ASICMINER: Entering the Future of ASIC Mining by Inventing It

[Vexual]

Transaction fees are not growing.

http://blockchain.info/charts/transaction-fees.

Right now they don't even meet the cost of electricity to process them.

Also a lot of future growth will be off-chain transactions, which result in no fees to miners.

Hey you're right, the block reward is still more than transaction fees!
good info

[1714053340]

1714053340

[1714053340]

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[Mabsark]

Also a lot of future growth will be off-chain transactions, which result in no fees to miners.

Which don't need to be processed by miners.

[muyuu]

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

[ning]

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

3+ (3.11) years ahead:)

[chriswilmer]

Transaction fees are not growing.

http://blockchain.info/charts/transaction-fees.

Right now they don't even meet the cost of electricity to process them.

Also a lot of future growth will be off-chain transactions, which result in no fees to miners.

They are absolutely growing!

http://blockchain.info/charts/transaction-fees?showDataPoints=false&timespan=all&show_header=true&daysAverageString=90&scale=0&address=

[ex-trader]

They are absolutely growing!

http://blockchain.info/charts/transaction-fees?showDataPoints=false&timespan=all&show_header=true&daysAverageString=90&scale=0&address=

Thats simply shows they grew from the early levels when no-one was using BTC in '10/'11. Through 2013 they have not grown at all. In fact they have fallen substantially from the peak earlier this year - why?

[ex-trader]

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

But the fees are what many people are holding onto as where the income will come from when mining and hardware keeps falling.

Would you pay the same for Apple if you knew they had to cut their prices in half every 5 years?

[muyuu]

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

3+ (3.11) years ahead:)

Yeah, I meant that under 2 years we will have to factor it in because a 2 year ROI in BTC mining is about right.

Obviously, 3.11 is still 2+

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

But the fees are what many people are holding onto as where the income will come from when mining and hardware keeps falling.

Would you pay the same for Apple if you knew they had to cut their prices in half every 5 years?

That's the point. If you are closer than ROI to the halving then yes, you need to factor that in. But if you're still pretty far away there is not much point, provided how quickly things develop in Bitcoin world. In 1 year or 2 we will have to start looking at fees and how are they developing.

[chriswilmer]

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

But the fees are what many people are holding onto as where the income will come from when mining and hardware keeps falling.

Would you pay the same for Apple if you knew they had to cut their prices in half every 5 years?

That's the whole point of bitcoin though. There is no reason why transaction fees need to add up to less than the original block reward. The total from transaction fees, in BTC, has been growing by 10x roughly every two years (similar to growth of BTC/USD rate, coincidentally). So it would not surprise me if the total transaction fees per block in two years were 3-5 BTC/block (instead of 0.3-0.5 btc/block now), and 30-50 BTC/block in 4-5 years.

So, I think there will always be PLENTY of bitcoins to mine. Whether or not it is profitable to do so will depend on electricity costs, technology, etc.

[🏰 TradeFortress 🏰]

They are absolutely growing!

http://blockchain.info/charts/transaction-fees?showDataPoints=false&timespan=all&show_header=true&daysAverageString=90&scale=0&address=

Thats simply shows they grew from the early levels when no-one was using BTC in '10/'11. Through 2013 they have not grown at all. In fact they have fallen substantially from the peak earlier this year - why?

Default TX fees per KB have been reduced from 0.0005 to 0.0001

[lophie]

They are absolutely growing!

http://blockchain.info/charts/transaction-fees?showDataPoints=false&timespan=all&show_header=true&daysAverageString=90&scale=0&address=

Thats simply shows they grew from the early levels when no-one was using BTC in '10/'11. Through 2013 they have not grown at all. In fact they have fallen substantially from the peak earlier this year - why?

Default TX fees per KB have been reduced from 0.0005 to 0.0001

While tx volume is constant?

[lucasjkr]

We still have 2+ years ahead with 25BTC blocks. I think the fee discussion is fine as a general Bitcoin challenge, but not a current problem for ASICMiner.

But the fees are what many people are holding onto as where the income will come from when mining and hardware keeps falling.

Would you pay the same for Apple if you knew they had to cut their prices in half every 5 years?

That's the whole point of bitcoin though. There is no reason why transaction fees need to add up to less than the original block reward. The total from transaction fees, in BTC, has been growing by 10x roughly every two years (similar to growth of BTC/USD rate, coincidentally). So it would not surprise me if the total transaction fees per block in two years were 3-5 BTC/block (instead of 0.3-0.5 btc/block now), and 30-50 BTC/block in 4-5 years.

So, I think there will always be PLENTY of bitcoins to mine. Whether or not it is profitable to do so will depend on electricity costs, technology, etc.

