Cryptocoin Mining?

[Idontcare]

I am becoming less hopeful about the continuing increase of the exchange rate. The claims that it would track difficulty have not been borne out.

As a professional currency trader, the logic that went into the claim you are referencing simply never jived with reality IMO.

First of all, mining is increasing the money supply. That is an inflationary pressure (devalues the money because the supply increases).

Yes the total number of bitcoins that will ever exist is a fixed quantity, but the number of coins that are actually available to sait demand (remember supply vs demand balance?) is only around half of the planned grand total.

Thus if demand for BTC is not growing faster than the pace of new BTC's being added to the money supply then the BTC exchange rate can only go down, that is inescapable supply/demand basics of all currencies.

The increasing mining difficulty will only ease the rate of inflation of the float, this will only serve to reduce the downward valuation pressures on BTC exchange rates.

The unfortunate thing for BTC holders is that with the float being rather small it is ripe for manipulation by well monied purchasers. This has, for example, been going on in the silver markets for decades. The Hunt brothers are legendary for their manipulation antics.

There is no question of "if" this will happen to BTC's, only a matter of when. History will repeat itself, I just hope all my friends and colleagues get out near the top and don't get burned holding the bag on the way down.

 

[dajeepster]

About a 6% gain with the new guiminer on my 5830s and 5850. Nice boost to get for free.

i'm getting about the same with all my ati cards...

however, on my nVidia cards i'm getting a 20% decrease

 

[dalamchops]

i'm getting about the same with all my ati cards...

however, on my nVidia cards i'm getting a 20% decrease

shouldn't mine w/ nvidia cards anyways. You're probably actually losing money to electricity. Unless you don't have to pay for utilities.

 

[Chiropteran]

Thus if demand for BTC is not growing faster than the pace of new BTC's being added to the money supply then the BTC exchange rate can only go down, that is inescapable supply/demand basics of all currencies.

The increasing mining difficulty will only ease the rate of inflation of the float, this will only serve to reduce the downward valuation pressures on BTC exchange rates.

The unfortunate thing for BTC holders is that with the float being rather small it is ripe for manipulation by well monied purchasers. This has, for example, been going on in the silver markets for decades. The Hunt brothers are legendary for their manipulation antics.

There is no question of "if" this will happen to BTC's, only a matter of when. History will repeat itself, I just hope all my friends and colleagues get out near the top and don't get burned holding the bag on the way down.

I agree with much of what you said. Heh, that silver Thursday story is interesting, never heard about it before.

Big question is if the influx of new users can exceed the influx of coin from mining. Right now, it looks like it's not. There was a big jump when bitcoins hit the press regarding silk road and such, which I attribute most of the $32 peak to, but since then I don't think there has been much exposure to people who aren't already aware of the currency. This is something that could change overnight though. I think right now the next great market for bitcoins is online gambling. The poker sites have taken heavy flak from the US government and need a solution.

Bitcoins could be that solution, and there is a huge market of online poker players who probably aren't already using bitcoins. I've seen one bitcoin poker site, but it's more of a proof of concept than a polished end user product. A very user-friendly poker site with a strong UI or dedicated client could easily become the bitcoin killer app. If that occurred, there would be a huge increase in bitcoin users, enough that I suspect the increase in supply via mining would be dwarfed by increase in demand.

I do still hold my opinion that difficulty and price are linked on some level, though. I don't think very many miners will continue to mine if difficulty ever makes mining a net loss due to cost of electricity alone, for example. If it ever gets close to that point, miners dropping out will push difficulty back down. And in the other direction, if mining ever becomes "too profitable" many miners will add additional mining hardware.

 

[dajeepster]

shouldn't mine w/ nvidia cards anyways. You're probably actually losing money to electricity. Unless you don't have to pay for utilities.

DC cost money too, but that doesn't stop us.

 

[Emulex]

so i read you guys buy kilo's of coke with your bitcoins ?? how long does it take to grow that many coins? crazy!

 

[dajeepster]

so i read you guys buy kilo's of coke with your bitcoins ?? how long does it take to grow that many coins? crazy!

i buy kilos of silicon..

 

[Muyoso]

I agree with much of what you said. Heh, that silver Thursday story is interesting, never heard about it before.

Big question is if the influx of new users can exceed the influx of coin from mining. Right now, it looks like it's not. There was a big jump when bitcoins hit the press regarding silk road and such, which I attribute most of the $32 peak to, but since then I don't think there has been much exposure to people who aren't already aware of the currency. This is something that could change overnight though. I think right now the next great market for bitcoins is online gambling. The poker sites have taken heavy flak from the US government and need a solution.

