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1
In the upcoming months the difficulty on the chain will cause GPUs to be non profitable (or so I hear).
So all we can do now is mine with ASICs - and even then see returns after a YEAR?
That will be the death of bitcoin .... If mining isn't profitable - no one mines - no one mines no coins generated and transactions fail ?
What are people thinking still trying to make rigs etc? Or am I completely mistaken?
4
Bitcoin's difficulty adjusts itself automatically according to the amount of hashing power available. Since not every miner has the same profit margin, they may be shutting off and turning on at different times. Because of this in the end only the most efficient miners will be mining.
In case there is a sudden drop in mining profitability (like say after the 2011 bubble), a lot of miners might drop off the network. As long as some of them still mine (those that are in for the long run and the idealists that will mine no matter what at the very least), that won't harm the network. The block generation might slow down for 2 weeks, but after the amount of hashing power stabilizes, everything will go back to normal. Bitcoin is a self-correcting system.
So as long as the amount of hashing power that suddenly drop out of the network is not really big, Bitcoin will be unaffected in the long run.
2
Bitcoin automatically adjusts difficulty every so often so if mining is not profitable then people will stop mining and the difficulty will drop, making mining profitable again. Unless there is a sudden crash in mining power Bitcoin will tick along happily.
Mining is never going to be wildly profitable, but the doomsday scenario you are suggesting is not going to happen.
2
Mining services are paid for using a subsidy. Currently this subsidy pays out 3,600 BTC (worth about 400K USD) each day.
Some miners will save their proceeds, others will cash out to fiat (especially the GPU miners who have high electric bills) and a small minority of miners will spend their mined coins in the Bitcoin economy.
So it matters little to the Bitcoin economy that the GPU miners will no longer be receiving enough to cover their electricity costs (and will be forced to retire that hardware).
Non profitable means there is too much processing power already. – Stéphane Gimenez – 2013-06-18T12:52:54.190
1which is there because it is profitable. Unless you plan to support it out of charity ? – user5618 – 2013-06-18T12:53:30.413
2If no one mines, mining will be profitable again. That's what the difficulty is about. – Steven Roose – 2013-06-18T14:34:49.743
Besides, Bitcoin is more than only mining. Eventually, only a small part of the big Bitcoin community will mine, while the others use it for what it's meant to be used. As a payment option and a currency. – Steven Roose – 2013-06-18T14:36:12.747
People are still building GPU rigs? I suppose it happens -- especially if a person isn't aware of what ASICs bring to the table) but probably this isn't occurring in any significant number anymore. – Stephen Gornick – 2013-06-18T20:14:36.260
3Nobody goes to that restaurant, it's too crowded. – David Schwartz – 2013-06-19T17:54:38.523