BurtW (OP)
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March 16, 2014, 01:03:56 PM Last edit: March 17, 2014, 12:54:11 PM by BurtW |
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This thread is just a quick attempt to project the minimum cost per BTC over the next year assuming the growth in the hash rate next year matches the growth in the hash rate over the last year. tl;dr: either the growth in the hash rate must slow down, the power consumption must go down, or the price of BTC must go up, a lot. Using the following conversion factors, constants and assumptions: GH/s per Diff 0.007158388055 Blocks/Period 2016 BTC/Period 50400 Watts per GH/s 1 (assumed constant for the next year - it may go down) USD/kWh $0.10
In other words assuming everyone in the network pays $0.10 per kWh and everyone has miners that burn 1 W per GH/s (1 J/GH) then we can calculate the average production cost for each BTC over the last year as follows: Hash Rate Power Energy Cost Cost Date Difficulty Delta Days GH/s kW kWh $/Period $/BTC --------- ------------- ------ ---- ---------- ------ --------- -------- ------ 14-Mar-13 4,847,647 34,701 35 24-Mar-13 6,695,826 38.13% 10 47,931 48 11,504 $1,150 $0.02 05-Apr-13 7,673,000 14.59% 12 54,926 55 15,819 $1,582 $0.03 17-Apr-13 8,974,296 16.96% 12 64,241 64 18,502 $1,850 $0.04 30-Apr-13 10,076,293 12.28% 13 72,130 72 22,505 $2,250 $0.04 12-May-13 11,187,257 11.03% 12 80,083 80 23,064 $2,306 $0.05 25-May-13 12,153,412 8.64% 13 86,999 87 27,144 $2,714 $0.05 05-Jun-13 15,605,633 28.41% 11 111,711 112 29,492 $2,949 $0.06 16-Jun-13 19,339,258 23.92% 11 138,438 138 36,548 $3,655 $0.07 29-Jun-13 21,335,329 10.32% 13 152,727 153 47,651 $4,765 $0.09 11-Jul-13 26,162,876 22.63% 12 187,284 187 53,938 $5,394 $0.11 22-Jul-13 31,256,961 19.47% 11 223,749 224 59,070 $5,907 $0.12 03-Aug-13 37,392,766 19.63% 12 267,672 268 77,090 $7,709 $0.15 13-Aug-13 50,810,339 35.88% 10 363,720 364 87,293 $8,729 $0.17 24-Aug-13 65,750,060 29.40% 11 470,664 471 124,255 $12,426 $0.25 04-Sep-13 86,933,018 32.22% 11 622,300 622 164,287 $16,429 $0.33 14-Sep-13 112,628,549 29.56% 10 806,239 806 193,497 $19,350 $0.38 25-Sep-13 148,819,200 32.13% 11 1,065,306 1,065 281,241 $28,124 $0.56 06-Oct-13 189,281,249 27.19% 11 1,354,949 1,355 357,706 $35,771 $0.71 16-Oct-13 267,731,249 41.45% 10 1,916,524 1,917 459,966 $45,997 $0.91 26-Oct-13 390,928,788 46.02% 10 2,798,420 2,798 671,621 $67,162 $1.33 05-Nov-13 510,929,738 30.70% 10 3,657,433 3,657 877,784 $87,778 $1.74 17-Nov-13 609,482,680 19.29% 12 4,362,914 4,363 1,256,519 $125,652 $2.49 29-Nov-13 707,408,283 16.07% 12 5,063,903 5,064 1,458,404 $145,840 $2.89 10-Dec-13 908,350,862 28.41% 11 6,502,328 6,502 1,716,615 $171,661 $3.41 21-Dec-13 1,180,923,195 30.01% 11 8,453,506 8,454 2,231,726 $223,173 $4.43 02-Jan-14 1,418,481,395 20.12% 12 10,154,040 10,154 2,924,364 $292,436 $5.80 13-Jan-14 1,789,546,951 26.16% 11 12,810,272 12,810 3,381,912 $338,191 $6.71 24-Jan-14 2,193,847,870 22.59% 11 15,704,414 15,704 4,145,965 $414,597 $8.23 05-Feb-14 2,621,404,453 19.49% 12 18,765,030 18,765 5,404,329 $540,433 $10.72 17-Feb-14 3,129,573,175 19.39% 12 22,402,699 22,403 6,451,977 $645,198 $12.80 28-Feb-14 3,815,723,799 21.92% 11 27,314,432 27,314 7,211,010 $721,101 $14.31 13-Mar-14 4,250,217,920 11.39% 13 30,424,709 30,425 9,492,509 $949,251 $18.83
Continued in next post...
