Call to arms!

[4kthm2]

What we need to do.....

STOP PANIC SELLING

Buy the cheap $300 coins

Fire up all our outdated rigs.


This looks like an attack on small miners,  $300 sell wall and 25% rise in hashrate,
Someone is trying to drive price down and diff. up to shut us down, lets do the opposite and make them the ones who lose their investment.

[goozman96]

How the difficulty is still going up, I don't understand.. If I had to pay for electricity, I wouldn't be mining right now. But I have free electricity.

[xstr8guy]

How the difficulty is still going up, I don't understand.. If I had to pay for electricity, I wouldn't be mining right now. But I have free electricity.

Because it's not home miners! Home miners are completely insignificant now and have been for the past several months. The hashrate is going up because ASIC manufacturers build for themselves and stock their miners in massive datacenters. And they aren't paying residential electric rates.

[seriouscoin]

How the difficulty is still going up, I don't understand.. If I had to pay for electricity, I wouldn't be mining right now. But I have free electricity.

You should thank S4 buyers on the behalf of Bitmain. Yup. they're expanding their farm.

[taipo]

How the difficulty is still going up, I don't understand.. If I had to pay for electricity, I wouldn't be mining right now. But I have free electricity.

I will posit two examples for people to consider.

Using a single Antminer S2 in the example with BTC value of $300

Example 1:
At 13 cents a kW, the electricity cost of running an S2 per day is about $3.43 and at $300 per BTC you would be mining around about $4.42, the supply cost then represents about 77.6% of the potential mining cost.

It doesn't matter how many S2 miners you have, this % mining cost only varies if you pay for tech staff to manage a large facility and any repair costs. Small businesses, i.e. home miners, CANNOT compete with large businesses who can run close to break even.

Example 2:
A fictitious web hosting company turned mining operation as a tax write off. It doesn't matter what the miner/mining costs are, if a company has $$$ to write off, they can do so by adding a tonne of miners to their racks and just blast away. Noone would question the purchase of miners as to the tax department or auditors, they are just more 'servers'.

While running their facility at a loss, they also earn BTC by the truck loads in undeclared wallets. It would be illegal to do so in some countries, but I have a feeling this is part of what is going on here along with legit big farms running close to the line.

[taipo]

How the difficulty is still going up, I don't understand.. If I had to pay for electricity, I wouldn't be mining right now. But I have free electricity.

Because it's not home miners! Home miners are completely insignificant now and have been for the past several months. The hashrate is going up because ASIC manufacturers build for themselves and stock their miners in massive datacenters. And they aren't paying residential electric rates.

Yup, and the closer the cost of mining gets to BTC earned, the higher the desperation of the large farms to convert BTC as fast as poss to pay mining costs, thus putting enormous pressure on the BTC exchange rate driving the value downward, which pushes the cost of mining closer to break even, and repeat the process above - more pressure to turn over BTC, driving value downward etc etc.

There is a certain level of fiduciary irresponsibility at play here with some big operations, with others, its clear to me they are a tax write off who have little concern with the cost of mining.

[goozman96]

Well this can't last forever. Pretty soon the price will be too low for even large mining outfits to continue. Then, and only then, will the price recover.

[leannemckim46]

Well this can't last forever. Pretty soon the price will be too low for even large mining outfits to continue. Then, and only then, will the price recover.

Most of this mining outfits mine hopefully for the price to rise, I dont think they will stop.

[mwizard]

The big mining farms can still be very profitable.  Tax write offs are not needed.

If you pay under $0.06 cents per KWh, and are an ASIC manufacturer, you are still making good money from your massive farms.

The current return on mining is 18 cents per hour Terrahash, or 18 cents per KWh, well above running cost of say 6 cents per KWh.  

This assumes mining efficiency of 1J/Gigahash and $300 per bitcoin.  In fact the recent miner hardware is significantly more efficent than 1J/gigahash and large farms in places like Iceland, Sweden, Washington State and parts of China are likely to be paying less than $0.06 per KWh.

While home mining in most places is unprofitable and miners have been turned off in droves don't assume everyone is making a loss.

Ultimately the difficulty will keep slowly rising till the most economic miners are marginally profitable but we are not there yet.  And uneconomic large mining farms will not be dismantled immediately, instead they will be mothballed, waiting for more profitable times.
 

[mwizard]

Also there is no deviation from the original bitcoin design in having large mining farms.  From Satoshi on
 Development & Technical Discussion > Post reply ( Re: Scalability and transaction rate )

The current system where every user is a network node is not the intended configuration for large scale.  That would be like every Usenet user runs their own NNTP server.  The design supports letting users just be users.  The more burden it is to run a node, the fewer nodes there will be.  Those few nodes will be big server farms.  The rest will be client nodes that only do transactions and don't generate.

[hedgy73]

The big mining farms can still be very profitable.  Tax write offs are not needed.

If you pay under $0.06 cents per KWh, and are an ASIC manufacturer, you are still making good money from your massive farms.

The current return on mining is 18 cents per hour Terrahash, or 18 cents per KWh, well above running cost of say 6 cents per KWh.  

This assumes mining efficiency of 1J/Gigahash and $300 per bitcoin.  In fact the recent miner hardware is significantly more efficent than 1J/gigahash and large farms in places like Iceland, Sweden, Washington State and parts of China are likely to be paying less than $0.06 per KWh.

