Mining as zero sum endeavor

[SMB-2525]

Has this been discussed before?
I'm starting to appreciate the cut throat competitive nature of BTC mining.
Supply is strictly controlled. It is roughly fixed per time period.
An investor looking to invest is taking supply from other investors from the fixed pool. It is not possible to expand the supply as in gold and oil mining.

So, I wonder what investors are thinking now?

Even as I was posting projections of mining hardware productive life at 10% increases, I was also predicting that at some point we would hit the point where the next investment in mining capacity is a difficult decision.

[-ck]

I guess this is more a bitcoin economy discussion than a mining one.

[cloverme]

Mining bitcoin alone is probably closer to zero sum, but if you mix in some good altcoins with mining and you can come out ahead. Electricity, difficulty, and the dropping price of btc makes it very difficult if you just focus on bitcoin alone. This year, your mining equipment had about a 6 month roi scale, before the power to run it outpaced it's ability to mine. The hardware manufacturers didn't produce a cost effective miner this year to challenge the high difficulty. If the price of btc continues at this level, I think bitcoin-only farms will start either looking at altcoins as an alternative or shutdown their farms to bring the cost of electricity back in line. If you just mine BTC, whether at home or in a datacenter, I don't see how you can profit this quarter. I think you need to also mine an altcoin too, but I understand why people don't because of all the pump-n-dumps that happened.

[SMB-2525]

I guess this is more a bitcoin economy discussion than a mining one.

I dunno.
I wonder how this effects the willingness of investors to set up and maintain large mining farms?

I posted elsewhere, electricity prices in China are higher than most people assume.

[btckold24]

I had to shut down 2x 1g s2 miners that at the time of purchase btc was at $600 - with an electricity bill of over $400 there was no way I could keep these going and I believe it has to be the same for these farms.

it may be the best thing that can happen to bitcoin to actually stop going up in difficulty for awhile.

[SMB-2525]

I'm thinking about business school cost benefit analysis.

Suppose I have a largish farm. Older equipment. Some percentage dies over time. Runs at small profit in BTC.

I have $200,000 saved up in cash and BTC from prior mining.

I have to sell most BTC I mine to pay monthly expenses.

I know that one reason BTC price is low is because many miners like me must keep selling our BTC.

The business decision is: do I double down on BTC and buy a new generation of hardware?
Or do I let my BTC endeavor fade away?

The ASIC manufacturers who are mining have a similar cost benefit analysis to go through.

Looming in 2016 is the next halving.

I do not think significant investment in mining capacity is a slam dunk decision for anyone anymore.

[philipma1957]

I'm thinking about business school cost benefit analysis.

Suppose I have a largish farm. Older equipment. Some percentage dies over time. Runs at small profit in BTC.

I have $200,000 saved up in cash and BTC from prior mining.

I have to sell most BTC I mine to pay monthly expenses.

I know that one reason BTC price is low is because many miners like me must keep selling our BTC.

The business decision is: do I double down on BTC and buy a new generation of hardware?
Or do I let my BTC endeavor fade away?

The ASIC manufacturers who are mining have a similar cost benefit analysis to go through.

Looming in 2016 is the next halving.

I do not think significant investment in mining capacity is a slam dunk decision for anyone anymore.

  you got it. they pushed too much growth in mining for their farms and not enough sales to us.

but I actually think they did us a favor. Time will tell.