The mining rat race

[Biodom]

In january 2013 first ASIC-based miners had arrived.
You would be surprised to learn that they were mining 18-20 BTC a day (~$240/day with BTC at $12-14).
See
http://bitcoinmagazine.com/3231/working-avalon-asic-confirmed/

Since then the network hashing speed increased X13180 fold, but bitcoin price recently stagnated or declined. In fact, network speed increased 60-fold while price decreased at least twofold in the last 11-12 mo, putting a huge strain on profitability. Eight months ago a lowly cheap antminer S1 was producing MORE BTC than expensive and efficient (relatively) spondoolies SP-30 machine does right now, but S1 cost ~$700 last March and Sp-30 ~$3800 this summer and early fall. My point is that mining efficiency declined while miner prices stayed very high.

Right now, even the most productive and efficient machines DO NOT produce even the amount of bitcoin that is equal to their cost in bitcoins over their expected lifespan.
It means, that measured in bitcoin, they are inherently unprofitable to run, even with low electricity cost.
I expect that, if stagnation in price continues, many miners who try to run a profitable operation will withdraw, which would make the network much more centralized and vulnerable. Only newcomers and large mines will remain.

I wonder if in a couple of years mining will produce just a few bits (literally) per month-who would even do it?
The "mining for bitcoin reward" model seems broken to me if rewards are miniscule and getting smaller (in $$) all the time with average miner right now clearly subsidizing both the miner manufacturers and network as a whole. Instead of getting some rewards, miners are currently making a DONATION to multiple parties. I think that this is the opposite of what Satoshi envisioned.

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[goozman96]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

[Biodom]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

One of my points is for mining to continue at present OR higher difficulty level, price of BTC has to go up, or price can stay the same, but difficulty has to drop~2-fold. Present situation is unsustainable long term. People can tolerate short term, but NOT long term losses.

[dropt]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

The "early" pioneers weren't making a tonne either.  When I started mining with a fairly respectable GPU farm I may have been mining 5 coins a day, but they were only worth $5 each.

[goozman96]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

One of my points is for mining to continue at present OR higher difficulty level, price of BTC has to go up, or price can stay the same, but difficulty has to drop~2-fold. Present situation is unsustainable long term. People can tolerate short term, but NOT long term losses.

I agree. And either one or the other will happen eventually. It just depends on how long the big farms will hold out in hopes of a price increase - which they are also preventing from happening because most of them sell all mined coins quickly, thus not allowing for there to be a higher demand for coins. So by their own actions, they will run themselves out of business.

[seriouscoin]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

Only retards keep comparing bitcoin mining to gold mining.

Early miners dont makes that much if you take buying and holding to consideration. Frankly all the bitcoin richest are not miners. ...ie Roger Ver

Back in the gold rush days, ppl couldnt just buy gold while taking a dump ..... see the difference?

[philipma1957]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

Only retards keep comparing bitcoin mining to gold mining.

Early miners dont makes that much if you take buying and holding to consideration. Frankly all the bitcoin richest are not miners. ...ie Roger Ver

Back in the gold rush days, ppl couldnt just buy gold while taking a dump ..... see the difference?

Yes as I type this right now I am on another pc buying a coin from coin base. If it was 1849 buying a gold nugget would take time and effort.

 BTC has lots of advantages  over gold nuggets or bars.

Mining crypto coins will stick around for years to come since it offers  the ability to stash cash in the cloud. Is an inflation hedge and many other things.

I mine for fun since I will never be able to mine in house with big volume ever again.  I also buy BTC in order to make money. In order to have an inflationary edge.
In order to have more then the clothes on my back if I ever feel I need to run.

[Biodom]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

One of my points is for mining to continue at present OR higher difficulty level, price of BTC has to go up, or price can stay the same, but difficulty has to drop~2-fold. Present situation is unsustainable long term. People can tolerate short term, but NOT long term losses.

It just depends on how long the big farms will hold out in hopes of a price increase - which they are also preventing from happening because most of them sell all mined coins quickly, thus not allowing for there to be a higher demand for coins. So by their own actions, they will run themselves out of business.

