Look at the damn GPU they use, they use ONE, you can go on newegg.com and make a better build using 4+ GPUs depending on the motherboard.

They also waste money on things like the case and memory.

This is true, but then you don't have to pay you 40% of profit for it.

Or just buy a better machine for more money. Or just buy coins.

How is it that hard for you to be such an expert at so many "difficult" things, yet not have access to $1,000 to do this yourself?

You don't even make one god damn bit of sense. Maybe this actually thought out response by someone on the bitcoin forum will help you understand.

Furthermore, you have to understand currency in the first place. Whenever our government prints off more money, the value of our dollar loses value.

With Bitcoin, their will only ever be 21 million coin in circulation, so if Bitcoin were to succeed, then soon Bitcoins would commonly be traded as fractions like this: 0.00000008 -- This is the max they can be divided into.

With 21 Bitcoins, the price cost of them will ALWAYS be going up just like gold. If the US were to print double of the amount of bills we have today, Bitcoin would go up in double value.

Basically if what YOUR saying is right, then your saying Bitcoin will fail, which it HAS to if what your saying is correct.

I for one don't believe it will fail.

A lot of this is mind-boggling at first to comprehend, but once you actually understand it then you'll stop making your idiotic statements.

Icy, if I just wanted to buy a machine outright, you pick whatever you want, what's it gonna cost me (before shipping) for you to build it, make it, and ship it to my door? How many MHash/s will it get? What's the power consumption going to be?

Icy-,

Perhaps you should just scratch together $1000 yourself rather than continue this digression?

eh.. you got this graph out of my own thread... and want to show it to me? funny.

so please tell me: how many gigahashes do your rigs have and how many coins are you expecting to generate in its whole lifecycle?

800W of power
1200 mh/sec
$976.97 after shipping

At current difficulty/sell rate for bitcoins you would make..
per Day ฿2.13 $42.44
per Week ฿15.51 $309.47
per Month ฿64.67 $1,290.21
http://www.alloscomp.com/bitcoin/calculator.php

Keep in mind difficulty can go up and down as well as cost of bitcoin, overall both would go up. If this doesn't happen, then Bitcoin will fail as a currency.


Yeah? I said that. He proves my point very well.

No, I want to know with you building it. If I didn't do a 40% deal. You build it, install it, and give me simple enough instructions my mother could start mining on it in <15 minutes.

$976 is the Newegg cost I'd imagine. How much are your services worth in $$? You are not risking anything so it makes no sense to give you a percentage.

The calculator is no good, since the difficulty will be 850K by the time the machine is up and running. 20.81 BTC in the first 2 weeks. Assume 35% drop each week in that. So I get about 60 BTC over the lifetime of the machine. It will cost me $300 in electricity to run it for 6 months. So I'll pay $21.266/coin based on those assumptions. I can get that much on Mt. Gox for $19.8 now (but I could resell my hardware for something if I wanted to).

So your assumption is difficulty will not go up 35% on average? If I drop it to 10% increase after 14 weeks, I end up with 70 coins. A bit better, $18.22/coin.

But I have to give you 40%. So really I only get 42 coins in the better case. $30.38/coin. See why this might be a bad idea?

you cant use this calculator like that...
could you please calculate again with accurate difficulty-intervals?
also, when you have your rigs ready, the starting-difficulty will be 800k

The point of me even offering service is to start mining on my own, I just don't have any startup money. I go to school and live with my rents on school loans that don't pay for everything and my parents have loaned me enough money.

I've already started discussing these deals with some of my friends who may be interested, they just are having a hard time understand Bitcoin sense most of them are computer dummies.

For the 3 people who have PMed me I offered them this deal:

40/60 deal on the first server, so that I can actually make a profit as well

Then you can give me money for future servers and I'll build it for you, for free. You could have me run it for 10% + elect costs, or run it at your own location with me keeping no profit.

As part of the deal I'll build up to 10 machines for you.

If this isn't fair then I don't know what is. For the time and efforts I need to take into this, thats the deal I'm willing to provide.

Can we just drop the icy- interactions? Just leave him be, he won't get it.

By the way, e306, you're right. The problem with your numbers though is that those 37% increases won't continue if the price is still at ~$20. That's what I was talking about earlier with equilibrium prices. The true equilibrium is probably somewhere around what it costs purely in electricity (at slightly cheaper than average rates). We won't reach that for a long time though, unless BTC prices drop dramatically.

The bigger factor right now is whether or not it's worth it for new investors to join. I think it still is BUT it's already considered to be something of a push when you factor in the need for an X% return and factoring in all the uncertainty.

Something like 50k difficulty/$ of bitcoin value is probably a decent guideline for the near future. If the price drops significantly then the equilibrium changes to the long-term one quickly because the issue is no longer new investment. It's which miners will keep their machines on.

What? You don't know FOR SURE how high the difficulty will go, (it can drop) and how high the price will start rising. They both have factors that make it pointless to use a spreadsheet to try and figure that out.

To be fair, using a spreadsheet is no better than using that calculator. But history shows that as difficulty has gone up, price has gone up with it at a very precise amount shown on the charts above.

Go back and read. YOU are the one not getting it.

I shouldn't and don't have to waste my breath convincing people this is profitable, if anything the people that don't think is profitable will help others profit more who actually know what the **** they are talking about.

