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Author Topic: with difficulty rising, is our only hope the market?  (Read 3173 times)
clonedone
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May 09, 2011, 02:20:04 PM
 #1

It is as JJG has predicted, the feared difficulty rise.
apparently difficulty is rising exponentially and theres no stopping it. it has gone down twice before, but as far as i know, difficulty increases as mining increases. and mining is increasing like crazy.
is our only hope now going to be the market price of the coins? we cant predict that the price will shoot up because the difficulty is shooting up. so far it has worked out that way from 1.8 to 3.8, but it seems to have reached a plateau @ around 3.8 even though difficulty is not stopping. if it continues to rise, mining will be obsolete for the little guys like me who dont get 10g/hash.

Anyone know what we can hope for then?
or is the bitcoin mining future reaching an end here?
what do u guys think

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BitLex
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May 09, 2011, 02:42:31 PM
 #2

maybe you didn't notice that the price per bitcoin also is increasing like crazy.

in the last 3-4weeks difficulty doubled, btc-price tripled,
so mining is even more profitable today, at a higher difficulty, than it was a few weeks ago.

maybe you should do your math again.

clonedone
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May 09, 2011, 02:45:00 PM
 #3

maybe you didn't notice that the price per bitcoin also is increasing like crazy.

in the last 3-4weeks difficulty doubled, btc-price tripled,
so mining is even more profitable today, at a higher difficulty, than it was a few weeks ago.

maybe you should do your math again.

i meant that there is no direct correlation between difficulty and price increase.
people dont buy more cus they see the difficulty rising for miners.
im asking is there any other hope than just hoping that the price will rise

silversurfer
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May 09, 2011, 03:11:34 PM
 #4

If all you have is hope, sell your bitcoins. 

That which is falling should also be pushed.
steelhouse
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May 09, 2011, 05:09:49 PM
 #5

It is more profitable to mine bitcoins now than in January, February, March, or April.  Reason price rose. 
MoonShadow
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May 09, 2011, 06:08:37 PM
 #6

maybe you didn't notice that the price per bitcoin also is increasing like crazy.

in the last 3-4weeks difficulty doubled, btc-price tripled,
so mining is even more profitable today, at a higher difficulty, than it was a few weeks ago.

maybe you should do your math again.

i meant that there is no direct correlation between difficulty and price increase.

Um, yes there is; but it's the market price of the bitcoins that drives difficulty later.  Cause and effect.  The rise in the value of the block reward, which is sneaking towards $200 per block, encourages new miners to join the game.  When I got into all this, a block was worth about $1.30.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
BitLex
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May 09, 2011, 06:26:58 PM
 #7

i meant that there is no direct correlation between difficulty and price increase.
point is that difficulty alone doesnt say anything about profitability of mining.

IF the price doesn't rise, but difficulty does, it'll be less profitbale,
but currently that is not the case, price rises even faster than the difficulty does,
which results in mining now, at a higher difficulty, is more profitable than it was weeks/months before, at a lower difficulty.

you get less coins per day, but you earn more money anyway, cool, isnt it?  Grin

Vandroiy
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May 09, 2011, 07:08:30 PM
 #8

Mining will face its destiny when the calendar shows 2013.

Until then, just mine when it's profitable and stop when it isn't. Like any sane person would. But remember current price is paid by investors, keep BTC only if you're willing to gamble like they are.
tomcollins
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May 09, 2011, 09:08:17 PM
 #9

maybe you didn't notice that the price per bitcoin also is increasing like crazy.

in the last 3-4weeks difficulty doubled, btc-price tripled,
so mining is even more profitable today, at a higher difficulty, than it was a few weeks ago.

maybe you should do your math again.

i meant that there is no direct correlation between difficulty and price increase.
people dont buy more cus they see the difficulty rising for miners.
im asking is there any other hope than just hoping that the price will rise

If you already have your equipment, unless you are super inefficient, mining will remain profitable.  Your rig is a sunk cost if you bought anything for it.  You just need to beat electricity, which isn't that hard to do.

Electricity Costs = Cost of electricity in $/kw-hr
Difficulty = Difficulty
Exchange Rate = $/BTC
Reward = BTC/block


Using these numbers, you can determine the minimum efficiency needed to continue operating.

So the formula is:
2^32*Difficulty * Electricity Costs
------------------------------------         =   Minimum efficiency to mine profitably using variable costs
3600 * 1000 * Exchange Rate * Reward


I'll use the upcoming difficulty:

Electricity Costs = $.12/kW-hr (adjust to your local rate)
Exchange = $3.80/BTC
Reward = 50
Difficulty = 150,000

We end up with 113khash/s /W to mine profitably.

Almost every GPU can meet this standard pretty easily.

Using the current exchange rate, even if difficulty gets up to 2.75M, some cards can still be marginally profitable.

So while difficulty continues to rise pretty high, I do expect more miners to keep coming online if they already have the hardware.  This can continue for quite some time and still have them be profitable.  This does not mean spending large amounts of money to buy rigs is worthwhile unless you would have bought it otherwise.
tomcollins
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May 09, 2011, 09:10:44 PM
 #10

Mining will face its destiny when the calendar shows 2013.

Until then, just mine when it's profitable and stop when it isn't. Like any sane person would. But remember current price is paid by investors, keep BTC only if you're willing to gamble like they are.