I agree, in the last couple of weeks, on miltiple occasions, I observed that as soon as hashing speed decreased, price increased and vice versa. It looked almost like someone is testing a model. Since price is rebounding strongly on even a small hashing rate decrease, some investors could buy bitcoins AND a large, but inefficient farm, then take that farm out of production and receive almost immediate 20-30% boost to their bitcoin value, sell bitcoin and switch the farm back on. Rinse and repeat ad nauseum. I wonder if some entity is already pursuing this or similar strategy since we undergo large hashing speed fluctuations in a matter of a couple of days.

[xhomerx10]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

One of my points is for mining to continue at present OR higher difficulty level, price of BTC has to go up, or price can stay the same, but difficulty has to drop~2-fold. Present situation is unsustainable long term. People can tolerate short term, but NOT long term losses.

It just depends on how long the big farms will hold out in hopes of a price increase - which they are also preventing from happening because most of them sell all mined coins quickly, thus not allowing for there to be a higher demand for coins. So by their own actions, they will run themselves out of business.

I agree, in the last couple of weeks, on miltiple occasions, I observed that as soon as hashing speed decreased, price increased and vice versa. It looked almost like someone is testing a model. Since price is rebounding strongly on even a small hashing rate decrease, some investors could buy bitcoins AND a large, but inefficient farm, then take that farm out of production and receive almost immediate 20-30% boost to their bitcoin value, sell bitcoin and switch the farm back on. Rinse and repeat ad nauseum. I wonder if some entity is already pursuing this or similar strategy since we undergo large hashing speed fluctuations in a matter of a couple of days.

 The problem with that thinking is that the bitcoin network hashing rate is not "known" per se at any point in time but it is calculated based on the number of blocks being found per unit of time.  Finding blocks is probability based and there are inherent swings in the apparent hashing rate because of this fact.  It wouldn't make sense to take your miners offline because you don't know exactly when you are going to solve your next block- you might solve three blocks in the next 16 seconds and then wait hours to solve the next even though you haven't altered your hashing rate.  I would imagine if you are observing this phenomenon, there is an entirely different explanation for it. Perhaps they don't have any coins to sell because they haven't produced any which would explain why the apparent network hashing rate had also taken a dip and the fact that they aren't selling leaves buyers looking to buy and edging up the price.

 

[SSSSwinner]

Having been involved since the beginning, it sure makes me smile when reminiscing the whole bitcoin rush

[philipma1957]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

One of my points is for mining to continue at present OR higher difficulty level, price of BTC has to go up, or price can stay the same, but difficulty has to drop~2-fold. Present situation is unsustainable long term. People can tolerate short term, but NOT long term losses.

It just depends on how long the big farms will hold out in hopes of a price increase - which they are also preventing from happening because most of them sell all mined coins quickly, thus not allowing for there to be a higher demand for coins. So by their own actions, they will run themselves out of business.

I agree, in the last couple of weeks, on miltiple occasions, I observed that as soon as hashing speed decreased, price increased and vice versa. It looked almost like someone is testing a model. Since price is rebounding strongly on even a small hashing rate decrease, some investors could buy bitcoins AND a large, but inefficient farm, then take that farm out of production and receive almost immediate 20-30% boost to their bitcoin value, sell bitcoin and switch the farm back on. Rinse and repeat ad nauseum. I wonder if some entity is already pursuing this or similar strategy since we undergo large hashing speed fluctuations in a matter of a couple of days.

yeah I think we are witnessing DIFF fixing by large companies.  I think they realize growth limits may be better for them then unchecked wild growth.

[SMB-2525]

yeah I think we are witnessing DIFF fixing by large companies.  I think they realize growth limits may be better for them then unchecked wild growth.

Game theory would indicate this is very difficult to pull off. How many parties would be required to make this work?

