Genesis-mining.com || World's leading hashpower provider!

[thevictimofuktyranny]

QED. Difficulty will not double this year, but stay under 50 billion difficulty range    

I agree. I don't think difficulty will rise a lot anymore..

It is a clever piece of macro economics included in Bitcoins and other crypto currencies, to increase difficulty you have to increase capital expenditures up front. This is very cheap at the beginning of the process of establishing a crypto currency, but it becomes ever more expensive as doubling of difficulty occurs. Therefore, people can accurately forecast the future difficulty on the basis of price expectations.

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[thevictimofuktyranny]

I just bought an extra 150ghs at Genesis Manufacturing using CRYPTO MINING BLOG (5% off).

I know it is a long 11 month ROI

But, everyone should be thinking of helping to support the remaining efficient manufacturers with token purchases in 2015

[BankToTheFuture]

Well when Asics came out in Jan 2013 the diff was 3 million, then Jan 2014 was 1.2 billion, last month 40 billion.

You are dreaming if you think the diff will be anything under 47 billion by end of this year.  If btc price doesnt go up, alot of people are fup

If you have a better way to forecast than through past events you are welcome, but the curve seems to be going up.

They invented cloud mining because they cannot make any profit selling hardware that becomes obsolete within 90 days,

Do the maths dude

Doubling the current difficult would require the additional usage of 26,9565 Bitman S5 ($413 plus PSU plus extras $600) units or their equivalent alternatives.

This would require $161,739,130 this year up front, plus not a single old unit must be decommissioned, however at 44 billion difficulty most of the old 1.2 watt units had to shut off

Therefore, if difficulty doubled, most 1 watt units would have to be shut down and therefore another $161 million would be needed to replace them as well; net $322 million up front costs

Current Bitcoin price $225 makes this level of new investment impossible, because the profits per Bitcoin are insufficient to fund such investments.

Annual production of BTC this year value at current prices (3600 times $225 times 365 days) $295,650,000.

Most Bitcoins are never available to buy, under 30% reach the open Fiat Currency exchanges, which will be under $88,695,000 to fund hardware, labor and electricity costs. Nowhere, near close enough to fund the doubling of network hashpower.

QED. Difficulty will not double this year, but stay under 50 billion difficulty range    

Very useful analysis. Thank you. It also seems that the hardware manufacturers just don't have the same incentive to innovate and invest in creating ever more powerful ASIC right now.

[TXTCLA55]

Well when Asics came out in Jan 2013 the diff was 3 million, then Jan 2014 was 1.2 billion, last month 40 billion.

You are dreaming if you think the diff will be anything under 47 billion by end of this year.  If btc price doesnt go up, alot of people are fup

If you have a better way to forecast than through past events you are welcome, but the curve seems to be going up.

They invented cloud mining because they cannot make any profit selling hardware that becomes obsolete within 90 days,

Do the maths dude

Doubling the current difficult would require the additional usage of 26,9565 Bitman S5 ($413 plus PSU plus extras $600) units or their equivalent alternatives.

This would require $161,739,130 this year up front, plus not a single old unit must be decommissioned, however at 44 billion difficulty most of the old 1.2 watt units had to shut off

Therefore, if difficulty doubled, most 1 watt units would have to be shut down and therefore another $161 million would be needed to replace them as well; net $322 million up front costs

Current Bitcoin price $225 makes this level of new investment impossible, because the profits per Bitcoin are insufficient to fund such investments.

Annual production of BTC this year value at current prices (3600 times $225 times 365 days) $295,650,000.

Most Bitcoins are never available to buy, under 30% reach the open Fiat Currency exchanges, which will be under $88,695,000 to fund hardware, labor and electricity costs. Nowhere, near close enough to fund the doubling of network hashpower.