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BurtW (OP)
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March 16, 2014, 01:04:15 PM Last edit: March 16, 2014, 01:22:34 PM by BurtW |
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Over the last year the average increase in the difficulty and hash rate was 23.92% per adjustment period and the average length of each adjustment period was 11.38 days. Assuming the network growth rate over the next year is the same as it was this last year we get: Hash Rate Power Energy Cost Cost Date Difficulty TH/s MW MWh $/Period $/BTC --------- ----------------- ---------- ------ --------- ------------ ---------- 24-Mar-14 5,266,766,872 37,702 38 10,293 $1,029,253 $20.42 04-Apr-14 6,526,449,656 46,719 47 12,754 $1,275,425 $25.31 16-Apr-14 8,087,417,983 57,893 58 15,805 $1,580,476 $31.36 27-Apr-14 10,021,732,041 71,739 72 19,585 $1,958,487 $38.86 08-May-14 12,418,687,065 88,898 89 24,269 $2,426,909 $48.15 20-May-14 15,388,935,546 110,160 110 30,074 $3,007,367 $59.67 31-May-14 19,069,595,359 136,508 137 37,267 $3,726,656 $73.94 12-Jun-14 23,630,579,651 169,157 169 46,180 $4,617,982 $91.63 23-Jun-14 29,282,440,667 209,615 210 57,225 $5,722,492 $113.54 04-Jul-14 36,286,089,639 259,750 260 70,912 $7,091,173 $140.70 16-Jul-14 44,964,841,429 321,876 322 87,872 $8,787,209 $174.35 27-Jul-14 55,719,339,970 398,861 399 108,889 $10,888,896 $216.05 07-Aug-14 69,046,053,494 494,258 494 134,933 $13,493,256 $267.72 19-Aug-14 85,560,193,384 612,473 612 167,205 $16,720,515 $331.76 30-Aug-14 106,024,114,653 758,962 759 207,197 $20,719,656 $411.10 11-Sep-14 131,382,509,124 940,487 940 256,753 $25,675,295 $509.43 22-Sep-14 162,806,015,974 1,165,429 1,165 318,162 $31,816,202 $631.27 03-Oct-14 201,745,262,850 1,444,171 1,444 394,259 $39,425,865 $782.26 15-Oct-14 249,997,832,322 1,789,581 1,790 488,556 $48,855,575 $969.36 26-Oct-14 309,791,245,073 2,217,606 2,218 605,406 $60,540,642 $1,201.20 06-Nov-14 383,885,790,658 2,748,003 2,748 750,205 $75,020,494 $1,488.50 18-Nov-14 475,701,952,889 3,405,259 3,405 929,636 $92,963,576 $1,844.52 29-Nov-14 589,478,312,272 4,219,715 4,220 1,151,982 $115,198,206 $2,285.68 11-Dec-14 730,467,214,878 5,228,968 5,229 1,427,508 $142,750,821 $2,832.36 22-Dec-14 905,177,240,458 6,479,610 6,480 1,768,934 $176,893,352 $3,509.79 02-Jan-15 1,121,673,663,040 8,029,375 8,029 2,192,019 $219,201,947 $4,349.24 14-Jan-15 1,389,950,774,416 9,949,807 9,950 2,716,297 $271,629,732 $5,389.48 25-Jan-15 1,722,393,258,358 12,329,559 12,330 3,365,970 $336,596,970 $6,678.51 05-Feb-15 2,134,347,914,361 15,278,491 15,278 4,171,028 $417,102,794 $8,275.85 17-Feb-15 2,644,832,123,808 18,932,735 18,933 5,168,637 $516,863,657 $10,255.23 28-Feb-15 3,277,411,764,061 23,460,985 23,461 6,404,849 $640,484,897 $12,708.03 12-Mar-15 4,061,289,098,283 29,072,283 29,072 7,936,733 $793,673,336 $15,747.49
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chriswilmer
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March 16, 2014, 04:44:00 PM |
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Cool!
