Cryptocoin Mining?

[endscape]

I need to get back into mining. I need to buy some BTC. Hrmmmm...

 

[Fire&Blood]

Thanks for the feedback. I lowered the memory clocks as well as the voltage, for mining, browsing and general light usage, 1100 on the core is stable at 1024v, ~1010v should be stable too, 1v crashes with any browser activity.
I have to admit that I'm intrigued by the jalapeno but in the long run I expect it to have a negative impact on BTC, it's value will likely be massacred.

 

[RussianSensation]

I have to admit that I'm intrigued by the jalapeno but in the long run I expect it to have a negative impact on BTC, it's value will likely be massacred.

So are you thinking GPU mining is dead around October then?

Ya, I am undecided about those ASICs simply because of ETA. If they come on-line in large volumes in October, then it's probably the end for GPU mining due a huge rise in difficulty (much like CPU mining was killed off). At least that leaves a bit more time for people to pay off their AMD hardware or a part of it. But I think the greatest fear I have is people with 2 original singles will just upgrade to the new Mini-Rigs for free. That's like going from 1.6 GHash/sec to 40 GHash/sec! At the current difficulty rate, 40,000 Mash/sec = $5,500 USD / month. At those rates that's just 1.5 weeks or so to repay back the Mini-rig. Everyone in this thread would just buy 1 in that case. That likely means the difficulty will skyrocket soon.

 

[blastingcap]

So are you thinking GPU mining is dead around October then?

Ya, I am undecided about those ASICs simply because of ETA. If they come on-line in large volumes in October, then it's probably the end for GPU mining due a huge rise in difficulty (much like CPU mining was killed off). At least that leaves a bit more time for people to pay off their AMD hardware or a part of it. But I think the greatest fear I have is people with 2 original singles will just upgrade to the new Mini-Rigs for free. That's like going from 1.6 GHash/sec to 40 GHash/sec! At the current difficulty rate, 40,000 Mash/sec = $5,500 USD / month. At those rates that's just 1.5 weeks or so to repay back the Mini-rig. Everyone in this thread would just buy 1 in that case. That likely means the difficulty will skyrocket soon.

You incessant cheerleading of mining isn't helping. Difficulty is rising 10% week over week. Even without ASIC mining, that kind of pace will result in difficulty increasing 50% in just one month's time, and more than doubling by October. The last thing we need is more miners.

 

[chimaxi83]

You incessant cheerleading of mining isn't helping. Difficulty is rising 10% week over week. Even without ASIC mining, that kind of pace will result in difficulty increasing 50% in just one month's time, and more than doubling by October. The last thing we need is more miners.

I'm a new miner. Welcome me. I'll probably take m 7950 in with my 7970 so I can break 1 Ghash

 

[Fire&Blood]

So are you thinking GPU mining is dead around October then?

Ya, I am undecided about those ASICs simply because of ETA. If they come on-line in large volumes in October, then it's probably the end for GPU mining due a huge rise in difficulty (much like CPU mining was killed off). At least that leaves a bit more time for people to pay off their AMD hardware or a part of it. But I think the greatest fear I have is people with 2 original singles will just upgrade to the new Mini-Rigs for free. That's like going from 1.6 GHash/sec to 40 GHash/sec! At the current difficulty rate, 40,000 Mash/sec = $5,500 USD / month. At those rates that's just 1.5 weeks or so to repay back the Mini-rig. Everyone in this thread would just buy 1 in that case. That likely means the difficulty will skyrocket soon.

Not necessarily dead, but after ASIC units IMO it will mutate into something ugly with deflated value and shrunken user base, eventually becoming a niche hobby, hardly a profitable one. I mean, Jalapeno introduction will be like pitting a Athlon vs i7 and expecting the Athlon to look good.

Shutting out the CPU didn't hurt because the user base didn't shrink, GPU to fall back on which most own. Once the (affordable) boxes are out, it's simply impossible for the difficulty to change without accounting for the ASIC unit results, effectively rendering the GPU useless for mining. Even if the BTC/US$ ratio were to miraculously survive the ASIC boom, (needs lots of unicorns) the ease at which shares will be accumulated has to take it's toll and eventually returning to today's average earnings but with an irreversibly decimated user base. Why would one buy a $160 box if that box becomes the average unit that the difficulty is calculated for, if it's output be reduced to $25 which is the average output today, hence taking 6 months plus to repay and offering no other direct benefits like computer hardware does. For every individual that will own more than one box, there are two more that will suffer, regardless if they own one on their own or not.

