Bitcoins

[DownInFlames]

Originally Posted by corporatejay

What does mining do?

I'm not sure an easy answer is possible, but...

Because it is a decentralized system bitcoin miners use the processing power of their computers to keep track of the transactions. New bitcoins are added to the system at a regular rate, and they go to the miners as a reward for doing the work. The biggest problem with this (I think) is that our computers are more than powerful enough to do this work, so they have to make it more difficult by getting the miners to do lots and lots (billions of calculations per second) of math to earn the bitcoins, hence the ridiculous mining rigs in the previous posts.

Think of it this way: A teacher asks a simple question, and whoever answers first get a prize. You'd have all the students yelling out at the same time, so the teacher makes them run a marathon before they can answer.

[Slava]

Here's a fantastic (but long) read on bitcoins and their interaction with the 'normal' financial markets, and everything else about them. Very interesting.
https://medium.com/money-banking/2b5...aign=subB_long

[Rathji]

Originally Posted by photon

So if I'm a company that's going to sell hardware that can be used to make money mining bitcoins, why am I selling them? Shouldn't I just make them and use them?

So there are 2 things that I think are important here:

1) The butterfly labs products, were preordered and the final development process was completed with that money, ala kickstarter. Without those funds, they might not have a product. Even now, they are having trouble meeting the power consumption promises. Actually just checked the site and they revamped thier product/prices - The previous 4.5 Gh/s unit for $150 is now a 5Gh/s machine for $274.

2) As soon as the hardware gets widespread use it increases the difficulty to the point where a machine doing anything more than paying for itself is a lengthy and possibly uncertain proposition, hinging on the value of the bitcoin.

If I put $150 into my pocket (or into dev costs) for a unit that might generate me $150 in a year after paying for electricity/facilties, I would consider that being ahead.

[Hack&Lube]

Is anybody here even considering using an ASIC miner like the Butterfly Labs Bitforce series?

I'm guessing that once the ASIC miners come out in May-ish, the bottom will fall out for prices for graphics cards and mining will become infeasible for conventional miners as the difficulty will skyrocket soon.

[Diemenz]

I am glad I found this thread.

I purchased 100 long ago because the newsgroup site I used only accept bitcoins as payment.

Considering i still have 99 and the ridiculous current price I am going to do everything in my power to offload them ASAP

[Hack&Lube]

Originally Posted by Diemenz

I am glad I found this thread.

I purchased 100 long ago because the newsgroup site I used only accept bitcoins as payment.

Considering i still have 99 and the ridiculous current price I am going to do everything in my power to offload them ASAP

Congrats, you are ~$15,000 richer if you offload them today.

The Calgarian that started the Canadian Virtual Exchange is probably a very rich man by now.

[Diemenz]

Originally Posted by Hack&Lube

Congrats, you are ~$15,000 richer if you offload them today.

Are you friggin serious?
Any suggestions on how to offload them as easy and quick as possible?

[Hack&Lube]

Originally Posted by Diemenz

Are you friggin serious?
Any suggestions on how to offload them as easy and quick as possible?

I'll PM you.

[Rathji]

Originally Posted by Hack&Lube

Is anybody here even considering using an ASIC miner like the Butterfly Labs Bitforce series?

I'm guessing that once the ASIC miners come out in May-ish, the bottom will fall out for prices for graphics cards and mining will become infeasible for conventional miners as the difficulty will skyrocket soon.

I was, before the price bump.

Not sure now, though, as by my estimates, unless the price stayed over $80 there was no way you would expect to make money except in the extreme long term. This is assuming that difficulty increases by 50-100x within the initial couple months before someone who ordered now would receive their unit. Any less than that, and you will earn money for sure and more than that and you will lose money for sure.

The reality of the situation is that most BFL units won't be shipped and in use until June or July, best case scenario.

[Hack&Lube]

Originally Posted by Rathji

I was, before the price bump.