[galdur]

If you go back six months or so you´ll see glowing predictions
by leading mining experts and geniuses of BTC $1-2000 by
xmas 2014. Result: idiotic overinvestment in mining, irate
bankers and coming bankruptcies. Good luck, g

[galdur]

2014-05-28 01:35 PM

BTC to break $2,000 mark by Christmas – Experts

http://cointelegraph.com/news/111597/btc_to_break_2_000_mark_by_christmas_experts

Tamas Blummer, Bits of Proof - Don't know

Jesse Powell, Kraken - $1,000,000

Prof Robin Reigland, Stockholm School of Economics - $1,300

Kirill Suslov, Tabtrader - $500

Johann Gevers, Monetas - $5,000

George Frost, Bitstamp - Can’t say

Anthony Gallippi, Bitpay - $1,160

Mary Beth Stanton, Heather Podesta and Partners - Higher than what I paid

Joel Gartner - $2000-$3000

Alakanani Itireleng, Bitcoin Botswana, $10,000

Jinyoung Lee Englund, Bitcoin Foundation - Not relevant

John Karamja, Whive, $2,000

J. Dax Hansen, Perkins Coie - No idea

Brian Klein, Baker Marquart LLP - Higher, but don't know where

Elizabeth Ploshay, Bitcoin Magazine - Doesn't matter

Thomas Voegtlin, Electrum - No comment

Joseph Cutler, Perkins Coie - Beginning to stabilize

Alexey Bragin - I am optimistic

Brian Fabian Crain, Epicenter Bitcoin - $2,000

Brian Armstrong, CoinBase - Going upwards

Lars Christensen, Saxobank - Don't know

Bobby Lee, BTC China - $500

Juan Llanos, Unidos Financial Services Inc - $500

Trace Mayer, Investor - really big

Laura Jeppson, Aoen Risk Solutions - $800

Dr. Marco Krohn, Genesis Mining - $2000-$3000

David Schwartz, Ripple labs - steady rise

Nahid Samsami, CoinBase - No comment

Erik Voorhees, Coinapult - $2,400

Rodrigo Batista, Mercado Bitcoin - $0 - $10000

Gavin Wood, Ethereum - $200-$800 or $900

Peter Todd, Mastercoin - between 0 and infinity

Mark van Cuijk, CoinQY - $2,000

Lasse Birk Olesen, Bitcoin Nordic - $4,000

Brock Pierce, Bitcoin Foundation - $1000-$5000

Gavin Andresen, Bitcoin Foundation - bigger than now

David Irvine, Maidsafe - more interested in what you can do with bitcoin

Ron Gross, Mastercoin  - a few thousand dollars

Roger Ver, Memory Dealers - in the long term is going to be higher

Frank Schuil, Safello - $2,000

Marco Santori, Nesenoff and Miltenburg - Bitcoin has the power to change the world

Alan Safahi, Zip Zap - $500

Andreas Petersson, Mycelium - No idea

Jillian Friedman, Bitcoin Legal - $800

John Light, Cambrian - $1,000

Jon Matonis, Bitcoin Foundation - Logarithmic growth

Steve Beauregard, Gocoin - $600-$800

Gregory Simon, Cryptowerks - 2-3 times higher than today

Ravi Iyengar, Cointerra - higher

David Orban, Dotsub - Price to climb

Michael Terpin, Social Radius - $1000-$2400

Ron Gross, Mastercoin - $4,000

Martijn Wismeijr, MrBitcoin - I don't know

Sam Cole, KnCMiner - $2000-$3000

Edward, Cryptonit - $1000 at least

Patric Stiller, Baytrade Group - $1500-$2000

Kevin Beardsley, Bitcoin Foundation - As long as the community keeps growing

Alan Reiner, Armory Technologies - I don't make predictions.

Average price is two thousand and seventy-two dollars.

[raskul]

This is why it was advantageous to get in on the rush early on. Similar to the gold rush in the west. People are still making some money now, otherwise they wouldn't be mining. But not nearly as much as the early pioneers.

One of my points is for mining to continue at present OR higher difficulty level, price of BTC has to go up, or price can stay the same, but difficulty has to drop~2-fold. Present situation is unsustainable long term. People can tolerate short term, but NOT long term losses.

It just depends on how long the big farms will hold out in hopes of a price increase - which they are also preventing from happening because most of them sell all mined coins quickly, thus not allowing for there to be a higher demand for coins. So by their own actions, they will run themselves out of business.