A big problem with that line of thinking is the overall prevailing view of the community, where many holders think/hope that the value of a single bitcoin could grow to $1000, $10000 or even $1,000,000 (ok, that last one isnt voiced that often, but ive see more than a couple people chime in in agreement when that number was raised; so long as people have hopes and even expectations of that sort of growth, theyre not going to spend their coins, which means theyre not available for making transaction fees off of.

Until we start seeing concrete proof that transaction fees are growing, speculating that they'll achieve any level (3-5 BTC/Block, 30-50 BTC/block) is just that - speculation. It's as useful as attempting to figure out your mining returns if difficulty would just stay flat for months on end.

Yes, the total earned from transaction fees may  be growing, but thats not the number to be looking at - we need to look at the transaction fees per block, and by that metric, theyre not climbing at all.

This is a major stumbling point to the fixed cap nature of bitcoin; the compensation that miners earn right now is from Bitcoins that are magically created out of thin air, once miners are forced to rely on fees and only fees to pay for energy consumption, as things look right now, and projecting from the trends we see in transaction fees per block (dangerous, yes, but it's data linked to reality rather than hope), absent a HUGE increase in BTC prices, there will be no reason for miners to mine, save for being a loss generating public service. Which brings about the earlier point, if BTC is to survive longer term, either transaction volume needs to increase greatly or the value of each BTC needs to - since most people are counting on the second and not spending their BTC, that becomes the only real hope for its survival.

[Jutarul]

This is a major stumbling point to the fixed cap nature of bitcoin; the compensation that miners earn right now is from Bitcoins that are magically created out of thin air, once miners are forced to rely on fees and only fees to pay for energy consumption, as things look right now, and projecting from the trends we see in transaction fees per block (dangerous, yes, but it's data linked to reality rather than hope), absent a HUGE increase in BTC prices, there will be no reason for miners to mine, save for being a loss generating public service. Which brings about the earlier point, if BTC is to survive longer term, either transaction volume needs to increase greatly or the value of each BTC needs to - since most people are counting on the second and not spending their BTC, that becomes the only real hope for its survival.

reminds me of all the fallacies of the value proposition of bitcoin. E.g. bitcoin is not about lowering transaction fees or enabling micro transactions - it's about limiting censorship and exposing the middle man to a true free market economy for transaction processing. If bitcoin is the only way to get money across borders, you'll gladly pay a 10% premium. Expect the transaction fees to go up dramatically as the free world around you crumbles. Bitcoin is build for zero-trust environments and that's where it's utility lies.

Another fallacy is the need for bitcoin to increase in price for it to gain utility. bitcoin transactions "conduct" wealth. Higher bitcoin prices merely increase it's conductance. However, the rapid settlement ability of bitcoin (1 hour) allows deals to go through sequential settlement cycles, effectively compensating for a lower bitcoin price. If a bank transaction of 10 million $ needs 3 days to get processed, you can achieve the same thing with let's say 20 bitcoin transactions, leading to a factor of 20 in bitcoin price flexibility.

What does that all have to do with ASICMINER? ASICMINER is a facilitator for mining technology and is operating in the mining industry. If bitcoin becomes the preferred global censorship proof payment system it set out to be, then you SHOULD expect transaction fees to become significant and SHOULD NOT necessarily expect bitcoin price to increase ad infinitum. The only scenario where bitcoin prices should go through the roof is if it achieves safe haven status, which is a tough one for a 4 year old money scheme. This means that the expected long term yield in bitcoin from mining will be more than the its subsidy.

[runeks]

friedcat was smart to pick 55nm/65nm 2nd gen node size; chip efficiency won't matter until China runs out of cheap electricity and space or the difficulty increases much, much more.

This doesn't make sense. We are already seeing the 130nm chips being too power hungry, of course it's only a matter of time before the 55nm chips use too much power as well.

Mind you, I'm not talking about power costs, I'm talking about finding locations with enough incoming power to actually run the miners.

The network is currently around 700 TH/s. ASICMiner is at ~40 TH/s. For ASICMiner to regain 10% of the network, they'd have to add 34 TH/s. At an efficiency of 8W/GH that's 272kW, and that's just to bring up the network share up to 10%.

I'm no data center expert, but from reading previous posts in this thread it was my impression that this posed a problem.

Let me document it this time: prior 7 blocks starting from this one (newest as of right now)

http://blockchain.info/block-index/414784/00000000000000040d3bd18e95ccb4c089bafaa4667f70efec145ae517e73e77

0.07420021 BTC
0.2445046 BTC
0.33552803 BTC
0.25201038 BTC
0.19562 BTC
0.18380026 BTC
0.19215369 BTC

Only one of those is even in the 0.3-0.5 range.

If someone would write a quick script and find the average over the past month that would be much appreciated.

