Bitcoin/GBP withdrawal issue...

[phil4]

One interesting differentiator this time is the lack of "other" use for the ASIC. When buying into CPU mining or GPU mining there was always the fallback of using the PC or for gaming. Or the other way around people buying for gaming and using for mining the rest of the time.

ASICs while pricey don't offer any such fallback, it's all or nothing. In essence that presents two variances.

1 that only determined miners are likely to buy one, this reducing the number sold.

2. The buyer takes much more risk buying.

ASICS will change mining for sure, and perhaps in a subtly different way to mining before due to the reasons above.

The effect of that on Bitcoin is pretty much irrelevant... The current us and fluctuating prices I can't see changing. The only possible effect may be a slight rise in price due to ASIC miners wanting their investment back so holding out for a higher price. But I'd expect that to e miner.

I'm not an expert, and the above isn't advice. I even doubt I'll be proved right.

[jim]

It does have a lot to do with the price of electricity, as I explained, and again RELATIVE to the price of existing currencies, which is and will remain important as long as they coexist. The ~1.6 exchange rate between USD and GBP doesn't exist because someone in a shirt decided it should be that way, it's the result of many factors effecting each economy. Bitcoins are ultimately proof of work done, and the work is performed by electricity purchased using existing currency. I'm not trying to argue it is the only factor, but it most certainly is a factor.

Also, as I explained, efficiency will likely not increase once ASICs have gained some market share. Even the ASIC vendors themselves are mentioning programs to limit how many individuals can buy to prevent saturating the market too quickly. If everyone could get hold of a plug and play ASIC device, they would very quickly go from looking easily profitable to near break-even, and you're back where you started, only you're now relying on some companies that have proved less than reliable already.

I'm talking about miners being forced to buy new gear, not everyone on the planet, and my posts are aimed mainly at that side of things, if you hadn't guessed by now.

Mining may not be the only purpose of bitcoin, but you can be certain there are a heck of a lot of people using it purely for that, maybe even exceeding people just using it as a currency. Sure, that could change if/when it gains widespread acceptance, but it's not true ATM.

/looping so unsubbed

I know you're already aware of this, but I really think you're taking the mining aspect of it too seriously.

It is of course an element of the currency, but I think a much more significant element is it as a currency, i.e. something with which to purchase things. Every time a miner sells his bitcoins, someone out there is buying them up. You can already pay for servers, donate to websites, pay for online storage, even pizzas and some potentially illegal products that prefer the increased anonymity that bitcoins bring.

For the people using bitcoins in that event, they couldn't give a stuff about GPUs, ASICs, or anything else - what the efficiency or the value for money of mining is makes absolutely no difference, they just want to buy stuff.

[Agent]

It does have a lot to do with the price of electricity, as I explained, and again RELATIVE to the price of existing currencies, which is and will remain important as long as they coexist. The ~1.6 exchange rate between USD and GBP doesn't exist because someone in a shirt decided it should be that way, it's the result of many factors effecting each economy. Bitcoins are ultimately proof of work done, and the work is performed by electricity purchased using existing currency. I'm not trying to argue it is the only factor, but it most certainly is a factor.

Yes and I agree, but it's all relative. I don't take issue with what you're saying here. The factors involved are huge. The number of people using Bitcoin alone will play a massive effect on its value.

What I find interesting is:

Second, the value of Bitcoins is ultimately determined by power used.

Because I'd say that the value of a Bitcoin is "ultimately determined" by its supply and demand.

Sure, the cost of generation of a Bitcoin is a factor in the number generated, but is a Bitcoin "ultimately determined" by the power used for it? If so, at what point? Once it's in the system, how do you factor the power used to create it in relation to the pool? How do you apply it over a time period?

From my POV, this is going to get overwritten by supply and demand almost instantly.

Also, as I explained, efficiency will likely not increase once ASICs have gained some market share.

I don't understand your POV here.

