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This is getting tiring. Nothing seems to confuse homo oeconomicus more than applied statistics.
You model the solo case one-sided as if it was a rule that one will find nothing. There is equal probability to get a block on the first day of mining as there is to find one too late.
0% pools still keep the transaction fees and suffer from more stale shares than possible when you go solo. Again, I didn't claim that pools are considerably worse, they just don't have better returns on average.
You model the solo case one-sided as if it was a rule that one will find nothing. There is equal probability to get a block on the first day of mining as there is to find one too late.
0% pools still keep the transaction fees and suffer from more stale shares than possible when you go solo. Again, I didn't claim that pools are considerably worse, they just don't have better returns on average.
Alot of us do not try and achieve the gambling man orgasm while mining for bitcoins, alot of us have legit reasons for running their miners as a business with realistic daily/weekly and monthly income projections. It would be a self destructive decision for alot of users on a big pool to move into solo mining.
I'm sorry, but IMHO anyone who has invested anything into dedicated mining hardware, since the beginning of this month, "even" when he is mining pooled, is a much worse gambler than I am. There is real money at stake. I, in contrast, just don't switch my PC off at night as I would normally do and that's all. The "business" of recent rig buyers runs on the assumption that we won't reach 10.000.000 difficulty anytime soon (which won't even pay electricity for many and might be on the horizon within weeks) and that the current XXX/BTC rates aren't moon prices. Pooled mining doesn't hedge this risk. There is no market of considerable size for the exchange of real goods or services for Bitcoins. There is just one huge speculation bubble with thousands of people hoarding them in the hope to get rich and who might dump them any time, if they get cold feet. There is no necessary correlation between difficulty and exchange rate. A too high difficulty might also make many people loose interest and motivate to move on and cash in. I don't want to hold Bitcoins on the day when hoards of miners become scared when the long-term uptrend breaks on high volume one day (the recent break was just a short-term trend). We might very well see cent/BTC territory again, and if you ask me, that wouldn't even be a bad thing for Bitcoin as a currency. A couple of weeks ago it was still hot to tell friends of Bitcoin and they could all earn their share with a little effort. Even at the current difficulty this isn't true anymore and many couldn't justifiably care less for the returns you get with pooled mining ATM.
Pooled mining at the current difficulty is only "worth" the effort, if you leverage the current profit by buying extensive amounts of mining gear. This leverage in itself is very, very risky. Even the aftermarket value of the latter is severely threatened by a scenario when mining suddenly becomes unprofitable for many. Because of that I see people, who undertake pooled mining on a business-scale (anything else doesn't pay enough on a pool), as the real gamblers in this game. I couldn't be farther away from that with my solo mining HD5870.
So although the theoretical average is 50/50, the actual average might be completely different. Think 10-times heads in a row. It's unlikely, but if your sample happens to be those 10 events, your average is not 50/50.
The difference between actual and theoretical doesn't matter for the average profit as long as the risk to fall below average is exactly as high as the chance to end up above it, which is the case here. The only difference is the variance in particular case, which might be much higher for solo miners, but not their average return. When the risk to never find a block increases (increasing difficulty), the average payout of pools decreases by the same magnitude. A particular miner might never find a block or win the lottery, but on average all solo miners together have a higher return than all pool miners together (if you exclude the pool operators).
For the record: after cashing out, I could identify the block I have mined, it is http://blockexplorer.com/b/133035.
Anywho, the cases are not precisely the same. There is a difference in valuing what you already possess against what you can potentially gain, against what you can potentially gain vs. what you can definitely gain.
You just cite economic tenets, which do not really apply here. No interest is paid on the actual possession of Bitcoins, so early crediting does not improve profits. Maybe you understand it, when you look at an opposite projection: falling USD/BTC and difficulty. By your logic solo mining would become more profitable, because your probability to find a block would be shifted into the future into lower difficulty territory (just as the higher difficulty territory in your projection). Both projections are false. Solo and pooled mining have identical returns on average with a slight advantage due to fees and less stale shares for solo mining.
