Who Keeps Adding Mining Capacity?

[Bitcoin++]

I don't understand how anyone can make a profit now, even with cheap electricity and no VAT.

You can still make a small profit running your existing equipment, but no way investing in new equipment can be justified.

Is the current spike in hash rate due to:
Randomness?
Hardware turned back on after summer?
Investment back log?
Irrational investors?
Or people buying miners for heating?

[FeodoroAndy]

Manufacters is the answer, they are in profit zone all the time, so they are investing in equipment.

[jimmothy]

I don't understand how anyone can make a profit now, even with cheap electricity and no VAT.

You can still make a small profit running your existing equipment, but no way investing in new equipment can be justified.

People have been saying this since last year. First batch S3's bought 1 month ago have already mined ~0.35 btc and can be sold for ~1btc so about 200% ROI in one month.

And the home miners with S3's aren't even putting a dent in the network. Hardware manufacturers and other large scale operations have much cheaper hardware/electricity than the rest of us.

Is the current spike in hash rate due to:
Randomness?
Hardware turned back on after summer?
Investment back log?
Irrational investors?
Or people buying miners for heating?

None of these make sense.

[RoadStress]

I don't understand how anyone can make a profit now, even with cheap electricity and no VAT.

You can still make a small profit running your existing equipment, but no way investing in new equipment can be justified.

Is the current spike in hash rate due to:
Randomness?
Hardware turned back on after summer?
Investment back log?
Irrational investors?
Or people buying miners for heating?

Bitfury keeps adding the most mining capacity.

People have been saying this since last year. First batch S3's bought 1 month ago have already mined ~0.35 btc and can be sold for ~1btc so about 200% ROI in one month.

Who would pay 1btc for an S3 when you can order it directly from the BITMAIN for 0.58 for September delivery or when he could pay 0.66 for August delivery?

[jimmothy]

Who would pay 1btc for an S3 when you can order it directly from the BITMAIN for 0.58 for September delivery or when he could pay 0.66 for August delivery?

I'm guessing it's the same people who would pay $4200 for an sp30.

S3's in hand are selling for ~$499 on ebay.

[SMB-2525]

Entities with BTC mining capacity in the pipeline have no choice but to rush it into production and attempt to get a return on their investment.

The real question is anybody putting significant new mining capacity into the pipeline? At the current rate of increase in difficulty, by April 2015, a .5W/GHS chip will not cash flow at $0.05 electricity.

[DrG]

I don't understand how anyone can make a profit now, even with cheap electricity and no VAT.

You can still make a small profit running your existing equipment, but no way investing in new equipment can be justified.

Is the current spike in hash rate due to:
Randomness?
Hardware turned back on after summer?
Investment back log?
Irrational investors?
Or people buying miners for heating?

Bitfury keeps adding the most mining capacity.

People have been saying this since last year. First batch S3's bought 1 month ago have already mined ~0.35 btc and can be sold for ~1btc so about 200% ROI in one month.

Who would pay 1btc for an S3 when you can order it directly from the BITMAIN for 0.58 for September delivery or when he could pay 0.66 for August delivery?

I'll give 50BTC to anybody who can give me an S3 back in 2011.  So you not understand the importance of time sensitivity?

[RoadStress]

I'll give 50BTC to anybody who can give me an S3 back in 2011.  So you not understand the importance of time sensitivity?

Of course I understand the importance of time sensitivity. I would pay 50BTC for an S3 back in early 2013, but that's not important. I'm just amazed that people are ready to pay 1BTC for something that was available for order from stock just a few days ago for 0.66 BTC.

[taipo]

According to some sources, large farms will be coming online every month or so pushing the hashrate to between 400 and 700PH by XMAS. If that is true, then set your clocks for a DIFF of between 50⁹ and 80⁹ by XMAS.

Bitcoin Difficulty:   23,844,670,039
Estimated Next Difficulty:   27,938,012,015 (+17.17%)
Adjust time:   After 1938 Blocks, About 13.2 days
Hashrate(?):   187,336,606 GH/s

[shields]

I don't understand how anyone can make a profit now, even with cheap electricity and no VAT.

There is no condition saying that most or even any miners must make a profit.

[cryptcoin_de]

According to some sources, large farms will be coming online every month or so pushing the hashrate to between 400 and 700PH by XMAS. If that is true, then set your clocks for a DIFF of between 50⁹ and 80⁹ by XMAS.

And if this will be true - there is a another "worst case".
The network is calculated right now for 25 BTC every 10 minutes. When five or six companies holding the most mining capacity, they can say how many BTC reaching the network.
They can hold and sell as they want and manipulate the FIAT exchange rate as they want for maximum profit.

To reach this point they must only sell right now most of all mined BTC and adding more and more hashpower.
Exchange rate goes down, Difficulty goes up - and more and more private miners will power off there miners.
When they have together enough hash power to control the network than they must only hold most new mined BTC and the exchange rate will goes up for there best profit.

