I'll be amazed if bitcoin is still around in 2140. Automation and home manufacturing are going to do some weird things to the economics all currencies depend on. We could end up with a barter system where we trade in manufactured goods and creative output instead of currency.
You think society is going to take a step back? How do you invest in a company in a barter based economy? To save time I'm stealing the following issues with a barter based economy from wikipedia.[1] How do you think home manufacturing and automation are going to mitigate these issues?
Need for presence of double coincidence of wants: For barter to occur between two people, both would need to have what the other wants.
Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debt is denominated in units of the good that will eventually be used in payment, it is not a problem.
Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some barter economies rely on durable goods like pigs or cattle for this purpose.
This hypothetical barter society works, for a while, because no one needs anything. Most things are made by machines, and you can make most of the rest. You could charge a currency like bitcoin for your creations, but what would you buy with it if you convinced someone to pay for it in currency instead of something like perishable goods? You would run out of uses for it quickly.
Currency already relies on our belief in its value. It won't last long when it's easier to trade for your own production and swap goods for things than to try and find a buyer for your bits.
I would buy electricity, natural gas and shares of a financial instrument in order to save for retirement. I don't plan on running out of those uses for a while.
You can make your own electricity and natural gas, or form a co-op with your neighbors. And I never said it would be an instant transition to an interplanetary utopia of self-sustaining, currency-free communities. 2140 is a long way away. We're going to live through the transition, and it's not going to be pleasant.
How are my neighbors and I going to make enough natural gas to heat our houses in the winter?
Most importantly if automation and efficient manufacturing are so widely dispersed why would someone else accept goods they can just as easily make themselves?
You forgot to answer how I will save for retirement.
EDIT: I just saw your revision. You seem to assume that society will decide to give up currency go back to a barter based system. Why will we go back?
"We'll either move toward this or have a living hell where most people have no jobs and nothing to occupy their time. We seem to survive these transitions well enough, so I like to think someone will come up with the answers."
Look, I understand that you think the transition will be tough. I'm curious why you think we will make the transition.
EDIT: You have edited your post again.
"You seem adamant that currency will still have value when most people don't need it"
Why will people not need to store wealth in order to take care of their needs later in life?
I'll join the discussion by saying that mkr-hn might be trying to fit a Star Trek:TNG society onto today's world. (Though I add the caveat that this is just speculation on my part.) I certainly see a Trekkie answer to your concerns, anyway, you just have to swallow the sci-fi for a moment. ;) That hypothetical 24th century isn't such a bad place to live, at least compared to 21st century Earth. (My major beef with it is that people still die. Death isn't that hard of a problem, especially when you have teleporters!) In the 24th century, many humans still do purposeful work to better themselves and better humanity. Those that don't work live unexciting lives on some unknown colony planet, but so long as the Borg et al. don't attack, they can live their longer lives in peace and comfort, free of charge. Energy isn't free even in the Star Trek universe, but the society has moved beyond requiring people to toil for money in order to live. Such non-toiling has its costs, of course. Not every slacker can have their own galaxy class ship.
In essence, with such technology, and with such a culture of "it's okay for people to be useless and their marginal cost for the Federation to support is close to 0 so why not", it's not that hard to see how they can get rid of money. They still have de-facto currency and capital, though. e.g. natural dilithium is a common source of conflict among the space-faring races. But such sources of capital typically have instrumental value apart from being able to get other stuff with it.
This is all sci-fi speculation, though it can be useful to postulate various technologies existing and try and guess how humanity might be changed. I'll leave you with a simplified form of a particularly hairy one that some very smart people are spending their lives on right now. Will they succeed by 2100? 2500? Via I.J. Good:
"Let an ultraintelligent machine be defined as a machine that can far surpass all the intellectual activities of any man however clever. Since the design of machines is one of these intellectual activities, an ultraintelligent machine could design even better machines; there would then unquestionably be an "intelligence explosion," and the intelligence of man would be left far behind. Thus the first ultraintelligent machine is the last invention that man need ever make."
Each bitcoin transaction has an optional fee set by the party issuing the transaction. The miner, or mining pool, solving the block containing the new transaction is awarded the fee.
At the moment bitcoin mining is all about solving blocks from newly created bitcoins. When they are gone, then bitcoin mining will be all about collecting transaction fees.
At $3000/day 'revenue', can anyone chime in for the cost of electricity to run that rig assuming $0.10/kWh, not factoring in the initial investment of the hardware?
I just found out about mining pools; interesting idea to spread the risk of not finding any bitcoins for a long time. Why would a user with such massive mining speed need this though? Wouldn't it be more efficient for him to bear the risk himself and earn a bit more?