GPUs are still more efficient than CPUs. ASICs are more efficient than both. Surely the efficiency of coin generation is a simple case of working out how much energy it takes to generate a coin, which is always going to be better on more specialised hardware? Could you explain how a ASIC could ever be less efficient than its predecessors as market share increases?

Even the ASIC vendors themselves are mentioning programs to limit how many individuals can buy to prevent saturating the market too quickly. If everyone could get hold of a plug and play ASIC device, they would very quickly go from looking easily profitable to near break-even, and you're back where you started, only you're now relying on some companies that have proved less than reliable already.

But as above - Bitcoin doesn't care about profit. Why does it matter to the Bitcoin network if something is profitable to generate or not? If you injected a million Bitcoins into the market tomorrow in one go, the price of a Bitcoin would certainly change, but Bitcoin doesn't care about stability.

I'm talking about miners being forced to buy new gear, not everyone on the planet, and my posts are aimed mainly at that side of things, if you hadn't guessed by now.

I know where they are aimed and I can kinda see your POV, I just don't agree that anyone is forced to buy anything. You don't need to mine to use Bitcoin. Mining is just a way of ensuring the integrity of the Bitcoin pool, while rewarding those with new coins for doing so. If people are better and faster at it than me, then I'll leave them to it.

Mining may not be the only purpose of bitcoin, but you can be certain there are a heck of a lot of people using it purely for that, maybe even exceeding people just using it as a currency. Sure, that could change if/when it gains widespread acceptance, but it's not true ATM.

I don't agree at all. Neither do most people in the community: http://www.weusecoins.com/mining-guide.php

Let's clear up some misconceptions about mining. Most Bitcoin users don't mine! Bitcoin mining is a business and very competitive`. Mining makes sense either if you do it for fun and don't care if you make less than you invest, or if you can do it very efficiently.

Bolded is theirs.

http://bitcoinstatus.rowit.co.uk/hosts.html

Average number of miners in the last 24 hours is around 16k. The number of trades in Bitcoins on mtgox alone in the last 24 hours is about 71k. That means that on average, every single person in the pool would have traded over 4 Bitcoins. The probability of that happening is rather....remote. And that's only the figures from one public market exchange.

/looping so unsubbed

That's a shame because you're one of the more articulate users on here. Sometimes things need to be reworded and discussions had for everyone's views to be understood / changed. I only replied because I was genuinely interested in your POV based on your previous high quality posts. Then again, this is becoming more common on HEXUS Very few people actually want discussions now.

[ehhhhhhh]

1 that only determined miners are likely to buy one, this reducing the number sold.

2. The buyer takes much more risk buying.

I believe only determined miners built multi GPU setups too. Consider the cost of the components and the huge power consumption.

Users with 1-2 cards got out of it rather quickly in my experience. Or much sooner than the participants with dedicated mining rigs.

I don't think ordering any ASIC now would be riskier than buying hw for 2-3 mining rigs ~2 years ago.

[watercooled]

Apologies for thread bailing, wasn't in the best of moods yesterday for a number of reasons and at the time, it seemed like I was entering into another pointless thread loop. I know that's not the case though. I've nothing against discussions, just I've seen so many threads descent into back-and-forth bickering I wonder if it's worth debating things sometimes. Still, I've woke up in a better mood so I'll continue.

Anyway, yeah I agree I'm over-focussing on the mining side and may be misunderstanding a few things (maybe even the bits I'm more confident in). The 'more people mine than use' was an uneducated assumption based on what I've read which is likely to be heavily biased towards the mining side of things.

My reasoning that ASICs will end up no more efficient than GPU mining is based on possibly an over-simplistic model where ASICs are very widely adopted and where electricity price is a large factor in the relative worth of the coins. Assuming they're exactly based on power cost, however efficiently they're mined, they will always be worth a given amount relative to power. For example, say power costs £1/Joule, if you get one coin per joule on a GPU, the coin will be worth £1. If ASICs completely replace GPUs, and you get 10 coins per Joule, coins are now worth 10p each. So £1 worth of coins still takes £1 of electricity to mine. I know there are more factors involved, but it's certainly no coincidence mining is, on average, very close to break-even.