QED. Difficulty will not double this year, but stay under 50 billion difficulty range    

Pardon my stupid...but are you telling me that buying more hash now is a good thing or a bad thing? I want to believe that its a good time as if the difficulty isn't going higher than current equipments hash power that means theres a slight chance to make ROI.

[thevictimofuktyranny]

Well when Asics came out in Jan 2013 the diff was 3 million, then Jan 2014 was 1.2 billion, last month 40 billion.

You are dreaming if you think the diff will be anything under 47 billion by end of this year.  If btc price doesnt go up, alot of people are fup

If you have a better way to forecast than through past events you are welcome, but the curve seems to be going up.

They invented cloud mining because they cannot make any profit selling hardware that becomes obsolete within 90 days,

Do the maths dude

Doubling the current difficult would require the additional usage of 26,9565 Bitman S5 ($413 plus PSU plus extras $600) units or their equivalent alternatives.

This would require $161,739,130 this year up front, plus not a single old unit must be decommissioned, however at 44 billion difficulty most of the old 1.2 watt units had to shut off

Therefore, if difficulty doubled, most 1 watt units would have to be shut down and therefore another $161 million would be needed to replace them as well; net $322 million up front costs

Current Bitcoin price $225 makes this level of new investment impossible, because the profits per Bitcoin are insufficient to fund such investments.

Annual production of BTC this year value at current prices (3600 times $225 times 365 days) $295,650,000.

Most Bitcoins are never available to buy, under 30% reach the open Fiat Currency exchanges, which will be under $88,695,000 to fund hardware, labor and electricity costs. Nowhere, near close enough to fund the doubling of network hashpower.

QED. Difficulty will not double this year, but stay under 50 billion difficulty range    

Pardon my stupid...but are you telling me that buying more hash now is a good thing or a bad thing? I want to believe that its a good time as if the difficulty isn't going higher than current equipments hash power that means theres a slight chance to make ROI.

Yes, it should work out to be a good thing

[Mike18feb]

Well, it depends on personal insight. For those looking for unbelievable good ROI in no time (I mean those still living in 2013) I wouldn't say it's a good investment. But there's ponzi like companies out there for those willing to take the risk for quick profit.

Long term I'd say it's a good thing. Bitcoin is far from being dead, there's more possibilities every day, and the difficulty growth is slowing. Hardware manufacturers should be careful about what they do as history has proven that mindlessly adding massive amounts of power can be disastrous for both difficulty and coin value and leads to dropping sales. Which means the arms race will probably move towards efficiency. Building 250W 0.8THs miners instead of 1200W 2.5THs versions. I'm sure they will sell more of those efficient machines then of the biggies, so the investment for the manufacturer is a lot less risky. There is a market for big ass miners, but the number of customers capable of buying, running and maintaining those is a lot smaller. If only one or two of those big customers don't buy a load then the impact on sales is quite big already.

So, I'm with Marco Streng when he said you better be mining already for when Bitcoin goes up, because the demand for hashrate at such times will spike. If you have to buy in at that point it will be costly. So, long term thinking, I keep expanding my hashrate slowly. Yes, the value of the mined coins may be less, despite adding hashrate, but hey, that's short term thinking again.
Let's see where this leads to 6 months from now, or 12 months, or 24. Might end up at the bottom, but that's where I came from originally, so can't get worse. Lots to gain, nothing to lose

Oh, to those mining UNO (yes, me included), buckle up

[galdur]

It´s easy to say that everything will be fine later when bitcoin heads for the moon but the reality here on the ground is that BTC has been and still is constantly on the verge of a collapse. There is chronic microscopic volume and no buyer interest. Of course those with rosy price expectations never explain what will cause those negative factors to disappear nor when that´s supposed to happen.

[thevictimofuktyranny]

Well, it depends on personal insight. For those looking for unbelievable good ROI in no time (I mean those still living in 2013) I wouldn't say it's a good investment. But there's ponzi like companies out there for those willing to take the risk for quick profit.