At the moment you are correct. But pool mining software is very easy to configure and maintain, and anyway within a few months there will be many more rigs mining at this rate - and thus justifying using the pool.
When I was running mining rigs in 2011, I used BTCGuild as they had very reasonable fees.
A mining pool significantly lowers the volatility and yields a more consistent rate of return. The difference in expected return isn't much: an effective fee of approximately 1%.
"By the way, whoever user 67117 is they will be generating about 122.83 bitcoins a day at the rate of 800 GH/s, or $3,000 US Dollars at today’s rates."
... assuming that the miner is using the Avalon ASIC batch #1 device, the reported hash rate per device is 68,000 mega hashes per second - which is 500 times faster than an example AMD 5770 graphics card. The Avalon box uses 400 watts. 800 giga hash per second could be supplied by 11 Avalon ASIC devices. Total they would cost $14000 plus shipping from China.
Plugging this data into the bitcoin mining profitability calculator at: http://www.bitcoinx.com/profit/ , we get 122 bitcoins mined from the pool each day, at this moment valued at $26, for a total daily revenue of $3193. Only $15 worth of electricity is consumed at $0.15 kWh.
The mining hardware for this lucky miner pays for itself within a week.
As the owner of the BTCGuild mining pool said on his IRC channel, "welcome to the future"! Its obvious that graphic card based mining will not be profitable when ASIC mining rigs become common.
Lucky miners are those who invest first in disruptive technology rigs. Most miners are gambling that they can pay off their rigs before the technology changes.
Serious question: why would Avalon sell these things, rather than just mine Bitcoins themselves? at the very least, the cost of the device seems far too low at current Bitcoin conversation rates.
The opportunity to make huge profits is closing (very fast). In fact, if you were to buy an ASIC miner now it wouldn't arrive until May and by then the bubble will have (mostly) popped.
The Avalon ASIC miners were pre-ordered which gave them enough cash to R&D and then produce them - but even if they had found cash somewhere else and made lots of miners for themselves it wouldn't be long until other people were selling ASIC miners and they were not so profitable. It's better for Avalon to make a name for themselves as a good place to get ASIC miners so they get all the business in the future.
I wouldn't be surprised if this user mining at 1.2 Thash/s is Avalon or one of the other ASIC manufacturers.
Besides the reasons discussed elsewhere, I see many reasons:
- The device in itself disrupts the mining hardware market. Should they mine by themselves, others would take notice and make their own ASIC hardware. They're in a much better place if they position themselves as the standard supplier for mining hardware, at least in the long run.
- I would see this ROI collapse as soon as this catches on. The market will be flooded with bitcoins, their individual value will diminish, and the bounty will likely decrease compounding the decrease. History says that the return will eventually (and soon) decrease to match the cost. Assuming the hardware is fairly priced (which it seems, given the current low volume), I would say the money value of those 122.83 bitcoins will come down to the same money value you would get out of $14k invested elsewhere.
- Whoever is operating the rig for user 67117, he's doing a hell of a marketing job for Avalon, just by being there. Is there any other offer in the world that can deliver on the promise "Give me $14k and you get $3k a day"? Sounds like a short-term proposition, but there's surely a good amount of money to make while it lasts.
Asic economics dictate that the cost of making the masks needed for prodution is hundreds of thousands. Once you have the masks, the cost of making chips is ~$10k per wafer. Depending on the size of their chips (I don't know), you can build high tens to hundreds of chips per wafer.
They gathered the money for masks by selling the first batch. Now they own the masks, and they can make more of them relatively cheaply. I suspect that they are building their very own mining pool as we speak.
Looks like the "shovel & pickaxe trade" during any gold rush. There is some money to be made by the early adopters, little or no by the late comers and then a steady and good source for those offering services to the miners.
P.S. One problem these ASIC manufacturers have is not being able to shift a lot of BTC, the kind of which they would be hypothetically making by just mining themselves. Leave that matter to the miners to work out.
In practice Avalon draws 620 Watts and runs at 66 GH/s [1].
And let me introduce a few points to consider for an inspired by your calculation soon-to-be miner :)
1. BFL [2] and whoever else is able to produce an ASIC system start shipping very soon. All this hash power will skyrocket the difficulty, eventually decreasing the profits to today's GPU levels.
2. Volatility of BTC varies greatly and can be anything in a few months term. As I recall, the first gold rush happened in 2011, when GPU miners appeared. BTC peaked at over $30 in June and was less than $5 by November.
3. If you order your system now, you will likely get it in May if not later. Pre-orders started last summer and they're still waiting.
