Why 9-month payoffs are still foolish

[AngelusWebDesign]

Even if you're comparing your mining return to interest at a bank (which, admittedly, is quite low), it's still silly to buy cards that won't pay off for 9 or more months.

Besides the usual argument, "Bitcoin could be $3 in a few months!" which no one can really refute...

What if the 7000 series cards have a much better stream processor count?  Another thread mentioned them having *double* the stream processors. That's only a rumor, of course, but what if something like that happened? Does any of us know what the 7000 will bring? Isn't it prudent to wait until the details have been released, before sinking one's savings into 6990s?

Those who *didn't* buy cards with a long payout will be in a better position, because they can buy the 7000 series cards and keep up with the difficulty increases that will no doubt ensue.

Those already "invested" in $500 5970's and 6990s will have to watch their returns diminish, and won't have as much capital (or free slots) for 7000 series cards as everyone else.

So there are many things to consider when you go "all in" at this point.

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[xunker]

Besides the usual argument, "Bitcoin could be $3 in a few months!" which no one can really refute...

By the same token, no one can refute "Bitcoin could be at $30 in a few months!" since both statements rely on subjective and selective data.

This is a gamble, pure and simple, and anyone who thinks they have a "foolproof system" is the one who's going to be hurting soon.  Play this like any other market -- take profit when you can, don't invest more than you can afford to lose.

There is a second gamble here, though:  the VLIW design could change for worse or for better, like you said.  Consider this: if the 7000-series changes in such a way that they emulate NVidia's approach (better actual D3D/OGL performance at the cost of lower hashing performance) then the 69xx cards you now have start to go UP in resale value, since it becomes known that there won't be anything in the near term to replace them.  This is, again, a gamble, you are betting that the future will turn out one way or the other.

[johnj]

I'm pretty sure AMD is aware that their card is the choice pick of mining.  I doubt that AMD is going to give up that part of the market with sub-par numbers. Sure mining isn't their focus, but they're aware that it brings them money.

Edit:  This is why I try to make sure any investments can pay for themselves within 2 months.  If BTC crashes in the first usually the 30 day return will still be in effect.  If BTC crashes in the second, at least I've made half my investment back.

But I'm not a major rig operator or anything.

[AngelusWebDesign]

Besides the usual argument, "Bitcoin could be $3 in a few months!" which no one can really refute...

By the same token, no one can refute "Bitcoin could be at $30 in a few months!" since both statements rely on subjective and selective data.

This is a gamble, pure and simple, and anyone who thinks they have a "foolproof system" is the one who's going to be hurting soon.  Play this like any other market -- take profit when you can, don't invest more than you can afford to lose.

There is a second gamble here, though:  the VLIW design could change for worse or for better, like you said.  Consider this: if the 7000-series changes in such a way that they emulate NVidia's approach (better actual D3D/OGL performance at the cost of lower hashing performance) then the 69xx cards you now have start to go UP in resale value, since it becomes known that there won't be anything in the near term to replace them.  This is, again, a gamble, you are betting that the future will turn out one way or the other.

You're right that it TECHNICALLY could go either way -- but it would take a Black Swan event to bring Bitcoin into the $20s, whereas the trend right now is $1 less every couple weeks.

So betting it will go lower is not "equal" with betting it will go higher. There is more evidence for the former.

Regarding the video cards -- you're right. That's why I said "wait and see" rather than go one way or the other. I'm sure there will be 6990s for sale even after the 7000 series is released (or definitively described) to the public.

[bcpokey]

The people who think that AMD gives two flying craps about bitcoin are just not in the right headspace, pure and simple. I really wish there was an FAQ posted somewhere about how the bitcoin numbers represent essentially nothing to AMD. Literally, nothing. It doesn't bring them one cent.

THe 7000 series is still completely under wraps by AMD, except for mobility series, which as I recall was a tiny improvement over the 6000 series, with its 28nm fab process, and certainly not something at all related to mining.

