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Author Topic: We're 30,300 blocks from the reward drop!  (Read 6612 times)
Garr255
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March 05, 2012, 06:00:00 AM
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I am starting to wonder whether GPU miners will keep going at it or not. Then the market will be flooded with 5xxx and 6xxx series GPUs driving the prices way down. In the future there will be those with free electricity, and those with FPGAs.
What are your opinions?

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LEALANA Monero Physical Silver Coins


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March 05, 2012, 06:18:37 AM
 #2

It will get cheaper to mine at higher hash rates as time goes on. this produces better security for the entire network. Rewards halving will likely have a "bubble" price associated with it prior to the halving because of anticipation of the change in block rewards from 50 to 25.

The more people use it and the more merchants accept it, the more valuable they will become.

Currently there are only about 290k bitcoins up for sale on Mt. Gox for a total market value of something like 3 million USD.

If we added another 1 million users as has been mentioned as a goal in the november bitcoin conference, then if each of those users bought 10 bitcoins that would be the entire supply of bitcoins at that point (December 9th or so of 2012).

I still see prices going higher especially with the Fed and other central banks printing paper currency at an astounding rate of trillions upon trillions.

If even 1% of that money goes into bitcoin prices would rice substantially.

Just my $0.02.

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Garr255
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What's a GPU?


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March 05, 2012, 06:38:44 AM
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Thanks, you just made the value of the USD go up. Wink

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Affordable Physical Bitcoins - Denarium.com


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March 05, 2012, 02:57:19 PM
 #4

I think that it's more the FPGA -part that's the doom of GPU miners, not the block reward drop. It will take time for FPGA's to become more common, I'd expect 1-2 years before it gets next to impossible to profit if you are a GPU miner and pay for electricity. GPU miners with fixed electricity cost or those that mine with a PC they use anyway, might still find it profitable for a long time to come, possibly for a very long time.

The reason I emphasize this is that the reward drop will very likely cause a price increase in itself. It halves the inflation rate of bitcoins which will undoubtedly increase the market's appreciation of bitcoins. What will happen is that the price will start adjusting upwards a month or two before the event and it will not cause any increase in hash power because at the same time the miners are expecting the block reward to halve.

The end result is that for these 1-2 months the profitability of mining will be very high because the price rises and difficulty doesn't and then when it halves it drops to relatively normal levels again. This is my prediction, we'll see what actually happens.

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March 05, 2012, 05:00:44 PM
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Current Block: 169672
Last Block with 50 BTC reward: 209998 https://blockexplorer.com/q/bcperblock/209998
First Block with 25 BTC reward: 209999 https://blockexplorer.com/q/bcperblock/209999

209999-169672=40327 blocks to reward halving.
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Gerald Davis


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March 05, 2012, 05:08:45 PM
 #6

In the future there will be those with free electricity, and those with FPGAs.
What are your opinions?

Really that black or white? Only those w/ free electricity or FPGAs. 

Marginal miners will be squeezed out and difficulty will fall.  All that matters is revenue per GH/s.

Bitcoinx makes nice charts (I just wish they were based one 1 GH/s).



Today a miner makes about $3.20 daily per GH/s.  If the block reward drop was today and price didn't rise AND difficulty didn't fall the same miner wold be making $1.60 per GH/s.  My rigs cost about ~$0.90 daily in electricity per GH/s.  So I would still be operating.

However lets look at the peak in this chart. It was $6.00 daily per GH/s.  So lets say hypothetically price rose to ~$7 and difficulty fell 20% that would put us back at $6 daily per GH/s.  Then reward got cut in half.  That drops us to $3 daily per GH/s.  Lower than today but hardly the doomsday scenario right?

The network will always adjust (unless people operate at a loss).  My guess is that after price & difficulty stabilizes following the drop we will be between $2 & $6 (recent peak and bottom) per GH/s. 
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Gerald Davis


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March 05, 2012, 05:32:53 PM
 #7

The network will always adjust (unless people operate at a loss).

