Bitcoin Forum

Am I the only one who doesn't get how miners think they have to shut things down the moment Bitcoin becomes unprofitable? Do gold miners quit mining because they haven't found gold in a few weeks and are not making much money?

What is the point to mining but to speculate, if I dropped out of crypto everytime I made a loss then the market would go nowhere. This is capitalism, nothing in life is certain and handed to you on a silver platter. Write it off on your taxes and hold your coins and hope for next month to make up your losses and then osme.

Indeed. To hell with rationality, covering costs, and business sense, this is Bitcoin!

I do not know what and/or who is behind this misfortune for bitcoin prices but it seems that it has at least correlation with oil prices.

Mainstream Businesses don't always break even every month or are profitable 100% of the time. Who shuts down their restaurant just because they had a bad month?

The poor little miner is long gone, my friend. You need a seriously strong computer to get in this business, and the people who did are cold blooded. I don't see any sign of panic coming from them.

I predict  prices improve since it is an atmosphere.

yeah , the klingonians are trying to bankrupt earth miners for the annexation of mars

lol... i'm still trogging along at 0.7 Gh/s getting maybe 700-900 satoshi a day  ;D

A bad month?!  Have you been paying much attention much this past year? ?

Well, gold miners do shut down their mines if mining is no longer profitable.

Judging from your post, I assume that you must have a room full of ASICs mining away, supporting the network. If not, then why not?

I don't mine, i'm a trader. But I don't walk away from trading just because I make a few bad trades, lose some money and call it quits. Why are miners expected to break even every single day 100% of the time any more than I am?

If a mining company has been losing money for a few months straight then yes I would see the reason for shutting it down, but walking away just because they dipped into the unprofitably stage for less than a few weeks is silly. There are restaurants that can run in the red for months at a time before they finally shut down and their line of credit is dropped. If you claim to run a business then act like one and take the risk otherwise go get  a job working for someone else.

You try hard to make stupidity sound so noble. Do you make trades that you know are bad? Why not? You are a trader! How can you shirk your responsibility to trade even when you know you are going to lose money!

Of course I don't make trades that I know are bad, you won't know they will be bad until days or weeks later and can only go off your gut feeling or market analysis. How many people lost their shirts on Blackcoin thinking it was the next LTC? Does that mean everyone who lost money on that should exit the crypto game for good?

Likewise, miners stop mining when they know they are going to lose money.

But I will still buy a coin knowing full well I won't make money on it or recover my loss potentially weeks or months down the road. I'm just saying many miners have lost the speculative attitude of crypto, for all they know they could mine at a loss now but Bitcoins price could jump up 2x or 3x or more next month and instead of making ANY money/coins they will wish they had had those coins.

Good real world example, Semgroup a big oil company here in my state was bleeding money years back and close to bankruptcy, their stock plummeted from I believe 80-100 dollars a share (can't remember exactly) to less than a dollar. Well some would have called buying into that stock insane yet those who gambled and took the risk were rewarded years later when the company recovered and the stock is now 63 dollars a share. You could have become a millionaire with just a few grand investment.

All i'm asking is where are people's balls at? How long has K-Mart or Sears been unprofitable yet you don't see them closing shop?

If the cost of a mining operation exceeds the expected return, most miners will shut down.

In the above situation, if a miner thinks BTC is undervalued and will increase in price, the rational thing to do is to stop mining and buy BTC directly.

For example, it makes zero economic sense to spend $300 to mine 1 BTC when the cost to buy 1 BTC is less than $300.

Who says miners are losing money? Any proof of that? Once they've bought their ASICs, electricity's cost is very low. They are making less money, that's right, but there's no sign any miner is actually losing money from its daily operation.

Because of the low BTC price and high difficulty, most miners spend at least half of their revenue on electricity.

The most efficient miners on the market are ~.5W/GH, so a 1 TH/s miner would use ~500W and earn ~$60/month at current difficulty and a BTC price of ~$180.