As for the main topic the OP posted, as it has been since you started all this a few months ago, no one really knows what will happen. It's been a wild ride up and down; will it continue to trend down, maybe, or up, who knows? All investments are inherently risky. The ones with greater payoffs are almost always riskier. Warn people about that, fine. Make grandiose statements with no backing but supposition and/or fear mongering...  


Edit: Some further thoughts -- There is no real release date for the 7000 series cards, whatever they are. Powercolor suggests Q1 2012, so potentially a release as far as 7 months in the future, or more if there is a delay (almost the 9 months the OP is suggesting people not buy into). The cards when first released will carry with them the huge premium markup that all new releases have, so do not expect to see some balls-out radeon 7000 for $100 with a billion stream processors ready to hash at 5THash/sec. Furthermore, AMD is switching to a newer more sophisticated stream processor, why would they then double the amount? Or if they did double the amount, why would you expect them for anywhere near the same price as we see on 5xxx series cards. Furthermore we to my knowledge do not know how the VLIW-4D cores hash, since they are more complex, with likely more instructions for things that actually matter in a graphics card, such as tessellation, directx, streaming large amounts of data, not so much useful for mining.

[johnj]

The people who think that AMD gives two flying craps about bitcoin are just not in the right headspace, pure and simple. I really wish there was an FAQ posted somewhere about how the bitcoin numbers represent essentially nothing to AMD. Literally, nothing. It doesn't bring them one cent.

AMD may not care about BITCOIN, but they're not run by dummies.  5870's which were released *two years ago* are still selling at premium prices, even used. 5770's are only $40 less than 6870's.  Newegg has tons of refurbished/open box Nvidia cards while ATI/AMD get snapped up within moments.

Granted these are only observations from a newbie, but I'd be hard pressed to think that AMD isn't aware of the impact mining is having on their sales.

[bcpokey]

The people who think that AMD gives two flying craps about bitcoin are just not in the right headspace, pure and simple. I really wish there was an FAQ posted somewhere about how the bitcoin numbers represent essentially nothing to AMD. Literally, nothing. It doesn't bring them one cent.

AMD may not care about BITCOIN, but they're not run by dummies.  5870's which were released *two years ago* are still selling at premium prices, even used. 5770's are only $40 less than 6870's.  Newegg has tons of refurbished/open box Nvidia cards while ATI/AMD get snapped up within moments.

Granted these are only observations from a newbie, but I'd be hard pressed to think that AMD isn't aware of the impact mining is having on their sales.

For (hopefully) the last time, AMD doesn't fab any 5xxx gpus anymore. They're done, they were done years ago, they're not going to start again, hence they make $0 off sales of 5xxx series cards. Why then do they care about bitcoin selling cards used at high prices?

AMD is a multi-billion dollar company, with tens or hundreds of millions of dollars going into each fab line, they're ABSOLUTELY NOT going to cater to a tiny cluster of renegade miners who use their cards just fine as they already stand in comparison to the millions of paying gaming customers. Just deal with that.

[johnj]

For (hopefully) the last time, AMD doesn't fab any 5xxx gpus anymore. They're done, they were done years ago, they're not going to start again, hence they make $0 off sales of 5xxx series cards. Why then do they care about bitcoin selling cards used at high prices?

AMD is a multi-billion dollar company, with tens or hundreds of millions of dollars going into each fab line, they're ABSOLUTELY NOT going to cater to a tiny cluster of renegade miners who use their cards just fine as they already stand in comparison to the millions of paying gaming customers. Just deal with that.

Of course they aren't going to *cater* to mining.  That'd be foolish.  It'd also be foolish of them not to see 'Hey, WHY are those 5x series still selling for so much?".  AMD is a multi-billion dollar company.  And they pay their execs tons of money to get as much marketshare/profit as possible.  Bitcoin mining is a part of that.

[bcpokey]

For (hopefully) the last time, AMD doesn't fab any 5xxx gpus anymore. They're done, they were done years ago, they're not going to start again, hence they make $0 off sales of 5xxx series cards. Why then do they care about bitcoin selling cards used at high prices?

