So, mining folks... Tell me of your profits and your future sustainability?

[g0l1athrulz]

I don't care about the manufacturers, the retails and supplier on the other hand do care, like I said be my guest, give them a call and ask them.

Think about it like this, Person A buys 5 GPU's from you over the course of 2 months. He lives in Cpt so the cards need to be shipped to him...
3 months from now 2 of the cards fail...these cards now have to be returned to the retailer, courier collects (R90 minimum) and delivers to the retailer, they then test the cards/or send it back to the supplier. Cards are replaced and then sent back to the retailer, the cards are then couriered back to Person A (R90 minimum). All is well, 3 months down the line 1 of the replacement cards starts acting up, so the whole process starts all over again...Couriers again, Retailer, suppliers, Retailer, courier, Person A...That's just for one person...out of thousands. All of this, costs the retailer money, the supplier money, suppliers start getting complaints from manufacturers because they want to know why so many cards are being returned or swapped out. I shouldn't say this but what the hell, I know for a fact that Gigabyte isn't happy and neither is Sapphire.

It costs money to refund, repair, swap out hardware...

I've seen the incredible rise in rma's on AMD cards 1st hand...


Think what you want and say what you want but suppliers and retailers are not happy about it.

I can see amd cards coming with 6month/1year warranty soon....

Sent from my GT-I9190 using Tapatalk

 

[mzg]

When your profit margin is only R200 on a 280X...you would also not be happy.

Anyway this is derailing the thread completely.

Maybe I'm missing something but the guys are complaining about the money gained or lost on mining but run a business with a profit margin of R200 on a R4000 item?

 

[PancakesZA]

Maybe I'm missing something but the guys are complaining about the money gained or lost on mining but run a business with a profit margin of R200 on a R4000 item?

lol Never mind I can tell you actually have no idea how profit margins in the PC hardware market works.

Anyway I am out of the thread, bawb's post is epic and I hope more people read it before blindly spending thousands on blade miners that are already worthless.
Good luck and God speed to all the miners.

 

[mzg]

When your profit margin is only R200 on a 280X...you would also not be happy.

Anyway this is derailing the thread completely.

To get back on topic, the lesson in all of this is clear: you should only play this game with money you can afford to lose.

 

[PancakesZA]

To get back on topic, the lesson in all of this is clear: you should only play this game with money you can afford to lose.

Agreed.

 

[Pansyfaust]

lol Never mind I can tell you actually have no idea how profit margins in the PC hardware market works.

Anyway I am out of the thread, bawb's post is epic and I hope more people read it before blindly spending thousands on blade miners that are already worthless.
Good luck and God speed to all the miners.

I think the majority of people who have 1-6 GPU's will not(Should not) be buying ASICS as they have not made ROI on the current cards/equipment they have bought. I have only just made ROI and I was lucky enough to get a 1.4Mhs GPU for free.

For ASICS I feel it is go big or go home, there is no middle ground as I don't think there is an equivalent value/hash rate and Resale value for the equivalent 1-6GPU miner, and thus no point really.

You cant really sell an ASIC even 3 months later and expect to get half of what you paid for it as there will be faster/cheaper and newer ASICS out at the time. This is just my opinion, but if Gridseed themselves can drop their price by $650 in the space of 3 weeks, you can bet your ass that reselling that gridseed ASIC 3 months later will (if the buyers are informed) not go for much. In three months time the $1000 miners will be much faster than the 5.2Mhs Blades out now.

 

[capricious]

How different this convo would be if the price of BTC was at $1000

 

[Pansyfaust]

How different this convo would be if the price of BTC was at $1000

Or if LTC were back at $30

 

[Oj0]

Two things on the graphics card front:

I'd rather have a PowerColor card than many other "big" brands, I've had more ASUS cards die on me than PowerColor. Just because they're cheap doesn't mean they're worse/crap.

Mining doesn't need to shorten the lifespan of a card. Overclocking the life out of it and letting it run hot, however, will. I've got a largish selection of GTX 580s that have been running at 100% load for a few years now and haven't failed/degraded. They're mildly undervolted and kept below 70 degrees. I can guarantee you that all six would've been dead years ago had I treated them the way I see many people treating their mining cards...

 

[stevenwiner]

I'd rather have a PowerColor card than many other "big" brands

Agreed. I have never had a "bad" Powercolor card whether mining or gaming, whereas I have had other brands fail on me before.
Like many others on Carbonite, I have had many, many GPU's pass through my hands of many different brands and kinds.

 

[nicodium]

Yeah, Im not selling my mining rigs any day soon.

In 2011 I had a few 5970's mining 2btc a day, for 2 months, sold all my coins for 3k via paxum and mtgox when asics were announced, then sold the rigs aswell, thought the crypto days were long gone.
Then, end of 2013 when btc reaches 1000USD, the goldrush starts again, with the alt coin boom.
If I had sticked to my guns, I could have just started them up when again as ltc gained popularity and made a killing, being early enough in the game. Without the mining boom waiting and price spikes.
Funny enough, I see that 5970's are still going for about what I sold mine in 2011 for, so its not like your cards are going to be absolutely worthless.

Also, how cares about warranty / rma issues. That's what insurance are for.
Changed my santam policy to include all electronic items inside my home for the total cost of my home, for about a R250 increase per month, flat rate excess of 2k.
Meaning if lightning strikes, and I lose my 200k worth of rigs, I am covered completely.

I have set my capital out for this investment, not going to bail on it anytime soon, who knows, in a year or two there is a new algo which is incredibly popular, and the gold rush starts all over again, then my miners shall go back to swinging the digital ax.
Think about this, people who invest their money in high risk high return situations, can end up losing all of it, with absolutely nothing to show for it, except the proof of payment bank transfers, and a sob story. Ala Kings realty debacle.
Here, the miners made some cash, and still have something usable to show for it. Also the possibility of extreme future growth.

What, did you think you can just unload a few 100k, and see that triple in 2 months time; that is not how the world works.

 

[Wasabee!]

You're assuming that the manufacturers/retailers actually care - they are making a bucket selling millions of cards only because of mining and I don't hink they really care (ATI anyway)

Besides, the cost of actually producing a card (parts) is probably 10-20% of the retail value of the card so they willl probably RMA till the warranty expires quite happily. They can't have their bread buttered on both sides?

