What's your magic number? (or, Should I keep mining?)

[hoki]

The current profitability is around 2-3% / month (compared to hardware costs). I don't see why would anyone start mining at this moment. Am I wrong maybe?

[befuddled]

Anyone whose magic number is lower than this shouldn't be mining.

Thanks, that's a good analysis. Except there's one other consideration. Your number is for instantaneous profitability. That may apply if you are selling all mined coins immediately and saving in other currency. However, if you expect in the longer run bitcoin may appreciate, then it can be worth it to accumulate as many as you can now in anticipation for that day, even if you have to pay by operating at an instantaneous loss in the mean time.

I think it will be an interesting dynamic at the point in time when the bitcoin block bounty halves to 25, and again later as it halves again and again towards zero. The market will have to absorb a lot of new bitcoins that are created in the meantime, and they can drop a lot. But at each of these discontinuities in block bounty, the supply/demand situation changes. A lot. When there are half as many per unit time being created, that will create pressure for appreciation.

[Grinder]

Your number is for instantaneous profitability. That may apply if you are selling all mined coins immediately and saving in other currency. However, if you expect in the longer run bitcoin may appreciate, then it can be worth it to accumulate as many as you can now in anticipation for that day, even if you have to pay by operating at an instantaneous loss in the mean time.

We've been over this many times. If you keep them it's speculation, and the potential gain should be attributed to this, not the mining. Also, if you are operating at a loss you should stop mining and buy coins instead.

But at each of these discontinuities in block bounty, the supply/demand situation changes. A lot. When there are half as many per unit time being created, that will create pressure for appreciation.

It will also create pressure for significantly higher fees. If people aren't willing to pay them a lot of miners will stop mining, and the network will get much less secure.

[BitterTea]

Your number is for instantaneous profitability. That may apply if you are selling all mined coins immediately and saving in other currency. However, if you expect in the longer run bitcoin may appreciate, then it can be worth it to accumulate as many as you can now in anticipation for that day, even if you have to pay by operating at an instantaneous loss in the mean time.

We've been over this many times. If you keep them it's speculation, and the potential gain should be attributed to this, not the mining. Also, if you are operating at a loss you should stop mining and buy coins instead.

Not necessarily. Hardware is a one time cost. It may be more beneficial to run it even when the sale of coins doesn't pay for electricity and upkeep, just to keep the hardware generating. Obviously this is less attractive if you expect the value of bitcoins to fall instead of climb.

[bcpokey]

But at each of these discontinuities in block bounty, the supply/demand situation changes. A lot. When there are half as many per unit time being created, that will create pressure for appreciation.

It will also create pressure for significantly higher fees. If people aren't willing to pay them a lot of miners will stop mining, and the network will get much less secure.
[/quote]

Right now something like 95% of miners mine on pools, and none of the pools payout from tx fees. Unless this changes, there is no pressure for fees to do anything.

I am not sure why people are overgeeking this into obscure numbers.

5. Forget magic numbers.

I tend to agree, I don't really feel like there is much need for a magic number. Work out how much profit you are comfortable making and decide that way.

I'm personally considering dropping out already even though I'm way above/below a magic number, and I'm still making more than electricity costs, simply because electricity costs an arm and a leg here, and the hassle and noise and heat of running mining is approaching a level of not being worth it for me when half the money made pays for electricity, even though techincally I'm still getting a fair amount of "free money".

[Grinder]

It may be more beneficial to run it even when the sale of coins doesn't pay for electricity and upkeep, just to keep the hardware generating.

No, it won't, and you'd better stay away from business if you think so.

[Grinder]

Right now something like 95% of miners mine on pools, and none of the pools payout from tx fees. Unless this changes, there is no pressure for fees to do anything.

They will have to start sharing them eventually. If they don't there will be no point in mining, and which means nobody will use their pool.