Here are the stats from the last 70 blocks:

Code:

Analyzed 70 blocks containing 22,887 transactions.
-----Stats-----:

ASICMiner stats (7 blocks, 2730 transaction):
	Average transaction count per block: 390.0
	Maximum number of transactions in a block: 673
	Minimum fee: -0.00000000
	Average fee: 0.00054074
	Average fees per block: 0.2109
Other blocks stats (63 blocks, 20157 transaction):
	Average transaction count per block: 320.0
	Maximum number of transactions in a block: 1054
	Minimum fee: -0.00000000
	Average fee: 0.00058110
	Average fees per block: 0.1859

[...]

This is a major stumbling point to the fixed cap nature of bitcoin; the compensation that miners earn right now is from Bitcoins that are magically created out of thin air, once miners are forced to rely on fees and only fees to pay for energy consumption, as things look right now, and projecting from the trends we see in transaction fees per block (dangerous, yes, but it's data linked to reality rather than hope), absent a HUGE increase in BTC prices, there will be no reason for miners to mine, save for being a loss generating public service.

[...]

The network can adjust. There is no reason that all miners will stop simultaneously. The unprofitable ones will stop and the others will continue. So this might cause a fall in the network hashrate, that's entirely possible. But saying that all miners will chose to stop mining at once is unwarranted.

[Rival]

The only scenario where bitcoin prices should go through the roof is if it achieves safe haven status, which is a tough one for a 4 year old money scheme.

A deflationary currency is designed to be hoarded, but it does not follow that coins will never be spent. Day-to-day transactions will still occur and will still require currency to perform those transactions. Assuming higher future adoption rates as the currency matures, it will increase pressure to both hoard and to spend. The question that needs to be addressed is whether hoarding and spending will both increase at comparable rates creating an equilibrium.

I would suggest that both working in tandem will continue to drive prices up in the long term. Working against this is the creation of new coins. I have not run any in-depth calculations on this but my gut tells me that adoption is currently creating a demand for coins to hoard and coins to spend that exceeds what is being provided by the current pool and the coins being created. If continued adoption rates keep their growth slopes then astronomical btc values are inevitable. If the rate of adoption reaches critical mass and goes exponential and becomes widespread, I think even the wildest projections will look puny. But that is a big pile of ifs stacked on a shaky foundation to begin with.

Edit: Currently btc are being hoarded and fiat is being spent. This is an important dynamic to understand.

[Jutarul]

If the rate of adoption reaches critical mass and goes exponential and becomes widespread...

Adoption does not mean that people will store their life savings in bitcoin. It may simply mean that they use bitcoin financial services to conduct transactions when necessary, thus increasing the demand for money in circulation and thus increase the implied price.

Edit: Currently btc are being hoarded and fiat is being spent. This is an important dynamic to understand.

Probably an outcome of Gresham's law.

[Rival]

Adoption does not mean that people will store their life savings in bitcoin. It may simply mean that they use bitcoin financial services to conduct transactions when necessary, thus increasing the demand for money in circulation and thus increase the implied price.

Increasing implied prices would be an incentive to hoard, and would attract hoarders. It is already an observable phenomenon. They re-enforce each other in a feedback loop.

Probably an outcome of Gresham's law.

Yes, I simply restated it with the current dynamic as an example.

[David Chen]

anyone noticed the Asicminer's mining wallet address received 191 bitcoins  and 70 bitcoins
see here: https://blockchain.info/zh-cn/tx/c6f0bbcd7b0b3b17beb0f11d366234734c1dab3ef04c7f83c96e14b613c8a303
and here:https://blockchain.info/zh-cn/tx/5375b5b7fbf2f45d27bf3b7d0ce2069116926798e384621494a5baa03609bf22

I guess the FC franchising business is already on the way. 

But, just personal guess, we need to wait offical message from FC.

[stefffe]

anyone noticed the Asicminer's mining wallet address received 191 bitcoins  and 70 bitcoins
see here: https://blockchain.info/zh-cn/tx/c6f0bbcd7b0b3b17beb0f11d366234734c1dab3ef04c7f83c96e14b613c8a303
and here:https://blockchain.info/zh-cn/tx/5375b5b7fbf2f45d27bf3b7d0ce2069116926798e384621494a5baa03609bf22

I guess the FC franchising business is already on the way. 

But, just personal guess, we need to wait offical message from FC.

yay!!! say hello 3+

[BitAddict]

anyone noticed the Asicminer's mining wallet address received 191 bitcoins  and 70 bitcoins
see here: https://blockchain.info/zh-cn/tx/c6f0bbcd7b0b3b17beb0f11d366234734c1dab3ef04c7f83c96e14b613c8a303
and here:https://blockchain.info/zh-cn/tx/5375b5b7fbf2f45d27bf3b7d0ce2069116926798e384621494a5baa03609bf22

I guess the FC franchising business is already on the way. 

But, just personal guess, we need to wait offical message from FC.

I hope you're right