OK, so, assuming efficiency doubles... we can halve the cost of bitcoins produced in our heads pretty easily...
Just to be crystal clear, you are assuming 25 btc per block with no transaction fees right?
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chriswilmer
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March 16, 2014, 04:46:15 PM |
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Also, it's interesting to keep in mind that these are variable costs... and that the capital costs are quite significant.
It would be interesting to do a calculation that lumped amortized capital costs in together with the variable costs to get a better sense of much bitcoins costs to produce in practical terms. (clearly this would be much more subjective... but as long as the parameters were easy for people to play with...)
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BurtW (OP)
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March 16, 2014, 08:02:07 PM |
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Cool!
OK, so, assuming efficiency doubles... we can halve the cost of bitcoins produced in our heads pretty easily...
Just to be crystal clear, you are assuming 25 btc per block with no transaction fees right?
But, these numbers already assume the current best case efficiency and assume that the entire network is only burning 1J/GH. This is not the case. The network currently burns a lot more than that because not everyone has the most efficient, up to date, latest and greatest miners. See Greg's thread here: https://bitcointalk.org/index.php?topic=281279.0 which shows that the most efficient miners on the market are at about 0.8 J/GH plus overhead which is why I used 1 J/GH as a best case estimate. Yes, in the assumptions I show 50,400 BTC per adjustment period. Each adjustment period is exacly 2,016 blocks so these numbers assume 50,400 / 2,016 = 25 BTC per block. I do not take fees into consideration because they are small compared to the block reward and I am trying to calculate the USD and energy cost of producing new BTC.
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BurtW (OP)
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March 16, 2014, 08:14:21 PM |
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http://en.wikipedia.org/wiki/Electricity_generationShows the 2008 worldwide power generation at 2,311.4 GW (20,261 TWh of energy). If the current growth rate continues then one year from now the entire Bitcoin network will consume a minimum of 29,072 MW or 29.072 / 2,311.4 = 1.26% of all electrical power generated on the planet and it will cost a minimum of $15,747 to produce each new BTC. Hash Rate Power Energy Cost Cost Date Difficulty TH/s MW MWh $/Period $/BTC --------- ----------------- ---------- ------ --------- ------------ ---------- 12-Mar-15 4,061,289,098,283 29,072,283 29,072 7,936,733 $793,673,336 $15,747.49
So... I am betting on a leveling off of the growth rate this year.
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chriswilmer
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March 16, 2014, 08:15:36 PM |
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I follow ASICMINER pretty closely and they are coming out with 0.35 J/GH miners imminently. *shrugs* That's not confirmed until someone has a working miner in front of them... but I wouldn't confidently exclude the possibility. I think we will probably see 0.1 J/GH sometime in 2015.
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BurtW (OP)
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March 16, 2014, 08:25:05 PM |
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I follow ASICMINER pretty closely and they are coming out with 0.35 J/GH miners imminently. *shrugs* That's not confirmed until someone has a working miner in front of them... but I wouldn't confidently exclude the possibility. I think we will probably see 0.1 J/GH sometime in 2015.
Sure, if either of those things happen then the numbers will adjust accordingly. However, I have to wonder why the 0.35 J/GH specification has not been included in Greg's thread. Perhaps he has stopped updating it? If you have a link to an actual spec and you can post it in that thread then maybe we can get him to update the OP in that thread.
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pdawg
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March 16, 2014, 08:26:57 PM |
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This is why the next 12-24 months will be very, very interesting for BTC. I do think we are already seeing a leveling off to a certain degree of hash power, probably somewhat related to the recent price drop which affects for-profit farms (i.e., powering down if price is below a certain threshold). But the very large farms are getting equipment and electricity for very cheap so that scenario does not apply to them unless there is a severe price crash (which I don't see happening due to the broad adoption phase we are currently in). I can't help but believe that BTC value will sky rocket due to the raw cost to mine and the lack of new supply being introduced into the marketplace.
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chriswilmer
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March 16, 2014, 08:28:41 PM |
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I follow ASICMINER pretty closely and they are coming out with 0.35 J/GH miners imminently. *shrugs* That's not confirmed until someone has a working miner in front of them... but I wouldn't confidently exclude the possibility. I think we will probably see 0.1 J/GH sometime in 2015.
