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Author Topic: Is this a bubble?  (Read 2990 times)
1Pakis
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September 26, 2013, 05:30:18 AM
 #1


The question is where it will pop?

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Rannasha
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September 26, 2013, 05:34:26 AM
 #2

It won't.

ASICs that are currently mining or pre-ordered will continue to mine for as long as running the ASIC generates more bitcoin than is lost through electricity costs. And it'll take quite a while before that happens. Whether the ASIC generates enough to justify its purchase is irrelevant in this matter, they've been ordered and produced, so they will be operated.

Eventually the growth of the hashrate will slow down, but unlike a price-bubble, there will be no collapse.
1Pakis
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September 26, 2013, 05:42:53 AM
 #3

OK.
Can you show me some similar real life graphs?
I mean graphs with something to be gained from.

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September 26, 2013, 05:48:36 AM
 #4

It won't.

ASICs that are currently mining or pre-ordered will continue to mine for as long as running the ASIC generates more bitcoin than is lost through electricity costs. And it'll take quite a while before that happens. Whether the ASIC generates enough to justify its purchase is irrelevant in this matter, they've been ordered and produced, so they will be operated.

Eventually the growth of the hashrate will slow down, but unlike a price-bubble, there will be no collapse.

So this time it will be different?

How about if bitcoind is modified to take out the ASICs. 
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September 26, 2013, 05:52:25 AM
 #5

this is not a bubble. the hardware to mine this hard, is out there, and it will stay out there until when upgrades come, and the hardware will be obsolete.

How about if bitcoind is modified to take out the ASICs. 
then me and 98% of the network will still use the good and old bitcoind, and fork the source.

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September 26, 2013, 06:03:10 AM
 #6

this is called paradigm shift - conditions have severely changed
1Pakis
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September 26, 2013, 06:26:01 AM
 #7

So. Now similar graphs then. This is a first.
Lets see how and when it pops.

EDIT
Similar threat wrong subforum
https://bitcointalk.org/index.php?topic=300642.0

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September 26, 2013, 06:57:04 AM
 #8

A few years ago, we have seen far steeper increases in difficulty than what we see now. You cant spot that  in the current curve anymore as it has become noise, but here is a good chart for you:


http://thegenesisblock.com/bitcoin-network-reaches-1-petahash-per-second/

These werent "bubbles" and nor is the current rise,  its the network adjusting to new technological realities.  This apparent exponential growth wont last, just like the previous ones didnt last, but that doesnt mean it will implode, just that it will taper off once the transition is complete. FWIW, whats happening now has been predicted many years ago, it was inevitable we would move to asic's at some point given they are inherently vastly superior in GH/$ and GH/W than FPGA, GPU's and CPU's. If anything this transition is happening much slower than I would have predicted.

But we are now in the last phase. After asics (and particularly 28nm asics)  there is nothing else to create this kind of network growth. Or if there is, its yet to be invented. The network will continue to grow to 10+ PH without slowing down, probably even accelerate further in the coming months. Then it will begin to slow, but it wont stabilize before we reach somewhere between 50 and 500PH (assuming constant btc price).
Economics dictate that.
1Pakis
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September 26, 2013, 07:07:28 AM
 #9

(assuming constant btc price)
That was my thought too reading your analysis.
But you can't assume that.
I think we have a very wild ride in front of us.

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September 26, 2013, 07:10:57 AM
 #10

(assuming constant btc price)
That was my thought to.
But you can't assume that.

Nor can you predict it. Whats going on now has nothing to do with BTC price and BTC price will have next to no influence on network hashrate over the next months either; even if it goes to $1 or $10000, those asics will be deployed and cant be deployed faster than they are anyway. BTC price will only determine at what level the growth will taper off.
1Pakis
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September 26, 2013, 07:16:45 AM
 #11

If the price goes to $1 I will be switching off my miners for sure.
And I will not be willing to buy any more coins.

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September 26, 2013, 07:22:52 AM
 #12

A few years ago, we have seen far steeper increases in difficulty than what we see now. You cant spot that  in the current curve anymore as it has become noise, but here is a good chart for you:



You can still easily spot that early rise in the difficulty curve if you use a logarithmic scale:
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September 26, 2013, 07:27:49 AM
 #13

If the price goes to $1 I will be switching off my miners for sure.
And I will not be willing to buy any more coins.

Buying coins has nothing to do with it (btw, you would buy them at todays price, but not at $1? I sure as hell would).
And you may shut down your inefficient miners, but even at $1/BTC today those 28nm asics would still earn more than they cost in electricity.
Now $1 is pretty extreme, but you get my point.
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September 26, 2013, 07:30:14 AM
 #14

OK.
Can you show me some similar real life graphs?
I mean graphs with something to be gained from.


http://www.wolframalpha.com/input/?i=moore%27s+law

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September 26, 2013, 07:31:15 AM
 #15

Analogy should be to the Moore's law, not to price variations.

Are the cpu speeds that we enjoy today a bubble? Shall we go back to using 80386's?

If you're saying the current bitcoin price is a bubble. That may very well be. But don't mix the two issues.

Of course if the bitcoin price is a bubble, and if it crashes, AS A CONSEQUENCE OF THIS, the miners may turn off their mining equipment.  But that doesn't mean the bitcoin network hashing power is a bubble.
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September 26, 2013, 07:42:51 AM
 #16

Are the cpu speeds that we enjoy today a bubble?

No but you could say the speed increase we've enjoyed over the past decades will hit a brick wall. In so far it hasnt already. And moore's law is running out of steam too. IIRC on some chips we are down to feature sizes that are just a dozen atoms wide, transistor size is approaching atomic levels. It just doesnt get smaller than that.  We are not there yet, still a few shrinks that are probably feasible but the end is in sight.
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September 26, 2013, 02:57:18 PM
 #17

Nothing goes up forever.  Question is what play should you execute to take advantage of an unsustainable rise and timing of course.

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September 26, 2013, 03:17:20 PM
 #18

Saturating is not the same thing as crashing.

A bubble, by definition pops (i.e. crashes).
Ekaros
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September 26, 2013, 09:33:11 PM
 #19

It can pop, but that is when bitcoin goes out of use.  As said, it's not a bubble as in financial bubbles.

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Ekaros
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September 26, 2013, 09:36:09 PM
 #20

Are the cpu speeds that we enjoy today a bubble?

No but you could say the speed increase we've enjoyed over the past decades will hit a brick wall. In so far it hasnt already. And moore's law is running out of steam too. IIRC on some chips we are down to feature sizes that are just a dozen atoms wide, transistor size is approaching atomic levels. It just doesnt get smaller than that.  We are not there yet, still a few shrinks that are probably feasible but the end is in sight.

Moore's law itself does scale further, though there is walls with gains and prices.

You just need to add more chips for Moore's law to work. Though this is costly and gains aren't very good beyond some point.



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