AMD is a multi-billion dollar company, with tens or hundreds of millions of dollars going into each fab line, they're ABSOLUTELY NOT going to cater to a tiny cluster of renegade miners who use their cards just fine as they already stand in comparison to the millions of paying gaming customers. Just deal with that.

Of course they aren't going to *cater* to mining.  That'd be foolish.  It'd also be foolish of them not to see 'Hey, WHY are those 5x series still selling for so much?".  AMD is a multi-billion dollar company.  And they pay their execs tons of money to get as much marketshare/profit as possible.  Bitcoin mining is a part of that.

No it isn't. It seriously just isn't. You don't seem to understand the process so I'll try to simplify it for you. ATI designs and fabricates incredibly complex processors, this costs millions of dollars, it then designs a rich and incredibly intricate architecture to utilize those processors, which costs millions more, producing a "reference board". It produces just those things, then sells off millions of processors and licenses the reference design to manufacturers like sapphire, xfx whoever to produce the cards for retail sale. So when you buy a sapphire 5870 from Electronics-Store #1, or jimbob off the street for $500, AMD doesn't care because it's not selling to you, it's selling to sapphire who sells to the store who sells to you.

So what influences AMD? Marketshare, but share of what market? The gaming market, that has millions of cloying customers wanting the fastest most powerful GPU they can get their hands on, to run the shiniest newest game at the fastest speed possible. AMD is competing directly with NVidia and they need every last bit of their muscle to streamline for this aspect, to keep up with, and maybe even slightly outdo their competition. Any sideline would need to be VERY lucrative to even cause them for one second to give side attention.

There are at best 30-40,000 miners if you look at the numbers, and > 10million gamers. That represents less than one half of one percent of the market for video cards. No one gives a crap about that market segment. Seriously, we've had this discussion a lot before, bitcoin is cool, but lift your head up from the tunnel vision of bitcoin and you'll see how insignificant it is in the scheme of any kind of market share.

[wndrbr3d]

I'm pretty sure AMD is aware that their card is the choice pick of mining.  I doubt that AMD is going to give up that part of the market with sub-par numbers. Sure mining isn't their focus, but they're aware that it brings them money.

I'm fairly certain there are many, many, many more Gamers/Consumers out there using AMD cards for Gaming than people using them for mining. So I don't buy that AMD gives two squirts of piss about Bitcoin mining. For AMD to remain competitive against nVidia, they need to focus on Gaming First, and GPGPU second.

If anything, it'd behoove them to focus on gaming with the 7xxx series so schmucks like us can buy up the remaining backstock of 68xx and 69xx series cards.

[STP]

Without mining 6990's could be had on almost any site. You can talk about the 5xxx series all you want but AMD is aware why they are sold out and its not due to gamers or new system builds. They built enough for that demand. It was the mining that pushed them beyond what they planned or they would have produced more. We may be a small community but many of us hold many of these cards and you divide that up we a large enough community to monitor.

I am still building rigs 9 months or 2 months or 18 months to pay off. What ever. I use my rigs profits to reinvest which I am sure many others do as well. About the only way to counter the difficulty until recently and worst case if this folds I own some decent hardware for resale or for the next big thing or fork that needs hashing power. I also did not even get into this until mid June. I had owned 2x5990 since June of 2010 but did not know about it, looking back sucks as what could have been!!! Anyhow. I work IT as many of you all do. This is fun and I have an excuse to build a new server room, hide from the wife   and play with Linux all while making a $ or two. Don't think many like me are not out there. Of course if this thread is just intended to scare peeps from getting in good luck with that.

[ElectricMucus]

(40 nm /28 nm )^2 = 2.04081633

This is the theoretical maximal gain of the smaller feature size of the 7XXX series cards.

However the practical gain is much smaller for various reasons.

