[Cryptography] Bitcoin compute power

[grarpamp]

On Wed, Jun 11, 2014 at 12:40 PM, Nemo <nemo at self-evident.org> wrote:
> Paul Ferguson <fergdawgster at mykolab.com> writes:
>> On 6/11/2014 5:53 AM, John Levine wrote:
>>> It is my impression that mining has been unprofitable for at least
>>> a year.  People keep doing it because they hope the coins they're
>>> hoarding will increase in value enough to be retroactively
>>> profitable.

Holding is speculating a high future price, for which you're better off
simply buying coins as said price usually exceeds interim mining returns
(within your own speculative time-to-price estimates that is).

> The aggregate power of the Bitcoin miners is approaching 100 petahashes
> per second. Note "petahashes", not "petaflops". And it appears to be
> growing steadily at something like 1000x / year:
>
>     http://bitcoin.sipa.be/
>
> how it is even possible is not too far from being an interesting
> question.

You mine because you gen blocks of 'free' coins for yourself.
There has always been a shallow ROI+profit period with each
line within CPU -> GPU -> ASIC. That drives bulk petahash buying
to beat the curve. Once ASIC speeds can no longer be improved,
and everyone has deployed current rigs into that ROI at costs
equilibrium, there is no more free profit on new coins alone (even
though some new coins are still slowly coming in as partial cost
offset) and network supply/demand kicks in. To meet costs, you
must then either raise trans fees, or shutdown your rigs. Simple.
The real question is, what will post-max-ASIC-speed
trans fees level out at, and who will be in the game
driving them. Curiously, so long as you can deploy
the same max-speed-ASIC's they have at similar costs,
you can always charge the same (plus or minus a tiny
delta to try for more profit/volume, that depends a lot on
the number of players, congestion, price, etc)... market economics.
Right now everyone's budget calcs are still on mining free blocks
to cover costs and profit so real supply and demand has yet
to set in.