That .5W/GH miner would still use ~$37 (@10 cents/kwh) in electricity per month to earn $60.

Most miners are not running the most efficient hardware on the market, and many have costs that exceed 10 cents/kwh.

I have no doubt that a very high percentage of the mining market is in the red right now (probably between 25-50% of the network hashrate).

The economics of mining are terrible right now, so either miners will quit and the difficulty will go down (as it should given the low BTC price), or the price of bitcoin needs to go up.

Note: I ran a 30TH mining farm between April and August of this year, so I know what I'm talking about...

Mining is a way to acquire bitcoins at a discount. Speculation on future value is a completely different issue. If a miner can acquire a bitcoin at a cost of $300 through mining, or they can acquire a bitcoin at a cost of $180 from a trader, they will stop mining and buy the bitcoin from the trader.

Mining is an a way to acquire bitcoins at a discount. Speculation on future value is a completely different issue. If a miner can acquire a bitcoin at a cost of $300 through mining, or they can acquire a bitcoin at a cost of $180 from a trader, they will stop mining and buy the bitcoin from the trader.

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+1

And we are well below production cost....

This is interesting, I was just thinking about this today.  Seems like a lot of people invest in crypto currencies along with traditional markets such as stock, bonds, and futures.  It only makes sense that when the market takes a pounding, all segments are hit.  Bitcoin is no exception to this rule.  The wise investor buys when everybody sells and sells when everybody buys.  At least, that's my best guess.  I'm going to stick with it because I love the technology.

When i lose money i don't quit because i just paid for my lesson.

Having lost a lot of money on several occasions i find myself not losing as much anymore and i am more careful and can spot things i didn't consider looking at before.

I think with more getting my hands on i will become more experienced and finally Expert so I can help or give advice to other people.

I don't think a loss should make someone quit, it can only make someone wiser, including stepping back, taking it easy, investing more to lower the average cost, etc.

If I can buy more bitcoin, with my power usage today, than my miner would produce. Why would I run them?

If a gold mining company was able to KNOW FOR A FACT, today they would spend 10,000 to produce 5 ounces, or they could go out and buy it for less (Or not spend at all) I can promise you, today they would not mine.

We miners are lucky, we know exactly what we will produce (sort of) at any given time ;)

What I don't understand is if all of BTC's coins are going to be fully distributed soon--why do miners matter as much?

From what I've read of it, if all commercial miners disappeared it actually wouldn't matter because there is enough worldwide interest in the currency that people would still support the network (even if it is at cost or at a slight loss)

So going out on a limb here and assuming miners aren't that important in the grand scheme of thing (they were important to mine all the coins initially) then isn't commercial-mining just going to die out and supply/demand will end up being the real deciding value of the currency?

I'm pretty sure most of the commercial mining operations were in it to get rich quick and instantly sold most of their coins to cover their costs--so why would users of BTC even want miners just dumping all their coins as fast as possible?

(and yeah I could be wrong with everything said here, its just what I've gathered from reading around)

Mining is necessary for proof of work, right?

Asic manufacture has much lower cost than average miners. But I doubt they can continue production any longer if price stay this low.

I hope they cant, so smaller hobby miners can get a little more out of their rigs

It won't, I think price will rise again.  BitCoin isn't going away.

They will have to drop their prices, but as long as the price of the miner is more than the manufacturing cost, they will keep pumping them out.

So you stopped mining when BTC fell below $500? Quite surprising. Especially considering that you made quite an investment to get 30TH.
My mining experience is very limited. I tried it in early 2013, with my own home computer, which wasn't up to the task, so I stopped quickly. Now, there's a difference between not making any money, and actually losing money. How long's the return on investment when buying an ASIC? After that tipping point, the only cost is electricity, and BTC's price is still above that, I believe.