I wish I was more optimistic but the pending ASIC landing is like placing a foot on a balloon which sadly represents the bitcoin market as we know it, then planting one's entire weight on it. The 2 weeks prior to Jalapeno launch should be interesting though.

I wish Butterfly labs are a hoax. Either way, they are the ones to profit in a few months.

The only scenario that would have worked IMO is if BFL retained the units, simply renting them hence controlling the damage done to the market.

The boxes add a e-peen measure stick, remove the patience aspect which is part of what makes BTC what it is and they antagonize patient miners that will be left behind. Karma is a witch though, I expect majority of the boxes to be collecting dustbefore Q2 2013.

 

[RussianSensation]

You incessant cheerleading of mining isn't helping. Difficulty is rising 10% week over week. Even without ASIC mining, that kind of pace will result in difficulty increasing 50% in just one month's time, and more than doubling by October. The last thing we need is more miners.

You really think me dropping mining here and there on our forum is going to help increase mining difficulty? HD7970 barely gets ~ 700 Mhash. These ASICs have the potential to increase the network rate 10-100x, etc. You can't really blame me on recommending HD7900 series on a forum and correlating that to mining difficulty increases especially since bitcoin prices aren't just related to difficulty.

The current network rate is just 16.933 Thash/s, well below the 18-23 Thash/sec rate when 1 BTC was hitting $13-15.

Not necessarily dead, but after ASIC units IMO it will mutate into something ugly with deflated value and shrunken user base, eventually becoming a niche hobby, hardly a profitable one. I mean, Jalapeno introduction will be like pitting a Athlon vs i7 and expecting the Athlon to look good.

If GPU mining become unprofitable though, wouldn't GPU users who didn't get the ASIC drop out? That would leave people holding ASICs at least some initial profitability, I guess unless you expect a ton of people to grab $150 Jalapenos. It's so hard to say what will happen but I am leaning more towards your side which is why I haven't ordered an ASIC yet. Others think bitcoin mining prices will rise to compensate for the exponential increase in difficulty rate.

 

[Vesku]

No reason to change current mining behavior because of a yet to launch product from a company with a history of overestimating performance and delayed deliveries.

 

[MrK6]

If I was still in college I would be mining to my hearts content (electricity was free). Now that I have to pay for my own, it eats about 40% of my profits, so I'm out for the summer months anyway.

 

[Fire&Blood]

If GPU mining become unprofitable though, wouldn't GPU users who didn't get the ASIC drop out? That would leave people holding ASICs at least some initial profitability, I guess unless you expect a ton of people to grab $150 Jalapenos. It's so hard to say what will happen but I am leaning more towards your side which is why I haven't ordered an ASIC yet. Others think bitcoin mining prices will rise to compensate for the exponential increase in difficulty rate.

Most users will drop out because mining is costly to run. I guess some will drop out even before they lose all profitability. Heat, noise and inconvenience of having clocking profiles and switching between them for gaming/desktop usage/ dedicated mining, all combine for a strong urge to uninstall.

I didn't find numbers and charts to back this up but I think BTC responds to changes in miner performance on the fly. Opening the door for such fast investment returns like buying 5+ Jalapeno units simply has to demolish value for 90% of user base. Buying a 7950 cost me $320 and going by today's prices, it's paying itself off at a rate of ~$64/month, before the utility bill and before help from 5770.

As for the possibility of mass adoption, I can't completely exclude it but how likely is it really? What happens once the word spreads out that you can (at current rate) spend $160 on a computer "accessory" that could repay itself (at current rate) in 9 days and make them another $335 in the following 21? Just a guesstimate but in order for the BTC value to survive, the difficulty would have to rise ASAP to the point of Jalapeno having a BTC output similar to that of the high end 7xxx cards.

Let's go with an optimistic early adoption rate of 20%. Shutting out 80 of users, even temporarily +increasing difficulty rendering GPU's useless-end of BTC as we know it.

 

[fleshconsumed]

From what I understand the biggest danger is bitcoin currency collapsing in value after ASIC introduction. If dedicated ASICs render GPU mining obsolete, suddenly the PC people will have very little reason to use bitcoin currency - it's impossible to mine using GPU and it is too inconvenient to use as a valid form of payment still. This will substantially reduce bitcoin user base, less demand for the bitcoin currency means it's going to be valued less relative to the $.