As Phil4 says, the ASICs only have one use (potentially another if they could be re-purposed to SHA bruteforce attacks), so they're clearly an investment to make something back. They may look incredibly profitable initially, and perhaps they will remain that way for a while if production numbers are limited, but if/when enough people get their hands on them, they're no more profitable than GPUs, leading back into to what I said above.

If someone can disprove my efficiency model I'd happily read it. One way my theory is flawed however, is that I'm assuming people will end up using the same amount of total power with ASICs. TBF, based on ASIC price and power consumption, that probably won't happen with initial models at least.

[phil4]

I would agree about the power issue, I do a little GPU mining now, but my dislike if AMD GPUs hasn't done me any favours and so my NVidia cards don't make me any profit.

I have preoreded an ASIC, and from that cost perspective knowing it probably has no use for anything else my central goal and what I'll monitor closely is getting the cost back.

Form what I've read ASIC power consumption is circa 60w, so not much. Once I've paid for the ASIC i'll look at that.

So in my head it's less power consumption that drives my sell price and more making my investment back. I expect that to take 10-12months minimum.

So as you can see this is my take on it. Please don't argue with my opinion, it's mine. However I know I don't speak for everyone (or perhaps anyone else at all), so by all means present yours/alternatives.

[jim]

I think the reason everyone made so much money out of Bitcoin at the beginning was because it wasn't too well known - the difficulty absolutely rocketed whilst I was mining, no doubt because so many people were entering the game, trying to get on the bandwagon. I was one of them.

Now that it is well known, I agree with you. I was just re-doing the maths, and worked out that I could earn £40/month after electricity costs, if I bought a new 7970 for my gaming rig. That sounded great, for a bit, and then I realised all the time setting up, the noise, the heat, so on, all for the sake of £1.30 per day. Yeah, actually I'll pass.

When I gave up last time, I was making £3 per day after electricity, and didn't think it was worth the hassle any more after the difficulty increased. Now it's even worse, and yet people are still mining.

I think there are two problems: firstly, there are a group of core miners, who really hate that people are making profit out of this. They see it as some sort of duty to the world to mine and create this amazing currency, and spit on the disgracefulness of those who are profiteering. Those guys would carry on even if they were making a whacking great loss.

Secondly, there are a lot of people who pay a lot less for energy than I do, I'm sure of it. For one, anyone able to leverage corporate IT assets to their bitcoin campaign. For two, anyone with "free" or subsidised electricity, i.e. living in shared accommodation, living with parents, etc.

Those guys could theoretically mine until the end of time without losing money, excluding depreciation. In fact, not being responsible for the electricity costs was one of the main reasons why I made so much progress with bitcoin early on - when I had to pay, it really hurt my profit margins.

So yeah, the profit is always bound to drop due to difficulty - and right now we're at another peak of bitcoin value, with no guarantee that the price won't plummet in the future (which would screw you over a second time). The profitability of the mining equipment is very much reliant on the strength of the currency. I'm sure some of the ASIC early adopters will make a fortune, but I wouldn't want to be investing £20,000+ in a box that should hopefully make me some money for a bit. The only thing I'm not convinced about is that you're linking the value of the coins to the value of electricity, which I don't think is right. The arbitrary "difficulty" increases as people mine faster, so if you get 1GH/s today, you might earn 1 bitcoin per month on average. If the difficulty suddenly doubles, then you're doing 1GH/s of work, but you'll only earn 0.5 bitcoins per month. So the value of the currency doesn't need to change, you'll just get far fewer of them. I expect that's what will happen with the new ASICs.

