Bitcoin S-curve with Mining History + Qualitative Hasing Rate
Updated
Some assumptions first:
Bitcoin follows an S-curve typical of many growing technologies (and sometimes even stocks/indices): Adoption chart
The exact gradients / inflexion points of the S-curve shown here is illustrative, as we cannot know its future development.
The hashing rate shown here (brown line) is completely illustrative and represents only the changing trend (which has been increasing or constant since 2010).
S-curves (which appear as exponential curves in linear charts) indicate a viral exchange of information which is typical of technology adoption and hype (this is where stocks/indices come in etc)
In the case of Bitcoin, although the rate of production is supposed to be constant (hence difficulty adjustment) and therefore cannot affect the price, there is a clear relationship between price development and the development of network hashing rate. The hashing rate develops with the evolution of the mining sector from 2010 hobbyist to 2018 industrialist.
The next big boom in Bitcoin will take place in conjunction with the next revolution in mining. There are some 4 million Bitcoins still left to mine. The next halving (block reward reduction to 6.25 BTC/block) is probable in summer 2020. But the halving is not necessary in order to start a new growth phase. In fact the previous two halvings occurred half-way through the growth cycle.
Some reading:
Controlled Supply
Evolution of Bitcoin Hardware
Bitcoin hashing rate
Bitcoin mining price 2015
Bloomberg mining price 2018
Bitcoin follows an S-curve typical of many growing technologies (and sometimes even stocks/indices): Adoption chart
The exact gradients / inflexion points of the S-curve shown here is illustrative, as we cannot know its future development.
The hashing rate shown here (brown line) is completely illustrative and represents only the changing trend (which has been increasing or constant since 2010).
S-curves (which appear as exponential curves in linear charts) indicate a viral exchange of information which is typical of technology adoption and hype (this is where stocks/indices come in etc)
In the case of Bitcoin, although the rate of production is supposed to be constant (hence difficulty adjustment) and therefore cannot affect the price, there is a clear relationship between price development and the development of network hashing rate. The hashing rate develops with the evolution of the mining sector from 2010 hobbyist to 2018 industrialist.
The next big boom in Bitcoin will take place in conjunction with the next revolution in mining. There are some 4 million Bitcoins still left to mine. The next halving (block reward reduction to 6.25 BTC/block) is probable in summer 2020. But the halving is not necessary in order to start a new growth phase. In fact the previous two halvings occurred half-way through the growth cycle.
Some reading:
Controlled Supply
Evolution of Bitcoin Hardware
Bitcoin hashing rate
Bitcoin mining price 2015
Bloomberg mining price 2018
Note
This update includes the actual hash rate data Note
10nm and even 7nm (!) will be the next step in mining evolution. Making chips smaller than the current 14nm resolution is difficult and ASICs have been stuck at this level since 2016. Since last year companies like Samsung and Intel have working to produce smaller chips for mining, but also now for wider applications.This will increase efficiency and reduce power consumption many times over! A new race in mining will begin.
medium.com/novamining/rush-to-7nm-asic-chips-development-incoming-revolution-in-bitcoin-mining-industry-55b609cb73c5
Note
As of Apr 2018 Morgen Stanley estimates breakeven for lowest Chinese electricity tariff is USD 8600. Interestingly, they quote a breakeven figure of USD 5000 over two years for ASIC/miner manufacturers.They state that increasing difficulty will lead to further decline in earnings even with stable BTC price. And this will also affect ASIC manufacturers through decline in demand.
cnbc.com/2018/04/19/bitcoin-miners-are-losing-money-at-any-price-below-8600-morgan-stanley.html
...obviously these issues could be offset with an increase in BTC price...
Note
bloomberg.com/news/articles/2018-04-18/bitcoin-miners-facing-a-shakeout-as-profitability-becomes-harderThis article talks about some of the issues I'v discussed here at TradingView:
- Firstly miners hold around 30 % of entire supply
- Declining price will force miners to sell more coins to offset climbing operating losses, this may depress price even more
- Currently 70% of hashing rate resides in China, a shakeout of miners and consolidation of hashing power amongst a very small group (maybe just 7 companies!!!) will lead to a cartel which can easily perpetrate a 51 % attack thus rendering Bitcoin security useless.
This would literally be the end of Bitcoin. No one could ever trust the network again. This is why when John McAfee says "we are at war" he means it. The efforts of the big investment banks to push the price down, together with their paid shills here at tradingview are not about establishing a cheap entry point, they are about destroying this technology.
