quickly now.

Patience is a virtue, because my rigs pay out over time. 

[AngelusWebDesign]

You got a 5830 for $72.30?  Good deal!

Because if you got one for $72.30, it would pay for itself in 30 days. (Actually, that calculation assumes no increases in difficulty...which is a bit of a stretch.)

[Nagle]

Indeed.  Bitcoin's value requires a constant infusion of new market participants. 

That's the definition of a Ponzi scheme.

[Cluster2k]

Well, if you're going to assume that growth will be the same, then the BTC value will double every 3-4 weeks as it has done in the course of June alone.  Assuming worst case scenario (4 weeks) that puts the BTC value at $1088 per BTC by the end of December (based off $17 by the end of June). 

Thus mining will still be profitable.

The only guarantee is that it will remain profitable for people with pre-existing hardware and free electricity.  People who pay a lot for electricity may find it no longer profitable in the not too distant future, and people who would have to buy hardware up-front to start mining with now are already finding it unprofitable.

I switched a PC off a couple of weeks ago that was running a 5750, and am about to sell some 6950 hardware.  Both those PCs are still profitable at current power prices, but the return was very small and I just don't see the point in earning a few dollars per day per PC when they're probably depreciating in value almost as quickly.  The hash rate is still going up, meaning either people are paying a lot less for power than I am (0.25c/kwh) or they don't pay for power at all (fixed contracts or stealing power from work).

Even with the current difficulty squeeze on profits we'll see a difficulty increase of at least 20% next week (estimated at 8% right now).  If FPGA mining ever takes off then GPU mining will be killed off within weeks.

[Cluster2k]

Indeed.  Bitcoin's value requires a constant infusion of new market participants. 

That's the definition of a Ponzi scheme.

It's half way to a Ponzi scheme.  A Ponzi scheme also requires something of little to no real value changing hands, and payouts to early participants being paid from later participants.  Hmmmm.

Some people argue the world's banking systems and stock markets are a giant Ponzi scheme, as they rely on young people buying up assets at rising prices to benefit older asset holders.  But at least a stock represents ownership in a company making a useful product or providing a service.

The inevitable and fully predictable difficulty rate that's putting a squeeze on Bitcoin mining profits is a short term danger to Bitcoin.  Many people first noticed Bitcoin because it was a way to make money by having a PC running software.  The lost interest of these people must be replaced with real world uses and practical applications for Bitcoin.