Much less than you'd think.  Difficulty increases will be a much bigger factor before 2013 than the reward dropoff.  It's equivalent to the difficulty doubling.  The difficulty has doubled many times in the last 6 months.  It will double many times before then.  Sure, that extra doubling will suck, but it's a lot smaller than what is coming up with more miners coming online profitably as word continues to gets out.
MoonShadow
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May 09, 2011, 09:23:10 PM
 #11

Mining will face its destiny when the calendar shows 2013.

Until then, just mine when it's profitable and stop when it isn't. Like any sane person would. But remember current price is paid by investors, keep BTC only if you're willing to gamble like they are.

Much less than you'd think.  Difficulty increases will be a much bigger factor before 2013 than the reward dropoff.  It's equivalent to the difficulty doubling.  The difficulty has doubled many times in the last 6 months.  It will double many times before then.  Sure, that extra doubling will suck, but it's a lot smaller than what is coming up with more miners coming online profitably as word continues to gets out.

In fact, the difficulty has doubled 16 times since Jan 2009.  If it doubles another 16 times, we would be around 7,187,333,120 difficulty (if not more) and roughly 1,113,784,320 TeraHashes per second to get there.  I don't consider this likely, as I expect the growth to mute as Bitcoin's market matures; but I would consider at least two more doubling to be likely. 

The question is, how much hashing power is enough to secure the system?  That's not really an answerable question, but I'd have to guess that having a hashing power in excess of the total power of the top 20 known supercomputers is a safe goal.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
tomcollins
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May 09, 2011, 09:30:07 PM
 #12

Mining will face its destiny when the calendar shows 2013.

Until then, just mine when it's profitable and stop when it isn't. Like any sane person would. But remember current price is paid by investors, keep BTC only if you're willing to gamble like they are.

Much less than you'd think.  Difficulty increases will be a much bigger factor before 2013 than the reward dropoff.  It's equivalent to the difficulty doubling.  The difficulty has doubled many times in the last 6 months.  It will double many times before then.  Sure, that extra doubling will suck, but it's a lot smaller than what is coming up with more miners coming online profitably as word continues to gets out.

In fact, the difficulty has doubled 16 times since Jan 2009.  If it doubles another 16 times, we would be around 7,187,333,120 difficulty (if not more) and roughly 1,113,784,320 TeraHashes per second to get there.  I don't consider this likely, as I expect the growth to mute as Bitcoin's market matures; but I would consider at least two more doubling to be likely. 

The question is, how much hashing power is enough to secure the system?  That's not really an answerable question, but I'd have to guess that having a hashing power in excess of the total power of the top 20 known supercomputers is a safe goal.

Always account for the possibility of more efficient miners coming out.  This was a different game when we only had CPU miners.  At the current price, difficulty has a lot of room to go up and still have a lot of people be profitable, especially gamers who already have the equipment.
MoonShadow
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May 09, 2011, 09:33:55 PM
 #13


Always account for the possibility of more efficient miners coming out.  This was a different game when we only had CPU miners.  At the current price, difficulty has a lot of room to go up and still have a lot of people be profitable, especially gamers who already have the equipment.

True.  And dedicated ASICs would move the bar yet again.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
SgtSpike
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May 09, 2011, 09:34:26 PM
 #14

Again, I'll point to my spreadsheet (link in sig) for anyone questioning whether to invest or mine, or whether mining will still be profitable in the coming month(s).

Bottom line is, mining is very profitable right now.  It might not stay that way, but I would be shocked if people didn't get a return on their investment in new mining equipment if they purchased today (assuming they buy the best MH/price combo that I could find, which is a $250 base computer with 2 5850's).
BitterTea
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May 09, 2011, 09:37:25 PM
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In fact, the difficulty has doubled 16 times since Jan 2009.  If it doubles another 16 times, we would be around 7,187,333,120 difficulty (if not more) and roughly 1,113,784,320 TeraHashes per second to get there.  I don't consider this likely, as I expect the growth to mute as Bitcoin's market matures; but I would consider at least two more doubling to be likely. 

The question is, how much hashing power is enough to secure the system?  That's not really an answerable question, but I'd have to guess that having a hashing power in excess of the total power of the top 20 known supercomputers is a safe goal.

Wouldn't the difficulty continue to increase as long as hardware continues to improve? If not, then it seems it becomes easier over time for an attacker to achieve >50% network power.

Hmm, perhaps the difficulty could stay the same, as long as efficiency increased instead?
MoonShadow
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May 09, 2011, 09:42:33 PM
 #16

In fact, the difficulty has doubled 16 times since Jan 2009.  If it doubles another 16 times, we would be around 7,187,333,120 difficulty (if not more) and roughly 1,113,784,320 TeraHashes per second to get there.  I don't consider this likely, as I expect the growth to mute as Bitcoin's market matures; but I would consider at least two more doubling to be likely. 

The question is, how much hashing power is enough to secure the system?  That's not really an answerable question, but I'd have to guess that having a hashing power in excess of the total power of the top 20 known supercomputers is a safe goal.

Wouldn't the difficulty continue to increase as long as hardware continues to improve?

Yes, but the hardware improves for the common user at the same pace as the massive attackers' does.  There will always be new supercomputers being built, each faster than the one just before, so the happy target goal is always moving anyway.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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