Quote from scriabinop23:
FWIW, as an update and some idle thoughts...
In the last month or so, network hash rate on lite coin has ramped up from ~30k to ~80k. 50K MH increase in hash rate works out to about sales of 69K AMD R9 280x equivalent cards (a little over $20MM worth of sales of AMD video cards). This works out to about the equivalent of 28K 2.5 card rigs (since a lot of the rigs are using lower hash rate cards). In the face of Xbox One and PS4 sales in the same period, the impact to AMD sales should be fairly negligible. I assume also because these cards were already in the channel, you may not see even the $20MM of revenue impact until a later quarter.
Even then, the cards are all sold out, with the only thing available being slower mining cards (Radeon 7870/7850 being the next best alternative). So a few things are called into question: 1) How long will it take the supply chain to fill up stock again? 2) will AMD respond to the demand signal and up production of these cards. I think that may be a bad move, as gamers may just move to Nvidia cards, and with litecoin showing signs of topping, mining investment may be no longer attractive (at these difficulties).
Last point of interest: even thought mining appears profitable now at current prices, doing some simulation of the evolution of prices combined with likewise forecast of difficulty increases, getting a payback of just investment in a decent time (90-120 days) is looking increasingly unlikely. Doing so would depend on no more cards being available (capping difficulty increases) for the next month or two combined with an increasing price (from the $25 level here).
What's most interesting here is that mining litecoin made more sense at $6 with half the difficulty level and better upside price prospects than at current difficulty levels and $25 price level. The project's returns are quite path dependent, as its easier for a potential miner choose to not invest when not already in, but more difficult for a miner to stop given they've already sunk costs and there is still a tiny sliver of profitability or potential profitability. This will keep network MH high even if profitability for new miners is low. This mirrors the 2009 natural gas shale drilling boom, I believe. I think profitability and decent payback-time on investment is already a very difficult proposition for new players, even though it may not appear so.
