Either way, lotto or EV mining, could you even cover your costs? Operating a computer 24/7 for a year has to cost more than $25.

Electricity is even more expensive in the developing world generally. I doubt this would ever work for them.

A lot of these miners probably get their PC time for "free" by running it on their company's systems at night.

You need marketing to build a lively poker room. Degenerates don't show up just because a place is cheaper.

I recently ran some numbers. Based on a farm of 150 PCs with decent but not great graphics cards, I estimated getting 7470Mhash/s. Based on the predictor on the current difficulty level, the EV of getting a block comes to 13.2 hours. I need to calculate the power usage of the PCs, which is a bit hard. The power of the graphics cards was 9.2kW. The cost of that is around $.12kW/h, so creating one block would cost $14.57. 1 block would get you 50 BTC, which would be about $37.50, for a $20 profit over 13.2 hours. You could get 663 blocks per year with this setup, for $13,272 profit.

This is with machines that are not optimal for mining. A friend of mine has access to 150 of these machines and won't have to pay for the electricity, so it's all profit, so $26,000 a year if prices remain the same.

The optimal card for mining is sold out everywhere I was looking. A recommended rig costs $1678 with 2 graphics cards. It's got an 850W power supply, so maybe estimate the power usage as 750W. It's got incredible processing power, so you would get 1.29Ghash/s. That's a block every 76.19 hours.

Cost is 57.25 kW-hr * $.12/kW-hr = $6.8571. The block is worth $37.50, so $30 profit every 76.19 hours. 115 blocks per year, worth $30 each, so $3450 profit for the year. The rig cost $1678, so you make up that investment in 6 months. The rest is profit.

The more people that mine, the harder it gets, and that can crush the cost of buying these computers. The price has tripled just in the last 3 months, so if you are only making $13/BTC, your profit gets cut by 80%.

The lesson here is, if you have access to other peoples electricity and computers, you can make some good cash for little effort. If not, you are wasting your time.

As TomCollins alluded to, the difficulty level increases as more computing power gets thrown at mining the blocks. So, in the long run, returns from mining should theoretically get a lot closer to the cost of electricity + the depreciation of the hardware used for mining. Of course, if there are some miners who have access to free electricity or equipment, that will drive margins down as well.

It makes perfect sense. The people with the lowest costs for doing the same thing are the ones who can profit. Others should do something else.

Absolutely. Comparative and absolute advantages and whatnot.

edit: and it seems like with the metrics you're able to see on the network, it'll be easy for people to figure out on any given day whether or not mining will be profitable for them, which is great for the efficiency of the network.

Obviously, whoever started bitcoins is rich because they created a currency and mined it when mining was most profitable. The key to getting rich is starting a new currency that catches on.

Yeah, the problem with these calcs is network growth. Even if it is somewhat profitable today, the way this thing has been growing recently is sure to destroy your profits within a year or less. So you need to pay for your system within a few months to be a worthwhile risk I think.

First off, this is a mind-blowing concept technologically...
It's pulled in a LOT of very talented engineers/hackers...
** Genius level early adopter True Believers **.

You are viewing this from a production standout...
In which case you want to join a mining pool..
But probably a very limited window for production...
There are custom boards that blow away GPUs...
By factors of 10 or more...
The type used by telecommunications companies, etc.

Many early adopters are thinking "investment" or trading...
There can only be 21,000,000 coins ever...
Let's assume MARKET grows 10x in 2011 and 10x in 2012...
(You are starting from a tiny base of $5,000,000)...
BitCoins will go from $0.70 to something like $50 in 2 years...
Assuming money in circulation goes from $5m to $500m.

The KEY to which is probably mass Third World adoption...
It explodes only if places like Russia and Asia explode...
Because they need virtual currency to survive...
"Convenience" will NEVER drive a revolution...
Americans are too lazy to even stop paying 10% rake...
Western idiots pay Starbucks $4.00 for coffee and muffin.

Trading something with near-certain upside is easy money...
Even if BitCoin fails...
The next P2P crypto-currency will explode...
Or the next one.