This is quite possible. It's a bit of a convoluted way to speculate "going long", avoid exchanges, have a hardware hedge, and support the network at the same time (improving your long bet)! Plus, this is a hobby for many people, think of the F@H crowd.

I doubt a majority of the hash rate would do this, but it would be interesting to know how many would. Cheesy

If I could afford it, I certainly would.  Grin

Just my personal opinion but I don't think the network needs "help" so those who do this (and some do) are simply misguided.  From an attack perspective attacking a 9TH/s network isn't significantly different than attacking a 5TH/s network.  What I am saying is both are impossible for someone without millions of dollars.  For a bank there isn't much deterrent at 9TH/s that doesn't exist at 5TH/s.  If a bank wanted to kill Bitcoin it is unlikely they would say "well we can only budget $9.2 million so we need to wait for network to fall to 5TH/s to kill it".  It is more like "we need to kill Bitcoin and it will cost $10M, $20M, $28M" unless you are talking order of magnitudes (i.e. $10M vs $1B) increased costs doesn't net you much protection from someone with the means.  It is simply economics.  No bank wants to spend millions (even $1M) to kill something 99% of the world has never heard of.

IMHO the sooner the network reflects open market prices the better.  Eventually the network will need to be self sustaining and those who operate at a loss out of side misplaced loyalty simply increase the timeframe before the network is self sustaining.
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Gerald Davis


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March 05, 2012, 05:54:03 PM
 #8

Well, my example wasn't about loyalty, it was about speculation. We all know how rational speculators can be. If one thinks Bitcoins will be worth more dollars in the future, why wouldn't one mine at a loss now?

Because you could simply buy more coins and profit even more if Bitcoin does go up.

If your cost to mine 1 coin is say $6 and you can buy a coin for $5 then you can buy more coins then you can produce for a given amount of money.  It is non economical to do otherwise.  Less risk and more profit buying from the lowest price source. 

Quote
I'm not sure what the attack paragraph has to do with it, unless that was all a response to my "support the network at the same time". The network doesn't need help, but it needs miners to secure it. I wouldn't presume to guess what combined hash rate is necessary to secure the network from attack or not.   

Yeah that is it.  It is simply my point that if people need to lose money in order to "protect" Bitcoin then the system is flawed.  I don't feel anyone doing so is helping anyone (themselves, Bitcoin, other users, etc).  Either Bitcoin will be fine without any "help" (my belief) or it is flawed and will fail.  If flawed those hiding that flaw out of misplaced loyalty aren't helping.
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March 05, 2012, 08:46:48 PM
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Sitting here with free electric
if people started to sell there 5850's it would prety nice for me Wink

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March 06, 2012, 07:33:36 AM
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I am starting to wonder whether GPU miners will keep going at it or not. Then the market will be flooded with 5xxx and 6xxx series GPUs driving the prices way down. In the future there will be those with free electricity, and those with FPGAs.
What are your opinions?

I'll probably keep my GPU mining for quite a long time. You people in hot countries probably forget about it, but here, we heat for 6 months a year. FPGA is cute and wonderful, but I'm not counting on it to keep the house warm in winter.

Even if the price drops a lot, we already pay for heating. Bitcoin mining is a way to make heating profitable  Grin
Garr255
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What's a GPU?


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March 06, 2012, 07:42:53 AM
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I definitely like your perspective Tongue

“First they ignore you, then they laugh at you, then they fight you, then you win.”  -- Mahatma Gandhi

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Garr255
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What's a GPU?


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March 07, 2012, 12:55:07 AM
 #12

Well, I've decided to get into FPGA mining, how I'm doing that is here:

https://bitcointalk.org/index.php?topic=67547

“First they ignore you, then they laugh at you, then they fight you, then you win.”  -- Mahatma Gandhi

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March 07, 2012, 04:59:19 AM
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Here in Georgia I'm profitable with my single card system down to 1.96 or so per coin

Obviously someone in California won't be able to get away with that shit, napkin math says they break even at 6.2, I think I fudged some numbers

Assuming I flat out get half the amount of coins (doubt that'll happen), break even is 3.92
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March 07, 2012, 05:11:27 AM
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In the future there will be those with free electricity, and those with FPGAs.
What are your opinions?