Furthermore going back to the original point, all statistical probability requires a large sample, in the case of mining bitcoins, this sampling is time. If I flip a coin one time I have a 50/50 chance of either result. If I flip it twice, same thing. By your logic no matter how many times I flip it, betting on heads will yield the same results, which is completely untrue. Given a large enough pool of flipping it will come out 50/50. But on a small scale betting heads every time can yield profit, or loss. Large numbers and small numbers are not equivalent.
This really shows the barricade in your mind pretty nicely. On a small scale the average return is 50/50, just as in the large scale. The chances for loss and profit balance each other out exactly. Variance is variance, limiting it may have value to some, but it hasn't anything to do with average return.
So you ignore the equally as likely case (more likely based on available anecdotal evidence) as "myth" because you personally found a block? i suppose that's easier than debating it.
I haven't referred to that as an argrument once. I have also opened the thread before I knew of the block.
Myself though i'm not living at home sucking off mommies teat, and so the cost of running a miner is real, and i need to make a showing for doing so, not just sit at the slots and pull the lever until a little bit of change falls out and makes a big noise.
Why do you need to make a showing for a business no one is forcing you to undertake?
Just a note, the "average" time to find a block with a single 5870 at the current difficulty is now 152 days, 8 hours, 40 minutes. in that time there will be between 11 and 22 difficulty changes, almost all of them upwards, the ones in the near future will be large. You think that statistically speaking you are really likely to find another "big fat payout" in that time? Does .5 BTC per day seem less appealing than 50 btc per who knows how much time (likely a year)?
What many of you guys seem to forget, when using projections like this, is that the payout of pooled mining is also going to sink into a bottomless pit with these figures and won't be the "sure .5 BTC alternative" but rather something like the "wimpy .000005 BTC alternative". Is that going to be worth your time? Speculating that BTC/US will skyrocket until then, just because difficulty has increased is wishful thinking and and a large risk in itself.
but don't pretend that pools are just for lazy ignorant masses
I don't and just try to correct the incorrect representation that pooled mining is statistically more profitable. If at all, it is the opposite. I concurred with the "less variance" fact in my first post. I don't neglect, that there might be a need for that for some people.
That should be as simple as setting up another Nagios task from a remote server. Of course, if you do not already have such a setup, it might be more convenient.
The poclbm console output still logs RPC errors and "client not connected" messages for solo mining.
Well done. You got lucky today. I will stick to pooled mining. Only a 2% penalty - really not a big deal.
I agree, 2% really isn't a big deal. But the wiki and many forum posts suggest the opposite: that solo mining is less profitable on average, which isn't true IMHO.
(And consider the lottery for satisfying your variance cravings.)
A regular lottery within a regulated environment returns about 50% of its players' investment on average. Playing that is idiotic. The Bitcoin lottery returns more than 100% of my investment on average on the current conditions (basically only 240 watts of electricity). The chance is there, that I could never find a block (which luckily didn't happen), but if I find a block, its return is high enough to justify buying the ticket (on average more than 100%). So playing the Bitcoin lottery has both good returns, moderate risk, and it is fun. Beats Las Vegas in 2/3 aspects. Pooled mining would also return more than 100% right now, but with zero fun and much time wasted for a wimpy return (or considerable risk if you scale).
PS Does anyone know, how I can find out which block my miner has exactly found? The Bitcoin client only shows time, amount, and pending confirmations.
I think you need to read up on utility.
0.5 BTC a day doesn't have any utility for me compared to the effort.
Finding 50.0715 BTC in my wallet this morning had great utility in contrast.
What about Myth 1, BTW?
Why is this nonsense still in the wiki?
The logical extension of your mentality about this is that you shouldn't buy health insurance because you would pay more per month on health insurance than you would on average spend every month on paying for your own healthcare when you get badly injured.