This is in opposition to what I just said, but Icy-, your 2nd deal is a lot more reasonable.

Hosting/storing $10k worth of equipment and managing a mining operation that large day-to-day is probably worth the few hundred a month you'd be taking. There's still issues with trusting your expertise, what your specific power rate is, and what happens if your house catches on fire, etc.

What everyone is trying to get you to understand is you're offering a one-time service that could be had readily for less than $100. I can find one of the top mining experts on the bitcoin forum and offer him 5BTC to give me a shopping list for my budget and get a couple hours phone or email support when the rig shows up at my house.

For 1 BTC I can almost surely get a semi-unknown (you in this case) to do the same. For free I can look it up myself and ask questions along the way. Most folks in the community, both here and there, are pretty kind/helpful.

I modeled this a while ago. If the price stays constant, the difficulty still typically increases. This is because people who already have equipment would still be profitable just using it for mining since electricity is not that major of a cost. People might not rush out to buy rigs, but they aren't going to be shutting them off until the ratio gets *really* bad. There are plenty of gamers out there who have cards that are not using them for mining right now.

I had a pretty good correlation between the ratio of price to difficulty and how much the next difficulty jump was. I then modeled various price increases and determined what the difficulty would be. I also set caps on the most the network could increase (I think I did 50%, and a max of 50,000 initially, but that grew by 50% each difficulty level). You eventually hit a sweet spot where things go in parallel.

There is some correlation between a high difficulty to price ratio and the price then getting pushed up, though. If I am a new investor in the Bitcoin economy, I would typically choose to mine or I would choose to buy. If the ratio is terrible, I'll choose buying more often. If the mining option is more favorable, I'll instead buy rigs and buy fewer coins. So when interest increases, where that investment goes depends on the ratio. And if the ratio is unfavorable for mining, then the price will get bumped up more since more people are buying coins. So in some sense, difficulty does drive price a bit for new investors.

What is the 2nd deal?

Did you miss the post? Go back, I stated the deal I gave people who PMed me for more info.

EDIT:

I saw this, was confused if that was the 2nd deal, or he confused your raw parts cost $976 was the one he referred to as the 2nd.

Why go to these extremes? Just charge a fixed amount per machine, if you are actually in charge of keeping the machines up, charge a fixed rate for that too per month.

40/60 is such a bad deal it's not even funny, though.

TC, what are your thoughts on a stable ratio?

At 200k:1 I think you start to see some existing miners shutting down. Currently is around 29k:1. It's clearly got serious upward force right now even if the price is somewhat stable. Like I said 50k:1 looks like a fairly decent guess. Like I said, if there's a price drop that pushes the ratio to 100k:1 I think it can hold there, but I don't think we'll see new investors coming on to push it that high, we could only get there through a BTC drop.

icy, with your quote above "Price leads Difficulty, always. Difficulty drives price, never." and the latest prive-development:



what do you expect the difficulty to be after the next increase in a few days?

The 40/60 deal is just for the first month. Whats included in the deal is that I'll build you up to 10 machines FOR FREE, and charge 10% monthly profits ONLY if you want me to run and host them with me.

I'll give you yet another explanation.

Bitcoins are being created at the same rate no matter what. They will actually descrease over time. This ups the value on Bitcoins.

Bitcoins have a limit of 21 million, that being said they can not lose value sense you cannot make more bitcoins after that value hits. Unlike other currency where they have trillions of it lurking around, Bitcoin does not and their for Bitcoin prices will always have to go up.

This is only assuming Bitcoin is a success in becoming a currency, its still in its new/baby stages.

If it is a success and lots of people accept Bitcoin as a currency, due to it being limited, the value will always have to be around the ratio of all other currency.

If there are 100 bitcoins and 1000 dollars, each Bitcoin can assume a value of $10, this gets into a much more complicated subject that you might not understand as I'm typing this.

I did some calculations to figure out what MHash/s/W you needed to shut down. It was surprisingly high, even for some really crappy cards. Plus a lot of people with those have "free" electricity. Plus, if someone has a card for gaming, learns about Bitcoin, they will start mining since electricity is a minor cost. 100k:1 is nowhere near enough to shut down the top miners. Probably closer to 1 million : 1.

It's a ratchet effect. Difficulty creeps up a lot when people think mining is profitable, then it is very hard to bring it down.

I don't have my spreadsheet anymore (lol computer crash), but it was pretty conclusive for me and I don't want to do the research again to figure it out.

Another example I can give is think about what if everyone switched over to Bitcoin currency one day over time.

We will give people two categories, the rich and the poor. Its said that just 1% of the population are rich, owning 99% of the wealth.

Think about this.

What is 99% of 21 million Bitcoins?
What is 1% of Bitcoins?
What is 1% of Bitcoins divided by the population?

The trouble is, most of the mining is done in the first month. You end up with a 20% cut there. $22/coin. I'm not assuming any downtime as well (which there will be).

But if you are doing multiple rigs, then it comes out a lot better of a deal of course.

Also, it depends how you define profit. If profit is anything beyond what is put into the rig, it's a much better deal. Although how do you define that? If I get 20 BTC the first month, but the price goes to $50/coin does that mean it's a profit of $0? Or are we still in the red.

But anyway, mining rigs are so marginally profitable right now (almost all profit comes from coins going up in value, in which case, you just buy the coins), any overhead in paying someone to do the work for you would eat up most of that profit).