I'm a quant and a software engineer...
Been coding hash functions since 80s for my custom data structures...
This general idea is "killer app"... you just need to catch right train.



http://bitcoincharts.com/charts/

I was looking at discussion levels of bitcoin, and mining just takes up a huuuge portion of the conversation. I can't help but think that a lot of the drive of people toward BTC is people looking to mine and make some easy money. There's also a lot of people going into building exclusive mining rigs (the fact that the best cards are sold out from online retailers shows that a lot).

I think a lot of the people building these rigs or investing heavily in mining are going to be unprofitable (although using others electricity could help balance this some), and some people are going to be disappointed. Tracking this type of information including the difficulty level over time, might help guide the future prices. I'm feeling like shorting may be a way to go right now.

I've been playing around with bitcoin for the day. I love the concept. Unfortunately I don't sell anything or I'd set myself up to accept bitcoin.

I've been using the 0.05 that I got from the faucet. Some of the transactions have taken 2-3 hours to be confirmed. I read that the system is slower to confirm micro-transactions due to there being increased probability of it being a DOS attack.

I would certainly say that a lot of the profit from mining bitcoins will end pretty soon due to the difficulty being upped because of more people joining. As mentioned previously though, it's just a distribution method to get the bitcoins out there at a reasonable rate.

If the US government decides they don't like this they could certainly hurt the network even if they couldn't stamp it out completely. They do have a history of coming down hard on possible competition to the dollar (see eGold or Liberty Dollars).

I want to start reading up on the underlying processes. To be honest it's really early days for the currency. The most mature systems appear to be the trading sites rather than the merchant sites. That needs to change. I'm going to try and make a purchase of something in bitcoin although I'm not sure what yet.

The average person's complete disregard for security combined with bitcoin's anonymity and its account ownership being based solely on a single file seems pretty worrying to me. They should at least have included basic password based encryption (in a similar vein to the likes of KeePass).

BitCoin is still super early, so it's pretty user unfriendly right now, but that can easily change. I'm trying to figure out how this could actually take off mainstream. It needs an easier way for people to buy bitcoins if the economy is to ever expand. But why would people buy them if there's nothing to spend them on?

Mobile devices may be the key to expansion. Imagine I have a smartphone and my friend does too, and I owe him money. I can just take a picture of a 2D barcode on his phone and send him cash. It can be added to my phone bill.

But overall, while a super cool technology, it's got some huge drawbacks, and I'm still failing to see why anyone would prefer to use bitcoin, other than for illegal activities or just being a fanboi.

The security issue could be solved with e-wallets imo.

The user-unfriendliness is understandable at this point, but it obviously needs to get better before more people want to use it. I was looking at the Python API for bitcoin earlier and that looks promising and should make it a lot easier when someone with some business sense wants to make it more easily accessible to people.

This, but not the mobile bill part.

Been reading about Bitcoin ever since the OOT thread. I'd heard of it before, but paid no attention. now I'm hooked.

There's a ton of talk / hype at the moment of NFC / RFID comms from a smartphone to auto-bill your credit/debit card for small purchases. Bitcoin can have this market, all is needed is a smartphone app for android + iPhone that can send bitcoin to anything compatible in bluetooth / rfid range or something... I don't see a way of making this micropayment app profitable (maybe small transaction fees?), but it will surely be done if this currency is to go mainstream. Of course the same app could send payment to any other bitcoin account if desired, just a convenient "two people in the same place transfer" added to standard bitcoin app.

There's no reason to include the phone bill. A bitcion "wallet" app in the phone would suffice, and you just transfer some coins to his wallet same as you'd make any other bitcoin payment, except there's a nice GUI showing people "within range" and you just click / confirm.

WRT to mining, it is by design "almost breakeven". if you can mine more efficiently than the average miner, it is slightly profitable. if not, slightly unprofitable. It is an easy way to exchange $ for Bitcoin however, through the medium of electricity providers.

Somethings I noticed are there are some meetup bitcoin clubs starting up, that will be good for cash-coin no fee transactions. Also it will be very good for small ebay services since you won't have to worry about fees and shipping costs. Rakefree poker. Buying and selling silver. My blocks are stuck at 114662 but I think there are 117000 blocks out there. You can test out Nielsio theories on anarchism, trade based on reputation/arbitration. I wonder if a currency with a 2% inflation or money supply growth would have been better. Alternative might include a currency pegged to 1 ounce of silver. Seems December 31, 2012 will be the key date since inflation will always be less than 13% after that date.