Long term I'd say it's a good thing. Bitcoin is far from being dead, there's more possibilities every day, and the difficulty growth is slowing. Hardware manufacturers should be careful about what they do as history has proven that mindlessly adding massive amounts of power can be disastrous for both difficulty and coin value and leads to dropping sales. Which means the arms race will probably move towards efficiency. Building 250W 0.8THs miners instead of 1200W 2.5THs versions. I'm sure they will sell more of those efficient machines then of the biggies, so the investment for the manufacturer is a lot less risky. There is a market for big ass miners, but the number of customers capable of buying, running and maintaining those is a lot smaller. If only one or two of those big customers don't buy a load then the impact on sales is quite big already.

So, I'm with Marco Streng when he said you better be mining already for when Bitcoin goes up, because the demand for hashrate at such times will spike. If you have to buy in at that point it will be costly. So, long term thinking, I keep expanding my hashrate slowly. Yes, the value of the mined coins may be less, despite adding hashrate, but hey, that's short term thinking again.
Let's see where this leads to 6 months from now, or 12 months, or 24. Might end up at the bottom, but that's where I came from originally, so can't get worse. Lots to gain, nothing to lose

Oh, to those mining UNO (yes, me included), buckle up

Very good insights

Lower profitability from mining was inevitable, because whenever excessive profits occur, they seldom exist forever

In this case, excessive profit lastest for 14 months, before those 14 months there was 46 months of low profits mining Bitcoins.

Bitcoin supports 99% of SHA256 miners, it is an Economic Coin, when SHA256 miners choose to save/reserve their mined Bitcoin the price will skyrocket  

Litecoin supports 95% of Scrypt miners, it is an Economic Coin, when Scrypt miners choose to save/reserve their mined Litecoins the price will skyrocket  

Darkcoins support 60% of GPU miners, it is an Economic Coin, when GPU miners choose to save/reserve their mined Darkcoins the price will skyrocket  

Therefore, the reality of the situation that we are all trying to accurately explain is the relationships between Fiat Currency and our new sector of crypto currencies when a a major crypto currency transitions from being an hobbyist item (toy) into something that is useful to the masses. An Economic Coin is supported by more then 50% of miners on that algorithm indexed to mining equipment, essentially it is an economic democracy were miners have concluded the safest location for their investments and profits are in a particular currency utilizing a particular type of hardware or and algorithm. THIS IS WHAT NON-MINER INVESTORS WANT TO KNOW AND WHETHER THIS CRYPTO CURRENCY IS UNDERVALUED OR OVERVALUED.

More then one Economic Coin is needed, to prevent overvaluations causing losses to newbie investors, ultimately crypto currencies will need 6-12 POW crypto currencies to eliminate losses for Newbie investors

Developing answers to these types of questions is essentially to the progression of crypto currency sector:

How should the macro economic equations be written?

What is an acceptable long term profit margin from mining?

How should the network difficulty be used to affect the price of mined coins?

For Bitcoin and Litecoin and Darkcoin; they are at beginning of their economic existence

 


  

[samsonn25]

Isnt it much easier and cheaper  to just buy btc outright if people want to speculate  on the price rising.  Although  not as fun as mining or pretending  to be a miner by Buying hashrate On a cloud.

[thevictimofuktyranny]

Isnt it much easier and cheaper  to just buy btc outright if people want to speculate  on the price rising.  Although  not as fun as mining or pretending  to be a miner by Buying hashrate On a cloud.

Yeah, but last year miners had a largish profits and 3-5 month ROI.

Clearly, that will be habit forming

But, I'm coming round to the view: buy the crypto currency (checking it is not overvalued), stick in offline wallet, forget about for 1 year (do more interesting things with my time) and check it's apreciation in 1 years time

[julian071]

Today, Genesis-mining canceled my Scrypt contract (I did not opt to convert) as per the terms of the contract. However, they did give me the free GH they offered earlier anyway. A sincere 'thank you very much Genesis' from me for that.