People will buy them, and for the first fortnight might earn a fortune in bitcoins (although I accept they may well flood the market initially, causing the value to drop). Then, whenever the adjusted difficulty kicks in, they won't make nearly as much. The difficulty will adjust again, as more people receive their ASICs, and the number of bitcoins found per ASIC will plummet again. At this point, it will be horrendously unprofitable to mine with GPUs. Then it'll just be a battle to recoup the money spent on the ASIC before the difficulty rises so high that your £2,000 ASIC yields exactly the same as a 5870 did before they were introduced. Speed will be everything.

Well, that's my prediction at least

[watercooled]

Yeah that's essentially my take on it. I think we also kind of agree on the efficiency bit, perhaps from another angle though. Difficulty doesn't really matter to my overly-simplistic model (at least in long term), when you're talking about worth relative to other currencies.

[jim]

I think the problem with the difficulty vs. currency value debate is that difficulty is linked directly to mining, whilst currency value isn't.

If people are still buying currency with USD, to then make donations in bitcoins (increasing numbers of sites are doing this, I think in some part to escape Paypal's policing), then it will boost the value of the currency, irrespective of the mining. Difficulty on the other hand, that's directly screwing the miners. If they produce more, then the system fixes itself so they produce less.

Interestingly enough, if you look at the graphs, then mining and bitcoins' value go hand in hand. I wouldn't have called that, but I guess it's probably because people are responding to the changes in currency value - as it becomes more valuable, mining becomes more economical:

Mining stats: http://bitcoin.sipa.be/

Value stats: http://bitcoincharts.com/charts/mtgo...gCzm1g10zm2g25

On that note, you can see on the mining stats how difficulty (the red line) has rocketed recently.

[watercooled]

It looks like the BFL Jalepeno has been ditched from the product line, replaced by something barely faster (4.5>5 Ghash) and nearly double the price, and didn't the 'last half of April' shipping estimate say March a few weeks back? And it seems it was Feb before that: http://www.bitcoinx.com/bitcoin-mining-hardware/

Google cache: http://webcache.googleusercontent.co...&ct=clnk&gl=uk

[HalloweenJack]

more complaints as well - some people paid 1 year ago and still not received anything

[jim]

Maybe it's just me, but if these things were such a good idea, wouldn't the company just build a load, and then mine all the BTC they could?

It should be a lot more profitable than selling them.

Hmm.

[Agent]

Maybe it's just me, but if these things were such a good idea, wouldn't the company just build a load, and then mine all the BTC they could?

It should be a lot more profitable than selling them.

Hmm.

1) You build machines in production runs. Say you do a production run of a 1000, it's 1000 * base cost. That's a lot of money to have upfront. Making systems in singles is too expensive.

2) Bitcoin is volatile - the value can rapidly change. If Bitcoins become worthless overnight for whatever reason, you have a lot of custom equipment that's only good for Bitcoin in reality that's cost an insane amount of money.

3) Power and running costs - while these things are power efficient in nature, you still have to house them, power them, have room cooling, insurance (?), theft considerations.

There are probably lots more

[ehhhhhhh]

https://forums.butterflylabs.com/ann...ic-status.html

This is the official update thread.


Honestly, I do not mind waiting. They got my money almost 1 year ago. I have been following their progress, and I was completely aware of all the delays and I couldn't care less. They provide refunds anyways.

Everyone, who ordered from them should have known that it's not going to be easy and instant. Furthermore, nobody were forced to order from them.

why the hate?

[HalloweenJack]

the internet hate is because of the PR rep is just a troll and all the lies the company has given (apparently). and from other websites , refunds are very hard to get and at some times (allegedly) had to involve lawyers

[ehhhhhhh]

the internet hate is because of the PR rep is just a troll and all the lies the company has given (apparently). and from other websites , refunds are very hard to get and at some times (allegedly) had to involve lawyers

Have you ordered from them? have you had hard time asking for a refund?

"allegedly"....lol. I don't want to defend them (I don't like Josh either) but this is just pathetic.