Really that black or white? Only those w/ free electricity or FPGAs. 

Marginal miners will be squeezed out and difficulty will fall.  All that matters is revenue per GH/s.

Bitcoinx makes nice charts (I just wish they were based one 1 GH/s).



Today a miner makes about $3.20 daily per GH/s.  If the block reward drop was today and price didn't rise AND difficulty didn't fall the same miner wold be making $1.60 per GH/s.  My rigs cost about ~$0.90 daily in electricity per GH/s.  So I would still be operating.

However lets look at the peak in this chart. It was $6.00 daily per GH/s.  So lets say hypothetically price rose to ~$7 and difficulty fell 20% that would put us back at $6 daily per GH/s.  Then reward got cut in half.  That drops us to $3 daily per GH/s.  Lower than today but hardly the doomsday scenario right?

The network will always adjust (unless people operate at a loss).  My guess is that after price & difficulty stabilizes following the drop we will be between $2 & $6 (recent peak and bottom) per GH/s. 


+1, but I would allows some caveats.  For example, people may instead anticipate a rise in value after the reward-halving and continue to mine.  Actually, if I had to choose, I might fall on that side of the fence.  Potential reasoning for this includes a net rise in demand (i.e. can't mine as quickly but still want Bitcoins?  Guess you have to buy them).

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March 09, 2012, 03:21:05 AM
 #15

I am starting to wonder whether GPU miners will keep going at it or not. Then the market will be flooded with 5xxx and 6xxx series GPUs driving the prices way down. In the future there will be those with free electricity, and those with FPGAs.
What are your opinions?

Pick the right card and there is reasonable resale value.  I have sold most of my cards for near what I paid for them, after making money mining on them.  The gaming market does put a floor on the resale value even if it is low. 

I paid $689 for my 6990, it still sells on ebay for an average of $550 even though I have make more then the cost of the card already.

At the reward drop time, I will have made a considerable profit even if I turned off all of the hardware and threw it out.  Now a person using a FPGA mining card has a long payback time and uncertain resale value.  Maybe FPGA is the future after the reward drop.... but people buying now may never even pay off the gear. 

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FPGA convert


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March 09, 2012, 07:50:56 PM
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I am starting to wonder whether GPU miners will keep going at it or not. Then the market will be flooded with 5xxx and 6xxx series GPUs driving the prices way down. In the future there will be those with free electricity, and those with FPGAs.
What are your opinions?

I'll probably keep my GPU mining for quite a long time. You people in hot countries probably forget about it, but here, we heat for 6 months a year. FPGA is cute and wonderful, but I'm not counting on it to keep the house warm in winter.

Even if the price drops a lot, we already pay for heating. Bitcoin mining is a way to make heating profitable  Grin

Yeah man.  My rigs are placed around my house strategically to warm the house in the winter.  They work great lol I NEVER use my heater.

I buy and sell GPUs, most 5850s and 7970s. 
jimzolorenzo@gmail.com  -- Make an offer.
http://myworld.ebay.com/i_buy_5850s  -- current inventory
I have a couple bare bone mining rigs for sale as well.

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March 11, 2012, 07:33:46 AM
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 What's the ETA for the doomsday? And what if price of bitcoin will remain the same or will drop to 2-3$?

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March 11, 2012, 08:37:26 AM
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39,364

= ~273 days to go

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Gerald Davis


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March 11, 2012, 03:49:13 PM
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What's the ETA for the doomsday? And what if price of bitcoin will remain the same or will drop to 2-3$?
Why would price drop because supply is going down?
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March 12, 2012, 12:20:43 AM
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What's the ETA for the doomsday? And what if price of bitcoin will remain the same or will drop to 2-3$?
Why would price drop because supply is going down?
And why price will rise? Price of bitcoin doesnt depend on block reward.

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