 

[taltamir]

From what I understand the biggest danger is bitcoin currency collapsing in value after ASIC introduction. If dedicated ASICs render GPU mining obsolete, suddenly the PC people will have very little reason to use bitcoin currency - it's impossible to mine using GPU and it is too inconvenient to use as a valid form of payment still. This will substantially reduce bitcoin user base, less demand for the bitcoin currency means it's going to be valued less relative to the $.

Well, yes.
Alternative currencies are used to combat the inflation and insecurity caused by governments just printing out more and more fiat money.

Precious metal coins have actual use (industry and jewelry) as well as a finite quantity on earth and limited rate of mining. So inflation is possible, but so is deflation as population can grow faster then total reserves.

BitCoin however is not like either exactly, its based entirely on the difficulty in "printing" more money. Having no actual use besides being a currency it lacks one of the stabilizing factors of precious metals. And being math based, a creative improvement in mining technology is not only plausible but inevitable, and whenever one occurs you suffer market upheaval and inflation.

 

[Chiropteran]

BitCoin however is not like either exactly, its based entirely on the difficulty in "printing" more money. Having no actual use besides being a currency it lacks one of the stabilizing factors of precious metals. And being math based, a creative improvement in mining technology is not only plausible but inevitable, and whenever one occurs you suffer market upheaval and inflation.

It sounds like you are trying to say that the coming ASIC will increase bitcoin production and cause inflation.

That isn't how it works.

There will be a brief production increase, right as the ASIC hardware comes online, but with the next difficulty adjustment it will be right back where it was. That is the whole point of "difficulty", is to keep the generation of blocks (and the number of bounties created) relatively consistent.

The BFL ASICs could increase total hash rate by 100X but the overall rate of bitcoin production will remain the exact same.

 

[taltamir]

There will be a brief production increase, right as the ASIC hardware comes online, but with the next difficulty adjustment it will be right back where it was.

Which is WORSE not better. A one time inflation followed by stability is less harmful.

During that brief production increase, only a select portion of the population will see an increase, and when the difficulty is adjusted, only they will still be able to generate any at all. So its the same total amount being generated, but now its ONLY being generated by those with ASICs, in essence they perform two seizures.
1. Seize existing funds (via temporary inflation reducing the value of their competitors coins)
2. Seize production of new funds (via rendering production on GPUs impossible).

Interestingly, I went and looked the EXACT method of difficulty adjustment:
https://en.bitcoin.it/wiki/Target

It's important to realize that block generation is not a long, set problem (like doing a million hashes), but more like a lottery. Each hash basically gives you a random number between 0 and the maximum value of a 256-bit number (which is huge). If your hash is below the target, then you win. If not, you increment the nonce (completely changing the hash) and try again.

I had mistaking assumed that it WAS a long set problem...
What does this clarification mean? Well, it reduces the magnitude but fails to eliminate the issue of "seize existing funds".
And it has no effect on the second issue of seizing production of new funds.

 

[Suspicious-Teach8788]

jalapeno looks cheap. anyone jump on to get one? wondering if i should jump in for one.

 

[RussianSensation]

Alternative asset classes are used to combat the inflation and insecurity caused by governments just printing out more and more fiat money.

Precious metals are an asset class, not a currency . You can't really use other currencies to combat inflation since all world's currencies deflate vs. the cost of goods and services, just at differentiated rates. If you want to combat inflation, you buy other asset classes, bonds, T-bills, precious metals, not other currencies. At least I am not aware of any currency that appreciates in value when other currencies deflate in purchasing power due to inflation.

Precious metal coins have actual use (industry and jewelry) as well as a finite quantity on earth and limited rate of mining. So inflation is possible, but so is deflation as population can grow faster then total reserves.

Appreciation is probably the proper financial term. If price of copper rises, you wouldn't say that "deflated" or "inflated". If population rises and the quantity demanded for copper increases, the price for copper will appreciate to compensate for the scarcity of the said precious metal.

BitCoin however is not like either exactly, its based entirely on the difficulty in "printing" more money. Having no actual use besides being a currency it lacks one of the stabilizing factors of precious metals.