The first and simplest one is that the errors in the silicon do not decrease as much as the feature size so that the chip manufacturer has to cut smaller chips out the waver to reach the optimum yield. This factor is normally around the golden ratio for every feature size enhancement. So we would get the following factor:
2.04081633/phi = 1.26129386

Another factor is that with every generation the manpower required to design the chips increases so later chip generations make less effective use of the available transistors. This will more apparent in the future and it the major counter-effect of moores law. What it means before we would reach the cheapest possible physical transistor the people needed to design chips with them would exceed the mass of the earth.

[johnj]

I don't know if its true, but I've always heard that 80% of profits come from 20% of customers. Each 'miner' accounts for anywhere from 1-100's 'gamers'.  The mining community may be small people wise, but these people will fight over buying 20x of your highest end card.  The miners who know what their worth is as far as bitcoin goes will set the resale value which is also a huge asset to milk.  A higher resale value means more people will purchase it new because its a sounder investment.

[teflone]

Wrong...

Bitcoin has had a huge impact on availible AMD GPUs..

Plain and simple

ask any local major computer store.. 

[Brunic]

AMD got themselves a completely new market where they own the place at 100%. It was a pure accident, but it is the situation at the moment. If this business is managed correctly, they are probably studying this new market right now.

Sure, you're not going to see "Radeon 7000, only for mining" in store next week, but they are probably working on their marketing research right now. Well, I hope they have a good management. If they ignore this market, some competitors is going to see it and will try to get it.

If the network is at 13 000 000 MHash/s, and let's say that we take the Radeon 6770 sold at around 120$ for 200 MHash/s, you have a new market of around 7.8 millions dollars who just appeared from nowhere. And AMD probably owns 90% of this market right now, a market that appeared just 3 months ago. I really have a hard time that AMD is ignoring completely this market.

What if the 7000 series cards have a much better stream processor count?  Another thread mentioned them having *double* the stream processors. That's only a rumor, of course, but what if something like that happened? Does any of us know what the 7000 will bring? Isn't it prudent to wait until the details have been released, before sinking one's savings into 6990s?

We call that taking a risk, and that's usually what business owners does when they start a business. Either you take a risk, either you play safe. Waiting for the risk to become safe is also called "missing an opportunity".

[bcpokey]

AMD got themselves a completely new market where they own the place at 100%. It was a pure accident, but it is the situation at the moment. If this business is managed correctly, they are probably studying this new market right now.

Sure, you're not going to see "Radeon 7000, only for mining" in store next week, but they are probably working on their marketing research right now. Well, I hope they have a good management. If they ignore this market, some competitors is going to see it and will try to get it.

If the network is at 13 000 000 MHash/s, and let's say that we take the Radeon 6770 sold at around 120$ for 200 MHash/s, you have a new market of around 7.8 millions dollars who just appeared from nowhere. And AMD probably owns 90% of this market right now, a market that appeared just 3 months ago. I really have a hard time that AMD is ignoring completely this market.

I'll reply to you since you seem the most rational of this bunch, you're assuming that this market is both easily differentiable from the gaming market easily to GPU manufacturers, and and that the market is as expandable as the gaming market, both of which I do not believe are true.

The network is at 13,000,000 MHash/sec, for your numbers to be workable, that means you would need for the mining world to be willing to add another 13Mil MHash/sec at the same pricing point. Unlike gamers, who are happy to throw away their old cards in order to upgrade to newer shinier cards to run newer games, there is no similar incentive for the mining community. In fact, quite the opposite, increasing hash rate means a disincentive to invest further into the market (as people see their profits diminish from new purchases).

Not to mention there is absolutely no competition to AMD. There are only 2 GPU producers right now, because the barrier to entry into such a refined production structure is too high for anyone to reasonably enter right now. Certainly far far higher than $8million. Look at FPGAs/ASICs, why aren't they taking over? You can take already created chips, program them specifically to hash SHA2, with little to no onboard memory, and a power consumption that is almost nil, making them far superior to GPUs. But because the cost to develop such a platform would be in the tens of millions of dollars, it's not attractive enough to anyone to do it. What makes AMD, a company who makes literally billions of dollars off GPU sales more willing to take such a risk on such a paltry return then?

