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Mt. Gox collapses; will it damage cryptocurrencies enough for higher end AMD cards to return to sane
Radeon R9 270X: MSRP: $199 Cheapest on New Egg: $250
Radeon R9 280X: MSRP: $299 Cheapest on New Egg: $400
Radeon R9 290 : MSRP: $399 Cheapest on New Egg: $550
Radeon R9 290X: MSRP: $549 Cheapest on New Egg: $650
So you see the problem. We have previously discussed the cause: non-gamers buying up higher end AMD cards to use them for mining cryptocurrencies, especially Litecoin. Basically, it's almost like bitcoin, except that it's a "competitor" of sorts and not actually bitcoin itself. If New Egg can sell out a card at $400, they're not going to sell them to you for $300, so prices go up. Retailers that don't raise prices quickly sell out.
Mt. Gox might change that:
http://www.reuters.com/article/2014/02/28/us-bitcoin-mtgox-insight-idUSBREA1R06C20140228
They were the largest bitcoin exchange, with around 750k bitcoins on hand--nominally valued at several hundred million dollars. Were, not are, as those bitcoins all mysteriously vanished, and those who "owned" the bitcoins are simply out of luck. There had been previous cases of stolen bitcoins on various sites, but nothing like the largest and best-known exchange for bitcoins or any other cryptocurrency going poof.
How much will this shake confidence in bitcoins, or other cryptocurrencies? They demonstrably can vanish from even the largest, most trusted exchanges. If it's enough to drive prices down to the point that buying new AMD video cards to mine them is no longer profitable, then that will decrease demand for AMD video cards and allow prices to drop.
Higher prices on AMD video cards have driven a lot of the gamers who would have bought one to buy an Nvidia card instead. Higher sales at current prices and a lack of price pressure from AMD has allowed Nvidia to keep prices higher than they could have been had Nvidia been forced to slash prices to compete with AMD's MSRPs. So even those who prefer Nvidia have reason to want AMD prices to come back down.
Comments
Lower prices on hardware is always desirable so I would certainly hope so. I had seen a news article on this a few days ago.. and while I had known about bitcoin and other online currency i'm still not sure I understand it.
How exactly are they "mined" and where does the value come from? Some sort of hard to crack equation.. at least in my mind doesn't equate to anything of value. I've never found someone who could successfully explain the entirety of the subject to me.
I am one of those consumers who opted for the NVidia over the R9280x - I had my eye on it when it came out and then when I finally went to make my purchase the price jumped to $400 up from ($289 with a free game.) I was shocked at the time. I thought for that price I can jump to the 4gb gtx 770 or I can search for a bargain card and upgrade in a few years.
The r9280x was the hot item when Battlefield 4 came out - I debated to hold off and wait a month for the price to come back down after all the BF4 hype dropped out, but as your showing me, it never did come back. Comparisons where showing the 2gb gtx 770 was lagging behind the r9280x and at the time I thought the price jump was just a function of the high demand as a result of the 2gb 770 stuttering.
How can the card hold at the $400 price? Wouldn't they just make more and ultimately those miners buying them up would run out of funding? The manufacturers and vendors would still be getting the original $300 msrp? Unless..... the miners are the same people controlling the supply.
Ulitimately I found an asus gtx 660 for ($185 came with 2 free games AC blackflag and splinter cell) - I have been very pleased with it so far. I play most games on high to ultra settings and I didn't break the bank doing so. In 2 or three years I will upgrade my card and won't be losing out. I guess it was just meant to be.
Suppose that if you buy a $400 card and use it for currency mining, you mine $100 in currency per week after electricity costs. How many cards do you want to buy? The answer is, as many as you possibly can, as it will more than pay for itself in a month and then you have pure profit after that. And you can have an exponentially increasing number of cards if you sell coins as you mine them to buy new cards.
But what if you only mine $10/week in currency after electricity costs, and know that what you can mine will decrease exponentially while electricity costs won't? Then how many cards do you want to buy? None, probably. For currency miners, there isn't much of a middle ground between buying as many cards as you possibly can and buying none at all, as that middle ground depends purely on human risk aversion.
AMD buys their chips from TSMC (i.e., AMD designs the chips and TSMC actually fabricates them), which can't possibly keep up with arbitrarily large demand. There are also delays, as it takes several weeks for TSMC to make a wafer, and then it takes time for each wafer to be cut into chips, build cards around them, and ship them around the world. So AMD doesn't want to order a zillion GPUs, only to see demand die and be stuck with a ton of chips that they can't sell.
You can think of a hash function as a "random" function. You give it some input, it does something, and produces an output. You give it the same input, you get the same output. You give it a slightly different input, and you get a radically different output. A good hash function makes it impractical to start with a desired output and find an input that gives that output. It also makes it impractical to find two different inputs that give the same output. For most purposes, we want a hash function to be computed as quickly as possible subject to those properties.
Hash functions weren't originally meant for currencies, but for other purposes. For example, suppose that you want to detect it if a file has been altered. One thing that you can do is to take a hash of the original and store that. Later on, you can take a hash of the version that you think may have been altered. If it matches your stored hash of the "clean" version, you know that you have the original. The hash might only take 32 bytes or so, which is vastly smaller than storing the entire old file.
There have been a lot of functions used as hash functions. Bitcoin uses the 256-bit variant of SHA-2, which was published by the NSA in 2001. So basically, you give it an input integer in [0, 2^256) and it gives some "random" output in that same range. If that output is small enough and the input hasn't previously been used to mine a bitcoin, then you've just mined a new bitcoin. How small is small enough changes as time passes to get smaller.
Bitcoin miners generally believe that SHA-2 is good enough that the fastest way to mine bitcoins is to try lots of different inputs so that you occasionally get a lucky hit and mine a new bitcoin. Thus, they buy video cards to compute the hash of massive numbers of different inputs. Or at least, they used to; they've since moved on to FPGAs and then custom ASICs for bitcoin mining, though video cards are still used for some similar cryptocurrencies that use different hash functions.
If you really want to panic Bitcoin miners who know something about how the system works, publishing two different inputs that hash to the same output will do it, as it would imply that SHA-2 is insecure. Publishing an input that hashes to zero would be better yet. Someone who can easily compute lots of different inputs that produce bitcoins could conjure up massive numbers of bitcoins.