Where will the mining industry be in the long term?

[ssbn506]

There are just so many factors it seems like a crap shoot predicting where the diff will go and how fast it will grow long term. The manufactures have to be careful they don't make the hardware they sold 6 months ago worthless by selling new hardware that will make it worthless. I wonder if that is why some are holding back a bit.

I can’t figure out how the hardware manufacturers will keep customers. The more they sell the more worthless their product becomes. I wonder if they will start losing repeat customers as they figure out they can’t get their money back in a reasonable time if ever. 

I think the first sign that we may level off a bit will be if a few hardware manufactures going out of business. Most business rely on something like 80% repeat business. But if the only people who will make any kind of money are first few customers and everyone ells gets nothing how long can that business last.

I would think the next step would be the manufactures will start limiting production as to not cannibalize their current customers. It may not happen this gen of hardware but soon. Or they will have to steadily lower the price over every unit as they get further down the line. For the long term health of the manufactures I can’t see this arms race benefiting them.  If all their hardware could say all ROE in say 6 to 12 months that would be good vs the first 1000 ROE in three days and at unit 10,000 it will ROE in two years.

I love bitcoin as an example of an unregulated market and a real world test of how it will work. It will be fascinating to see how it all turns out jut in the mining portion of bitcoin. My bet is 90% of mining will be controlled by 1% or business will start sum type of self-regulation of manufacturing. 

[Nagle]

At some point, everyone still mining will have the best possible ASICs, the difficulty will level off, and miners will just barely be making money.

That point might be reached in 2014.

[envy2010]

ASICs have finite technological limits in terms of $/GH and GH/watt. These limits, and the value of BTC, will determine where difficulty will more or less plateau. The current rate of difficulty change is not sustainable.

[ssbn506]

At some point, everyone still mining will have the best possible ASICs, the difficulty will level off, and miners will just barely be making money.

That point might be reached in 2014.

What is the other application of an ASIC chip or are they purely engineered for bitcoin mining? I assumed they were for sum other application originally? If they are what is that application and what percent of sales would be going to bitcoin hardware. Will ASIC chips speed go up at the rate cpu are.

Another interesting sign is BFL seems to have stock of sum of the products and have lowered the price on them. So the demand for current tec is getting meat for at least that company. I assume BLF is more where new to bitcoin people go so maybe the frenzy of new people is leveling off. Or BFL is just cranking stuff out now or reputation is tarnished.

[frank754]

From what I've gathered, they are only for cryptocurrency mining, but you can also mine any other SHA-256 coins with them too, like Betacoin, E-Mark, Peercoin, Zetacoin, Terracoin, etc. I've noticed though, that mining these coins, according to Coinwarz, most of them seem to have kept within a reasonable closeness in value in the amount of profit per day you can mine with these other coins vs mining Bitcoin, and their value over time is a lot less predictable, so most folks stay with Bitcoin. I think the market controls this, if one got to be a bit more profitable for a sustained time, folks would pump and dump them and this would level the playing field again. Correct me if I'm wrong. I don't know if the increasing rise in BTC diff would help these other coins later, probably not. Just a lesser ROI across the board.

[mpattison]

They will always be around, but I do not think they'll always be directing their hash power towards BTC.

[byronbb]

I am sure there is more margin to be sacrificed at the production/re-seller end of things. If there is greater demand, the cost to produce will drop and so forth.  Sadly though, consolidation of the hash-rate into the hands of larger and larger companies seems inevitable. This has changed my view of  LTC which is more resistant to such conglomeration. Bitcoin was more enjoyable when a bunch of nerds were risking fires in their basement cranking out hashes with GPUS.   

[ScaryHash]

After 28 nm ships in quantity, and if they ever get 20 nm mining chips to work, that's when the REAL test will begin, of who is really committed to Bitcoin.

Because after that, there will be no more technological edge to push. The only way to increase your earnings will be to add hashpower, at whatever price it will cost (hint: 20nm circuit lithography machines are NOT cheap).

So, I think the weak hands and fly-by-night operations will be shaken out, and only the dedicated/properly planned mining operations will remain.

Network hash rate will become more stably predicted, and it will start to fall into a more linear range.

And, most importantly, I think BTC price will stabilize and will not have so many wild swings.

This will be good, in the long run. In the short run, people will whine

[cdog]

The hardware manufacturers and their partners are the miners and will be from here on out.

There are no other miners of consequence, only people who choose to donate their money to the manufacturers.

[stompix]

After 28 nm ships in quantity, and if they ever get 20 nm mining chips to work, that's when the REAL test will begin, of who is really committed to Bitcoin.

Because after that, there will be no more technological edge to push. The only way to increase your earnings will be to add hashpower, at whatever price it will cost (hint: 20nm circuit lithography machines are NOT cheap).

So, I think the weak hands and fly-by-night operations will be shaken out, and only the dedicated/properly planned mining operations will remain.

Network hash rate will become more stably predicted, and it will start to fall into a more linear range.

And, most importantly, I think BTC price will stabilize and will not have so many wild swings.

