Bitcoin Forum

I have always wondered where the money go that miners get. Of course from the obvious expenses: server cost, rent, maintenance, electricity bills,etc... I`m more interested what miners do with their profits, not income.

I try to understand how beneficial miners are to the economy, of course aside from securing the network, I mean from a financial standpoint.

I would certainly not want to see miners dumping all their bitcoins on exchange for dollar or euro, that would be very bad for our bitcoin economy.

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For example in this current spam attack, millions of dollars of bitcoins were spent by the attacker to slow down the network.

All that money goes to miners in forms of increased fees. But if the miners dump all that money for dollars then its a net loss for the entire network.

But if the miners just HODL all their profits, or at least the majority of them. Then essentially any attack against the bitcoin network, is just a free subsidy for the miners profits, and if they HODL all their profits, then it makes bitcoin more scarce and more valuable, essentially the attacker subsidizing the whole bitcoin economy ,and achieving the exact opposite what he intended to do.

So please answer my question as precise as possible, or if is there any way to know or calculate what the miners do with their profits, in aggregate.

You could achieve exactly the same buy using your profits/salary to buy bitcoins and hold forever (or just burn them straight away) instead of trying to dictate what others should do with their profits.

I think that is not possible to know what they do with the fee profits. I don't see a big problem if they sell all their profits for dollars, other people will buy this bitcoins. On the other question, you say that some million dollars were spent on this attack, it could be that someone move it from one of its wallets to another of its wallets, this bitcoins weren't spent only moved.

They probably sell it for profit, and hold some bitcoin for the long term. Obviously they invested fiat for mining equipment, and they want to make fiat profit since it's accepted in more places then bitcoin right now. They would also hold a portion because if they mine they should know that the btc price might go up soon and they might sell it then for a bigger profit.

Can't say for sure though.

Child down, i`m not dictating anything, where do you get this?

I`m just curious to know thats all, i am an hobby economist and always like to analyse these things


Not just fee profits but the minting profit as well. There is a big problem if miners dump all their profits, because that means that they only exploit bitcoin, and if they have most of the power over bitcoin consensus, they will not represent our best interest.

But I dont think they dump it all.

On the other hand, the money came from outside if a large organization was behind it, they first bought bitcoins, and then used that bitcoin to spam.
The money trail could be traced back by exchanges, but thats another story.

It all depends on their strategy and assumptions. If they strongly believe in mining, they would reinvest most of the profits. Otherwise, they would withdraw it and invest in other kind of assets.

In my opinion, I think a large majority of miners take their profits and treat them like how you and I would use money that we earn; exchange it, buy things, pay bills, etc.

Maybe a small amount of miners take their profits and then re-invest back into their operation, but if the money keeps on rolling in, I think they're happy with what they're mining.

So no miner has any savings in bitcoin that they HODL in your opinion? That sounds really unreal.

I can understand using BTC as money, but generally speaking bitcoin is technically a commodity, plus people already do save in money, especially bitcoin users who try to avoid fiat.

So with those assumptions I guess any miner has at least 10-15% of his profits saved.

I completely forgot to mention that actually.

I think that a year or two ago, before the halving was so close to occurring, there would be a lot more miners who would just take the straight exchange and then go do whatever with their funds. Now that we're bordering on the halving, I have a feeling miners are holding more than 10-15% of their profits and are waiting for the halving to roll around. I think some miners are holding upwards of 40% of their funds waiting for the halving, but I'm not a giant Chinese Bitcoin mine owner, so I am not entirely sure.

I have a friend who is a Bitcoin miner and he is self-employed. All his rent, monthly bills and food are paid for by his altcoin mining rigs so I guess you could get by just from mining. He is probably saving up something in a wallet for long-term investment as well.

From someone who used to mine back in GPU days, I would say, I used my profits into acquiring more and newer GPU's back then therefor I was contributing back to the network using my profit and at the same time was making my computer rig, much cooler and stronger in terms of performance. Nowadays same goes with miner, they spend some of their profits into purchasing better and more efficient mining equipment's and the remaining profits are used for personal expenses.

I once heard that miners (in China) are selling their coins to the rich Chinese people who want to transfer money out of China.

