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Author Topic: Mining Game forecast  (Read 1823 times)
btc_uzr
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October 19, 2013, 09:26:09 AM
 #1

I'm still curious and wondering how the mining game will work out in the next 2 yrs.
Each company wants his customers to succeed.

Let me paint a simple black&white picture to show what I mean:
There are 3,6 companies each with 1.000 customers, so altogether 3.600 miners worldwide. Hashrate is spread equally. Electricity price is everywhere equal. So each customer gets 1BTC a day with same profit.

So the hardware price must reflect profit for mining 30BTC a month, until next hw generation appears or more miners join the game.

Mining attracts more&more ppl due to advertisements and reports, let's say 30 times more, you will end up with 1BTC a month.
The only question is now, what does one pay for his hardware (buy, maintenance, electricity), because now the hardware price must reflect profit for mining 1BTC a month, until next hw generation appears or more miners join the game.


I see some possible scenarios, ranked by probability:

1) it does not work out for most miners, they will loose money, only 'free electricity' helps to survive, most do not buy again and companies experience insolvency or at least massive losses when they do not leave the game in time with their profit

2) those few companies join a cartel and dictate hashrate&prices, they suck money out of our pockets, but the network lives on

3) companies challenge each other by selling products with a small margin over price costs, ending up in one manufacturer blows others away by selling way under profit (even making debts) in order to destroy competition, then enjoy monopole and make money back.

4) BTCs value increases coincidently in correlation to the amount of miners and money spent for hardware



Number 4) is the only positive scenario for BTC, miners and companies, but it's the one with the lowest probability from my point of view.
I guess we can be lucky if they form a cartel.  Undecided

Core of the thoughts is too many miners ruin the game for everyone, as hardware has certain base costs as well as electricity has and there's a maximum of daily BTC available with an upper limit in value. I see the amount of miners sky rocking, but not BTCs value and this may end up in a big bubble bursting.


Your thoughts are very welcome.

..and Thou shalt spread the coin in the name of cryptography for eternity
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hulk
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October 19, 2013, 09:32:20 AM
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Well, the future miner is getting as cheap as $6 per GH/s. It will continue to slide until the company have no more profit..

btc_uzr
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October 19, 2013, 09:44:03 AM
 #3

agreed.
what do you think what happens as soon as this barrier of price costs with low margin is passed ?
edit: or when too much miners buy this cheap hardware

..and Thou shalt spread the coin in the name of cryptography for eternity
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October 19, 2013, 01:37:42 PM
 #4

agreed.
what do you think what happens as soon as this barrier of price costs with low margin is passed ?
edit: or when too much miners buy this cheap hardware

Soon, we will have electricity war. Who ever have the cheapest electricity wins... Just like GPU right now for alt-coin Sad

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October 22, 2013, 11:33:04 PM
 #5

Soon, we will have electricity war. Who ever have the cheapest electricity wins... Just like GPU right now for alt-coin Sad

I'm happy to live in Quebec, where I can still manage to break even while mining on an overclocked Nvidia GTX580 SLI! =D

EDIT: Alt-coins, obviously... Tongue
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October 23, 2013, 12:48:16 AM
 #6

I'm still curious and wondering how the mining game will work out in the next 2 yrs.
Each company wants his customers to succeed.

Let me paint a simple black&white picture to show what I mean:
There are 3,6 companies each with 1.000 customers, so altogether 3.600 miners worldwide. Hashrate is spread equally. Electricity price is everywhere equal. So each customer gets 1BTC a day with same profit.

So the hardware price must reflect profit for mining 30BTC a month, until next hw generation appears or more miners join the game.

Mining attracts more&more ppl due to advertisements and reports, let's say 30 times more, you will end up with 1BTC a month.
The only question is now, what does one pay for his hardware (buy, maintenance, electricity), because now the hardware price must reflect profit for mining 1BTC a month, until next hw generation appears or more miners join the game.


I see some possible scenarios, ranked by probability:

1) it does not work out for most miners, they will loose money, only 'free electricity' helps to survive, most do not buy again and companies experience insolvency or at least massive losses when they do not leave the game in time with their profit

2) those few companies join a cartel and dictate hashrate&prices, they suck money out of our pockets, but the network lives on

3) companies challenge each other by selling products with a small margin over price costs, ending up in one manufacturer blows others away by selling way under profit (even making debts) in order to destroy competition, then enjoy monopole and make money back.

4) BTCs value increases coincidently in correlation to the amount of miners and money spent for hardware



Number 4) is the only positive scenario for BTC, miners and companies, but it's the one with the lowest probability from my point of view.
I guess we can be lucky if they form a cartel.  Undecided

Core of the thoughts is too many miners ruin the game for everyone, as hardware has certain base costs as well as electricity has and there's a maximum of daily BTC available with an upper limit in value. I see the amount of miners sky rocking, but not BTCs value and this may end up in a big bubble bursting.


Your thoughts are very welcome.

In 2 years time, the miner would realise its not many profit so they stopped ordering ASIC. The ASIC company would close down and we win Smiley

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October 23, 2013, 01:49:55 AM
 #7

Soon, we will have electricity war. Who ever have the cheapest electricity wins... Just like GPU right now for alt-coin Sad

I'm happy to live in Quebec, where I can still manage to break even while mining on an overclocked Nvidia GTX580 SLI! =D

EDIT: Alt-coins, obviously... Tongue

How much is your electricity cost and Nvidia is for gaming Smiley

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October 23, 2013, 10:20:14 AM
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Bitweasil
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October 23, 2013, 07:50:13 PM
 #9

Each company wants his customers to succeed.