Sure, if either of those things happen then the numbers will adjust accordingly. However, I have to wonder why the 0.35 J/GH specification has not been included in Greg's thread. Perhaps he has stopped updating it? If you have a link to an actual spec and you can post it in that thread then maybe we can get him to update the OP in that thread. Here are the chip specs: https://bitcointalk.org/index.php?topic=438359.0
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BorisAlt
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March 17, 2014, 03:46:37 AM |
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Burt, could you re-compute please for 0.35w/h case?
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chriswilmer
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March 17, 2014, 04:15:22 AM |
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Burt, could you re-compute please for 0.35w/h case?
I think you can just multiply all of the numbers on the right by 0.35
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mwizard
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March 17, 2014, 04:21:59 AM Last edit: March 17, 2014, 04:44:55 AM by mwizard |
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I find the initial assumption of this thread that there would be a continuing 23.92% difficulty increase completely unrealistic.
I have 2 reasons.
1) There are no obvious technical reasons to expect large hash rate improvements in the next year.
This time last year the first ASIC systems where shipping and it was obvious to everyone that difficulty would zoom up. People were still using GPUs with a hash rate of one megahash or so. The entire world hashing rate in March last year was just 35 terrahash.
The mining hardware world is now much more stable with no major technological advances expected. The only expected change are a movement to 20nm with some Joule/Gigahash improvements (as mentioned earlier in this thread).
2) The size of the hashing network is now so large it is difficulty to grow by such large amounts. Right now a 23.92% increase would require adding a petahash (1,000 terrahash) each day and even more in the future. It is just not happening. The sheer size of the current hashing network makes further growth more difficult.
It would be a much more realistic to assume an average 15% increase till mid 2014 giving a hashing network size of about 120 petahash by June 2014, 10% average till the end of the year giving 300 petahash, and 5% during 2015 giving 500 petahash at some time during 2015. This still means enormous network growth with 20+ petahash being added per fortnight during 2015.
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seriouscoin
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March 17, 2014, 08:19:38 AM |
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Wow for a hero member, with activity over 1000 make a complete joke trial at projecting cost of BTC......unreal....
I cant stop laughing.... I will let someone explain to you a thing or two about production cost....
Hint: just taking assumed electrical cost of the mining network is NOT how you calculate the production cost of BTC.
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BorisAlt
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March 17, 2014, 10:51:55 AM |
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Wow for a hero member, with activity over 1000 make a complete joke trial at projecting cost of BTC......unreal....
I cant stop laughing.... I will let someone explain to you a thing or two about production cost....
Hint: just taking assumed electrical cost of the mining network is NOT how you calculate the production cost of BTC.
How do you calculate? Why will you let someone else to explain if you know?
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BurtW (OP)
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March 17, 2014, 12:50:51 PM |
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I am glad you got a good laugh at me and gmaxwell since his thread does exactly the same thing from a different angle. Obviously I was not trying to calculate the actual production cost. You seem to have missed the entire point of the thread.
Since you missed it others might also so I have changed the title and OP.
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Bicknellski
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April 10, 2014, 07:56:09 AM |
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Any planned updates to the thread BurtW?
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samsonn25
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April 10, 2014, 03:01:38 PM |
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What I do know is the difficulty is 1000x what it was last spring and the btc price is 5x higher.
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BurtW (OP)
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April 10, 2014, 06:35:09 PM |
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There really is nothing new to report. The difficulty continues to climb at about the same rate and the price continues to go down. This wil not last. One of these things MUST give. Either the price needs to go up or the difficulty must stop going up. Eventually.
I will redo the calculations in a month or two.
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cloverme
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April 10, 2014, 11:18:39 PM |
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There really is nothing new to report. The difficulty continues to climb at about the same rate and the price continues to go down. This wil not last. One of these things MUST give. Either the price needs to go up or the difficulty must stop going up. Eventually.
I will redo the calculations in a month or two.
The other issue is that all bitcoins are equal, btc mined at a lower energy cost are worth as much as those generated at a higher energy cost relative to difficulty. Eventually, like you correctly predict, the market will not be able to sustain the two factors going in the opposite direction. I think the balance will occur when the supply of BTC goes down as difficulty rises or BTC will crash in price and large hashing farms stop mining because it won't be profitable. As a result, the hashrate would drop and difficulty with it. I think we are going to see mining have some sort of a correction this summer unless price goes up by 40%.
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