Mining aint easy nowadays. Big guys come - big guys go. There is always someone who want to take a ride  8)

Sometimes you just have to roll the dice and put the trust into believing what you believe in.... However, not many hangs on to that

I'm assuming that since no one replied what I wrote here is accurate then?

Mining is an integral part of Bitcoin -- that is how blocks are added to the block chain. Because the ratio of new coins to existing coins has dropped dramatically over the years, miners as a group no longer have as much of an impact on the exchange rate as they used to.

There have been several manufacturers that have had significant amounts of trouble selling the limited amount of miners that they have in inventory. This will result in overall lower miner prices.

So I guess it could be argued that the current price fluctuations are at least partially attributable to miners, and that with a lot of them failing we may be better off.

Miners do matter because they are the ones who move and process transactions in the whole network. Their roles are not limited in producing or "minting" new coins. Even though the coins are all minted, still they play a very vital role in the network itself, as they are the ones who process transactions and move the coins in the whole network.

Yes, we can say that. As what has been stated here, the number of newly minted coins dropped dramatically due to different factors (such as the difficulty increase and whatnot). We can fairly say that the price fluctuations recently are caused by some badass traders and intelligent market manipulators, or I could be wrong. Either way, the miners don't have much impact on the exchange rates in the current time frame.

Very simple calculation: Electricity per month: 21'000.
Coins per month: 78
Price per coin: 200
Revenue: 15600
Loss: 5400

Price per coin: 300
Revenue: 23400
Profit: 2400

So why should I accumulate a monthly loss of 5400 at the moment?

And just as a reminder: The costs for the hardware and maintanance is NOT included here...

The number of newly minted coins does not change with difficulty. The difficulty could be 1, it could be a zillion, but every 10 minutes a block will be found, and the reward amount (currently 25btc+transaction fees) will be distributed to miners.

It's true that the payout halved a year or two ago and will halve again in another year, but that's not quite relevant to the last 6 months or so.

The basic problem is simple: If it costs more in electricity to mine a bitcoin than the bitcoin is worth then it is economically stupid to mine. This is not a "we can't meet capital expenses" it's "we can't meet the most variable operating expense". It is completely and utterly illogical to mine when the value of bitcoin produced is less than the electricity to mine it. You're just digging a deeper hole, not minimizing your losses (which is at least the rationale in a dollar auction game).

Now if you expect miners to mine for your personal benefit to an arbitrary level of security, then fuck yourself and pay the transaction values of the service so that the miners will mine. If not the number of miners in the pool will drop, the difficulty will adjust down, the network will become less secure, to a point where mining is profitable again.

The trick in the above paragraph is (no, not fuck you :-) the level of "security". If the network dwindled down to one girl mining, it would still confirm blocks every 10 minutes, but that miner could screw with the network at will. Reverse transactions, fuck with the world, drive you crazy. You want more than one miner, so the price of bitcoin either needs to go up to the point where other miners hop in or transaction fees need to go up to the point where mining becomes more profitable.

Right now in my opinion the network is secure enough with all these miners, it would be secure enough with half of them. But what if half the miners idled their equipment and difficulty dropped 50%? That would be great, but the mining equipment idled still exists. Someone could harness that, offer a dump truck full of bitcoin to those idle miners and do a 51% attack on the chain.

Oops. That's a problem, isn't it. A Queen's race one can't slow down from without threatening the whole block chain.

Hm.

You pay to much for power, or your using ancient hardware

I'm thinking about putting solar panels on the house.  Should reduce power costs, right?

No.

You would make more money selling the power back to the grid, or offsetting your other electricity usage (fridge?). If you got the panels and the inverter for free including install and could not grid-tie then maybe.

"We do what we must, because we can."

could someone point out why the difficulty keeps on growing?
there was a slight drop, but now it keeps elevating.

1) People are not rational.
2) People like coins that are freshly minted with no history
3) People prefer mining coins to buying them
4) People are alturistic, and want to ensure that the blockchain is secure.