Maybe - is this the current Bitfury plan?
They are mining in different pools and nobody can say how many PH/s are in the hand of the Bitfury company right now.
Look at there website:
"The company estimates that 40 percent of all Bitcoins are mined using its chips."
And there is no BF Miners to buy, for about two months:
"We are performing audit, inventory and restructuring our business."

Be watchful...

[xyzzy099]

According to some sources, large farms will be coming online every month or so pushing the hashrate to between 400 and 700PH by XMAS. If that is true, then set your clocks for a DIFF of between 50⁹ and 80⁹ by XMAS.

Bitcoin Difficulty:   23,844,670,039
Estimated Next Difficulty:   27,938,012,015 (+17.17%)
Adjust time:   After 1938 Blocks, About 13.2 days
Hashrate(?):   187,336,606 GH/s

50⁹ is 1,953,125,000,000,000.  Maybe you mean 50+E09 or something like that?  I doubt diff will be in the quadrillions by Christmas  

[promojo]

Who would pay 1btc for an S3 when you can order it directly from the BITMAIN for 0.58 for September delivery or when he could pay 0.66 for August delivery?

I'm guessing it's the same people who would pay $4200 for an sp30.

S3's in hand are selling for ~$499 on ebay.

What are your thoughts on the sp30/sp31 (5.5th/s).  I just bought two sp31's giving me 11th/s (hopefully)

[TheJuice]

I don't understand how anyone can make a profit now, even with cheap electricity and no VAT.

These chips cost next to nothing to make once developed. It's all about scale. Also over the past few months difficulty hasn't been increasing at such a torid pace.

[Johanna]

Manufacturer is creating big farm, they already get the capital for selling overpriced asic to us

[taipo]

According to some sources, large farms will be coming online every month or so pushing the hashrate to between 400 and 700PH by XMAS. If that is true, then set your clocks for a DIFF of between 50⁹ and 80⁹ by XMAS.

Bitcoin Difficulty:   23,844,670,039
Estimated Next Difficulty:   27,938,012,015 (+17.17%)
Adjust time:   After 1938 Blocks, About 13.2 days
Hashrate(?):   187,336,606 GH/s

50⁹ is 1,953,125,000,000,000.  Maybe you mean 50+E09 or something like that?  I doubt diff will be in the quadrillions by Christmas  

Sorry yes 50+E09

[taipo]

set your clocks for a DIFF of between 50⁹ and 80⁹ by XMAS.

Thanks for the early morning belly laugh, math mistakes can be so funny.

yes, but it just looks so cool with the 9 raised instead of typing 50B or 50,000,000,000 zzzzz

[taipo]

And if this will be true - there is a another "worst case".
The network is calculated right now for 25 BTC every 10 minutes. When five or six companies holding the most mining capacity, they can say how many BTC reaching the network.
They can hold and sell as they want and manipulate the FIAT exchange rate as they want for maximum profit.

To reach this point they must only sell right now most of all mined BTC and adding more and more hashpower.
Exchange rate goes down, Difficulty goes up - and more and more private miners will power off there miners.
When they have together enough hash power to control the network than they must only hold most new mined BTC and the exchange rate will goes up for there best profit.

Or maybe its a pump and dump on a grand scale. Cant imagine they could sustain these operations after the next halving if the conversion rate does not rise significantly. Then again if they can create scarcity of BTC supply prior to the halving, and employ professional trading companies to sell their BTC, that could help push the price, but also that type of activity could slow the velocity of the currency somewhat which could have an opposite affect too.

Maybe - is this the current Bitfury plan?
They are mining in different pools and nobody can say how many PH/s are in the hand of the Bitfury company right now.
Look at there website:
"The company estimates that 40 percent of all Bitcoins are mined using its chips."
And there is no BF Miners to buy, for about two months:
"We are performing audit, inventory and restructuring our business."

Be watchful...

From the Blockchain pie graph, the unknown sits at about 15% to 17% which hasnt really changed as the overall network rate has increased, so from that I would assume they are spreading their hashrate around rather than putting it all in one pool?

Its going to be quite a ride....the next 5 months.

[SMB-2525]

Or maybe its a pump and dump on a grand scale. Cant imagine they could sustain these operations after the next halving if the conversion rate does not rise significantly. Then again if they can create scarcity of BTC supply prior to the halving, and employ professional trading companies to sell their BTC, that could help push the price, but also that type of activity could slow the velocity of the currency somewhat which could have an opposite affect too.

IMHO, nobody mining today is thinking about the next halving in terms of their near term investment decisions. I think the next halving will has a big impact on their long term investment decisions.

Every miner in production today will be essentially worthless in 12 months if the current difficulty trend continues.