Note
Hey guys I wrote a Medium article on estimating the break even price for new S9 mining units both individually and on MW-scales and I get figures very close to those published by Bloomberg and Morgan Stanley. I use statistical process and don't refer to those two sources at all in the working.medium.com/@sunnyday.james/estimating-the-break-even-price-for-new-bitcoin-mining-units-88e39a0f5f9a
Note
7 nanometer is here: GMO Internet from Japan launch world's first 7nm miner24 TH/s (almost double an S9)
12 GH/s per W (compare S9: 10 GH/s per W) -> 20 % more efficient (first gen. tech.)
On sale now, DELIVERY OCTOBER
gmominer.z.com/en/
news.bitcoin.com/japans-gmo-specs-price-7nm-bitcoin-mining-rigs/
Note
can see the average difference between difficulty and hash rate is a simple scaling coefficient. Curves more or less the same, but difficulty should change with hash rate and there should be some feedback to hash rate as mining becomes less profitable. Note
Hash rate update: Quebec (Canadian Provence) is a major "western" crypto miner thanks to cheap renewable energy (hydro). Electricity demand from miners rose so much recently that Hydro-Quebec have stopped processing requests for more power from Quebec miners. Guys look at the hash rate/difficulty chart above. Do you see the drop in h rate or difficulty since the correction began? What about the drop in the 2014 bear market?? No? That's because it's a fucking war between these guys. One S9 makes 0.25 BTC/year. They driving up difficulty in order to push weaker miners out. That means that even if the spot price of BTC stays the same, the mining income still decreases! The only way miners can fight this is add extra hashing power, the more you have the longer you will survive in that game... the Quebec miners must be feeling the heat about now. bloomberg.com/news/articles/2018-06-07/quebec-halts-bitcoin-mining-power-requests-amid-booming-demand?srnd=cryptocurriencesNote
4 million BTC left to mine. And the ones that survive to the end after the last Bitcoin is mined, will process the transactions (fees!) for the entire global economy. If you're one of the five or six big miners left in China, that's your end game!Note
Mining cost update:This chart plots global hash rate against estimated total earnings from mining. What we see is telling. Whereas in pre-ASIC years, Bitcoin bubbles led to massive rewards (in BTC) for miners, since 2013 the story is very different. In fact at the height if the 2017 ATH, income was only 4x greater than computation power (compare to previous years!). And here's the hammer: In December miners expended 0.25 Gigahashes per scond for every dollar they earned, now they expend 3 GH/s fore every dollar the earn. That means it is now 12x more expensive for them to mine than in December.
Note
ahhh the orange line is Bitcoin price and the green line is hash rate divided by income !!Note
A photo study inside a Bitmain farm. Look at the size of it. Also many, many workers. Bitmain, arguably the world's largest miner, made more money supposedly than Deutsche Bank last year. qz.com/1313030/xiaomi-ipo-xiaomi-wants-you-to-know-there-has-never-been-a-company-like-xiaomi/Note
sorry wrong link: qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/Note
There has been no significant increase in mining efficiency since 2016. According to the pre-2016 ASIC development trend we should be in the 40-50 TH/s/kW range. Antminer S9s have 10 TH/s/kW. The new GMO has 24 TH/s machine has 12.5 TH/s/kW - that's just not enough to support this very shaky edifice. Blue is actual trend, red is projected pre-2016 trend (now broken)
drive.google.com/file/d/1WE24jXfgbasFhsiqhn2_YIXHPSbTh_Na/view?usp=sharing
Note
I made a final post summarising how I see the role of Bitmain, who is really behind them and their effect on centralising BTC. Whatever will happen, will happen. Thanks to everyone that contributed to this thread and helped me understand the topic medium.com/@sunnyday.james/the-one-miner-the-unseen-fight-for-bitcoin-supremacy-8befcd765503Note
99% of all BTC will be mined by 2050. here's a chart showing the growth of Bitcoin number and all future halvings drive.google.com/file/d/1BzcGJuxxFJICXz9HZdMn2IzuWhYhhk8K/view?usp=sharingNote
Satoshi Nakamoto in his first 2009 post: "...one big problem unsolved: double-spending. Any owner could try to re-spend an already spent coin by signing it again to another owner. The usual solution is for a trusted company with a central database to check for double-spending, but that just gets back to the trust model. In its central position, the company can override the users, and the fees needed to support the company make micropayments impractical."and that company is Bitmain... your model was flawed from the beginning. You couldn't foresee ASICs? Specialist tools that make anyone not using them lose the game. Of course the winner is the one that makes them! Well I guess you are not in hardware then...
Note
Biggest problem facing proof of work in my opinion ibb.co/gGuN4pNote
Mining Update: Both energy efficiency and unit hashing power should double by 2020Energy efficiency: ibb.co/gPp8KU
Hash power: ibb.co/jBBoKU
Note
Trends in mining 2018 and beyond medium.com/@sunnyday.james/bitcoin-mining-efficiency-set-to-double-by-2020-e2abb1052c2f
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