The term you were looking for is "extrapolation"
and it's still incorrect. I am a big fan of health insurance. The costs of keeping enough liquidity to be prepared for the worst cases covered by health insurance is higher than paying health insurance. The required liquidity for the latter is much lower, because there is enough inflow of money every month.My point is, if you have multi-GH/s power you can afford solo mining with its better average returns without too much risk of never finding anything. If you have less hashing power, the return of pooled mining is too wimpy to be worth the hassle (if you aren't a kid) and possibly risk of investment (even tighter increases of difficulty or price drops). Mining solo is fun on the other hand. You either write it off after a while (0.5 BTC/day wouldn't have changed much) or you jump in circles over $750 in you wallet after waking up.
This means that variance is not just "psychological", there is a real economic cost to variance. These days you might get away with saying that if you're a Vulcan you're better off mining solo, but in the future when mining will be one in a million chance to get $100M even that much won't be true.
That's incorrect. Even at insane difficulties solo mining pays more on the bottom line. The chance to find a block solo decreases as much as the average payout of a pool, the relationship between both stays invariant.
Solo mining is undoubtedly better mathematically, but you could mine for years without ever finding a block and I just can't see that sitting well with most people.
The alternative is heating and noising up your house for a wimpy 0.72 BTC a day on the same assumptions. That's really not worth the hassle.
On the other hand, I have switched 1 week ago from pooled to solo mining, after earning 3 BTC in total, the hard way. Today I have 53 BTC in my account, that's really worth the effort. The big profits make you smile. IMHO, a trickle profit of <1 BTC really isn't much more satisfying than 0 payback and the chance for big cash. That might be interesting for kids converting their parents' electricity to cash, but not for me.
LOL!!!!!!!!!!!!!!!!
After my last post my lonely HD5870 (940/300) has just generated a block! Can't see, which one it is, yet. It includes 0.0715 BTC fees and has only 23 confirmations so far.
Compare that to a measily 0.4 BTC a day, is that really worth your time? All or nothing!
After my last post my lonely HD5870 (940/300) has just generated a block! Can't see, which one it is, yet. It includes 0.0715 BTC fees and has only 23 confirmations so far.
Compare that to a measily 0.4 BTC a day, is that really worth your time? All or nothing!
And that's just it, the real benefit of pools. There is a real tangible benefit to returns NOW rather than possible returns later. The two are not equal in an accelerating growth model.
That's a bit rhetorical. Just as gmaxwell wrote: there is no sure return "NOW" in a pool vs. an uncertain return in a distant future for solo mining. There is just a trade-off between probability and payout. There indeed is a risk to never see a block before difficulty hits the space age. But there is also a chance to find multiple blocks during the current difficulty and get a large payout. A pool doesn't pay you better in the latter case, solo mining does.
Having instant benefits now instead of later might be a huge benefit during accelerated growth of a whole economy. But Bitcoin is a currency and does not earn you interest. Getting 50 BTC now or later is of no difference if it is BTC's value itself that is growing. If mining would return another currency, say Batcoin, and your goal was to participate in Bitcoin's growth, instant payout of Batcoins would be important, so that you can convert them to Bitcoins before the price (Batcoin/Bitcoin) increases. But the payout is denoted in Bitcoin already, you participate in the growth of its value, even if you aren't cashed out immediately, because the return is always a nominal 50 BTC.
It would be different if the price of Bitcoin was falling and you always sell your coins immediately to earn interest in another currency. Then an instant payout would be a benefit.
IMHO none of the anti solo mining myths are correct except one: pooled mining generates a steadier flow of income (at a price).
Myth 1: Mining in a modern pool produces less stale shares due to long polling, which the regular Bitcoin client doesn't provide for solo miners.
Fact: You don't need long polling for solo mining at all. Just set the askrate to something as 1 second. For solo setups the added overhead is below noise. You loose 0.5 seconds worth of work on average per freshly found block, but even the best pools with LP support cannot beat that in practice, since you seldomly get less than 0.5-1% stale shares (often more). This nonsense is even part of the wiki! There is no 1-2% benefit due to LP, in fact local fast polling is more reliable. Can anyone remove it?