This will be good, in the long run. In the short run, people will whine

This sounds like : 640K is more memory than anyone will ever need on a computer.
Do you honestly think people will stop above 5mm ?

ps. Of course it's a myth that Bill Gates ever said that

[ssbn506]

I am sure there is more margin to be sacrificed at the production/re-seller end of things. If there is greater demand, the cost to produce will drop and so forth.  Sadly though, consolidation of the hash-rate into the hands of larger and larger companies seems inevitable. This has changed my view of  LTC which is more resistant to such conglomeration. Bitcoin was more enjoyable when a bunch of nerds were risking fires in their basement cranking out hashes with GPUS.   

This is what I tend to think also. The 1% or a new 1% will control all the mining. Selling mining hardware will go back to mostly hobby stats or buying what is no longer in use for fun. From my understanding the big boys in LTC are the bot nets. I would rather corporations make the big bucks than people who are steeling computer power. But I hop I am misinformed about LTC.

The good old days could be at an end. Like every new big thing a few will do very well and the rest can say they were along for the ride. If everyone got rich now one is rich. For me the real shame is it is so much fun I hate to think the party is close to over. I don't need or want to make a lot at it not even close. I would just hate to se it get the point of CPU mining where it is utterly pointless unless you spend hundreds of thousands to millions.

 I would predict in the next two years 90% of hashing will be preformed by 10 or 20 big time mining corporations and the last 10% for the rest of us. The only thing to stop that is if the price of BTC crashed for a time but that would be even worse.

[Rival]

There will be globally listed mining companies and you will buy shares in those companies.

Anything else will just be buying lottery tickets with an extremely small chance of paying anything ever.

The end.

[mestar]

I wonder if they will start losing repeat customers as they figure out they can’t get their money back in a reasonable time if ever. 

I have an issue with your "if ever" clause.  This assumes that the difficulty will rise forever and forever, and this is not going to be the case. 

In a steady state, if your cost of mining per one bitcoin is less than one bitcoin, there will always be a time-frame where you get to repay your investment.

Nothing can go up forever.

[Philopolymath]

There is only one immutable law governing everything in this universe

Balance

If you need two words
Rhythmic Balance

If you need 3

Rhythmic Balanced Interchange....Walter Russell

What goes up will come down...

And round and round we go

[ScaryHash]

After 28 nm ships in quantity, and if they ever get 20 nm mining chips to work, that's when the REAL test will begin, of who is really committed to Bitcoin.

Because after that, there will be no more technological edge to push. The only way to increase your earnings will be to add hashpower, at whatever price it will cost (hint: 20nm circuit lithography machines are NOT cheap).

So, I think the weak hands and fly-by-night operations will be shaken out, and only the dedicated/properly planned mining operations will remain.

Network hash rate will become more stably predicted, and it will start to fall into a more linear range.

And, most importantly, I think BTC price will stabilize and will not have so many wild swings.

This will be good, in the long run. In the short run, people will whine

This sounds like : 640K is more memory than anyone will ever need on a computer.
Do you honestly think people will stop above 5mm ?

ps. Of course it's a myth that Bill Gates ever said that

I'm not saying that we won't get to less than 20nm circuits. I'm just saying it's pretty easy to go from 110 nm (1st gen ASICS), down to 65 nm, then 55 nm, then 28 nm, because that technology already exists and it's mature.

20 nm is on the horizon right now for later on this year. Beyond that, you have 12 nm tech, that they are working on for a couple of years down the road (and smaller).

But, your average fly-by-night BTC hardware company doubtfully has the deep pockets that is required for that kind of hardware investment, unless they are backed by HUGE amounts of venture capital. Not saying it cannot happen, it's just less likely to given current BTC prices.

With 10 times current BTC price, maybe.  

Quantum Bitcoing mining, anyone? 

[dplusf]

Quantum Bitcoing mining, anyone? 

If Quantum Computers show up we'll got a huge problem SHA256 as encryption will not be safe.

[ssbn506]

I wonder if they will start losing repeat customers as they figure out they can’t get their money back in a reasonable time if ever. 

I have an issue with your "if ever" clause.  This assumes that the difficulty will rise forever and forever, and this is not going to be the case. 

In a steady state, if your cost of mining per one bitcoin is less than one bitcoin, there will always be a time-frame where you get to repay your investment.

Nothing can go up forever.

I think you are correct you wont go up at this rate forever. It will level off. What will level it off will be power cost. The diff will jump to a point that the hardware you can run in your house will cost more than it makes. That will shake out all the home miners. That is happening already as many of the 1+th miners wont or will just barley run on a home power grid.

The other factor is how fast you get your money back and at what rate. The market will push the mining sector to a more normal rate of return. Again that is happening now.  Getting you money back in three months not going to happen unless you have an inside edge. Make 5% per year on you investment ok that will happen. But for most miners spending 10,000 to make 5% per year is forever. So you win on a technicality.

[ssbn506]

Quantum Bitcoing mining, anyone? 

If Quantum Computers show up we'll got a huge problem SHA256 as encryption will not be safe.

I would put Quantum computers next to free energy machines as not going to happen in our lifetime. I hope I am wrong about Quantum computers.

[ssbn506]

I should point out I am in the mining game just a bit with 80gh for fun not profit. So I hope in 6 months someone can throw my wrong predictions in my face and laugh at me.   

[An amorous cow-herder]

I would put Quantum computers next to free energy machines as not going to happen in our lifetime. I hope I am wrong about Quantum computers.

Well, if you get your hands on one of these tell me how many PH/s (EH/s?) you can get out of it.