Difficulty level predictions - is mining toast - Is everyone heading into war

[greenr]

HI guys,

I was hoping to post this some were else....but as a new member this is the only place i can post apparently.

I got into Bitcoins a few years back, i am a Futures risk manager and i started to mine on my GPU`s.

With bitcoins trading at $90 back then i thought i would get involved. Ended up getting distracted and missing the boat.

I am now not happy as you can imagine, i could have been an innovator but now i am a lagger!

Any way to my point and research here.

I was looking to buy a 2 THs machine from Black Arrow for $6,000 shipping start of march 2014.

Here is my concern!

The Difficulty level has been rising at about 28% every 11 days.

So as of today 12/13/2013 the difficulty levels is at 908 Million.

Lets put this into a chart now, with a 28% rise every 11 days on the difficulty level.

http://www.vnbitcoin.org/bitcoincharts.php

2nd chart down has it bang on, i tried to upload my chart but i cannot find the image upload function on this forum.....i must say it’s not very easy to understand this and i have my online banking forum I coded very user friendly!!!(rant over...moving on)

So at the moment with the current level i would be able to mine 1.1073 BT a day on a 2 THs miner

But when i get my machine early march (if they deliver on time) the difficulty level is going to be at roughly 6,000 million

The 2 THs machine would only mine 0.1674 BTC a day.......so roughly 1 week to mine 1 BCT.

SO lets assume BTC stay at $800 a coin, it would now take me roughly 2 month to Break Even on my machine.

And this is not considering that the Difficulty level will be rising 28% every 11 days while i mine to Break Even on my machine and the fact this machine will be pulling 2000 Watt from expensive UK Lecky bills!

So in this case all im relying on and gambling on is in hope that Bitcoin will continue to rally to higher prices

1 thing i have not factored into this hypothesis is the fact can the Continued hash rate of the network keep rising parabolically, which is what the prediction data is supported by?

I mean if we see this prediction play out, that means there is going to be a serious amount of power increase in the bitcoin network.

I have not worked this out yet but when i do this weekend i will update this post.

Would love to hear everyone's views on this  

[burnum]

As cost of mining goes up wont the cost of the coin? seems about normal to me, 4 months time to double your investment? That is pretty good I think

[greenr]

Yes that makes sense, but is yet to be seen.

So instead of running this as a business.......you/me are gambling on that Bitcoin will increase in value.

If they dont, well its a dead end investment.

Im only here to ask what every one has to say about this.

I see a lot of people on here investing in 100 GHs miners, these are going to be out of date before they receive their product.

Nothing is a get rich quick scheme here any more, that opportunity has gone in bitcoin.

What im trying to work out now is if there is still an opportunity to run a realistic business mining any more.

I just did a rough calculation in my head (forgive me if im way off course here)

But if black arrow release 3,000 2 THs miner in march ( im 3,000 id number on my contract)

Thats another 6000 THs into the network almost doubling the power from this 1 supplier.

Not mentioning BFL of KNC miner

I was hoping someone would pull some awesome data i have missed here...other than relying on BC rising in value lol.

If any thing in my business model i have done figure at BT starting at $500 to be safe, thats 50% off the current high.

1/2 price from a market auction theory perspective, incase this market become range bound for the unforeseen future

[greenr]

Any one? 

[Isokivi]

Any one?  

I dont see anything wrong with your math, it is assumed that difficulty rises will eventually tone down, because asics cant get much more efficient (smaller nanometer processes). But your assesment of that being a bad investment seems correct. You have two options:
1. Keep up to speed with new developments in available hardware and once something looks good, go for it. To do this you need to feel very confident that the manufacturer you are going with will be capable and willing to ship when promised and with the specs promised.
2. Invest directly in to bitcoin.

[edit]
I myself am sitting next to some miners that will propably never hit 100% ROI in the currency I bough them with, btc. Had I paid in fiat I'd be past 100% by now tough, mainly because the exchange rate rising.

[greenr]

Any one?  

I dont see anything wrong with your math, it is assumed that difficulty rises will eventually tone down, because asics cant get much more efficient (smaller nanometer processes). But your assesment of that being a bad investment seems correct. You have two options:
1. Keep up to speed with new developments in available hardware and once something looks good, go for it. To do this you need to feel very confident that the manufacturer you are going with will be capable and willing to ship when promised and with the specs promised.
2. Invest directly in to bitcoin.

[edit]
I myself am sitting next to some miners that will propably never hit 100% ROI in the currency I bough them with, btc. Had I paid in fiat I'd be past 100% by now tough, mainly because the exchange rate rising.

Thanks for taking the time to reply.

Think you hit the nail with manufacture, this is one variable i am not confident in.

Black Arrow say they are shipping late Feb.....What if they pull off a BFL stunt lol.

Also my order will most likely get caught up in UK customs lol, its not likely they will let $6k get past them without Milking 20% VAT form me!!!!

Tough call here, i was thinking to go down just buying the bloody coins instead.

Just would really like to mine them, may i ask what vendor your using for your machines?

Cheers

Ryan

[Isokivi]

Thanks for taking the time to reply.

Think you hit the nail with manufacture, this is one variable i am not confident in.

Black Arrow say they are shipping late Feb.....What if they pull off a BFL stunt lol.

Also my order will most likely get caught up in UK customs lol, its not likely they will let $6k get past them without Milking 20% VAT form me!!!!

Tough call here, i was thinking to go down just buying the bloody coins instead.

Just would really like to mine them, may i ask what vendor your using for your machines?

Cheers

Ryan

Vat is most certainly a major consideration, I myself primarily look for hardware within the Eu because of this. I have heard whispers of bitfury going for a second asic design of a smaller process, should that actually happen it's most likeley to be the point when I unlock my wallet to buy hardware again, if ever.