Myth 2: Because difficulty constantly increases, joining a pool improves your chance to get any payback before the next difficulty increase, thus pooled mining has a higher profitability.
Fact: The premise is true, but not the conclusion. Solo mining has a low probability to get a large payout before the next difficulty increase. Pooled mining has a large probability to get a low payout before the next difficulty increase. It sums up to zero. Pooled mining does not increase your chances in a scenario of steeply increasing difficulty.
I think all other myths are self-explanatory nonsense.
There is not one benefit of pooled mining except less variance. You pay for this comfort with pool fees, missed transaction fees, stale shares, generally higher network downtime exposure, the risk of getting ripped off by a pool operator, implicit costs of sophisticated pool hopping (if you aren't the hopper). These costs are real, the costs of solo mining are purely psychological (not for the faint of heart).
Myth 1: Mining in a modern pool produces less stale shares due to long polling, which the regular Bitcoin client doesn't provide for solo miners.
Fact: You don't need long polling for solo mining at all. Just set the askrate to something as 1 second. For solo setups the added overhead is below noise. You loose 0.5 seconds worth of work on average per freshly found block, but even the best pools with LP support cannot beat that in practice, since you seldomly get less than 0.5-1% stale shares (often more). This nonsense is even part of the wiki! There is no 1-2% benefit due to LP, in fact local fast polling is more reliable. Can anyone remove it?
Myth 2: Because difficulty constantly increases, joining a pool improves your chance to get any payback before the next difficulty increase, thus pooled mining has a higher profitability.
Fact: The premise is true, but not the conclusion. Solo mining has a low probability to get a large payout before the next difficulty increase. Pooled mining has a large probability to get a low payout before the next difficulty increase. It sums up to zero. Pooled mining does not increase your chances in a scenario of steeply increasing difficulty.
I think all other myths are self-explanatory nonsense.
There is not one benefit of pooled mining except less variance. You pay for this comfort with pool fees, missed transaction fees, stale shares, generally higher network downtime exposure, the risk of getting ripped off by a pool operator, implicit costs of sophisticated pool hopping (if you aren't the hopper). These costs are real, the costs of solo mining are purely psychological (not for the faint of heart).
Sorry to tell you, that you won't ever break even with this setup. We will see a difficulty of 10,000,000 in a couple of weeks, after that you can be glad to cover the costs of energy with GPU mining. Certainly you won't have the cost of investment back up to that point.
The comment referred only to IP transfers, which are covered by the BTC spec. The more usual case of BTC-address to BTC-address transfers is secure over TOR.
TOR anonymity is usually overrated. It does secure you well for anything that doesn't interest the big agencies that much. If you've got something really evil to hide, using TOR is rather going to attract attention than the opposite. Many backbones and end nodes are intensively monitored and reveal a lot of useful information by statistical inference.
TOR anonymity is usually overrated. It does secure you well for anything that doesn't interest the big agencies that much. If you've got something really evil to hide, using TOR is rather going to attract attention than the opposite. Many backbones and end nodes are intensively monitored and reveal a lot of useful information by statistical inference.
It is a good news indeed.
Now decentralized blackmarket exchanges will emerge, protected by TOR and other anonymous networks.
And having legal exchanges like Mt Gox and Britcoin is also very important. I expect it to work like this:
Blackmarket goods <-> Blackmarket exchanges <-> Cash <-> Legal exchanges <-> Legal goods
Now decentralized blackmarket exchanges will emerge, protected by TOR and other anonymous networks.
And having legal exchanges like Mt Gox and Britcoin is also very important. I expect it to work like this:
Blackmarket goods <-> Blackmarket exchanges <-> Cash <-> Legal exchanges <-> Legal goods
BTC transactions "protected" by TOR can be trivially stolen by malicious TOR end nodes.