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Author Topic: How much do bitcoins cost? $0.48 USD?  (Read 12732 times)
Chuck
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April 30, 2011, 05:20:23 AM
 #1


Seeing the mtgox price at $2.75 has got me depressed, wishing I'd bought coins back in December.

But it has me thinking - what is the average cost, today, to create a bitcoin? I know it can't be anywhere near $2.75.

I've been mining for coins for the last 11.4 days, and I've earned 27.8 BTC. I figured I'm spending at most $35 a month extra in electricity (probably less), so that means I "purchased" those coins for $0.48 each.

I am wondering what everyone else who mines thinks they are paying to "buy" bitcoins.

I am also wondering what this says about the $2.75 price - which is 5.7x more then what I'm paying for coins. It seems really, really high.

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April 30, 2011, 05:25:03 AM
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buy an extension cord  Grin

Net Worth = 0.10    Hah, "Net" worth Smiley
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April 30, 2011, 06:20:06 AM
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You didn't factor in Capital Cost (price of your mining rig) and all the other factors discussed on this forum before.

Chuck
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April 30, 2011, 07:10:39 AM
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You didn't factor in Capital Cost (price of your mining rig) and all the other factors discussed on this forum before.

If the card I purchased for mining died today (and it was not under warranty), then add $0.27 to the cost of every BTC I've mined to date. That makes the coins I've mined recently cost $0.75, not $0.48, but still far from $2.75.

My point was, there should be a very (very) rough estimate of what it costs to make a bitcoin. I know mining hardware can vary in efficiency, and electric costs are not the same everywhere. But I think if you average it all out, you'd get a figure far under $2.75.

I'm curious what that figure would be...  then you could say, "Every 10 minutes, the world is spending about $ X USD to create 50 BTC"... has someone already figured this number out?

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April 30, 2011, 07:40:12 AM
 #5

I did a rough estimate of about $0.50 a BTC.  The problem arises is that in 10 days it is going to be $0.60 due to increased difficulty.  You don't where the price of bitcoin is going to be.  

Also I think I found a attack on the system.  If you buy say 500,000 BTC and then flood the market with btc, you could crash btc to about $.10 then put out rumors the currency collapsed.    It might come down by itself.
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April 30, 2011, 09:00:30 AM
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Quote
If the card I purchased for mining died today
Your card was OC'd too much, caught fire, and let the blue smoke out of your entire computer. Now how much do BTC cost you? (Full Capital Cost)

Okay, so you just spent >$1000USD to buy a new computer, since the last one caught on fire. What could you have spent that money on instead? Couldn't you have thrown it into the stock market? Or maybe community college classes so you can push for a raise next year? (Opportunity Cost)

Well you decided school is lame, and The Stock Market For Dummies is too expensive. So you spend a few hours picking out hardware, drop $1500 on a new system, and sit around doing nothing but fantasizing about your sweet new rig. (Lost Time)

New machine is here! You spend a few hours putting it together, lost a few fingernails, and sliced your finger open on the metal case. Now you can't donate blood tomorrow because you lost a pint of blood from that cut Sad (Lost ... erm ... Blood?)

You spend a few hours tweaking the new cards, OCing them, etc. (Lost Time)

You spend every night lying awake at night watching the machine to make sure it doesn't go down. (Lost Time and Increased Healthcare Costs in the Future)

Next week, you refresh Mt. Gox for the millionth time and notice the curve dropping ... and dropping ... and now BTC are worth $0.05USD. (Risk)

And that, my friend, is why BTC are so expensive (or, actually, it's because the value of a currency isn't determined just by the cost of manufacturing it)

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April 30, 2011, 10:26:37 AM
 #7

There's plenty of risk in buying BTC as well. I agree the price seems high at the moment, if you're thinking of buying small amounts. For large amounts (and look at the volumes being moved on mtgox recently), you'd need a pretty hefty hardware investment up front to get anywhere.