My opinion.

Actually YOU are assuming they are making a bucket? YOU are assuming the cost is only 10-20% to produce the card? What about the millions/billions for R&D costs before one chip is sold? I think these sweeping statements are ridiculous, if it was so profitable, why are there only two major companies in the GPU arena? Exactly...

lol Never mind I can tell you actually have no idea how profit margins in the PC hardware market works.

Anyway I am out of the thread, bawb's post is epic and I hope more people read it before blindly spending thousands on blade miners that are already worthless.
Good luck and God speed to all the miners.

+1 mzg I really think you have no idea of online retail.

Think and say what you want but it's kind of dumb that their sales probably went up by a factor of 100 (on high end cards) and they now want to moan about RMAs?

There is no fair use clause on gfx cards. It's not uncapped DSL so I can buy it and run it at 100% 24 hours a day (legally). They warrantied it and must live with the pain (They warrantied it for gaming, not mining...) or revise their business model but then take into account that their sales have skyrocketed.

Would they rather go back to the trickle sales on the high-end cards?

Actually there is no fair usage clause that I know of either. However, the question is more principal than example.

If you take any product, and use it above it's rated specifications or intended use, and in doing so break it - it is your fault. Just because there is no clause that says you cannot put foil on your GPU and fry eggs, doesn't mean you should. I am actually sure if one reads the T&Cs finely there is something to the effect of RMAs and intended use, but once again this is up for interpretation/proof before it can be applied.

So while some may think they are smart to do the whole GPU mining thing, I have questions regarding the ethical responsibility of a consumer. Surely most will not know what I am talking about as in SA many only demand but no one realises that most relationships are two way. The ADSL example is a good one. Many people in SA go on and on to ISPs due to the fact that they cannot utilize their full line speed or whatever the whole month on their uncapped accounts. Or worse moan when they are shaped during business hours.

The real questions of principal and ethics beg to be asked however. Is it necessary for many consumers to be downloading 100s of GB of content a month? Is it legal? Is it fair onto the system? (Let's exclude whoever makes the stupid capacity decisions on exchanges etc). If the reality is that in the day our national network is generally congested, wouldn't it be great if everyone just runs their "legal" downloads at night?

The reality is that people are in a mindset that if they can get away with it, they will do it. Whether it is over-utilizing their uncapped ADSL (for illegal purposes) or mining on GPUs that were designed for gaming (and then during RMA tell the retailer it just died) or evading the tax man to pay less tax. I think you can see my perception on such topics but I guess many people just have the entitlement/if not why not attitude.

I know the above is very supplier centered, not consumer centered, but it should be an enlightening perspective seeing that forums are often only from the consumers' perspective.

 

[Oj0]

Also, how cares about warranty / rma issues. That's what insurance are for.
Changed my santam policy to include all electronic items inside my home for the total cost of my home, for about a R250 increase per month, flat rate excess of 2k.
Meaning if lightning strikes, and I lose my 200k worth of rigs, I am covered completely.

Insurance doesn't cover wear and tear... And claiming lightning damage when it was wear and tear is fraud.

 

[nicodium]

I only mentioned lightning because I live in a lightning prone area, but it is insured against ALL risk damage.
But that is not the point of my post, and involving the word fraud is a little extreme regarding my post.

 

[Pansyfaust]

Actually YOU are assuming they are making a bucket? YOU are assuming the cost is only 10-20% to produce the card? What about the millions/billions for R&D costs before one chip is sold? I think these sweeping statements are ridiculous, if it was so profitable, why are there only two major companies in the GPU arena? Exactly...



+1 mzg I really think you have no idea of online retail.



Actually there is no fair usage clause that I know of either. However, the question is more principal than example.

If you take any product, and use it above it's rated specifications or intended use, and in doing so break it - it is your fault. Just because there is no clause that says you cannot put foil on your GPU and fry eggs, doesn't mean you should. I am actually sure if one reads the T&Cs finely there is something to the effect of RMAs and intended use, but once again this is up for interpretation/proof before it can be applied.

So while some may think they are smart to do the whole GPU mining thing, I have questions regarding the ethical responsibility of a consumer. Surely most will not know what I am talking about as in SA many only demand but no one realises that most relationships are two way. The ADSL example is a good one. Many people in SA go on and on to ISPs due to the fact that they cannot utilize their full line speed or whatever the whole month on their uncapped accounts. Or worse moan when they are shaped during business hours.

The real questions of principal and ethics beg to be asked however. Is it necessary for many consumers to be downloading 100s of GB of content a month? Is it legal? Is it fair onto the system? (Let's exclude whoever makes the stupid capacity decisions on exchanges etc). If the reality is that in the day our national network is generally congested, wouldn't it be great if everyone just runs their "legal" downloads at night?

The reality is that people are in a mindset that if they can get away with it, they will do it. Whether it is over-utilizing their uncapped ADSL (for illegal purposes) or mining on GPUs that were designed for gaming (and then during RMA tell the retailer it just died) or evading the tax man to pay less tax. I think you can see my perception on such topics but I guess many people just have the entitlement/if not why not attitude.

I know the above is very supplier centered, not consumer centered, but it should be an enlightening perspective seeing that forums are often only from the consumers' perspective.

I do agree using items not as they were intended is not on, like frying an egg on a GPU, but if silicon is not meant to be used 24/7 then it must be poor silicon . I'm pretty sure the majority of silicon lasts way beyond their warranty dates expire, or else there is no money in it. I dont want to make wide sweeping assumptions, but I feel unless you are applying massive overclocks and bumping up voltage without adequate cooling, the chip and VRMs should not fail. Obviously if you let cards run at 90 degrees and dont try undervolt it wont last long, but to keep them in spec and at default or lower voltage, then, I wonder, maybe we actually extend the lifespan of the chip itself (probably neither in any case).

I for one have undervolted my chips and applied a tiniest overclock to my 280x's. I have also underclocked my 7990 a smidge and undervolted a large percentage, and keep all the cards in an open frame where the temps go between 77-83 for the 7990 and stay under 70 for the 280x's.

But yeah, I dont feel I am not entitled to using these cards for processing. I mean, if I kept them rendering benchmarks all the time, would you tell me I am misusing them?