So your phone company will front you bitcoin? Why not just take it from your bitcoin account?

The transfers are almost free. If the early adopters manage to get the economy big enough that it starts to appear stable to the outsider then you could see more traditional merchants add bitcoin payment options. Perhaps some would pass on a part of the saving in order to promote its use (for their own benefit). The illegal part may be too harsh, people may want to use it for things that embarrass them such as porn or supporting an organisation they'd rather not be traceable to.

So you just trust some site to handle all of your transactions and security for you? I think this would necessarily do away with the anonymous nature. If the site doesn't know who you are then they have no reason to allow or disallow a transfer, just the same as a password encrypted file on your local drive. It also by definition removes your direct control of your finances in return for the security expertise of the e-wallet, presumably less a fee.

steelhouse, why do you want money supply growth? Why, or better yet HOW, do you want to link it to silver? I think you're missing key concepts that are differentiating bitcoin from something like e-gold.

If I buy $100 of bitcoins, and this thing say doubles in usage over the next 6 months, how much would I be able to sell my $100 for?

Can somebody send me a pittance on 1KD5XJy1RVrokUWQ4AR7mh5Nw1MZDeekdt ?

After perusing some info about bitcoin I wasn't able to discern whether or not the "number crunching" is itself valuable or for a particular purpose.

Why not use the number crunching two find the next undiscovered prime or some other useful task?

You have to initially fund your bitcoin account somehow. This wouldn't be the phone company fronting it, but an app that automatically trades on a market for you. If you have money in your bitcoin account, it uses that of course.

The anonymous nature is only a feature for a small percentage of the potential users and only a small percentage of the time. Do you go into a store wearing a mask/disguise and buying with cash every time you want to buy something? I know I don't.

Yes, the e-wallet would be a convenience factor. But the client could improve as well. But right now, someone needs to put forth work toward making it easier to use, and profit motive is the best one.

My current understanding is that it's a bit of both. The number crunching has no value outside of the bitcoin system, but the system has been designed to use the output of the number crunching (so now it does have a use).

If they'd wanted to use undiscovered primes they would have to have come up with a totally different system (obviously) and they wouldn't have had as much control on the speed of dispersal. There would also be the possibility that somebody had previously calculated a lot of "undiscovered" primes without publishing them.

As far as I understand it the number crunching done to generate a coin is unique to each miner (or at least each address that will receive the 50 BTC bounty). Each miner is trying to solve the current "problem" in a way that will assign its address with 50 BTC. Other miners are trying to assign their own addresses with the 50 BTC. The network sets the difficulty of the problem based on the amount of computational power of the entire system (estimated based on the actual rate of problem solving?). As far as I understand it this is all to get a good dispersal of bitcoins by basing it on "work" so that their is some burden on candidate bitcoin receivers. For instance, if they distributed them randomly every hour what would stop me registering 5 billion bitcoin addresses to load the dice in my favour. You could argue that favouring those with computational power isn't fair either, but it isn't supposed to be fair so much as just work.

I'm only starting to learn about this so you'll have to judge the above information for yourself.

Ah, okay. You did actually say phone bill. Have you tried Mt Gox or one of the other markets? It's not as easy as it could be/will be but it does appear to be at least straight forward.



I absolutely agree. I would say, though, that I support the anonymous nature without actually having any use for it myself. Although, now that I think of it when I buy poker software such as Holdem Manager I would just as soon not reveal my name and address to them. Same goes for any paid poker service. Of course, I'm not the general public.

The client needs to be way better. Profit seems to be an excellent motive, particularly where UIs are involved.

I'm totally out of the loop on smart phone technology. I was under the impression Apps could put charges on your phone bill (I remember some Smurf game that put a ton on). So you have a "BuyBitCoins" app that just trades it for you, and then you have a different app to transfer.


Sure, the anonymous part is a necessary feature, although it's not something I think most people don't see that as a good thing (and many see it as even a bad thing.... the turrurists/drug dealers are able to use it!)

Pretty much a given that this will be said. It'll be true too. It also seems obvious that governments are going to hate this. The question is whether they can effectively kill it or not.