I agree, in the last couple of weeks, on miltiple occasions, I observed that as soon as hashing speed decreased, price increased and vice versa. It looked almost like someone is testing a model. Since price is rebounding strongly on even a small hashing rate decrease, some investors could buy bitcoins AND a large, but inefficient farm, then take that farm out of production and receive almost immediate 20-30% boost to their bitcoin value, sell bitcoin and switch the farm back on. Rinse and repeat ad nauseum. I wonder if some entity is already pursuing this or similar strategy since we undergo large hashing speed fluctuations in a matter of a couple of days.

yeah I think we are witnessing DIFF fixing by large companies.  I think they realize growth limits may be better for them then unchecked wild growth.

I too, have been thinking this for some time now. All it would take is a few skype-calls between a collection of large company farmers and *click* 'lets power down in time for the difficulty increase.' not a difficult feat in any way and likely to be controlled by those who build the hardware, and also mine with it. Continual difficulty increases would simply render both their own farms too inefficient to run, and halt sales of their own product. Correlating price with network hash-rate is also something i've been trying to get my head around, but in truth, there is no logic to it whatsoever, when the market value is solely dependent on market activity, due to the fact that bitcoin has no base tracker function (it's not backed by anything except the price people are willing to buy/sell).

regarding bitcoin price?

1BTC=1BTC, anyone who speculates anything other than this is on a hiding to nothing

MHO.

[Biodom]

2014-05-28 01:35 PM

BTC to break $2,000 mark by Christmas – Experts

http://cointelegraph.com/news/111597/btc_to_break_2_000_mark_by_christmas_experts

Tamas Blummer, Bits of Proof - Don't know

Kirill Suslov, Tabtrader - $500

George Frost, Bitstamp - Can’t say

J. Dax Hansen, Perkins Coie - No idea

Elizabeth Ploshay, Bitcoin Magazine - Doesn't matter

Thomas Voegtlin, Electrum - No comment

Lars Christensen, Saxobank - Don't know

Bobby Lee, BTC China - $500

Juan Llanos, Unidos Financial Services Inc - $500

Nahid Samsami, CoinBase - No comment

Peter Todd, Mastercoin - between 0 and infinity

Gavin Andresen, Bitcoin Foundation - bigger than now

David Irvine, Maidsafe - more interested in what you can do with bitcoin

Roger Ver, Memory Dealers - in the long term is going to be higher

Marco Santori, Nesenoff and Miltenburg - Bitcoin has the power to change the world

Alan Safahi, Zip Zap - $500

Andreas Petersson, Mycelium - No idea

Ravi Iyengar, Cointerra - higher

Martijn Wismeijr, MrBitcoin - I don't know

Kevin Beardsley, Bitcoin Foundation - As long as the community keeps growing

Alan Reiner, Armory Technologies - I don't make predictions.

^^^^Here, I "fixed" it by removing the most outlandish calls. These are people who were reasonable.
Maybe this is a list of folks worth listening to.
BTW, $500 is still possible by Christmas, depending on how the auction goes.

[Biodom]

Hey, is it possible for ANY manufacturer to have a machine that can breakeven in BTC in reasonable time (not infinity) or we are post that now and forever?

[raskul]

Hey, is it possible for ANY manufacturer to have a machine that can breakeven in BTC in reasonable time (not infinity) or we are post that now and forever?

My new SP20 is arriving today.
My s3's have paid back... Watch this space for SP20.
However, since i don't buy miners with BTC then my ROI is never stagnant and for me getting my investment back isn't as clear cut as making back the bitcoin i paid for the rig.

[philipma1957]

Hey, is it possible for ANY manufacturer to have a machine that can breakeven in BTC in reasonable time (not infinity) or we are post that now and forever?

yes the s-3's have.  and I think the sp20's will


my batch 1's  cost me 1.35  btc they have earned 1.93 BTC and  2.96 NMC before power cost


.58 btc profit the nmc is worth  a little  so .59 btc profit power in my case has been .17 btc so I am up .42btc

[HellDiverUK]

Only people who made money in the Gold rush were the shovel manufacturers.

Only people who make money in the Bitcoin mining game are the ASIC manufacturers.


History repeats, greed is timeless.