 

[BillyBob]

Hmmmm... was expecting more of a flaming for my views on Virtual Currencies - glad to see some other okes are waking up as well.

Hopefully not too many BTC speculators around here, because I'm pretty sure the whole shebang is going to end in tears somewhere down the line.


As for the tangent the thread seems to have gone off on (Thanks Pancakes )--- Ai yai yai... the mining-a-GPU-at-stock-or-overclocked-frequencies-because-it-has-warranty crowd...

Supplier margins are low... you think they make a big premium over dollar pricing available from US-based sites, but they get spanked by customs and import taxes / duties the same way you get hit if you bring cards in yourself from overseas... They make their money on moving volumes of a wide range of products, with RMA / warranty overheads carefully calculated.

When the failure rate shoots up on a product, questions start being asked - by both the supplier, and the manufacturer... A good analogy would be performance cars.. 10 years ago, you could abuse, race and even modify the likes of a BMW M3, while still keeping your motorplan in place with minimal hassle in the event of something going wrong... When the 335i's and E60 M5's / E92 M3's came out, tuners had a field day - upping the boost on 335i's and setting M3 / M5 rev limiters to 9000 RPM... until M5's started chowing bearings and 335i's started blowing turbochargers and melting pistons... when BMW Germany went "Huh-uh, we're not covering user abuse anymore."

These days, they have rigorous measures in place... The ECUs have lockout & verification protocols up the wazoo, and super-intricate checksums for new files - all aimed at discouraging aftermarket tuning... They even have inspectors assigned to warranty claims to assess the cause.. Your M3 over-revved and popped the motor, motorplan void. You remap / move the rev limiter, motorplan void. Your M3 is spotted at a track day or drag racing event, motorplan void. Hell, brake discs and pads have to last xxx km or they're not covered under motorplan. Why? To curb abuse of a car doing something that the warranty wasn't designed for.

So yeah - let's say the next generation of cards are somehow super efficient at mining, or a new mining protocol comes out that makes GPUs feasible again - I assure you, suppliers and manufacturers won't take kindly to the high failure rates and implied costs for them... Something's got to give, and eventually, the masses will be penalized in some way for miners abusing the system --- One or a combination of the following measures will most likely be taken:

* Additional markup on GPUs to cover higher warranty overheads.
* Shorter warranty periods
* Measurement protocols & logs for mining activities built into GPU BIOS or a separate EPROM, which gets checked when submitted for warranty claim. Card used for mining? Sorry, warranty void.

Mark my words guys... The warranty fallout from cards used for mining is still a work in progress - the cards that haven't failed in the first year of their lifespan while used for mining, will still have a higher chance of failing further down the line than cards that were exclusively used for gaming... a big chance of something going wrong in the remaining 2 years of warranty as offered by the bigger manufacturers.

Graphics cards have always had failure rates - even when just used for gaming - the fact that those failure rates have shot up since the advent of mining, should tell you all you need to know... they're not built for the 24/7 abuse they suffer in a mining environment, period.

 

[Rahl]

I had 2 medium spec cards of which one was being used. Sold them both and got a nice 9 280x in return. Between the sale of the old cards and the little bit I made from mining I basically broke even and that's all I really wanted.

As for the ASIC's debate I am of the same opinion as most people here that its just not feasible for you to make your money back. The lack of transparency from the companies producing these miners is putting up a lot of smoke and where there is smoke...

I will keep an eye on things and see how it develops but either way I can play most games without having to worry about specs for the next year or two.

 

[Pansyfaust]

Hmmmm... was expecting more of a flaming for my views on Virtual Currencies - glad to see some other okes are waking up as well.

Hopefully not too many BTC speculators around here, because I'm pretty sure the whole shebang is going to end in tears somewhere down the line.


As for the tangent the thread seems to have gone off on (Thanks Pancakes )--- Ai yai yai... the mining-a-GPU-at-stock-or-overclocked-frequencies-because-it-has-warranty crowd...

Supplier margins are low... you think they make a big premium over dollar pricing available from US-based sites, but they get spanked by customs and import taxes / duties the same way you get hit if you bring cards in yourself from overseas... They make their money on moving volumes of a wide range of products, with RMA / warranty overheads carefully calculated.

When the failure rate shoots up on a product, questions start being asked - by both the supplier, and the manufacturer... A good analogy would be performance cars.. 10 years ago, you could abuse, race and even modify the likes of a BMW M3, while still keeping your motorplan in place with minimal hassle in the event of something going wrong... When the 335i's and E60 M5's / E92 M3's came out, tuners had a field day - upping the boost on 335i's and setting M3 / M5 rev limiters to 9000 RPM... until M5's started chowing bearings and 335i's started blowing turbochargers and melting pistons... when BMW Germany went "Huh-uh, we're not covering user abuse anymore."

These days, they have rigorous measures in place... The ECUs have lockout & verification protocols up the wazoo, and super-intricate checksums for new files - all aimed at discouraging aftermarket tuning... They even have inspectors assigned to warranty claims to assess the cause.. Your M3 over-revved and popped the motor, motorplan void. You remap / move the rev limiter, motorplan void. Your M3 is spotted at a track day or drag racing event, motorplan void. Hell, brake discs and pads have to last xxx km or they're not covered under motorplan. Why? To curb abuse of a car doing something that the warranty wasn't designed for.

So yeah - let's say the next generation of cards are somehow super efficient at mining, or a new mining protocol comes out that makes GPUs feasible again - I assure you, suppliers and manufacturers won't take kindly to the high failure rates and implied costs for them... Something's got to give, and eventually, the masses will be penalized in some way for miners abusing the system --- One or a combination of the following measures will most likely be taken:

* Additional markup on GPUs to cover higher warranty overheads.
* Shorter warranty periods
* Measurement protocols & logs for mining activities built into GPU BIOS or a separate EPROM, which gets checked when submitted for warranty claim. Card used for mining? Sorry, warranty void.

Mark my words guys... The warranty fallout from cards used for mining is still a work in progress - the cards that haven't failed in the first year of their lifespan while used for mining, will still have a higher chance of failing further down the line than cards that were exclusively used for gaming... a big chance of something going wrong in the remaining 2 years of warranty as offered by the bigger manufacturers.

