Earnings Update (August 2017)

With regards to earnings, not a lot has happened since my interim August update. In summary, here is what happened for me this month:

  • I purchased two Gigabyte GTX 1070 G1 boards at what looked like a semi-reasonable price (although it decreased a bit further afterwards due to the weakening of the USD…)
  • As that would make my Bitcoin-related ‘capex’ higher than what I felt comfortable with, I sold approx. 0.110 BTC.
  • With my mining income since then (0.0258 BTC) I can more or less assume that one of these GTX 1070 boards has been paid for.
  • I am now earning a relatively stable average of 0.00175 BTC per day using 1×GTX 1080 (22/7 load) and 2×GTX 1070 + 1×GTX 970 (24/7 load)

The month of August was marked by several important events:

  • Bitcoin Cash (BCH) forked succesfully and did not crash immediately, and neither was Bitcoin (BTC) influenced adversely.
  • We witnessed huge growth in the price of Bitcoin, Ethereum, Litecoin and several other coins.
  • Surprisingly — at least to me — GPU mining difficulty did not jump as high and as quickly as I had expected.

In September however, I expect rougher seas. Even if I see no fundamental reasons for the continued huge growth of BTC, I don’t mind that it continues. However it also means more folks will be buying more video cards and driving mining difficulty further, faster.

Meanwhile, more and more news reports warn that a new Bitcoin hard fork is very likely in November, and things will probably get very, very ugly.

Before and during the BTC/BCC split one month ago, people on both sides acted across clearly defined lines. Some folks wanted large blocks while others said, ‘Block size is fine, but let’s change what information we put on these blocks, and add some new technology that will make block size irrelevant’. Regardless of the merits of both ideas, it was clear who was ‘staying’ and who was ‘leaving’. The large block supporters forked the blockchain, implemented replay protection, adopted a different name (Bitcoin Cash) and went on to shape the world as they saw fit, or die trying. Regular Bitcoin users were not hurt in any way by this, and we even got rewarded with Bitcoin Cash equal to our Bitcoin holdings just before the split. Whether Bitcoin Cash has a future is a topic for an entirely different conversation, but the important thing is the fork went well and nobody lost anything.

However now we seem to be kept hostage to the desires of some folks who backed the New York Agreement and signalled SegWit2x support but are now not so sure.

The way I understand things, there are those who planned to support SegWit2x just so long as the SegWit part was implemented (which happened in August), and don’t care at all about the 2x part (increasing the block size from 1MB to 2MB, which is scheduled to happen in November).

As a result of this, when the time comes to implement the switch to 2MB blocks and the blockchain inevitably forks to accommodate for this, there may be a non-trivial group of miners who will decide to stay on the other fork (1MB blocks + SegWit) instead of abandoning it. Thus the soft fork (a mutually agreed change to protocol rules) will become a hard fork (a contentious split between supporters of different protocol rules).

The problem is that both of these groups seem to claim ‘spiritual succession’ to the original Bitcoin as imagined by Satoshi Nakamoto. Neither plans to back off the way BCC supporters did, and no one seems willing to implement replay protection so that coins from one fork can’t be double spent on the other. This looks to me like the most expensive game of chicken in the history of mankind.

The most infuriating part about this is that the whole concept of consensus is being thrown out of the window and miners are deciding the future of Bitcoin by threatening to withdraw their hash power from one blockchain and direct it towards the other. The intricate balance between miners, developers and users that has survived thus far is likely going to be permanently destroyed, and when this happens, trust in Bitcoin is gone.

How will that influence my actions between now and November? I plan to continue mining but I will not be buying any more hardware unless things change. I have no immediate need to sell coins (I have sufficient funds from previous BTC sales to cover my electricity bill until November) but I will not hesistate to sell everything if I feel the market begins to lose confidence or the two contending groups fail to reach a graceful way to enable the 2x fork for everybody come November.

What are your thoughts on the future of Bitcoin right now? Do you feel everybody will see reason and keep Bitcoin united and expensive, or do you expect another split? Let me know in the comments below.

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