What use does US dollar have other than being a currency? Currency by itself has no value other than what the market assigns to it. Before the US dollar was backed by gold reserves, but it isn't anymore. $100 USD is worth only what it costs to print and what the market deems its worth.

Also, a person can go out now and trade bitcoin currency in circulation. So it's incorrect to say that it's "entirely based on difficulty" to mine it. The existing bitcoin currency in circulation is subject to much of the same laws that a normal currency is subject to, minus the regulation and so on. Since the world's financial analysts/Wallstreet aren't covering Bitcoin as a fiat currency, obviously the fluctuations in value are erratic since not many people have an idea of how that value is derived. However, the price of bitcoin is still dictated by the market, difficulty being just one factor, not the only factor. We have seen bitcoin value all over the place despite difficulty steadily increasing for the most part. So difficulty alone can't explain the value of Bitcoin.

BitInstant aims to partner with MasterCard to allow consumers alternative ways to spend bitcoins.
http://thenextweb.com/insider/2012/...currencies-international-bitcoin-credit-card/

This article touches on various aspects of bitcoin, it's not just difficulty that affects the price of bitcoins as has been shown here many times:
http://www.theverge.com/2012/8/15/3243200/bitcoin-ponzi-schemes-savings-and-trust

For example the value of bitcoin dipped from $13-15 range to $10 and difficulty remained exactly the same during that period.

Even if GPU mining is dead, bitcoin can still function as a viable virtual currency as long as people convert their fiat currencies to purchase Bitcoins. The appeal of bitcoin is also Not having to disclose personal information via online transactions.

 

[Chiropteran]

Which is WORSE not better. A one time inflation followed by stability is less harmful.

During that brief production increase, only a select portion of the population will see an increase, and when the difficulty is adjusted, only they will still be able to generate any at all. So its the same total amount being generated, but now its ONLY being generated by those with ASICs, in essence they perform two seizures.
1. Seize existing funds (via temporary inflation reducing the value of their competitors coins)
2. Seize production of new funds (via rendering production on GPUs impossible).

It won't be a one time inflation.

BFL isn't a huge company, and has production limitations. There will be a first batch of orders shipped out followed by others, and it's not like every single device will be turned on at the same moment. Also, some of the difficulty increase may be mitigated by the fact that GPU miners who pay for electricity will probably shut down mining when it becomes unprofitable.

All in all, the increase in total hash isn't going to be much different from the increase that occurred when the first GPU miners became popular and CPU mining died off. The end result back then was BTC going from being worth pennies to being worth dollars. It certainly didn't cause any inflation, it caused the exact opposite.

I see no evidence to support the idea that increases hash rates and difficulty will cause inflation.

 

[taltamir]

Precious metals are an asset class, not a currency .

They are both.
Being non perishable and with sufficient value per gram, precious metals can be used as a currency as is and in fact have been used and are being used as currency all over the world.
For example, coins have been minted out of gold, silver and copper throughout history.

You can't really use other currencies to combat inflation since all world's currencies deflate vs. the cost of goods and services

That's just silly, different currencies inflate at a different rate. A currency can even undergo deflation while another goes inflation. And currencies value relative to each other constantly fluctuates.

What use does US dollar have other than being a currency?

None, which I have clearly stated when I explained its a fiat currency.
Why are you using this kind of statement to talk down to me? did you even read what I said? did you comprehend it?

Currency by itself has no value other than what the market assigns to it.

With the exception of currencies which have additional value sources.
Gold and silver and gems in the modern world. Salt in rome, etc.
When your currency is made out of a precious good, even if your economy tanks it retains intrinsic value.
If its a piece of paper or a digital bit of data then it has no value at all after such a collapse.

 

[blastingcap]

All in all, the increase in total hash isn't going to be much different from the increase that occurred when the first GPU miners became popular and CPU mining died off. The end result back then was BTC going from being worth pennies to being worth dollars. It certainly didn't cause any inflation, it caused the exact opposite.

So wrong. Mining difficulty does not drive price; if anything it is the other way around as high enough prices encourage people to buy more mining equipment.

Something like 9 million BTC have already been mined. Each day's addition of 7200 BTC is nothing; in a few months it will be even less, at 3600 BTC. Even if we compare it to average daily transaction volume it's less than 10% of that. The point is that supply is fairly fixed; not perfectly fixed because it does crawl up, but 9,000,000 to 9,007,200 barely changes supply. And when you have almost-fixed supply, then demand is what drives price.