Graphics cards have always had failure rates - even when just used for gaming - the fact that those failure rates have shot up since the advent of mining, should tell you all you need to know... they're not built for the 24/7 abuse they suffer in a mining environment, period.

Your original post was flaming virtual currencies? How so? I saw the post as flaming virtual currency mining itself, not the actual uses of the currency. What about the actual currency and network do you think is wrong? Just the mining bits and the volatility of value?

As for ASIC's causing issues, i do agree with you somewhat. I feel that they might be overvalued compared to current Bit/Litecoin pricing. At current prices, Bitcoin Farming is not profitable for anyone outside of the manufacturers, and I have an ugly feeling that due to the pricing of their ASICs they themselves are creating a bubble of speculation. To spend so much on something that at current prices will never ROI is a hefty gamble. One I feel that only early adopters can afford to keep spending money on. Everyone else who is not an early adopter I feel will get stung in some way.

Look at this poor sod- $46K Spent on Mining Hardware: What Happened Next?

As for warranty support , I do understand, and the concerns are valid. But I still feel like telling your consumers how to not use their GPU's instills negativity and caution on the part of the consumer into a product.

If there was a compromise about warranty support I think it may suit both parties to a degree. For instance, if they sold "mining" GPU's cheaper with one year warranty, I think miners may be on board for that. Sure, miners could buy the regular desktop GPU's and use them for mining, but void their warranty. However, if AMD and their partners sold "mining" GPU's at a cheaper price and reduced warranty, I think miners would be on-board with that. Either pay for a "mining" GPU with 1 year warranty, or a gaming one with 3 years. Give the consumer choice and let them decide. Just having a blanket policy of "if you mine with it you void warranty" instills negative connotations with the brand and may drive away consumers. It may be a complicated process as people could easily sell GPU's with voided warranties because they just "tried this mining thing" without realising the warranty complications. But if it is clearly communicated it may be of benefit to both miners and AMD.

Also, imagine you had a GPU and they said warranty was voided because you mined with it, yet it was some sort of malicious virus that hijacked your GPU for mining purposes that "one time your PC was running slow in games so you reformated you PC". That would bleak me out.

 

[BillyBob]

Your original post was flaming virtual currencies? How so? I saw the post as flaming virtual currency mining itself, not the actual uses of the currency. What about the actual currency and network do you think is wrong? Just the mining bits and the volatility of value?

As for ASIC's causing issues, i do agree with you somewhat. I feel that they might be overvalued compared to current Bit/Litecoin pricing. At current prices, Bitcoin Farming is not profitable for anyone outside of the manufacturers, and I have an ugly feeling that due to the pricing of their ASICs they themselves are creating a bubble of speculation. To spend so much on something that at current prices will never ROI is a hefty gamble. One I feel that only early adopters can afford to keep spending money on. Everyone else who is not an early adopter I feel will get stung in some way.

Look at this poor sod- $46K Spent on Mining Hardware: What Happened Next?

As for warranty support , I do understand, and the concerns are valid. But I still feel like telling your consumers how to not use their GPU's instills negativity and caution on the part of the consumer into a product.

If there was a compromise about warranty support I think it may suit both parties to a degree. For instance, if they sold "mining" GPU's cheaper with one year warranty, I think miners may be on board for that. Sure, miners could buy the regular desktop GPU's and use them for mining, but void their warranty. However, if AMD and their partners sold "mining" GPU's at a cheaper price and reduced warranty, I think miners would be on-board with that. Either pay for a "mining" GPU with 1 year warranty, or a gaming one with 3 years. Give the consumer choice and let them decide. Just having a blanket policy of "if you mine with it you void warranty" instills negative connotations with the brand and may drive away consumers. It may be a complicated process as people could easily sell GPU's with voided warranties because they just "tried this mining thing" without realising the warranty complications. But if it is clearly communicated it may be of benefit to both miners and AMD.

Also, imagine you had a GPU and they said warranty was voided because you mined with it, yet it was some sort of malicious virus that hijacked your GPU for mining purposes that "one time your PC was running slow in games so you reformated you PC". That would bleak me out.

Yes, I did slate BTC in my original post as well - the boom has come and popped - and in the aftermath, BTC's value is diminishing daily on a long-term downward trend, with little-to-no fundamental support.

Not a big deal you say? Now bear in mind the difficulty factor - considering the rate at which difficulty is climbing with dedicated 2/3 TH miners hitting the market place, one would expect the value to be climbing proportionately (considering that the virtual coin infrastructure is designed that way to begin with) - but it isn't... despite the coins becoming an absolute schlepp to produce, it's no longer appreciating in value - it's not even buoying the rate of decline... But why?

You have to consider a few fundamental facts behind bitcoin as a commodity:

* Commodity pricing is based on supply vs demand... simple. More buyers than sellers in the market? The price goes up. More sellers in the market than willing buyers? Price goes down... Reward vs Risk - And simply put, Bitcoin requires a big risk appetite as it stands, because it seems that the guys that don't have money to burn are looking to cash out before things potentially get worse - even if it's at a slightly lower rate than the market dictates at the moment. Bitcoin isn't an essential commodity - it's not oil or grain... heck, it's not even a precious commodity like gold or platinum... it's an intangible. It's like having money in the bank... but it's money that you have to keep an eye on due to its volatility. And there's no consumption of it as a commodity.

* Acceptance / Adoption - While select e-tailers and online services now accept bitcoin, its spending appeal is limited. It's missing the boat in terms of its original stated purpose - a universal, unregulated virtual currency in exchange for goods or services - whereas the vast majority of current bitcoin sales are people who cash out through brokers, or sell to long-term speculators. Considering the current trend of volatility, it's not likely to gain much acceptance either... E-tailers would create additional admin and effort for themselves in adopting a currency that needs to be watched closely, in case it crashes and loses you loads of money. In the world of Paypal and online credit card transactions, and the current (and ever-worsening) negative-return for mining your own BTC, Bitcoin has shot itself in the foot by its own devices and the capitalist nature of ASIC manufacturers... It has become a cumbersome trading method, useful only for anonymous transactions and as a measure of convenience by people who already happen to have coins.

* What backs it and gives it value? Sentiment. Unlike physical currencies that derive strength from economies, along with their fundamental factors like politics, produce, exports, etc --- by comparison, Bitcoin is much more subjective - with a perceived value based on sentiment and continued bitcoin production.

