Why are you still mining?

[dlasher]

It's complicated, but here's a couple.

I think people are still mining because they hope the coin price 2x's, which makes up for the reward drop
I think people are still mining because they haven't done the math.

(While some people undervolt/passive-cool/etc) Since the block reward drop, as a -loose- generalization, if you pay more than -about- 11 cents/kw/hr for your power, and you run GPU's, It's costing you more to run the equipment, than you're making in coin.

[SgtSpike]

Also, the difficulty IS taking an obvious downturn now, so some people have definitely shut off their machines.



http://bitcoin.sipa.be/

[hdclover]

price is good now why not mining ?

[ciphermonk]

Even after the reward drop, miners are still producing on average 108'000 bitcoins per month. To some extend, miners control the supply of bitcoins, and thus the price. If miners feel the current price is too low for them, they should hold on to the bitcoins and sell them later when the price is right. By lowering the bitcoin supply, miners can drive the price up.

If miners dump all the coins on the market as soon as they are produced, they increase the supply of bitcoins and tend to lower the price. If selling bitcoins at current price would result in a overall loss, miners should hold on to the bitcoins until they can sell them for profit.

However, historically, market players do not always play the optimal strategies. Market dynamics are thus complex to predict. Time will tell.

[SgtSpike]

Even after the reward drop, miners are still producing on average 108'000 bitcoins per month. To some extend, miners control the supply of bitcoins, and thus the price. If miners feel the current price is too low for them, they should hold on to the bitcoins and sell them later when the price is right. By lowering the bitcoin supply, miners can drive the price up.

If miners dump all the coins on the market as soon as they are produced, they increase the supply of bitcoins and tend to lower the price. If selling bitcoins at current price would result in a overall loss, miners should hold on to the bitcoins until they can sell them for profit.

However, historically, market players do not always play the optimal strategies. Market dynamics are thus complex to predict. Time will tell.

Well, there's two flaws with that thinking:
- that miners work together cooperatively
- that the future price is predictable

[ciphermonk]

Well, there's two flaws with that thinking:
- that miners work together cooperatively
- that the future price is predictable

Well I simply wanted to point out that miners can, to some extend, control the price by controlling supply. Obviously, you can't predict the future price, but you can play on the parameters that influence the price. Supply being an important parameter.

I often have the impression that miners have a mine-dump strategy where they never hold on to the coins. By playing this strategy, miners surrender their power and give the supply forces to market players.

Imagine that all miners decided to hold on to their coins and sell them at 30$. The new supply of bitcoins would be completely stopped and the price would most likely go up according to current trends. Of course I'm not suggesting that all miners should do that. It's only a mind game to understand the influence of the supply-side of the market.

Miners that find themselves in an unprofitable situation today with the current price, should consider mining and holding on to the coins. You're in a net loss only if you sell the coins. Of course, thats a personal decision to make and there is some risk involved, especially if your time preference is low due to credits or otherwise.

[zoroaster]

why don't miners quit mining, the reward dropped already? I'm just curious about all this sh*t... I expected a free fall in mining, so the rate btc/usd goes up rapidly. so what now?!

[Kluge]

why don't miners quit mining, the reward dropped already? I'm just curious about all this sh*t... I expected a free fall in mining, so the rate btc/usd goes up rapidly. so what now?!

Errr - Price (and amount of BTC awarded per block) affects how many people mine, not the other way around. If the price increases, more people will mine because it's more profitable. Also worth noting - more people mining doesn't increase the rate at which BTC is "produced," just who owns newly-minted coins (rather, 50BTC blocks are split among more people if more people mine [assuming all have equal hardware], but BTC won't be awarded faster or in larger quantities just because the network has more hashpower behind it).