I've seen estimates that Silk Road drives 20% of BTC traffic, and certainly the ponzi schemes and speculators have a huge effect on the thinly-traded markets as well. (If you had $800k you could basically wipe out most of the orders on MtGox today. How is this NOT a recipe for currency manipulation?)

But those are demand-side changes, not supply-side. Repeat: DEMAND side, not supply side. Nobody gives a crap about miners' difficulty except miners; skyrocketing difficulty does not mean skyrocketing prices. There is some correlation but it's due to the reverse causation, as sky-high prices encourage people to buy more mining equipment. A BTC value collapse or partial-collapse (e.g., US regulators ban companies like Dwolla from doing business with MtGox) would also wipe out many miners.

Now if you're argument were different--that BTC is inherently deflationary due to the max number of coins able to be mined--maybe that has some truth to it, but that mild deflation built into BTC is currently swamped by volatility due to speculators. Plus, one could also change the code to increase the BTC limit; seems antithetical to BTC but if it lasts long enough there may be pressure to do so.

 

[hyrule4927]

I'm really interested to see how everything turns out with the ASIC units. Not going to claim to be knowledgable enough to predict what is going to happen, but I'm tempted to order a Jalapeño just for the hell of it. As long as things don't get so screwed up it can't even pay itself off I can't see it being a bad idea.

Only downside is that it will be completely useless (unlike a GPU) once the difficulty gets too high for it to be worth the trouble of running it. I wonder if it would be possible to find a way to utilize these units for something like F@H at that point, or are they only suitable for bitcoin?

 

[krnmastersgt]

Just to clarify, you cannot trade in 2 Singles for a Mini. BFL only lets you trade in (at full list price) for up to 50% of the new product that you want, so they'd still be out 15 grand.

I know Jalapenos are backlogged, but what about the new Singles, anyone ordering them that know if the shipments are on schedule?

 

[Zargon]

I just emailed them about the new singles

though I could doubtfully swing one at 1400 bucks

 

[philipma1957]

Seems to me the goose will get slain very soon. This setup that let gpu's make money is about to be lost. A lot of us do bitcoin to ease the cost of nice pc's .
The entire price structure has 9 million coins as of today worth 10 bucks a piece. So the amount of 'silver' mined is worth 90 million.

Silver trades 50 x to 100 x a year > 1 billion in silver = 50 to 100 billion in trades. So 9 million coins would = 450 to 900 million in trades. Of course the market end has nothing to do with the mining end.

One problem is the demand for bitcoins is not fully known. For instance amazon and newegg use the coins.
Could it be amazon and newegg sell more gpus they anyone else? If this demand is lost and it will be with enough "Peppers" sold. Would AmdGPUcoin be invented? A new coin that can only be mined with amd gpu's. Or is the amount of gpu's purchased due to bit coin mining just a small percentage of sales.

I can tell you this. If I were amazon or newegg and I determined that bitcoin mining boosted my gpu sales I would buy out ButterFly Labs today. Shut down all production and refund the buyers.

It is Not like companies do not do this to help the bottom line. Since I do not know how many gpus are sold by amazon and newegg due to bit coin mining all of the above is mere speculation.
I will just ride the gpu train into the ground and not grab a ' pepper ' till I feel a bit more secure.

As a complete aside ButterFly Labs would be better off not selling any of the new gear and just mining. So ask yourself why are they doing this?


the new big item is 1000 gh/s for 30,000 if they just run a few of them in a low cost power state they would not twist the results up much and make a profit with them. They could earn 30,000 back in a month. So it make no sense to sell them at ALL. just keep them to yourself add 1 or 2 a month they would make a fortune. The market would not be flooded. Just saying.

 

[cessation]

I know Jalapenos are backlogged, but what about the new Singles, anyone ordering them that know if the shipments are on schedule?

I emailed them, according to their reply they won't be shipping those for new orders in October either. I asked if they would be shipped this year and they acted like they had no idea.

 

[blastingcap]

Of course they have no idea when they will ship. Don't be surprised if they mine with the ASICs themselves for a while under the guise of testing. We'll know when they have them when the difficulty goes up by a factor of 10 within a month. After the easy money is gone (a month or two of that ought to do it), they may start shipping to customers.