So what are you waiting for? If you think the price is too high, get mining and maybe sell what coins you've generated already, if you expect others to come to the conclusion soon as well.
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April 30, 2011, 12:45:39 PM
 #8

I can understand all the time/effort/hassle of running a mining rig for profit making it feel less "fun" than it might otherwise seem..  

But having participated in quite a few "obsession" hobbies over the years (Dj'ing, Motor Racing, Helicopters etc), I find the thought that all that expensive silicon is actually working hard to do something with more value (to other people) than its usual job of pushing pixels around the screen for my entertainment to be enjoyable in a familair fashion.   Its the feeling of a finely tuned machine that you built working hard and doing something magical.  

Being able to peruse the code that is driving that silicon into producing intricately crafted patterns of numbers millions of times a second and know that the product of my machines work will be embedded into *the blockchain* (dah dah daa Wink ) - a kind of digital DNA of the bitcoin noosphere is a bit of a buzz..    The fact that I can then swap the proof of those humming chips work for real-world goods is icing on the cake Smiley

In fact, I'm about to do a bit of coding and intercept the hash value outputs from the miner and feed them to the 10-digit Alphanumeric Nixie-Tube display mounted above my monitor with some funky transition effects..   Ala the WOPR seeking the launch codes - movie style crypto-cracking Smiley  Like this.
http://www.youtube.com/watch?v=ek8S4r7bBUU&feature=related

No doubt the buzz of thinking about the silicon churning will get old after a while, like most such hobbies, but I'm pleased to be a part of helping grow the best conglomeration of ideas Ive seen in a new monetary system yet.. and even after the "woo, cool !" factor has faded, I will be hopefully left with a wallet full of valuable binary patterns, which is more I can say for most of the other passions I have indulged in over the years..

I'm reminded of a section from Cryptonomicon (Neal Stephenson), which Im sure many of you have read, but I will paste here for those who havent (or like reading), and will here reign in my flights of poetic cryptography fancy..  

(Geez I can blah on when Ive had too much caffiene cant I ? Wink - Hope you enjoyed it)

---  Cryptonomicon Quote about "Soaring through Number Space" ---

he has to use Ordo, which is a tool for taking his ideas and converting them into streams of bits that are almost indistinguishable from white noise, so that they can be sent to Avi in privacy. In exchange, it receives noise from Avi and converts it into Avi’s thoughts.  encryption is definitely a good idea. The question is: how much paranoia is really appropriate?

I would like you to generate a 4096-bit key pair and keep it on a floppy disk that you carry on your person at all times.  Even a 768-bit key requires vast resources to break. Add one bit, to make it 769 bits long, and the number of possible keys doubles, the problem becomes much more difficult. A 770-bit key is that much more difficult yet, and so on. By using 768-bit keys, Randy and Avi could keep their communications secret from nearly every entity in the world for at least the next several years. A 1024-bit key would be vastly, astronomically more difficult to break.

Some people go so far as to use keys 2048 or even 3072 bits in length. These will stop the very best codebreakers on the face of the earth for astronomical periods of time, barring the invention of otherworldly technologies such as quantum computers. Most encryption software—even stuff written by extremely security-conscious cryptography experts—can’t even handle keys larger than that. But Avi insists on using Ordo, generally considered the best encryption software in the world, because it can handle keys of unlimited length—as long as you don’t mind waiting for it to crunch all the numbers.

Randy begins typing. He is not bothering to look at the screen; he is staring out the window at the lights on the trucks and the jeepneys. He is only using one hand, just flailing away loosely at the keyboard.

Inside Randy’s computer is a precise clock. Whenever he strikes a key, Ordo uses that clock to record the current time, down to microseconds. He hits a key at 03:03:56.935788 and he hits another one at 03:05:57.290664, or about .354876 seconds later. Another .372307 seconds later, he hits another one. Ordo keeps track of all of these intervals and discards the more significant digits (in this example the .35 and the .37) because these parts will tend to be similar from one event to the next.