Could this possibly cause a drop in exchange price for BTC? If this user bought a bunch of ASICs, he needs to make his money back which could mean selling a lot of coin on a regular basis. However, if most miners already sell, it shouldn't make a difference, may even cause an increase if he starts hoarding more after making a full return on investment.
In the short term and if the miner sells all of his BTC yes. But in the medium term, the difficulty will increase, the same amount of coins as always will be mined and the price should remain roughly constant. ( And in addition, if you want to move the market to 25.50 $/BTC, you need to sell about 3k BTC [1] at the moment.) So the market would not move much, even if all of these bitcoins are dumped in an instant.
At first, bitcoins could be profitably mined using just your CPU. Back in July 2010, I solved two blocks by myself - there were no pools then - using my Linux development desktop.
Within a year, CPU mining was no longer profitable because gamers were re-purposing their AMI/AMD graphics cards for much more electricity-efficient mining. Again, all you had to due was to download software into an existing gaming rig.
Its actually far less effort and risk to simply buy and hoard bitcoins periodically during price dips. I gave up mining bitcoins in 2011 and sold off my six card 5770 rigs.
I believe that bitcoin hoarding has the same place in a diversified investment portfolio that gold does - namely some small percentage so that one can ignore short term price volatility.
The race for ever faster and cheaper Bitcoin-mining technology is eerily similar to the race for ever faster and cheaper gold-mining solutions during the Gold Rush of 1848-1855. During the early stages of the Gold Rush, gold miners would just pan for gold in rivers and streams. Then they organized themselves into larger teams and started using mining "cradles" and diverting river water into sluices. Then they developed modern hydraulic mining with high-pressure hoses. Towards the end of the 19th century they invented dredging technology for mining.[1]
51 comments
[ 3.2 ms ] story [ 127 ms ] threadNow at 1,211.06 GH/s... Wow. That's about $130,000 per month in the current market.
Most likely not, but still crazy to see someone mining this much when the price of a BTC is $26+
Need for presence of double coincidence of wants: For barter to occur between two people, both would need to have what the other wants.
Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debt is denominated in units of the good that will eventually be used in payment, it is not a problem.
Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some barter economies rely on durable goods like pigs or cattle for this purpose.
[1] http://en.wikipedia.org/wiki/Barter
Currency already relies on our belief in its value. It won't last long when it's easier to trade for your own production and swap goods for things than to try and find a buyer for your bits.
Most importantly if automation and efficient manufacturing are so widely dispersed why would someone else accept goods they can just as easily make themselves?
You forgot to answer how I will save for retirement.
EDIT: I just saw your revision. You seem to assume that society will decide to give up currency go back to a barter based system. Why will we go back?
Look, I understand that you think the transition will be tough. I'm curious why you think we will make the transition.
EDIT: You have edited your post again.
"You seem adamant that currency will still have value when most people don't need it"
Why will people not need to store wealth in order to take care of their needs later in life?
In essence, with such technology, and with such a culture of "it's okay for people to be useless and their marginal cost for the Federation to support is close to 0 so why not", it's not that hard to see how they can get rid of money. They still have de-facto currency and capital, though. e.g. natural dilithium is a common source of conflict among the space-faring races. But such sources of capital typically have instrumental value apart from being able to get other stuff with it.
This is all sci-fi speculation, though it can be useful to postulate various technologies existing and try and guess how humanity might be changed. I'll leave you with a simplified form of a particularly hairy one that some very smart people are spending their lives on right now. Will they succeed by 2100? 2500? Via I.J. Good:
"Let an ultraintelligent machine be defined as a machine that can far surpass all the intellectual activities of any man however clever. Since the design of machines is one of these intellectual activities, an ultraintelligent machine could design even better machines; there would then unquestionably be an "intelligence explosion," and the intelligence of man would be left far behind. Thus the first ultraintelligent machine is the last invention that man need ever make."
The creations of others, for example. Or perishable goods that the buyer doesn't happen to have.
As long as there's anything to barter, there's something that can be traded using currency.
when it's easier to trade for your own production and swap goods for things than to try and find a buyer for your bits
It can't really be more difficult to find a buyer, because the person you're trading with is a buyer, even if (s)he pays using alternative means.
Finding traders is the same as finding a buyer and a seller, with the added restriction that they must be the same person.
Basically you pay a small transaction fee and the miner gets that.
At the moment bitcoin mining is all about solving blocks from newly created bitcoins. When they are gone, then bitcoin mining will be all about collecting transaction fees.
http://news.ycombinator.com/item?id=5213780
When I was running mining rigs in 2011, I used BTCGuild as they had very reasonable fees.
This kind of mining won't last very long because soon more people will have ASICs and it will become much harder to compete.