While home mining in most places is unprofitable and miners have been turned off in droves don't assume everyone is making a loss.

Ultimately the difficulty will keep slowly rising till the most economic miners are marginally profitable but we are not there yet.  And uneconomic large mining farms will not be dismantled immediately, instead they will be mothballed, waiting for more profitable times.
 

Good post. Unfortunately 99% of us don't make asics and pay more than $0.06 KWh.

[taipo]

Perhaps people have to start seeing this from the market share perspective. Large operations are grabbing market share and it is in their interest and the interest of their investors not to concede that to anyone else. Big invested operations can run at a loss for a short period of time, how many large corporations do you know of that did not turn a profit on the odd year.

One only needs to look at the history of webserving, how it began as home operations then corporatised, and finally its erosion into 4 or 5 major cloud storage monoliths ( MS, HP, Google, Amazon et al ).

In a sense the large uneconomical farms should have already been shut down but instead their life is being extended by a reinvestment by the general public. It is a business model that has worked for them so far to varying levels of success, and will continue to work while the gen public keep falling for it.

Problem is so much time and effort in the cryptocurrency world has gone into the mining arms race, rather had that time and energy been spent extending the use of cryptocurrencies into communities around the world, the value of it would be steadily rising, instead it is in nose dive because the demand for it is not as high as the need to sell it to pay power bills.

When this is all over, and the last home miner is switched off, I hope the lessons people take away from this is that laissez faire capitalism, no matter how well it is coded into protocols, has and will always fail via the greed of men.

[SMB-2525]

What we need to do.....

STOP PANIC SELLING

Buy the cheap $300 coins

Fire up all our outdated rigs.

This looks like an attack on small miners,  $300 sell wall and 25% rise in hashrate,
Someone is trying to drive price down and diff. up to shut us down, lets do the opposite and make them the ones who lose their investment.

Small miners benefit from lower BTC prices. They will ultimately drive the large miners out of the game. We need to see $200 for about a year.

[Patek]

Example 2:
A fictitious web hosting company turned mining operation as a tax write off. It doesn't matter what the miner/mining costs are, if a company has $$$ to write off, they can do so by adding a tonne of miners to their racks and just blast away. Noone would question the purchase of miners as to the tax department or auditors, they are just more 'servers'.

While running their facility at a loss, they also earn BTC by the truck loads in undeclared wallets. It would be illegal to do so in some countries, but I have a feeling this is part of what is going on here along with legit big farms running close to the line.

That's what I'm thinking about this whole situation. Those guys will mine whatever the cost is, since they are saving money on their main operations.

[SMB-2525]

The big mining farms can still be very profitable.  Tax write offs are not needed.

If you pay under $0.06 cents per KWh, and are an ASIC manufacturer, you are still making good money from your massive farms.

The current return on mining is 18 cents per hour Terrahash, or 18 cents per KWh, well above running cost of say 6 cents per KWh.  

This assumes mining efficiency of 1J/Gigahash and $300 per bitcoin.  In fact the recent miner hardware is significantly more efficent than 1J/gigahash and large farms in places like Iceland, Sweden, Washington State and parts of China are likely to be paying less than $0.06 per KWh.

While home mining in most places is unprofitable and miners have been turned off in droves don't assume everyone is making a loss.

Ultimately the difficulty will keep slowly rising till the most economic miners are marginally profitable but we are not there yet.  And uneconomic large mining farms will not be dismantled immediately, instead they will be mothballed, waiting for more profitable times.

I posted an article about Chinese power prices a few days ago. Nobody in China is getting 0.06 power. Where there is cheap power, operating costs are higher with the possible extension of the Republic of Georgia which has large untapped hydroelectric potential. I think at least one farm is going in there despite the potential geopolitical issues. In the Pacific NW of the US, BPA delivers power at 0.034/KWH. Then there are transmission costs and losses, taxes and whatnot added onto that before it gets to the mining farm. Then you are paying US scale labor, property tax. IIRC, WA is a no income tax state but you pay property tax on your capital stock. All of this adds up. I suspect no mining operation has a marginal cost of operation of less than 0.10/KWH.

So, at $300, 10% bumps every 13 days, and 0.10/KWH cost of operations: the 1W/1GHS machines are netting $1.95/day today and go negative on power in December. That means a large part of the 2014 hardware investment is a negative. Only the newest most efficient machine cash flow and then for only a few more months.

BTC prices are going to stay low because it is pretty obvious some large miners have to mine and sell. The public should be buying BTC instead of hardware at this point.

The impact of this is not so much on the hashing investment in the pipeline but on any ASIC manufacturer contemplating new investment.

I do think difficulty increases are going to slow down - perhaps by a lot. Good for me because power is not metered at the apartment in my building so my 1.5KW mining operation goes unnoticed.

[eoakland]

What we need to do.....

STOP PANIC SELLING

Buy the cheap $300 coins

Fire up all our outdated rigs.

This looks like an attack on small miners,  $300 sell wall and 25% rise in hashrate,
Someone is trying to drive price down and diff. up to shut us down, lets do the opposite and make them the ones who lose their investment.

Small miners benefit from lower BTC prices. They will ultimately drive the large miners out of the game. We need to see $200 for about a year.

agreed. hw manufacturers and corp mining farms currently churn out btc and sell immediately.  a crash in btc price would force many of them to turn off the power.