[Syke]

What if the 7000 series cards have a much better stream processor count?

Just like the 6990 has more stream processors than the 5970? Oh, wait, it doesn't.

Does any of us know what the 7000 will bring?

Nope. All we can do is analyze how previous generations progressed, and extrapolate from there. From the 5000 to 6000 brought about...no change in mining capability. It's highly unlikely the 7000 will be any different. AMD designed it long ago, long before Bitcoin was as big as it is now.

[johnj]

What if the 7000 series cards have a much better stream processor count?

Just like the 6990 has more stream processors than the 5970? Oh, wait, it doesn't.

Does any of us know what the 7000 will bring?

Nope. All we can do is analyze how previous generations progressed, and extrapolate from there. From the 5000 to 6000 brought about...no change in mining capability. It's highly unlikely the 7000 will be any different. AMD designed it long ago, long before Bitcoin was as big as it is now.

That's because both the 5x and the 6x are on 40nm thingamaboppers.  The 7x are gonna be on 28nm thingamaboppers.  The extra space can/is going to be used for stream processors.

[CanaryInTheMine]

Even if you're comparing your mining return to interest at a bank (which, admittedly, is quite low), it's still silly to buy cards that won't pay off for 9 or more months.

Besides the usual argument, "Bitcoin could be $3 in a few months!" which no one can really refute...

What if the 7000 series cards have a much better stream processor count?  Another thread mentioned them having *double* the stream processors. That's only a rumor, of course, but what if something like that happened? Does any of us know what the 7000 will bring? Isn't it prudent to wait until the details have been released, before sinking one's savings into 6990s?

Those who *didn't* buy cards with a long payout will be in a better position, because they can buy the 7000 series cards and keep up with the difficulty increases that will no doubt ensue.

Those already "invested" in $500 5970's and 6990s will have to watch their returns diminish, and won't have as much capital (or free slots) for 7000 series cards as everyone else.

So there are many things to consider when you go "all in" at this point.

When are you gonna stop discouraging people from mining and/or increasing theu hash rates by bringing online new cards?

Your posts are so predictable and very consistent!

[Brunic]

I'll reply to you since you seem the most rational of this bunch

Thanks!  

, you're assuming that this market is both easily differentiable from the gaming market easily to GPU manufacturers, and and that the market is as expandable as the gaming market, both of which I do not believe are true.

[...]

What makes AMD, a company who makes literally billions of dollars off GPU sales more willing to take such a risk on such a paltry return then?

You have great points, and I agree with almost everything you say. In this current situation, it doesn't make sense for AMD to invest in that type of market. Rationally, it's not something they should do as graduate from university.

The thing is, the current needs of mining are a perfect case of disruption in the chipset market. Everything is set for a low-profile maker to build a good chipset for hashing and take this market. For a multi-million business, it doesn't seems interesting, but it should be a priority to take that market. Right now, we have those FPGA boards, where if enough research is made, could take the place of those GPU. A serious business who could inject a couple thousand of dollars in research for those boards could bring a disruptive product in the Bitcoin mining market.

Yeah, the market isn't that big right now. But a few months ago, the market was inexistant. What mining is going to be next year? The more there is miners, the more the network is secured. And the easier it is to mine, the easier it is to put Bitcoin in the hands of more people. If you can develop an easy miner equipment for the average joe, who's happy to get a few cents of Bitcoin every week to spend online, you're going to see that BTC value jump higher than 30$.

AMD already have a considerable advantage in this market. I just hope they don't diss the Bitcoin market, like those telegrams businesses were laughing at the telephone when it was introduced or like Sony did when it dominated the video game market and completely ignored Nintendo with their Wii.

Anyway, I see this as a perfect opportunity for a chipset manufacturer to introduce itself in an emergeant market with a lot of needs. If AMD isn't able to seize the opportunity, it's too bad for them.