Bitcoins could be that solution, and there is a huge market of online poker players who probably aren't already using bitcoins. I've seen one bitcoin poker site, but it's more of a proof of concept than a polished end user product. A very user-friendly poker site with a strong UI or dedicated client could easily become the bitcoin killer app. If that occurred, there would be a huge increase in bitcoin users, enough that I suspect the increase in supply via mining would be dwarfed by increase in demand.

I do still hold my opinion that difficulty and price are linked on some level, though. I don't think very many miners will continue to mine if difficulty ever makes mining a net loss due to cost of electricity alone, for example. If it ever gets close to that point, miners dropping out will push difficulty back down. And in the other direction, if mining ever becomes "too profitable" many miners will add additional mining hardware.

Bitcoins won't take off in popularity as along as it takes a week to covert your real money into bitcoins. If it was an instantaneous process, then more people would do it. Setting up a dwolla account, linking it to your bank account, transferring funds, then transferring to mtgox and then buying bitcoins is a pita.

 

[ultimatebob]

Bitcoins won't take off in popularity as along as it takes a week to covert your real money into bitcoins. If it was an instantaneous process, then more people would do it. Setting up a dwolla account, linking it to your bank account, transferring funds, then transferring to mtgox and then buying bitcoins is a pita.

I think that it would be even better if major store locations like Amazon or Newegg would start taking payment in Bitcoins directly. That way, you can eliminate the conversion process completely.

 

[ghost recon88]

Anyone else using BTCGuild? I've noticed my generated bitcoins in the last 24 hours fluxating like no tomorrow, despite the fact my cards have been up for a couple days straight at the same clock speeds. It's gone as high as .7, and is currently sitting at .31 without the difficulty having increased at all. Something definitely isn't right...

 

[dajeepster]

I think that it would be even better if major store locations like Amazon or Newegg would start taking payment in Bitcoins directly. That way, you can eliminate the conversion process completely.

i don't see amazon doing that anytime soon... they're still fighting off the states from collecting taxes from out of state internet sales...

and then they'd have a doozy of a time when it came to paying federal taxes... how do you claim bitcoins on your 1040?.. is here a box for bitcoin deductions?

 

[Jen]

Anyone else using BTCGuild? I've noticed my generated bitcoins in the last 24 hours fluxating like no tomorrow, despite the fact my cards have been up for a couple days straight at the same clock speeds. It's gone as high as .7, and is currently sitting at .31 without the difficulty having increased at all. Something definitely isn't right...

several have reported same problem , stats not updating. just waiting and hoping. had one miner offline due to uscentral was down or still is not sure


Jen

 

[NoStateofMind]

several have reported same problem , stats not updating. just waiting and hoping. had one miner offline due to uscentral was down or still is not sure


Jen

Apparently the guy who runs BTC Guild sleeps late and will adjust the stats "when he wakes up". Its ridiculous IMO. Not like he's doing this for free. I don't know what the reoccurring problem is but you would think by now it would have been resolved or at least be aware enough of it to anticipate fixing his server stats on the regular.

 

[Chiropteran]

Bitcoins won't take off in popularity as along as it takes a week to covert your real money into bitcoins. If it was an instantaneous process, then more people would do it. Setting up a dwolla account, linking it to your bank account, transferring funds, then transferring to mtgox and then buying bitcoins is a pita.

Well, if you can come up with a good solution to this problem you could make some money.

The delay is because bitcoin transfers are non-reversible, while most cash transactions are. If a site allowed for credit card or paypal purchases of bitcoins without delay it would be too easy to scam or cheat it.

 

[ghost recon88]

Why can't tradehill directly deposit funds into my account if I sell to them? That's what I don't understand. Why does it have to be transferred to dwolla.

 

[Chiropteran]

Why can't tradehill directly deposit funds into my account if I sell to them? That's what I don't understand. Why does it have to be transferred to dwolla.

I'd guess legal reasons.

 

[TakeNoPrisoners]

Newest GUI miner brought my Mhashes up from 263 to 280.

 

[Itchrelief]

I agree with much of what you said. Heh, that silver Thursday story is interesting, never heard about it before.

Big question is if the influx of new users can exceed the influx of coin from mining. Right now, it looks like it's not. There was a big jump when bitcoins hit the press regarding silk road and such, which I attribute most of the $32 peak to, but since then I don't think there has been much exposure to people who aren't already aware of the currency. This is something that could change overnight though. I think right now the next great market for bitcoins is online gambling. The poker sites have taken heavy flak from the US government and need a solution.

Bitcoins could be that solution, and there is a huge market of online poker players who probably aren't already using bitcoins. I've seen one bitcoin poker site, but it's more of a proof of concept than a polished end user product. A very user-friendly poker site with a strong UI or dedicated client could easily become the bitcoin killer app. If that occurred, there would be a huge increase in bitcoin users, enough that I suspect the increase in supply via mining would be dwarfed by increase in demand.

