Is mining gear efficiency a strong reason for difficulty increment?

[Epochjump]

The cold hard truth is that in "mining"  just like every other business on the planet now, It's "go big or go home'. The Commercial mines are in a race to the bottom. You have to run way more gear to achieve less margin. Just like Amazon et al. Large Corporations are gobbling up all the profit throughout almost every business on earth. So, cheap power and the most efficient gear possible will be the ONLY thing left. All others will die along the way. Keep in mind that even commercial miners that do not manage their business costs well, are susceptible to extinction. This process will not be a straight line. Factor in the fluctuations in difficulty as it ebbs and flows and there's no way to know how long this process will take, but rest assured it is real and it is happening. I started 3 years ago with 2 L3+ and have worked feverishly to expand knowing this trend is firmly in place. I'm now at 20 PH and expanding as fast as I can. There is no middle ground. It's go big ( and cheap ) or go home. I hate that it's this way but I'm already committed.

Lastly, as a commercial miner I do NOT believe running S9's just because they are cheap and have short pay offs is a good strategy. I am 75-80% certain that these units will be obsolete post Halving. Think L3+. Hard to believe I know but for all intents and purposes, if you want to be a miner, you need the lowest power, lowest floor costs, best gear and lots of it. IMHO.

[philipma1957]

Low power =  biggest key most of the time.
low setup/building/floor cost = somewhat important

best efficient gear vs best priced gear vs best durable gear is the complicated part.

If bitmain called me on the phone and said they would send me 1000 s17 pros I would take them over any other shipment of gear offered to me.  But  they are not doing that. And at 3000 they are not worth buying to me.  My power deal of 50-50 coin spilt means   I get 26.5 th of each 53th unit.

so 26.5 x 0.00001920 = 0.0005088 x 8200 = $4.17   a day or 3000/4.17 =  720 days  far too long to break even.

Bitmain sold s17 pros under 2000 back in april of 2019   which means they made money at 1600 a unit.
I suspect they can sell them as low as 1200 and turn a good profit.  So buying the most efficient gear  at a really high price does not work well.

Of course Being in the USA  adds in the import tax issues  27.6% is really big   but that is another angle.

[Epochjump]

Yes, I was fortunate to acquire S17's 56 th and T17's 38 th in decent volume before the price runnup. I'm with you. I'm waiting now. No way I pay these prices. It'll come down. I can wait. I'm willing to buy gear at a 12 month payback window at today's metrics but i won't go beyond that. Truth be told, I got my S17's way cheaper. I've been tempted several times to sell them at 2 and 3 x what I paid for them. but alas, I am a miner. Not a "re-seller".

[wndsnb]

This article has a bunch of interesting information.

https://semiengineering.com/5nm-vs-3nm/

They give a design cost range for 7nm ASICs to be from $120 million to $420 million. Their cost to actually manufacture the miners is probably pretty small, paying off that design investment is probably the biggest factor.

Estimates from Samsung and TSMC about efficiency improvements with the upcoming 5nm node are 20% to 30% while design cost will be a lot higher.  They are saying there will be a bigger efficiency jump for 3nm, 50% better than 5nm, but that won't hit the market until 2021, and design price will be huge, $500 million to $1.5 billion.

I think BTC price is going to have to jump up a lot to justify a billion-dollar investment in a single miner. Good news for us miners... makes it a little easier to justify buying some 7nm miners.

[Epochjump]

Good stuff. Thanks for sharing. Appreciate it.

[philipma1957]

This article has a bunch of interesting information.

https://semiengineering.com/5nm-vs-3nm/

They give a design cost range for 7nm ASICs to be from $120 million to $420 million. Their cost to actually manufacture the miners is probably pretty small, paying off that design investment is probably the biggest factor.

Estimates from Samsung and TSMC about efficiency improvements with the upcoming 5nm node are 20% to 30% while design cost will be a lot higher.  They are saying there will be a bigger efficiency jump for 3nm, 50% better than 5nm, but that won't hit the market until 2021, and design price will be huge, $500 million to $1.5 billion.

I think BTC price is going to have to jump up a lot to justify a billion-dollar investment in a single miner. Good news for us miners... makes it a little easier to justify buying some 7nm miners.

Well if you leapfrog over the 5 and on to the 3nm   lets do some math.

s17+ = 40watts a th 7nm   x 70% =  28 watts a th  x 50% = 14 watts a th  for 3nm gear

cost of double up grade is say 400 million + 1.5 billion = 2 billion  for sake of argument. Lets think 2022   not 2021   what do we have  in 2022  2 years before the 6.125 to 3.0625 ½ ing    so  365 x 2 x 144 = 105,120 x 6.125 = 643,860 reward coins.

from 2022 to 2024  that the 3nm can grab   lets pretend they figure good fees out.  Say 0.875 coins  are fees  this means 735,840 coins

so if a coin is 10,000 we have  6.438 billion to 7.358 billion worth of coins  that  does not justify building the gear. So the question is what happens does tech pressure drive coins up to  30,000 or so   that makes 19 to 22 billion of coins up for grabs.

I like the  info  since efficiency could drop from 40 to 14 watts a th.

 So the s21  could use 3000 watts and mine 210th that  would be a nice piece of gear.