Also, a nice long interview with 'our' CEO Marco Streng on Youtube:

https://www.youtube.com/watch?v=8ROQZZhjY1c

[IanFoxley]

Today, Genesis-mining canceled my Scrypt contract (I did not opt to convert) as per the terms of the contract. However, they did give me the free GH they offered earlier anyway. A sincere 'thank you very much Genesis' from me for that.

Also, a nice long interview with 'our' CEO Marco Streng on Youtube:

https://www.youtube.com/watch?v=8ROQZZhjY1c

Thanks for posting that Julian.

Ian

[thevictimofuktyranny]

If's official, it would cost $5 million to develop a 16nm ASIC Chip for SHA256 algorithm

From Marco Streng interview (CEO of Genesis Mining):

https://www.youtube.com/watch?v=8ROQZZhjY1c

Yearly, coin production value at $225 is $295,650,000

Using this formula, 10% is R&D ($5 million for 16nm), ratio of 10 to 1 on R&D versus Profit, total manufacturing profits must be $50 million. If, profit margin on selling units is 10%, then net sales will need to be $500 million.

Modifying the formula for lower profits:

Using this formula, 10% is R&D ($5 million for 16nm), ratio of 1 to 1 on R&D versus Profit, total manufacturing profits must be $10 million. If, profit margin on selling units is 10%, then net sales will need to be $100 million.

Essentially, it is highly unlikely you will see a 16nm SHA256 mining ASIC CHIP on BITCOIN this year, because no manufacturer would expect to generate 34% net sales out of net coin values when BTC price is stably frozen  

For Litecoin, coin production value at $1.80 is $18,921,600

Using this formula, 10% is R&D ($5 million for 16nm), ratio of 10 to 1 on R&D versus Profit, total manufacturing profits must be $50 million. If, profit margin on selling units is 10%, then net sales will need to be $500 million.

Modifying the formula for lower profits:

Using this formula, 10% is R&D ($5 million for 16nm), ratio of 1 to 1 on R&D versus Profit, total manufacturing profits must be $10 million. If, profit margin on selling units is 10%, then net sales will need to be $100 million.

Essentially, you are definitely not going to see a 16nm Scrypt mining ASIC on Litecoin at $1.80  

[Zeta0S]

Today, Genesis-mining canceled my Scrypt contract (I did not opt to convert) as per the terms of the contract. However, they did give me the free GH they offered earlier anyway. A sincere 'thank you very much Genesis' from me for that.

Also, a nice long interview with 'our' CEO Marco Streng on Youtube:

https://www.youtube.com/watch?v=8ROQZZhjY1c

Thanks for this post!

[arallmuus]

Isnt it much easier and cheaper  to just buy btc outright if people want to speculate  on the price rising.  Although  not as fun as mining or pretending  to be a miner by Buying hashrate On a cloud.

Yeah, but last year miners had a largish profits and 3-5 month ROI.

Clearly, that will be habit forming

But, I'm coming round to the view: buy the crypto currency (checking it is not overvalued), stick in offline wallet, forget about for 1 year (do more interesting things with my time) and check it's apreciation in 1 years time

either way early bird gets the worm
those who get in faster sure to be profitting anyway, the same words apply to those of early adopter

[Zeta0S]

Well when Asics came out in Jan 2013 the diff was 3 million, then Jan 2014 was 1.2 billion, last month 40 billion.

You are dreaming if you think the diff will be anything under 47 billion by end of this year.  If btc price doesnt go up, alot of people are fup

If you have a better way to forecast than through past events you are welcome, but the curve seems to be going up.

They invented cloud mining because they cannot make any profit selling hardware that becomes obsolete within 90 days,

Do the maths dude

Doubling the current difficult would require the additional usage of 26,9565 Bitman S5 ($413 plus PSU plus extras $600) units or their equivalent alternatives.