Therefore, maybe they do not use exchanges to cash out their profits.

What if bitcoin price plunged? i'd assume he'd be screwed.
Anyways, most miners nowadays attempt to roi and then spend their money. They have to earn enough to buy the next-gen miner. If they dont earn enough, theyll sell on amazon or ebay and sell for ridiculous prices.

He does say that his friend is mining altcoins, so it is not necessarily the end of the world for him if it happens. As long as the value of the altcoins he would be mining goes up at the same rate that Bitcoin goes down, he probably wouldn't even notice the difference.

i think miners are human and human need a life,vacation,pay bills,and food, i assume,they do use their mining profits for paying their everyday needs,and save the rest for the price increase or buying more rigs to make their profit more bigger

People need to live and people are free to spend their money however they wish, as long as it isn't hurting others.

It is hurting us if they dump it all on the exchange for worthless fiat  :(

They should hold on to more of it.

there are no exactly answers of this question unless you ask to the miners.

but if you ask to non-miner maybe I'll say they use it for their daily necessities or buy something they want to

Yes, it is true. It all depends on individuals. I don't like in reinvesting again and again in same thing whether it is mining or some other investments. So after I achieve my target in certain investment than I will try to move funds to other investments and will continue with same investment or increase little.

I just moved the thread there, I hope miners will answer it :D


Ok but after you achieved ROI? Because you can have profits as income-expense, but you can have total ROI with total income - total expense.

After you have recovered your initial investment, would you reinvest?

I think you will find it's not regular people causing most of the dumping.  The big mega miners are ones who I suspect do the most dumping.  They have machines they want to pay off in fiat, and also big expenses.  Also once they cash it out they have profit on books. 

I think home/hobby account for very small section of dumping.  I personally re-invest after expenses. I'm in it for the long term for the most part... so guess we wont know for a while if I did right thing or not.

Honestly its hard to tell, i watched a documentary a while ago, where many miners were interviewed, chines ones (with cheap electricity) and some of the bigger individual ones and most of them were in a loss and still kept going.

They were all in the long term.

Look it this way, if we win, we will be the new elite. If we lose we lose a few months/years and a big portion of the capital invested.


I think the upside potential is far greater than the downside.

I doubt most miners are making serious cash. Unless you mine with chinese electricity prices.
Right now I think only bitfury and Spondoolies Tech miners are making a good profit. Bitmain overcharges their machines because they are not that efficient.

They interviewed the wrong ones then... these mega mines are making huge profit's.  Cheap electricity and a some linked to makers of machines.... that leads to massive profits.

It's common sense these big mines are the ones doing the most dumping.  And they can keep some but they are a far bigger percent of machines hashing then the home/hobby miner.

Home/hobby miners are small portion of hash at this point.

Well the free market will sort them out.

If they dump now because they are impatient, and the price goes up later, they miss out on big profits. So maybe they will save more next time.

But at the same time by dumping now, they let many newbies buy bitcoins cheap now, rather than buy later more expensive.

You say that but really there is nothing that makes right now that cheap.  It is current price.   Cheap... look back 220's through there now that was cheap. 6 months or so ago... now looks cheap.  Right now is market price.

So yes we hope it goes up and speculate it hopefully.  But there is no guarantee's in this game at all.

When I have a significant amount of profit, for the near term it will probably go into more of whatever hardware is actually generating a profit for me.

 9-)


 I strongly suspect the big mines aren't as profitable as many folks assume - they've been hit by diff increases like everyone else, they just tended to get hardware cheaper so they could RoI it somewhat sooner.

Yes but look at the ones owned by Bitmain.  Do you think they pay near per unit as we do? I highly doubt it.   Also electricity it no doubt is a few cent's.   How many .... hard to saw.    But would bot surprise me 1-2 cents.

I think ones linked to manufacture are most profitable.  Second I think the big mega mines, again they are getting discounts due to amount they buy.   And again very cheap electricity.   

There has to be a lot of profit or they would not continue to re-invest.

Haha and I was hesitant to buy at 150 euro, now soon the 400 euro will be the cheap one as we go through 1000 euro.

Miners will probably get their ROI pretty soon.