I question your assertion.  So far, all they seem to want is a lot of preorder money and preferably to ship enough to get more preorders.

Need high quality, rack mountable GPU clusters for OpenCL work or password auditing?  http://www.stricture-group.com/
cowandtea
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October 24, 2013, 12:08:22 PM
 #10

Soon, we will have electricity war. Who ever have the cheapest electricity wins... Just like GPU right now for alt-coin Sad

I'm happy to live in Quebec, where I can still manage to break even while mining on an overclocked Nvidia GTX580 SLI! =D

EDIT: Alt-coins, obviously... Tongue

Nvidia GTX 580 sucks for mining, please don't spoil a good card....

John122
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October 31, 2013, 11:21:09 PM
 #11

Nvidia GTX 580 sucks for mining, please don't spoil a good card....

Well, my two cards mine almost as fast as my single HD7950. And I pay 5 cents/kwh! Tongue

How much is your electricity cost and Nvidia is for gaming Smiley

Indeed it's for gaming. Wink
JessicaSe
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November 01, 2013, 02:05:59 AM
 #12

Nvidia GTX 580 sucks for mining, please don't spoil a good card....

Well, my two cards mine almost as fast as my single HD7950. And I pay 5 cents/kwh! Tongue

How much is your electricity cost and Nvidia is for gaming Smiley

Indeed it's for gaming. Wink

Sell away those 2 card and buy 3 HD 7950, you can get 3x the speed for the same power consumption Smiley
John122
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November 02, 2013, 01:18:06 AM
 #13

Sell away those 2 card and buy 3 HD 7950, you can get 3x the speed for the same power consumption Smiley

I know I could, but my Nvidia 3D Surround setup wouldn't work anymore... It's still my gaming computer after all.

But let's stop hijacking this thread!
dani
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November 02, 2013, 03:44:14 PM
 #14

agreed.
what do you think what happens as soon as this barrier of price costs with low margin is passed ?
edit: or when too much miners buy this cheap hardware

Soon, we will have electricity war. Who ever have the cheapest electricity wins... Just like GPU right now for alt-coin Sad

Not soon, but rather now. It's just not everyone is in that war. I am, I sold some hardware because in freakin germany you pay prices that should get you golden elecricity. Like elecricity, with gold. You know..
I envy you americans with your zero-cost electricity.  Cry

Hai
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November 03, 2013, 01:06:13 AM
 #15

agreed.
what do you think what happens as soon as this barrier of price costs with low margin is passed ?
edit: or when too much miners buy this cheap hardware

Soon, we will have electricity war. Who ever have the cheapest electricity wins... Just like GPU right now for alt-coin Sad

Not soon, but rather now. It's just not everyone is in that war. I am, I sold some hardware because in freakin germany you pay prices that should get you golden elecricity. Like elecricity, with gold. You know..
I envy you americans with your zero-cost electricity.  Cry

Yup, never though even ASIC would need to have electricity war... as the difficulty increases the cost to operate my ASIC is getting close to my Bills.. Soon I will have to shut it down....


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labsbitforum
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November 07, 2013, 09:02:39 PM
 #16

I was explaining Bitcoin mining to a friend and it was very difficult to explain why a company trying to make money would sell devices for less than what they could make mining themselves with them…  He wasn’t buying it and I really struggle with that being true as well.

I explained that some groups have built their own chip and gear and don’t really sell to the public.  As long as they stay ahead of the pack they always win.

Those that claim to only sell mining equipment (BFL) and don’t mine I don’t believe completely.  I’m sure the owners, close friends, and business associates all mined with the very first gear to roll off the assembly line for months when it was the most profitable.  BFL got the orders they did because people believed they would get the equipment in a time frame that they would make money.  BFL continually misled and then accepted orders for way more product than they should have.  They knew how many TH's they took orders for and were well aware that putting that much on the market the units would never ROI just based on their own impact on difficulty much less others deploying gear.  That allowed them to make much more money than what they would have if they mined with their own gear.  But, that only works once.  Their brand is now complete sh*t and no one that does even a modicum of research will buy from them going forward.

The game is simply the first in line at any tech leap are the ones who profit.  Those that pick the winners but are too far back in line lose just the same as those who pick the wrong horse.

So the next leap is 22nm-28nm coming this Dec-Jan-Feb.  First ones to get working systems based on these do very well.  Those that back a failed venture or are too far back in line will fail.

The next leap is 10nm – 14nm and then we’re pretty much caught up with mainstream CPU/GPU die shrink leaps that occur every 18-24 months.

Isn’t it over for the average person?  Why would the big players that prove they can make the chip and the gear give that away from here on out…

End game = At this point it looks to me like we get down to 1 to 3 big players that have full control.  When that happens Bitcoin becomes non-viable because they become just like the governments and big banks that Bitcoin was created to obsolete in terms of fiat currency exchange.  The system collapses and the next version of digital currency comes on the scene that builds in a better mechanism to ensure it stays peer to peer.

Bitcoin is likely akin to Napster in the evolutionary sense.  This is a first good attempt but as it centralizes it becomes non-viable.  Likely it will be replaced by a better version that learns from the mistakes of this version.  Final version is a truly free P2P fiat currency exchange mechanism that nobody profits from.  Something similar to seti@home or folding@home but money.  Oh and its quantum cryptology based not SHA-256 running on ASICs.

Just my perspective.  Curious what others think.  (other than tl;dr)
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