Ordo wants randomness. It only wants the least significant digits—say, the 76 and the 07 at the very ends of these numbers. It wants a whole lot of random numbers, and it wants them to be very, very random. It is taking somewhat random numbers and feeding them through hash functions that make them even more random. It is running statistical routines on the results to make sure that they contain no hidden patterns. It has breathtakingly high standards for randomness, and it will not stop asking Randy to whack on the keyboard until those standards are met.

The longer the key you are trying to generate, the longer this takes. Randy is trying to generate one that is ridiculously long. He has pointed out to Avi, in an encrypted e-mail message, that if every particle of matter in the universe could be used to construct one single cosmic supercomputer, and this computer was put to work trying to break a 4096-bit encryption key, it would take longer than the lifespan of the universe.

"Using today’s technology," Avi shot back. "that is true. But what about quantum computers? And what if new mathematical techniques are developed that can simplify the factoring of large numbers?"

"How long do you want these messages to remain secret?" Randy asked, in his last message before leaving San Francisco. "Five years? Ten years? Twenty-five years?"

After he got to the hotel this afternoon, Randy decrypted and read Avi’s answer. It is still hanging in front of his eyes, like the afterimage of a strobe:

"I want them to remain secret for as long as men are capable of evil."

The computer finally beeps. Randy rests his tired hand. Ordo politely warns him that it may be busy for a while, and then goes to work. It is searching the cosmos of pure numbers, looking for two big primes that can be multiplied by each other to produce a number 4096 bits long.

If you want your secrets to remain secret past the end of your life expectancy, then, in order to choose a key length, you have to be a futurist. You have to anticipate how much faster computers will get during this time. You must also be a student of politics. Because if the entire world were to become a police state obsessed with recovering old secrets, then vast resources might be thrown at the problem of factoring large composite numbers.

So the length of the key that you use is, in and of itself, a code of sorts. A knowledgeable government eavesdropper, noting Randy’s and Avi’s use of a 4096-bit key, will conclude one of the following:

—Avi doesn’t know what he’s talking about. This can be ruled out with a bit of research into his past accomplishments. Or,
—Avi is clinically paranoid. This can also be ruled out with some research. Or,
—Avi is extremely optimistic about the future development of computer technology, or pessimistic about the political climate, or both. Or,
—Avi has a planning horizon that extends over a period of at least a century.

Randy paces around his room while his computer soars through number space.....

JJG
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April 30, 2011, 01:23:32 PM
 #9

I did a rough estimate of about $0.50 a BTC.  The problem arises is that in 10 days it is going to be $0.60 due to increased difficulty.  You don't where the price of bitcoin is going to be.  

Also I think I found a attack on the system.  If you buy say 500,000 BTC and then flood the market with btc, you could crash btc to about $.10 then put out rumors the currency collapsed.    It might come down by itself.

There are over 6 million BTC in circulation. There are plenty of early adopters who must have huge quantities of Bitcoin. In fact, there was a thread about someone who had 371,000 BTC back in July and surely has far more now.

I can see one of these wealthy Bitcoin owners waking up one day, checking the exchange rate, and deciding to dump it all. That would push the exchange rate straight to the floor. It would be balanced out somewhat by people eager to jump in and invest in cheap bitcoins, but a sudden drop of Bitcoin value will certainly make people think twice about the system.
stic.man
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April 30, 2011, 02:19:46 PM
 #10

The early adopters though probably weren't in it simply for monetary gain, they're probably all for spreading it around, stabilizing it, then add legitimacy and worth to their wallets. The more people involved the better. Besides dumping a ton at once is stupid when you're selling the last chunk of your lot for dimes and nickels
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April 30, 2011, 06:05:19 PM
 #11

 
Also I think I found a attack on the system.  If you buy say 500,000 BTC and then flood the market with btc, you could crash btc to about $.10 then put out rumors the currency collapsed.    It might come down by itself.

That's an expensive attack.
That doesn't even work. There are over 6 million bitcoins out there. Just crashing the market price doesn't destroy bitcoin.

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