While BTC was booming, it was the darling for day traders and early speculators, e-tailers adopted and the world was a wonderful place for anyone wanting to get into the bitcoin race... there was demand... since it crashed from that high, the late wagonjumpers have seen their investments drop by nearly 50%... Mt Gox has put a damper on its safety... It isn't much of a "safe haven" for rich folks in shaky economies either... So investor sentiment isn't doing well, people aren't buying, and it won't change unless something changes fundamentally (large scale adoption), or it drops low enough for more speculators to start buying.

It could see another boom in future - make no mistake - it's by no means a safe bet. And in the same breath, considering the China fiasco and America's position of sitting firmly on the fence, it may most likely never see the magical $1000 mark again.

LTC and Doge are in the same boat - they track BTC's general trend, as they take lead from it.

Once the whole mining game has played out, and provided the US Federal Reserve & international financial regulatory boards give the sign-off instead of trying to sink Bitcoin, its value SHOULD stabilize, and make it a brilliantly convenient commodity to transact in (provided all the large merchants the likes of Google and Amazon come onboard) - but it's got a rocky road to go along in order to get to that point... Look at the ongoing Bitcoin suppression attempts in China for instance... or the IRS in the US already wanting their pound of flesh from transactions... The new SA law regarding online purchases will subject you to local taxes on virtual currencies as well, of that you can be certain.

Bitcoin states a noble intention, and one that makes sense on a lot of levels - but getting there is another matter altogether.


As for GPU's, meh - I can't explain it any better than I already have... GPU's are not built and binned for mining purposes. Miners cost the manufacturers and distributors money through increased failure rates. Nvidia and AMD set the MSRP for their products - not the manufacturers... Manufacturers just add on the cost for their custom board implementations and coolers. Manufacturers get returned products, and forward their failed chip claims onto AMD... If anyone's going to call the shots on mining and the measures taken against it, it will be AMD directly - and if the high failure rates persist, you can be assured that they'll be making some changes.

 

[Gelmir]

This post has answered questions I haven't even asked yet.

Thanks!

 

[Pansyfaust]

Yes, I did slate BTC in my original post as well - the boom has come and popped - and in the aftermath, BTC's value is diminishing daily on a long-term downward trend, with little-to-no fundamental support.

Not a big deal you say? Now bear in mind the difficulty factor - considering the rate at which difficulty is climbing with dedicated 2/3 TH miners hitting the market place, one would expect the value to be climbing proportionately (considering that the virtual coin infrastructure is designed that way to begin with) - but it isn't... despite the coins becoming an absolute schlepp to produce, it's no longer appreciating in value - it's not even buoying the rate of decline... But why?

This is why I am also not sold on ASICs or the price they are sold at, where the input of mining power does not neatly translate into an increase in the value of the coin. Granted, if we look to last year BTC was only worth around $250 at the most by March last year, plateauing to $120 afterwards(lost 50% of value). The price spike to $1000 in November and plateau down to 450$-$500 now is also a loss of 50%. The point is it is still higher than it was last year this time.

You have to consider a few fundamental facts behind bitcoin as a commodity:

* Commodity pricing is based on supply vs demand... simple. More buyers than sellers in the market? The price goes up. More sellers in the market than willing buyers? Price goes down... Reward vs Risk - And simply put, Bitcoin requires a big risk appetite as it stands, because it seems that the guys that don't have money to burn are looking to cash out before things potentially get worse - even if it's at a slightly lower rate than the market dictates at the moment. Bitcoin isn't an essential commodity - it's not oil or grain... heck, it's not even a precious commodity like gold or platinum... it's an intangible. It's like having money in the bank... but it's money that you have to keep an eye on due to its volatility. And there's no consumption of it as a commodity.

Supply verse demand applies to crypto in the same way, most coins are deflationary in nature, which prompts people to keep an eye on their money and to save more rather than spend more- a lot of the financial crisis in 2008 was attributed to fiscally irresponsible spending/loaning of a currency- spend it now as its worth more. I do agree that the risk/reward is currently not in the favour of generating coins, but considering Bitcoin is also a social experiment as well as a financial one, you can expect society to treat it as the new "gold" if it shines like it did in November. As for essential commodity, I think reworking what is essential in the digital age is important-

There is a change in focus about what is considered valuable or has value in the age of the Internet- is a dota 2 armour item any less valuable than gold or platinum? It is a virtual item; you can see and interact with it in a "material sense", but you cannot touch it. Yes it may use "gold" colours or a Platinum "aura" on a dota 2 item, but the point is that as an article of code it derives value from its usage and function regardless of its intangible nature- that people value it within the world of dota 2. Intangible properties influence the value of things just as much as tangible ones- Gold may be valuable because it is scarce and requires a lot of work to extract. It is also used for electronics and manufacturing and in aesthetics- aesthetics being the "entwined" intangible and the tangible benefits of a commodity. Bitcoin may just be the evolution of economic trade focusing on the intangible properties of something over the tangible- the way the world is finding immense opportunities in the consumption and use of the digital, not only the tangible.

* Acceptance / Adoption - While select e-tailers and online services now accept bitcoin, its spending appeal is limited. It's missing the boat in terms of its original stated purpose - a universal, unregulated virtual currency in exchange for goods or services - whereas the vast majority of current bitcoin sales are people who cash out through brokers, or sell to long-term speculators. Considering the current trend of volatility, it's not likely to gain much acceptance either... E-tailers would create additional admin and effort for themselves in adopting a currency that needs to be watched closely, in case it crashes and loses you loads of money. In the world of Paypal and online credit card transactions, and the current (and ever-worsening) negative-return for mining your own BTC, Bitcoin has shot itself in the foot by its own devices and the capitalist nature of ASIC manufacturers... It has become a cumbersome trading method, useful only for anonymous transactions and as a measure of convenience by people who already happen to have coins.

This is probably were it is still has the most grounds for arguing against its benefits over traditional currency. Spending bitcoin is cumbersome here, and even if I could spend it, I doubt I would as I am still trying to "save" as much as I could. I can agree that currently people are treating it more as a commodity than a currency, and I assume day to day trading for goods and services is very minimal compared to market trading. I agree, due to its volatility people may be less inclined to spend it currently.