I do still hold my opinion that difficulty and price are linked on some level, though. I don't think very many miners will continue to mine if difficulty ever makes mining a net loss due to cost of electricity alone, for example. If it ever gets close to that point, miners dropping out will push difficulty back down. And in the other direction, if mining ever becomes "too profitable" many miners will add additional mining hardware.

It seems to me that mining isn't even supposed to be what sustains the bitcoin transaction network in the long-term, anyways, so any link between mining difficulty and bitcoin value is temporary at best, because mining is a temporary phenomenon.

When all of the bitcoins are mined, it seems you're just back to the same old system of being taxed by whatever organizations spring up to replace visa/mastercard/etc in the bitcoin world.

 

[Aikouka]

several have reported same problem , stats not updating. just waiting and hoping. had one miner offline due to uscentral was down or still is not sure


Jen

Yeah, it looks like USCentral was down for about 6 hours as I had no blocks processed during that time. I wondered why I was down to .2 BTC over 24 hours. :\

 

[gorobei]

It seems to me that mining isn't even supposed to be what sustains the bitcoin transaction network in the long-term, anyways, so any link between mining difficulty and bitcoin value is temporary at best, because mining is a temporary phenomenon.

When all of the bitcoins are mined, it seems you're just back to the same old system of being taxed by whatever organizations spring up to replace visa/mastercard/etc in the bitcoin world.

the btc wiki has an entry for the post mining phase. the premise is that anyone wanting to have a transaction processed will offer an additional fee amount to the total btc amount being sent(more of a tip or gratuity). the amount will be up to the sender, but the size of the tip would determine how fast the transaction is processed(big tip, more clients will jump at the opportunity to hash the transaction into the next block).

it's a feasible premise. the all or nothing nature of the block mining rewards right now caters to those with the most processing power, creating a large pool that processes transactions quickly at a low price(free). this is so new users of the exchange system dont see massive delays in their transactions. it is a big carrot they are dangling to get miner clients to hash for them, but the zerosum nature of the blocks means large collective pools are needed to guarantee any miner returns.

as the mining phase ends if the only way to earn coins is as a service fee, the reward becomes smaller reducing the number of miners and encouraging those who remain to leave the client on 24/7 to pick up the fractions of btc offered as gratuity. the amount of processing power required would drop and even the sp's in apu's from amd/intel that would be in every machine would be enough to hash it.
I imagine the profitability would probably be very low(maybe a 1$ a day) but if it is running as a client in background on cpu/apu at low power, enough people might opt for it as beer money bonus kinda thing.

 

[Acanthus]

BTCGuild has lost approx 600 GHash/s since last weeks high.

 

[Zargon]

BTCGuild has lost approx 600 GHash/s since last weeks high.

with the diff jump I bet alot of people turned off the low end miners because they werent worth it anymore, like hte 4 series radeons

here is what they are at now:
9,206 workers at 2,797.11 GH/s

 

[Chiropteran]

It seems to me that mining isn't even supposed to be what sustains the bitcoin transaction network in the long-term, anyways, so any link between mining difficulty and bitcoin value is temporary at best, because mining is a temporary phenomenon.

When all of the bitcoins are mined, it seems you're just back to the same old system of being taxed by whatever organizations spring up to replace visa/mastercard/etc in the bitcoin world.

Mining is temporary only in the very long view. It's going to going on for 20 more years or so. Also, transaction fees are paid to the miners, and will replace the generated block bounties if traffic picks up.

I still insist that mining difficulty will hold some relation with price, even 10 years from now. If the price/difficulty ratio is too low, mining won't even cover the electricity cost, in which case miners will quit mining. Or, if the price/difficulty ratio gets too high, miners will purchase additional mining hardware to take advantage of the lucrative gains. These basic facts apply no matter how many coins you get per block, and will hold true as long as bitcoin hold any value.

Obviously, there are a few exceptional individuals who may mine even if electricity cost makes it unprofitable, and also there are some who wouldn't mine even if the price/difficulty ratio is such that you recoup your investment in a single week... but I believe such irrationals are rare enough that the rational majority is enough to keep some sort of relation between price and difficulty.

 

[ultimatebob]

Heh... something tells me that solar cell panels will be the next big thing for bitcoin miners. When bitcoins get difficult enough to mine that selling them no longer cover the electricity costs, they'll just look for a cheaper form of electricity

 

[hdfxst]

I was thinking sapphire or one of the partners would come out with a card just for bitcoin mining.with a basic pcb a core,minimal memory and no video outputs