Building computer for mining

[Cdecker]

The best way to obtain bitcoins, in my opinion, is to buy them.

I think that too but we should not discourage people for mining.  The more miners there are, the stronger is the network.

To be more correct: the more independent miners there are the stronger the network, pools still are a single point of failure

[The Script]

The incentive for independent miners seems to be quickly decreasing, because the average person can't just download bitcoin, fire up his computer and expect to generate any coins in a reasonable period of time.  So it seems like the tendency will be towards group mining or people just won't bother to run the application. 

[Nefario]

The incentive for independent miners seems to be quickly decreasing, because the average person can't just download bitcoin, fire up his computer and expect to generate any coins in a reasonable period of time.  So it seems like the tendency will be towards group mining or people just won't bother to run the application. 

Specialisation of labour. Should I say more?

[The Script]

The incentive for independent miners seems to be quickly decreasing, because the average person can't just download bitcoin, fire up his computer and expect to generate any coins in a reasonable period of time.  So it seems like the tendency will be towards group mining or people just won't bother to run the application. 

Specialisation of labour. Should I say more?

I just thought the idea was that the more people running the bitcoin client, the stronger the network.  If only 30 people with specialized high-power mining setups are doing all the mining (and several mining pools) then you'll have a less secure network as there will be far fewer points of failure, right?  I'm not trying to be the newbie who thinks he found the crack in bitcoin's armour.  This is probably a non-issue as enough people will keep mining even for diminished returns on bitcoins, and additionally some will runt the client to support the network even without expecting to gain any bitcoins from it.  Thoughts?

[FatherMcGruder]

I just thought the idea was that the more people running the bitcoin client, the stronger the network.  If only 30 people with specialized high-power mining setups are doing all the mining (and several mining pools) then you'll have a less secure network as there will be far fewer points of failure, right?  I'm not trying to be the newbie who thinks he found the crack in bitcoin's armour.  This is probably a non-issue as enough people will keep mining even for diminished returns on bitcoins, and additionally some will runt the client to support the network even without expecting to gain any bitcoins from it.  Thoughts?

People will also run the client for the sake of collecting transaction fees.

[ribuck]

At some point, the standard client might detect and support graphics cards "out of the box". It's unlikely to happen soon, of course.

[The Script]

I just thought the idea was that the more people running the bitcoin client, the stronger the network.  If only 30 people with specialized high-power mining setups are doing all the mining (and several mining pools) then you'll have a less secure network as there will be far fewer points of failure, right?  I'm not trying to be the newbie who thinks he found the crack in bitcoin's armour.  This is probably a non-issue as enough people will keep mining even for diminished returns on bitcoins, and additionally some will runt the client to support the network even without expecting to gain any bitcoins from it.  Thoughts?

People will also run the client for the sake of collecting transaction fees.

Perhaps I don't understand the system completely (highly likely).  Do you have to be generating coins to be part of the network, or do you simply have to have the client running on your computer?  I thought generating the coins was how individuals supported the network by verifying previous bitcoin transactions. 

[FatherMcGruder]

Perhaps I don't understand the system completely (highly likely).  Do you have to be generating coins to be part of the network, or do you simply have to have the client running on your computer?  I thought generating the coins was how individuals supported the network by verifying previous bitcoin transactions. 

I think you also collect the transaction fees associated with those transactions, meaning that you have to have the client set to generating coins. Can someone confirm? Come to think of it, that doesn't solve the problem of having minuscule processing power compared to the rest of the network, since there's just as much competition for the fees as the regular awards per block. I suppose the incentive to "generate coins" will have to come from the desire to win the lottery by solving a block, and that depends on the value of bitcoins increasing dramatically.

[The Script]

Perhaps I don't understand the system completely (highly likely).  Do you have to be generating coins to be part of the network, or do you simply have to have the client running on your computer?  I thought generating the coins was how individuals supported the network by verifying previous bitcoin transactions. 

I think you also collect the transaction fees associated with those transactions, meaning that you have to have the client set to generating coins. Can someone confirm? Come to think of it, that doesn't solve the problem of having minuscule processing power compared to the rest of the network, since there's just as much competition for the fees as the regular awards per block. I suppose the incentive to "generate coins" will have to come from the desire to win the lottery by solving a block, and that depends on the value of bitcoins increasing dramatically.
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Ah, I get what you are saying.  But transaction fees are few and far between, from what I can tell, and as you said have the same difficulty associated as solving blocks.  But I suppose as the difficulty increases people will stop mining, causing the difficulty to decrease, combined with the rising value of bitcoins which will bring some people back to mining. 

