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Author Topic: What happens when ASICs cost more to produce than what they're worth?  (Read 1415 times)
cmg5461 (OP)
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September 27, 2013, 05:30:51 PM
 #1

Will companies call a quits?

Once the difficulty gets high enough and say a 20GH/s chip (22nm or some shit) costs 30 cents a chip, but will only make 10 cents in its lifetime, no one will buy and it'll be a stand still because of the saturation of the mining network.

Thoughts?

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farlack
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September 27, 2013, 05:32:39 PM
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What happens if bitcoin is worth 100k each?
cmg5461 (OP)
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September 27, 2013, 05:34:42 PM
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Notice in the OP I said cents.  Bitcoins have nothing to do with this, because I can't pay my mortgage in bitcoins.

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JimiQ84
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September 27, 2013, 05:46:33 PM
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Notice in the OP I said cents.  Bitcoins have nothing to do with this, because I can't pay my mortgage in bitcoins.

When we will be in situation where 22nm chip won't pay for itself, you'll be able to pay mortgate in bitcoins Cheesy
mgio
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September 27, 2013, 05:50:10 PM
 #5

No one will mine either. The difficulty will drop and mining will become profitable enough that *someone* will be producing ASICs.
Chalkbot
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September 27, 2013, 06:04:34 PM
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The companies that make them are not terribly concerned about that. The only thing that matters is whether people are still buying them or not. So they will continue to be sold until nobody is willing to buy them. Thier business model (in most cases) does not depend on the profitability of the device.

Obviously when nobody is buying them any longer, they will stop mass-producing them as a consumer product.
Takeshi_Kovacs
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September 27, 2013, 06:06:07 PM
 #7

What happens when ASICs cost more to produce than what they're worth?
...

The hardware manufacturers will no longer mine themselves but will be happy to sell the machines through pre-orders for eight times what they are worth to miners who will happily tell you that they are paying fiat for machines that will mine coins so how can you possibly say that they are going to make a loss?

Puppet
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September 28, 2013, 07:51:58 AM
 #8

Will companies call a quits?

Once the difficulty gets high enough and say a 20GH/s chip (22nm or some shit) costs 30 cents a chip, but will only make 10 cents in its lifetime, no one will buy and it'll be a stand still because of the saturation of the mining network.

Thoughts?

Yes, at some point mining profitability will be below production cost of these asics. Although its more likely the electricity cost that determines this than the chip production cost. Miners with the cheapest electricity will be mining at most at a marginal profit and most asic vendors will close shop; difficulty with taper off, and D will be influenced solely by BTC price variance and perhaps mining fees if that becomes a real factor.

No one knows how long it will take to get there, several years most likely, but you can estimate at what network hashrate this will happen. By my math, somewhere between 80 and 800PH at the current BTC exchange rate and using 28nm asics:
https://bitcointalk.org/index.php?topic=295270.0

I dont think we will see <28nm asics any time soon, if ever.
demontn
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September 28, 2013, 09:20:43 PM
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What happens if bitcoin is worth 100k each?

Right ! More ASICs --> Difficulty Rises --> Price Rise  !!!  It's Well balanced. But what will happen when there is no more BTCs to mine? Why people will keep their miners on, it will be a waste of money?
How much will worth an ASIC Miner? Who will keep the Bitcoin network on?
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September 28, 2013, 10:22:08 PM
 #10

Right ! More ASICs --> Difficulty Rises

Yep

Quote
--> Price Rise  !!! 


Nope.

Only mining revenue drops (per miner or per GH, overall it stays flat). Difficulty has no influence on price.

Quote
. But what will happen when there is no more BTCs to mine?

Transaction fees.
vastbitcoins
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September 30, 2013, 04:24:27 PM
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a solar/wind powered datacenter recycling program, profitable enough to run itself.
fattypig
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October 01, 2013, 09:51:43 AM
 #12

All the company will stop work until hash rate drop (well asic have lifespan) until a profitable level, then they fire up their factory and once again its in unprofitable level.

j68r
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October 02, 2013, 03:03:52 PM
 #13

The companies that make them are not terribly concerned about that. The only thing that matters is whether people are still buying them or not. So they will continue to be sold until nobody is willing to buy them. Thier business model (in most cases) does not depend on the profitability of the device.

or even the bitcoins they produce, which is the disturbing part of the equation. It would be interesting to know how many suppliers in the whole development and production chain required payment in filthy fiat as opposed to btc.

The problem with mining for profit is that it's rapidly becoming a race into a brick wall in terms of investment return, I'm sure there's a slew of other not entirely accurate analogies too.

The truth is though that bitcoin may be incorruptible and be around forever but the only way bitcoin mining is ever going to return any sort of profit from mining at this stage of the privileged, electronic obsolescence arms race is if it becomes a mainstream currency exchanged in large volume for goods and services worldwide, I know that is happening to some extent but as has been said, that is currently just a drop in the Olympic sized swimming pool and its true value is largely untested. I mean ultimately who cares about increasingly worthless fiat or how many "fiats" it might be worth. What really matters long term is what you can actually buy with it and what work you can do that pays btc.

At this stage in it's life it's really just a concept that's feeding itself in an almost closed loop and the challenge and big test for bitcoin as a crypto-currency and the network security it needs to survive the inevitable attacks on its incorruptibility in future will be when there is nearly nothing left to mine and the economics no longer justify the expense of doing so for the many small scale players.

Interesting times, my only hope is that it breaks the backs of the usury crooks, living high on the loot from their government backed money cartel and debt slavery system.

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