As for buying things, it offers great way of not having your banking/credit card details stored in a database somewhere. Think of the Playstation Network hacking a few years ago were people gained access to account details and credit card details. If you could buy games on Steam or PS store using bitcoin, it eliminates the need to have your sensitive data in their database. Its one of the main reasons I never choose to save my credit card details on steam in any form. As for watching your bitcoin value fluctuations, It does introduce uncertainty for wider adoption as the value of the coin could decrease or increase overnight. Uncertainty kills adoption I agree.

* What backs it and gives it value? Sentiment. Unlike physical currencies that derive strength from economies, along with their fundamental factors like politics, produce, exports, etc --- by comparison, Bitcoin is much more subjective - with a perceived value based on sentiment and continued bitcoin production.

There are a ton of arguments dealing with the strength of Bitcoin as something that has value- mainly, its nature as decentralised currency without regulatory control by a reserve bank, a liberal currency which is based on market demands- I think the whole concept of Bitcoin is very similar to FIAT based currency: the idea that if something without inherent value or backed by any material wealth(physical FIAT currency) and is purely backed by transactions between people (the economies, produce, exports, politics as you put) why cant something, which also is not tied to any "real value", like bitcoin, be similar?

While BTC was booming, it was the darling for day traders and early speculators, e-tailers adopted and the world was a wonderful place for anyone wanting to get into the bitcoin race... there was demand... since it crashed from that high, the late wagonjumpers have seen their investments drop by nearly 50%... Mt Gox has put a damper on its safety... It isn't much of a "safe haven" for rich folks in shaky economies either... So investor sentiment isn't doing well, people aren't buying, and it won't change unless something changes fundamentally (large scale adoption), or it drops low enough for more speculators to start buying.

It could see another boom in future - make no mistake - it's by no means a safe bet. And in the same breath, considering the China fiasco and America's position of sitting firmly on the fence, it may most likely never see the magical $1000 mark again.

LTC and Doge are in the same boat - they track BTC's general trend, as they take lead from it.

I dont pretend to offer any advocacy about how Bitcoin or LTC will "go to da moon". I personally feel that some people in the Bitcoin/crypto world offer it as the Digital Messiah to cure all our social ailments, and that is wrong. Behind everything is people, Bitcoin is people(like soylent green) and people will decide were to take it and through their actions will burn it to the ground or make use of it in a socially acceptable way for transacting in a digital world. As a concept of code and transparency of transactions it seems brilliant for security and utilising peer-to-peer networks for their combined security and strength. People will decide what happens to it, whether it becomes a speculative nightmare or an everyday currency. So far it seems ASICs and the business model behind them are creating a massive amount "mining economy" which I feel will start to become unstable because the majority of people will stop mining, especially now that KNC and others basically mine in competition with their customers. Possibly the only ones who can afford to mine are the ones who made thousands of BTC and currently use them to just buy up every ASIC that floats by.

As for GPU's, meh - I can't explain it any better than I already have... GPU's are not built and binned for mining purposes. Miners cost the manufacturers and distributors money through increased failure rates. Nvidia and AMD set the MSRP for their products - not the manufacturers... Manufacturers just add on the cost for their custom board implementations and coolers. Manufacturers get returned products, and forward their failed chip claims onto AMD... If anyone's going to call the shots on mining and the measures taken against it, it will be AMD directly - and if the high failure rates persist, you can be assured that they'll be making some changes.

I'm sure they could look at doing it? People were mining with hardware before the great shortage of December 2013, yet I never heard of any concerns from AMD over increased RMA's of 5870's and 6970's? Miners may cost the manufacturers money, but like I said, if there is a cost to them, make that cost work in your favour instead of out right "banning" its usage. GPUs are not binned for mining, but they are binned for MTFB maybe?

 

[BillyBob]

Yes, the current price is still higher - but it's on the way down as things stand. Do you know where it's going to end up?

If the production of more difficult coins isn't even counter-acting the decline - it's going to take a major fundamental influence to make it boom... one that I personally don't see coming anytime soon... Similarly, there are a multitude of potential threats that could severely cripple or kill BTC altogether. You underestimate the likes of governments, the World Bank and the US Federal Reserve - They have various nefarious methods to bring down crypto-currency should they be so inclined... taxation through the IRS and China's current tactics are prime examples of dissuading people from Bitcoin... Similarly, the FBI could bring BTC's value to its knees by selling off its seized stockpile.

Unless BTC becomes backed by gold or some other precious commodity, or has major adopters, there's very little to stem it.

Seriously on the DOTA 2 armor analogy? The market for that is so small, it's laughable... you can find niche markets for anything, with people willing to spend ridiculous amounts of money on spurious things - a sad reflection on modern society... But more to the point - the world at large isn't as tech savvy as we'd like to think - the notion of virtual currency has a very long way to go before it will gain broad-based acceptance.

As I said, I have nothing against BTC - its principles are noble.. (However, one could wonder whether the founder of Bitcoin may in fact own a large stake in the ASIC companies?) - but as it stands, the cons outweigh the pro's... especially in terms of speculation and perceived value. Mining it isn't worth the electricity costs, and buying right now to speculate is a massive gamble.

But hey, gambling addicts goan gamble.

 

[Pansyfaust]

Yes, the current price is still higher - but it's on the way down as things stand. Do you know where it's going to end up?

If the production of more difficult coins isn't even counter-acting the decline - it's going to take a major fundamental influence to make it boom... one that I personally don't see coming anytime soon... Similarly, there are a multitude of potential threats that could severely cripple or kill BTC altogether. You underestimate the likes of governments, the World Bank and the US Federal Reserve - They have various nefarious methods to bring down crypto-currency should they be so inclined... taxation through the IRS and China's current tactics are prime examples of dissuading people from Bitcoin... Similarly, the FBI could bring BTC's value to its knees by selling off its seized stockpile.

Unless BTC becomes backed by gold or some other precious commodity, or has major adopters, there's very little to stem it.

Seriously on the DOTA 2 armor analogy? The market for that is so small, it's laughable... you can find niche markets for anything, with people willing to spend ridiculous amounts of money on spurious things - a sad reflection on modern society... But more to the point - the world at large isn't as tech savvy as we'd like to think - the notion of virtual currency has a very long way to go before it will gain broad-based acceptance.