[Cryptoman]

One thing to keep in mind is that the reward for crunching a block gets cut in half each 210,000 blocks.  If the transaction fees don't start going up at least a little, there may be little incentive to mine/generate in the future.

[ribuck]

If the transaction fees don't start going up at least a little, there may be little incentive to mine/generate in the future.

It's the miners who set the fees, so this is a self-correcting "problem".

[The Script]

This bothers me.  I thought one of the main advantages of bitcoins was that you didn't have to deal with transaction fees.  What sort of safeguards are in place to prevent transaction fees from becoming prohibitively high?  From bitcoinme.com:

"Whereas credit cards and other online payment systems typically cost 1-5% per transaction, plus various other fees adding up to hundreds of dollars...  Bitcoin usage and transactions are always free.  It doesn't matter if you send $0.01... or $1,000,000.00...  the transaction cost is always the same:  free"

Is this blatantly false?  If so you shouldn't be advertising to people that the transactions are always free.  Can someone explain to me how this works? 

[theymos]

As far as I understand current bitcoind implementation does not have an easy way to force non-zero fee (which is a good thing).

The relevant code is very easy to change. ArtForz used to operate with non-standard, less-restrictive fee rules.

Is this blatantly false?

Yes. Bruce "exaggerates" a lot. There is also no encryption in Bitcoin, payments are not guaranteed to be irreversible (though reversal is difficult), and anonymity is not great.

What sort of safeguards are in place to prevent transaction fees from becoming prohibitively high?

The small-fee transactions will accumulate, which will incentivize new miners to step in and claim those fees. The required fee should always be quite small, though these transactions may take a while to be included.

[grondilu]

What sort of safeguards are in place to prevent transaction fees from becoming prohibitively high? 

Concurrence.  Free market.  Offer and demand.


What I mean is that bitcoin allows all miners to compete as far as their fees are concerned.  Hopefully this free market approach should reduce mining fees.

Am I right ?

[dacoinminster]

Back to the topic at hand (custom mining rigs):

I spent some time trying to figure out how to build one for myself, and how much that would cost. I eventually gave up, because I don't have time for a project like that. However, it would be very tempting if someone were selling purpose-built mining rigs that I could just buy and plug in.

I think it very likely that there is a market (of unknown size) for selling boxes like that - built by someone with PC building skills but no access to cheap electricity and sold to someone like myself who does have access to cheap electricity but doesn't have much free time. Such a buyer would want a PC optimized for the highest MHash/$. All the seller would have to do is set up a simple web store and advertise it on this thread.

[bitcool]

I gathered some information from this forum and slush's website, here is what I found:



It's incredible, the growth rate of this cooperative mining is about 20gig hashes per month. If you have a 5970 (~500MHashes/s), your share just decreased from 5% of the pool on 1/10 to 1.7% on 1/27.

With rapidly depreciating hardware (if you try to resell) and rapid growing competition, mining returns are quickly diminishing. It may be very  difficult to build computers, mine bitcoins, and make money. JMHO

[bitcool]

meanwhile, the total return of the pool has been flattening since 1/7: http://mining.bitcoin.cz/stats/graphs/
which means, the growth of the pool was just tracking the btc network.
of course you can bet the continuous appreciate of the bitcoin, if that's the reason, buying coins for investment requires less capital and is less risky.

[slush]

The pool jumped from 21-22 to 30 today/yesterday   and it is not necessarily all new mining capability, some could just switched from other pools or solo mining.

Big jump in today's pool hashrate was done by 13 fresh new 5970 connected to bitcoin network...

[bitcool]

LOL, I wonder who that would be  

I am just hoping Whoever did this won't keep rolling out 10gig HR every few days, because my share of the pie is getting smaller and smaller by the day 

Actually it all must be a recognition of stellar job Slush is doing.

An amazing job indeed.

[bitcool]

Your share may be getting smaller per block, but your share per day should remain the same if your hash rate is the same.

I sure hope so, so far I haven't had enough data to confirm this is happening.

The only thing a stronger pooled network should do, is increase how often you get the smaller payments... smoothing out the bumps.

You meant increase the the time interval for the "estimated reward"? I think showing the reward for current block is better, more transparent to the pool participants.
The graphs page does show previous day's total reward, but adding a "most recent x hour total" may be helpful.