[greenr]

Just seen this lol

http://money.cnn.com/2013/12/13/technology/bitcoin-europe-regulation/index.html

For me this has gone to far now, it has infected the world like a virus that is incurable!

Major business like starbucks and Virgin have been accepting Bitcoins for a while now.

These are clever investors, i doubt they would take the risk holding bitcoin if there was a real threat....

Comments 

[Septimus]

I've been following Black Arrow for a while now, and I have to say I'm not impressed with how they (or any other pre-ordering company) does business. Whenever a company asks something for nothing (vaporware) and then expects you to trust them with thousands of dollars despite them having either just started up in business or have been in the game a very short while, I have a very difficult time understanding why people decide to invest in these companies. The only reasoning I can think of is greed. The retards spending over 15 grand on old KNC Jupiter rigs on eBay prove that.

If someone walked up to you on the street and offered you a golden apple for six grand, saying they would give it to you three months from now with no way of getting your money back (bitcoin and bank transfers are fun like that), would you trust them? Sadly, millions of dollars spent on pre-orders say "yes, I would trust that anonymous individual from Shoienbzmeiy'ejoinzqoied'ujdovn, China/Sweden/Slovakia/Timbuktu with my hard earned cash." Honestly, it's stupidity plain and simple. Either that, or you're ungodly rich...which can often be synonymous with stupidity.

So what if you make some money on that sweet new box that you could've bought two cars with? Where does that money then go; on to the next generation of money boxes? Sounds like the company is winning, and you're not getting anywhere. That 2TH/s rig you just blew several paychecks on isn't gonna pay itself off once you get it. If it does, it's going to take months, not weeks...and every week and a half, that slope gets harder and harder to climb.

To answer your last post, it's not a huge threat if you hold onto Bitcoins. There's nothing wrong with simple investing, as long as you don't send your money off 'to the moon' in hopes it'll come back and deliver a magic money box. Yes, there is real world potential in Bitcoins. Whether that potential ever comes to fruition though is another question.

[hieroglyph]

Well with a quick once over of your thread and posts it seems you overall assessment is pretty spot on.  I'm still trying to get over the difficulty rise in bitcoin recently and in the coming months.  Thank for the information!

[young3dvard]

Well with a quick once over of your thread and posts it seems you overall assessment is pretty spot on.  I'm still trying to get over the difficulty rise in bitcoin recently and in the coming months.  Thank for the information!

Difficulty is killer, Im mining myselves and I wouldnt invest again if I knew so much about Bitcoin difficulty

Live and learn

[itlahic]

Id suggets mining alt coins, sure there not worth as much but damn you can mine alot of em fast.

[zendantom]

Id suggets mining alt coins, sure there not worth as much but damn you can mine alot of em fast.

Alot of em fast ? Only the new ones, but you must hope somebody pump the coin or your left with bunch of worthless coins

[stompix]

As cost of mining goes up wont the cost of the coin? seems about normal to me, 4 months time to double your investment? That is pretty good I think

There is no correlation between mining cost and bitcoin price.

[stompix]

Id suggets mining alt coins, sure there not worth as much but damn you can mine alot of em fast.

And if everybody is starting minign alt coins , we have the same picture as in the bitcoin environment , but with worthless rewards.

[pand70]

It's hard to find profitable options for mining equipment. Your math are good but you should do your calculations based on how many bitcoins you can buy instead of the mining equipment.

[Harley997]

$90 back when? few years ago? am i misreading this.....?

but yes, i think mining is toast for the casual miner..... need much capital to stay in the game. if you play it right by mining the right alt coins, though, you could massively profit on a pump and dump.

[stompix]

$90 back when? few years ago? am i misreading this.....?

but yes, i think mining is toast for the casual miner..... need much capital to stay in the game. if you play it right by mining the right alt coins, though, you could massively profit on a pump and dump.

No , you're not .
But most people tend to post a fake CV  of their past relations and adventures with bitcoin.

[dericksc]

Just seen this lol

http://money.cnn.com/2013/12/13/technology/bitcoin-europe-regulation/index.html

For me this has gone to far now, it has infected the world like a virus that is incurable!

Major business like starbucks and Virgin have been accepting Bitcoins for a while now.

These are clever investors, i doubt they would take the risk holding bitcoin if there was a real threat....

Comments 

Another way to look at legitimacy of Bitcoin is through the underworld's adoption of it.  The Euro, for example, became a de-facto underworld cash currency when its exchange rate significantly trumped the USD.  It also featured a 500 Euro note.  In simple terms, you could put more value in a suit case and that was attractive to the criminal types.

Today, Bitcoin is a major currency in the cyber underworld.   For example, the major carding sites ONLY accept Bitcoin.  That means those trading the 40 million cards taken in the Target heist are dealing in Bitcoin.  There are huge dollars associated with these industries.

Bitcoin is here to stay.  There will be crashes and spikes but it won't disappear.  Bitcoin mining as a business is probably very limited.  The research in this post pretty much nails it.  Bitcoin trading, however, will be lucrative as anything with volatility creates opportunity.  Why did the market for pork bellies disappear?  Refrigeration and other technologies removed the volatility. 

My CV?  Security and operations guy by day and got into very low levels of Bitcoin mining running power consumption experiments with ARM processors and low energy consuming ASICs.   If you want to learn more about the cyber underworld, read Kingpin.  It is a great read.  It also highlights that, in the end, crime doesn't pay but they sure do deal in a lot of volume.

[bitbitz]

As cost of mining goes up wont the cost of the coin? seems about normal to me, 4 months time to double your investment? That is pretty good I think

I dont think you CAN get ROI..