Not sure now, though, as by my estimates, unless the price stayed over $80 there was no way you would expect to make money except in the extreme long term. This is assuming that difficulty increases by 50-100x within the initial couple months before someone who ordered now would receive their unit. Any less than that, and you will earn money for sure and more than that and you will lose money for sure.

The reality of the situation is that most BFL units won't be shipped and in use until June or July, best case scenario.

Dilemma right now is whether or not to fire back up my 5GH/s conventional mining rigs for 2 months or liquidate it all now before BFL units kill the value of current hardware. The bubble could well burst before then but I have all these GPUs gathering dust.

From the proceeds of selling the 5GH/s worth of conventional hardware at today's prices, I could buy a 25 GH/s Bitcoin Miner...

[normtwofinger]

I had no idea about this before this thread, and I wish I learned about this years ago.

Just for curiosity can someone recommend a basic mining client? Just want to check it out.

[Rathji]

Originally Posted by Hack&Lube

Dilemma right now is whether or not to fire back up my 5GH/s conventional mining rigs for 2 months or liquidate it all now before BFL units kill the value of current hardware. The bubble could well burst before then but I have all these GPUs gathering dust.

From the proceeds of selling the 5GH/s worth of conventional hardware at today's prices, I could buy a 25 GH/s Bitcoin Miner...

Without hardware costs, it is a no brainer to run those cards if you are not going to sell them.

Assumign a 2000W power consumption (just a guess) thats $45+ a day at present prices ($135). Even if it drops back down to $50, which it was pretty stable at before this recent bump, you are making $15 a day. Chances are it ends up somewhere in the middle.

You are going to have to pool though, if you were not doing so before, because your average time to gen a block is almost 10 weeks.

At the end, you can still sell your cards for a reasonable amount.

Of course, the sooner you sell and order a ASIC rig to secure your place in line when they actually start shipping, likely the better. However, with the price increases, I expect the rate of ordering to decrease, so it might not be that bad.

[Rathji]

Originally Posted by normtwofinger

I had no idea about this before this thread, and I wish I learned about this years ago.

Just for curiosity can someone recommend a basic mining client? Just want to check it out.

GUIMiner is the easiest for beginners.

http://guiminer.org/

edit: You can check out this chart for reasonable expectations for your cards output. Suggested flags for optimal hashing are typically included. as well.

[Azure]

Originally Posted by Hack&Lube

Probably a large Bitcoin Exchange getting hacked will cause people to panic sell. There have been thefts of millions of dollars in Bitcoins in the past.

Pretty sure Mt. Gox had a use denial of service attack right after the price hit $140 the other day. They are now running again, and the price is still $141.

[Azure]

Originally Posted by Hack&Lube

I'll PM you.

I'm wondering the same thing.

[Daradon]

Drinks on Diemenz!

And Azure, apparently!

[Azure]

Difficulty is now 7,673,000. Up from roughly 6,000,000 a few days ago.

[Bill Bumface]

So do they just increase the difficulty to increase the time it takes to generate blocks? Not because more computation actually needs to be done? Did ATI and Transalta get together and invent this whole thing?

[Rathji]

Originally Posted by hulkrogan

So do they just increase the difficulty to increase the time it takes to generate blocks? Not because more computation actually needs to be done? Did ATI and Transalta get together and invent this whole thing?

The increase (or occasionally decrease) of the difficulty is to keep the time it takes to generate blocks exactly the same. (1 block every 10 minutes)

Originally Posted by Azure

Difficulty is now 7,673,000. Up from roughly 6,000,000 a few days ago.

From Bitclockers Calculator

The current mining difficulty is 7,673,000. The next difficulty is estimated to change by 232.88% to 25,541,730 on block #231,839. That should be 5 days 14 hours 8 mins from now.

Note: the estimated next change really doesn't mean anything, unless the growth in computational power is consistant, which I don't really suspect. The likely cause of this bump is rigs being brought backonline, like H&L's because it is much more profitable at this exchange.

[Hack&Lube]

Originally Posted by azure

i'm wondering the same thing.

ygpm2