Against the grain: Difficulty will plateau 3/2014

[TheJuice]

Like we saw with GPU adoption we had an explosion of hashing power, and then leveled off nicely. Since we have gen2 on the heals of gen1 asic we are going to see a continued exaggerated increase, but not for much longer.

It appears gen2/3 will come in around ~20 ghash for ~1 BTC after price pressure @ ~1.5 Watt per ghash.

Then I asked what difficulty would yield ROI in 6 months? A stable BTC/USD yields a difficulty of around 1 billion (20x current).

At 50% growth, we will see that in 3/2014.

ASIC USB miners at that time will earn 0.003 BTC/month profit.

We will see if this hold true.

[kaerf]

I have a similar projection. I think we're going to see aggressive growth until around March and then things start tapering off. Though the following months will still probably see growth rates around 40% (just not 50% or higher).

My guess is that around $5/GH is when ASIC manufacturers stop lowering prices. And at that price point, with bitcoin at $100 USD/BTC, there's an upper limit of ~$10M USD/month (108K BTC) that will be spent on hardware.

Though, private ASIC producing miners with lower costs could keep the hash rate growing a little longer. And if bitcoin prices start rising again, so to will the hash rate.

[Bitweasil]

There's a fundamental difference between the last hardware shifts and this time, and that is the preorder queue.  There was no real preorder queue for GPUs - you could get one within a day or two of ordering.  This time, many people are preordering ASICs that may or may not be delivered as promised, at some point in the future.  I think this will lead to a rather significant overshoot of people receiving ASICs that are no longer profitable to run, as the mining hardware companies do that which is optimum for them and ship out as much hardware as they can get paid for.

[CoinHoarder]

There's one problem with the GPU -> ASIC comparison.

It's that Bitcoin ASICs are made to do only one thing, and the manufacturers can lower their prices as much as they'd like as long as they're still making a small profit. They HAVE to lower their prices, otherwise they'd be out of business very soon because people will stop ordering from them.

GPUs on the other hand can be used for many things, and are actually a necessity (if you use a computer). ATI/Nvidia do not lower their prices for GPUs when the Bitcoin difficulty goes up. They do not care about Bitcoin miners, because they have millions of people lining up to buy their hardware and Bitcoin miners are a very small percentage of their customers. The prices stay at a pretty constant rate until the next generation of GPUs is released. Even then, -new- last generation GPUs still hold their value quite well and are usually sold for only a slight discount compared to the newer generation of GPUs.

Although I would not be surprised to see a tapering off of hash power eventually (there's only so cheap these ASIC companies can go before they're not turning a profit). I do not expect this to happen as soon as you guys are predicting. I've been wrong before though, and this wouldn't be the last time either!

[kaerf]

Just to be clear...I'm not saying difficulty will plateau in the Spring, but the rate of growth might slow down. Instead of 50+% month over month difficulty increases, difficulty increases will be a smaller percentage (e.g. 40% or 30%...which is still high). Like Bitweasil said, there is probably going to be an overshoot.

[Hfleer]

ASIC USB miners at that time will earn 0.003 BTC/month profit.

We will see if this hold true.

That's a pathetic amount of BTC for a month.  At that point I imagine they'll have some newer generation USB miners, don't think anyone will bother with those anymore.

[Bitweasil]

(there's only so cheap these ASIC companies can go before they're not turning a profit)

There is... but it's a /lot/ cheaper than things are now, once R&D is paid off and you're just reproducing chips you have masks already made for, and have the production process refined.

The ASIC companies are making a lot of money right now and have some nice models to work with.  Look at the USB eruptors - in the past few months, they've gone from 2.0 btc down to 0.3 btc, and are STILL being shoveled out the door as fast as they can be shipped.  I'm fairly certain they're not being sold to resellers at a loss.