"By the way, whoever user 67117 is they will be generating about 122.83 bitcoins a day at the rate of 800 GH/s, or $3,000 US Dollars at today’s rates."
Using the bitcoin mining hardware info at: https://en.bitcoin.it/wiki/Mining_hardware_comparison ,
... assuming that the miner is using the Avalon ASIC batch #1 device, the reported hash rate per device is 68,000 mega hashes per second - which is 500 times faster than an example AMD 5770 graphics card. The Avalon box uses 400 watts. 800 giga hash per second could be supplied by 11 Avalon ASIC devices. Total they would cost $14000 plus shipping from China.
Plugging this data into the bitcoin mining profitability calculator at: http://www.bitcoinx.com/profit/ , we get 122 bitcoins mined from the pool each day, at this moment valued at $26, for a total daily revenue of $3193. Only $15 worth of electricity is consumed at $0.15 kWh.
The mining hardware for this lucky miner pays for itself within a week.
More info about Avalon at: http://launch.avalon-asics.com/
As the owner of the BTCGuild mining pool said on his IRC channel, "welcome to the future"! Its obvious that graphic card based mining will not be profitable when ASIC mining rigs become common.
Lucky miners are those who invest first in disruptive technology rigs. Most miners are gambling that they can pay off their rigs before the technology changes.
Summary: They probably didn't have the money to build anything, so they funded it using Kickstarter-like preorders.
The Avalon ASIC miners were pre-ordered which gave them enough cash to R&D and then produce them - but even if they had found cash somewhere else and made lots of miners for themselves it wouldn't be long until other people were selling ASIC miners and they were not so profitable. It's better for Avalon to make a name for themselves as a good place to get ASIC miners so they get all the business in the future.
I wouldn't be surprised if this user mining at 1.2 Thash/s is Avalon or one of the other ASIC manufacturers.
- The device in itself disrupts the mining hardware market. Should they mine by themselves, others would take notice and make their own ASIC hardware. They're in a much better place if they position themselves as the standard supplier for mining hardware, at least in the long run.
- I would see this ROI collapse as soon as this catches on. The market will be flooded with bitcoins, their individual value will diminish, and the bounty will likely decrease compounding the decrease. History says that the return will eventually (and soon) decrease to match the cost. Assuming the hardware is fairly priced (which it seems, given the current low volume), I would say the money value of those 122.83 bitcoins will come down to the same money value you would get out of $14k invested elsewhere.
- Whoever is operating the rig for user 67117, he's doing a hell of a marketing job for Avalon, just by being there. Is there any other offer in the world that can deliver on the promise "Give me $14k and you get $3k a day"? Sounds like a short-term proposition, but there's surely a good amount of money to make while it lasts.
They are about $1.4k/unit.
They gathered the money for masks by selling the first batch. Now they own the masks, and they can make more of them relatively cheaply. I suspect that they are building their very own mining pool as we speak.
P.S. One problem these ASIC manufacturers have is not being able to shift a lot of BTC, the kind of which they would be hypothetically making by just mining themselves. Leave that matter to the miners to work out.
And let me introduce a few points to consider for an inspired by your calculation soon-to-be miner :)
1. BFL [2] and whoever else is able to produce an ASIC system start shipping very soon. All this hash power will skyrocket the difficulty, eventually decreasing the profits to today's GPU levels.
2. Volatility of BTC varies greatly and can be anything in a few months term. As I recall, the first gold rush happened in 2011, when GPU miners appeared. BTC peaked at over $30 in June and was less than $5 by November.
3. If you order your system now, you will likely get it in May if not later. Pre-orders started last summer and they're still waiting.
Happy mining :)
[1] http://garzikrants.blogspot.com.es/2013/02/avalon-miner-powe... [2] http://www.butterflylabs.com/
[1]http://bitcoincharts.com/markets/mtgoxUSD_depth.html
At first, bitcoins could be profitably mined using just your CPU. Back in July 2010, I solved two blocks by myself - there were no pools then - using my Linux development desktop.
Within a year, CPU mining was no longer profitable because gamers were re-purposing their AMI/AMD graphics cards for much more electricity-efficient mining. Again, all you had to due was to download software into an existing gaming rig.
Its actually far less effort and risk to simply buy and hoard bitcoins periodically during price dips. I gave up mining bitcoins in 2011 and sold off my six card 5770 rigs.
I believe that bitcoin hoarding has the same place in a diversified investment portfolio that gold does - namely some small percentage so that one can ignore short term price volatility.
http://webcache.googleusercontent.com/search?q=cache:fzkWVrs...
Let's call this what it is: The Bitcoin Rush.
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[1] http://en.wikipedia.org/wiki/California_Gold_Rush#Developmen...