As I said, I have nothing against BTC - its principles are noble.. (However, one could wonder whether the founder of Bitcoin may in fact own a large stake in the ASIC companies?) - but as it stands, the cons outweigh the pro's... especially in terms of speculation and perceived value. Mining it isn't worth the electricity costs, and buying right now to speculate is a massive gamble.

But hey, gambling addicts goan gamble.

I dont know where it will end up, but I personally have not invested more than I can afford to loose. I have no idea which way governments will swing, or if they should regulate it. I'm not anti-government in any sense, but if Governments are scared (or not) then their reactions to it just lend weight to taking BTC seriously, as either a threat or a new tax source. If Government regulation was used it could have prevented Mt Gox from crashing so spectacularly.

An analogy is meant to be an analogy? I merely used it as an example to show that people are attaching value and creating a marketplace and economy around digital items. I was not using it as an example of how dota 2 items are like or have the same amount of value as Bitcoin.

As for being backed by a precious commodity, if we think outside the box, some would argue that the Internet is a precious commodity and the infrastructure and development it enables and provides is also valuable. Modern banking and markets derive a large chunk of value from the infrastructural support of the internet. To avoid grand sweeping statements, but i just couldn't resist, If gold built empires 2000 years ago and oil built empires 100 years ago, then possibly the next one is leveraging the Internet?

Also, spurious spending? Like cigarettes, alcohol and entertainment?. People have been spending cash on various things on different degrees of the "spurious" spectrum for a long time. I mean, who needs BMW's when a VW golf/stationwagon can do the same task?

As for widespread adoption, the first computers in use in the 1970's were only used by the very tech savvy hobbyists and professional sectors. Fast forward a few decades and in the early 1990's many people considered going on Bulletin Boards and opening and checking emails a high tech activity, whereas now anyone with two cells can check their email and sign up and get scammed on a forum. Time domesticates technology, makes what was once considered the preserve of the tech savvy as fairly conventional.

 

[Dibzzz]

Interesting read.

Time will tell, I do not recommend mining to everyone because the truth of the matter is mining has become so specialized.
You have to keep up with new developments, coins and hardware to try and stay in the game and if you do not take a risk here and there you are wasting your time and money.

The end

 

[gox1201]

I've read Bob's post - not much new there. Its all been said before.

I've just gotten back in country, but I'll update this thread. But the long and short is this was posted before and after the crash in 2011, ditto 2012, ditto 2013, and now in 2014 again.

BTC crashes, people all say I told you so, bitcoin booms, people all say I told you so, rinse and repeat.

There are at least 20 threads on the bitcointalk/litecointalk speculation / market prediction forums going "its a scam" "its going to the moon" blah blah blah.

Its a stockmarket. I highly volatile one, with an interesting twist.

The old sentiment of "don't invest what you can't afford to lose" like in any other situation, applies here as well.

Its the EXACT same situation if you invest in voltatile stock on the market. Lets take a rather silly stock - Facebook stock. Go and look at that

"its listing yaaaay we all going to be rich"
Couple of days later

"its got no inherent value, there is no "product" behind it" booo its going to fail

Stock drops low ---> ppl want to kill / death threats blah blah blah

Now its sky high again ---> news all over the world about how great a stock it is.

Ditto Apple
Ditto any number of big name companies.


1. Its not for Joe soap anymore - its a highly specialized rapidly fluctuating market, where fortunes are made and lost daily.
2. It has a HUGE amount of manipulators, go and look, and I mean really look, at a major exchange. Look at the sell walls, whale baiting etc. There are people selling 150 BTC or more at a slight loss, just to try to create a panic, so they can buy back 170 BTC for the price they sold the 150 at. And this happens literally multiple times a day.

Just before I went overseas, you could literally have made 27x your input in less than 6h just by being clued in (the price of a coin rose by 27x)
This happens so often its not even funny. BUT its not random, and its not LUCK for most of the market players.

I think you get 4 types of coin players
- 1. Joe Amateur ---> his days are mostly over, he will get losses after losses but will still try to mine because either someone else pays for the electricity, or he hopes for a break
- 2. The big boy traders ---> these guys are professional stock brokers ---> you see movements of hundreds of bitcoins and thousands of litecoins in and out daily. These guys create rumours just to manipulate the market and they are GOOD at what they do
- 3. The big boy miners -> people that keep up with the latest asics, in big amounts, getting in on Batch 1 Deliveries of every major ASIC> They actually see roughly a 150-200% ROI on their asics cause they get them literally within the first week of release. They also tend to sell to the Joe Amateurs when its almost too late, but it still looks profitable. They plan on replacing their entire hardware selection every 3-6 months.
-4 . The wannabe big boy miners - this is where we (Viturrex) are sitting currently - Running the mining thing as a serious business, trying to show long term ROI, having to weather the ups and downs. The market volatility hurts us, as our mining profit shifts so badly from week to week. Two weeks ago we were doing 4x what we were the week before, and now we back down again. Hard to budget, but worth the ride IF our model works.

Much like any other business.

 

[BillyBob]

Too bad your analogy holds true to the converse end of the spectrum to which you'd intended... It is niche... Bitcoin is niche, transacted only by the likes of a handful of online enthusiasts.. And unless it can garner a whole lot of support to go mainstream while stabilizing its value, it will be nothing more than a speculator's game.

Therein lies the rub - while it's being heavily speculated with wild swings in value, virtually no layman would dare touch it. Someone looking for a short term investment vehicle, could maybe justify the risk... But someone looking to keep it as currency and conduct business or purchases with it, not so much...

How would you feel buying and holding onto US dollars for a couple of weeks with the intention of spending them, only to find out they're now only worth 2/3 of the price you bought them at?

You can debate the smaller points selectively and get into semantics, but basic financial principles surrounding BTC can't be ignored... Its value swings don't make it a viable long term tender at the moment, and doesn't do its image as the "currency of the future" many favours either.

 

[BillyBob]

I've read Bob's post - not much new there. Its all been said before.

I've just gotten back in country, but I'll update this thread. But the long and short is this was posted before and after the crash in 2011, ditto 2012, ditto 2013, and now in 2014 again.

BTC crashes, people all say I told you so, bitcoin booms, people all say I told you so, rinse and repeat.