Honestly, is their really money to be made with mining. I mean being a home miner not a big firm with enough money?
I doubt it. I bought a lot of S3's a while back and my earnings were just around 1k.

My BTC profits go to cover the losses I made "investing" in scam altcoins.  I'm attempting to achieve coin equilibrium.

In the old times I used to re-invest, now I have much less time and my rigs are often offline. Making profit with home mining is more and more difficult :)

 Right now, no. But there have been times in the past and probably will be a time in the near future that home miners will be able to mine for a profit again - if your electric is cheap enough.

That is a lot on poor countries, so many guys from there might sell and have their money in their pockets to 'feel good'.

But who knows, this metric doesnt really tell anything.

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I look for more scientific statistics if there is any available.

Most of the coins are likely being sold to pay for mining expenses at these levels unless there is evidence that most miners are real speculators and they are off-setting their expenses so they can take a mine & hold strategy?

Holding and trading are better ways to make bitcoin than just selling; a good trader can make money from his miners even if the miner has negative roi assuming the market is good. holding isn't a good idea at the moment, because btc seems to be holding at the price of 400 at the moment. But yes , most miners do sell their bitcoin as it is the best and safest option besides trading or holding.

Trading is not something simple or it would be easy money.  Day traders yes can gain huge profits but if your on the wrong side of it you lose lots of money.  It's much easier to say trading then actually doing it.

Long term holding is much easier, and should be less risky.  I prefer long term holding for general public over trying to trade large amounts.  I urge caution when trading. 

only 1/4 are sold, you can do an easy math based on the consumption and the earning to see this, unless they are buying new HW every day, but even in this case those will roi fast

the theory behind which miners are selling 3600 coins a day is flawed, they are not selling even 50% i believe, there is no reason, it's better to speculate now that the halving is coming

If you get to mine ETH long before it went 0.02 you could have profited 10x for what it is now.  And so if you have mine btc long before it reach 1200 USD you should have been celebrating.  I'm no miner but I can see some mine altcoins which they think can grow and they are easy to mine during the start..maybe you wanna check WARP coin.

 But you'd make MORE if you didn't mine, in that case.


 I tend to hold when I think the price is low, and sell when I think it's high - hasn't gotten low enough the last few months for me to buy, and it's getting close enough to the halfing that I'm almost ready to reset my "buy/hold/sell" thresholds.

Yes mining has become harder and harder.  But some still make profit so i would not say all not mine.  It all depends on many different variables.  Just really a lot of differences.

And having investors know about long before, so I don't see one big jump maybe gradual.  It's all speculation.  But I plan on holding way longer then past having.  Some day I will look back and say I was smart or an Idiot... could be either and I realize it.

Right now, with the BTCitcoin I get from mining it usually goes towards gas, food, goods, you name it. Right now I'm slowly saving up for the new Bitfury miner and I'll hopefully have coin for one when it is released, if not after release hopefully some one will sell them online for a few coins less.

But most of my bitcoin I used to just trade, buy low, sell high. Stuff like that. Try and make a few more bits in between dumps and pumps

I don't believe the small time miners are making profit at all the current mining market seems to be very much focuses for big time miners. Small time miners or home miners are not able to make any profit at all. Not since a year or so.

So what are they doing?

Paying the electricity bills with their salary, and using the mined bitcoins to hoard it ,and later on hoping that the price will go up so that they break even?

I think so, and i hope they will break even!

Maybe some of the big boys ain't making so much profit right now and are buying themselves some future power. Think how influential you'd be if it really takes off.

I have a feeling that most timers are already thinking about how influential they'll be once Bitcoin takes off, and I have a feeling they are very confident that Bitcoin will take off.

Regardless, though, they can still make a lot of money regardless where Bitcoin does go.

"We" the miners are reinvesting 100% of profits on hash power, after tax, bills, salary etc.
The importance of progressive, exponential hash rising due to profit reinvestment is too attractive for any miner...

Ok, nice to see such support from miners, even smaller ones.

Now we can see that the miners are very supportive of the community, and now just look for quick bucks.

they just join a mining pool, work together and share the rewards..
this can increase the speed and reduce the difficulty in mining putting profitability in reach...