This would require $161,739,130 this year up front, plus not a single old unit must be decommissioned, however at 44 billion difficulty most of the old 1.2 watt units had to shut off

Therefore, if difficulty doubled, most 1 watt units would have to be shut down and therefore another $161 million would be needed to replace them as well; net $322 million up front costs

Current Bitcoin price $225 makes this level of new investment impossible, because the profits per Bitcoin are insufficient to fund such investments.

Annual production of BTC this year value at current prices (3600 times $225 times 365 days) $295,650,000.

Most Bitcoins are never available to buy, under 30% reach the open Fiat Currency exchanges, which will be under $88,695,000 to fund hardware, labor and electricity costs. Nowhere, near close enough to fund the doubling of network hashpower.

QED. Difficulty will not double this year, but stay under 50 billion difficulty range    

I read this for the second time, and its truly possible. However my feeling says we go up to 250 billion this year.

[thevictimofuktyranny]

Did some comparison calculations posted on another thread, it may answer your question on difficulty for BTC

If you bought a Bitman S5 today as a newbie miner.

S5 is $413
PSU is $110
Raspberry Pi $56
Postage $23

Location USA, 10 cent per a watt.
Average difficulty 12 months 47 billion
BTC average price $225 over 12 months.

ROI is 14.28 months. Block Halving is in 18 months

Older miners, may have an existing PSU (11.28 months) or existing PC/Raspbery Pi (12.85 months) or both (10.28 months).

Cloudming ROI should be calculated on BTC average price of $225 and an average difficulty under between 41,44,47 and 50 (average is 47) billion before making the investment for 2015

These are highly speculative estimates about difficulty and watt range of equpment and quanitity of PHs at each switch off point:

1.2watts per 1GHs 50PTHs is swtiched off, but still setup to be switiched on if BTC price rises.
1.2 watts per 1GHs 60PTHs is in locations were electricity is 9 cent per watt and switches off when difficulty passes 44 billion.

1watt per 1ghs will be switched off at a difficulty of 47.1 billion onwards. This is speculation, but about 160PTHs of network hashpower is here.

0.7watt per 1ghs will be switched off at difficulty of 67.3 billions onwards. This stuff is quite new and there is about 80GHs of it on the network.
 
So, there are significant obstacles in place to halt rises in network difficulty in 2015 compared to the doubling of difficulty seen in the last 5 months of 2014

[samsonn25]

I think it is safe to say that most users (90-95% at least) in the US pay more than .10 for electricity, more like .14-.18

And until there is a pattern (3 months or more) of month to month decrease in Diff rate, we can only assume from the previous pattern that it will increase every month

With these theories there is NO Asic machine that will ever ROI if btc price stats current.

even the best asic Antminer s5 would only mine lifetime .32 btc. ($70 usd)   (electricity on low end .14 and diff on low jumps 3%)

at higher end .18 electricity and 4% diff jumps it would mine .028 btc.  ($6 usd)

[galdur]

Estimated Next Difficulty:   48,184,649,295 (+8.39%)
Adjust time:   After 1663 Blocks, About 11.1 days

[thevictimofuktyranny]

Estimated Next Difficulty:   48,184,649,295 (+8.39%)
Adjust time:   After 1663 Blocks, About 11.1 days

https://bitcoinwisdom.com/bitcoin/difficulty

That's going to hurt Bitman S5 sales in the USA at 10 cent

345.53 days ROI basic unit with postage (14 cent is  626.96 days)

475.51 days ROI PSU and Raspberry Pi included (14 cent is  862.79 days).

Not even in China at 8 cent does it look attractive

282.20 days ROI basic unit with postage

388.35 days ROI PSU and Raspberry Pi included.

A few people get free electricity, so some sales there

AMhash1 Dividends at Havelock will be reduced to approximately 4.6mbtc afterwards (BTC price $225), will need to watch how much network hashpower switches off afterwards