There are at least 20 threads on the bitcointalk/litecointalk speculation / market prediction forums going "its a scam" "its going to the moon" blah blah blah.

Its a stockmarket. I highly volatile one, with an interesting twist.

The old sentiment of "don't invest what you can't afford to lose" like in any other situation, applies here as well.

Its the EXACT same situation if you invest in voltatile stock on the market. Lets take a rather silly stock - Facebook stock. Go and look at that

"its listing yaaaay we all going to be rich"
Couple of days later

"its got no inherent value, there is no "product" behind it" booo its going to fail

Stock drops low ---> ppl want to kill / death threats blah blah blah

Now its sky high again ---> news all over the world about how great a stock it is.

Ditto Apple
Ditto any number of big name companies.


1. Its not for Joe soap anymore - its a highly specialized rapidly fluctuating market, where fortunes are made and lost daily.
2. It has a HUGE amount of manipulators, go and look, and I mean really look, at a major exchange. Look at the sell walls, whale baiting etc. There are people selling 150 BTC or more at a slight loss, just to try to create a panic, so they can buy back 170 BTC for the price they sold the 150 at. And this happens literally multiple times a day.

Just before I went overseas, you could literally have made 27x your input in less than 6h just by being clued in (the price of a coin rose by 27x)
This happens so often its not even funny. BUT its not random, and its not LUCK for most of the market players.

I think you get 4 types of coin players
- 1. Joe Amateur ---> his days are mostly over, he will get losses after losses but will still try to mine because either someone else pays for the electricity, or he hopes for a break
- 2. The big boy traders ---> these guys are professional stock brokers ---> you see movements of hundreds of bitcoins and thousands of litecoins in and out daily. These guys create rumours just to manipulate the market and they are GOOD at what they do
- 3. The big boy miners -> people that keep up with the latest asics, in big amounts, getting in on Batch 1 Deliveries of every major ASIC> They actually see roughly a 150-200% ROI on their asics cause they get them literally within the first week of release. They also tend to sell to the Joe Amateurs when its almost too late, but it still looks profitable. They plan on replacing their entire hardware selection every 3-6 months.
-4 . The wannabe big boy miners - this is where we (Viturrex) are sitting currently - Running the mining thing as a serious business, trying to show long term ROI, having to weather the ups and downs. The market volatility hurts us, as our mining profit shifts so badly from week to week. Two weeks ago we were doing 4x what we were the week before, and now we back down again. Hard to budget, but worth the ride IF our model works.

Much like any other business.

Uhm, thank you Mr Jordan Belfort for trivializing my post.. Much appreciated..

A pity the comparisons to Facebook and Apple are completely disrelated as far as stock value is concerned... Facebook has always inherently held many millions in advertising value. Apple is a company actively steered by innovation and a board of directors, with fiscal reports and product development...

BTC is another animal altogether. Primarily a currency that crosses over into the realm of precious commodity by virtue of its method of creation..

The fact that it is so susceptible to manipulation is a negative indicator in its own right... Trade is thin, and Relatively minor trades can cause panic sells, which simply serves to erode the value in the first place.

Propaganda and rumor-milling are nothing new, but BTC's volatility may eventually spell its downfall if the manipulation continues.

+1 on it not being a newbie's game anymore... Mining is an expensive and intensive activity, and trading needs to be done en masse for any meaningful return. Anyone else is just taking a gamble and hoping it pays off - and therein lies my point... Joe Blow Guys are sitting stockpiling coins, hoping for the next $1k spike.. And while the market may turn hungry and trigger a buying frenzy at the first sign of positive fundamental news, I very much doubt it will swing up that wildly again.

 

[Dibzzz]

[MENTION=334]BillyBob[/MENTION]

Bottom line you think BTC is gonna go down? And I/We think its going to go up? correct?

 

[crackOlicious]

I know very little about the crypto history etc but have always had very big doubt even though I tried my hand at it a little. As far as I read somewhere ( and I may be completely wrong) but was btc not created to become an online currency governed by none and spent by all? It may very well survive and have a space somewhere in the real world but I dont/can't see it as a currency. Think of me as Billy Bob's layman. Problem with us laymen is that current currencies/commodities are valued against tangible things like gold, diamonds, oil etc. Btc on the other hand has been created from nothing. Man made even worse. It's like pulling lint out my belly button and convincing people it's worth X because it's a better colour/texture than Billy bobs lint.

Sent from my SM-N9005 using Tapatalk

 

[Pansyfaust]

Too bad your analogy holds true to the converse end of the spectrum to which you'd intended... It is niche... Bitcoin is niche, transacted only by the likes of a handful of online enthusiasts.. And unless it can garner a whole lot of support to go mainstream while stabilizing its value, it will be nothing more than a speculator's game.

Therein lies the rub - while it's being heavily speculated with wild swings in value, virtually no layman would dare touch it. Someone looking for a short term investment vehicle, could maybe justify the risk... But someone looking to keep it as currency and conduct business or purchases with it, not so much...

How would you feel buying and holding onto US dollars for a couple of weeks with the intention of spending them, only to find out they're now only worth 2/3 of the price you bought them at?

You can debate the smaller points selectively and get into semantics, but basic financial principles surrounding BTC can't be ignored... Its value swings don't make it a viable long term tender at the moment, and doesn't do its image as the "currency of the future" many favours either.

When did anything worth billions today(Facebook/apple) start out as being non-niche? Even gaming was a very niche activity, yet today is worth more than Hollywood in revenue. I know you cant compare apples to pears, but compared to where it was 3 years ago, I'm sure it was seen as very niche then, and now as less niche.

I still do agree, it cannot be used as traditional currency in its current form, but it does not mean it cannot be used like currency; that is not a bad thing in itself, it's not like traditional currency and its not like a traditional commodity, as it can operate like both. You cant readily buy things with gold or platinum or oil, stuff that is most commonly viewed as commodities you can speculate with. If you go to a shop to buy a pair of sneakers or pay for groceries, you cant give the store a pint of oil or a sliver of gold, but you can hold and speculate with it. Its valuable, just not easy to trade with. With BTC, even though its value may jump or drop, you can, if there is support for it, trade it quite easily for goods and services, or speculate with it. It's neither a currency or a commodity in the traditional sense, its both.