It's also Winter in US/Canada, so people might mine until mid-Spring because the heat GPUs produce is also valuable (when it's hot, the heat's undesirable and not only wasted, but might be costly for people who try blowing the hot air outside). I don't think there's data on hashrate distribution by country, but I'd assume US/CAN make up >25% total. There are some people who speculate BTC price will increase, so mining now at a loss might result in net gain mid-term or long-term - an idea ciphermonk notes. GPU mining also isn't necessarily unprofitable -- some people mention having electricity included with their rent, but even for those who pay for electricity by KWh, the price is high enough and difficulty low enough where some can still make a small profit. Some people actually mine on principal, too, thinking increasing network security (however minimally) is itself valuable. Finally, FPGAs are in the wild, and while they probably don't make up too large a portion of total hashrate, it's worth noting those won't be unprofitable to operate until the ASIC backlog is cleared by manufacturers.

Probably a lot of other reasons I didn't think of, and there are plenty in this thread already, but anyway - there are many reasons people still mine.

[molecular]

Even after the reward drop, miners are still producing on average 108'000 bitcoins per month. To some extend, miners control the supply of bitcoins, and thus the price. If miners feel the current price is too low for them, they should hold on to the bitcoins and sell them later when the price is right. By lowering the bitcoin supply, miners can drive the price up.

Look at the silver mining market. The miners don't control the price there, they have costs and must sell. They even SHORT silver to lock in a price they can live with because of fear (best practice, not being in line of fire of shareholder in case price drops). Same with bitcoin. Miners are not speculators per se.

EDIT: and no, they don't control the money supply of bitcoin. The could try to control the supply on the markets by forming a strong cartel, but I'm not sure this would be impactful enough.. there are a lot of coins stashed away by hoarders/speculators that will come to market on rising price. So this might or might not work and it'll be quite a long game I doubt miners are ready to take the risk of playing seriously.

[Grecoin]

It's complicated, but here's a couple.

I think people are still mining because they hope the coin price 2x's, which makes up for the reward drop
I think people are still mining because they haven't done the math.

Well the FUN factor is still something to be considered for some

probably a luxury for the others who have done the math 

[SgtSpike]

Well, there's two flaws with that thinking:
- that miners work together cooperatively
- that the future price is predictable

Well I simply wanted to point out that miners can, to some extend, control the price by controlling supply. Obviously, you can't predict the future price, but you can play on the parameters that influence the price. Supply being an important parameter.

I often have the impression that miners have a mine-dump strategy where they never hold on to the coins. By playing this strategy, miners surrender their power and give the supply forces to market players.

Imagine that all miners decided to hold on to their coins and sell them at 30$. The new supply of bitcoins would be completely stopped and the price would most likely go up according to current trends. Of course I'm not suggesting that all miners should do that. It's only a mind game to understand the influence of the supply-side of the market.

Miners that find themselves in an unprofitable situation today with the current price, should consider mining and holding on to the coins. You're in a net loss only if you sell the coins. Of course, thats a personal decision to make and there is some risk involved, especially if your time preference is low due to credits or otherwise.

Ok, your last paragraph is most certainly wrong.  Miners mining at a loss would have more coins if they spent that money on coins instead of electricity.  Unless those people are still mining simply because of ideals (wanting to help the Bitcoin network, etc), there is no reason that anyone should be mining at a loss.

Also, I took a poll a few months back... the vast, vast majority of miners who answered the poll actually hold their coins.  Obviously, it's not scientific, but I was surprised that I was one of the only ones who regularly sold or used all the coins I mined.  Of course, I've been holding on to them myself for the last couple of months, and plan to generate a nice collection of them now.

[Carl16]

I mine to heat my house. Before it was free heating, not it is very cheap heating.

[thomison360]

Im new and just starting to discover the btc world. It sounds like its too late in the game to really start mining now wish I would have known about all this stuff at the beginning but ether way I'm glad to be apart of it now lol

[SgtSpike]

Im new and just starting to discover the btc world. It sounds like its too late in the game to really start mining now wish I would have known about all this stuff at the beginning but ether way I'm glad to be apart of it now lol

2 years from now, people will be looking back to today and thinking the same thing.  Consider yourself fortunate to have discovered it when you did!

[Lethn]

I'm mining just for fun and to get some Bitcoins, who knows? Might get hilariously lucky.

[Pardo]

I started out GPU mining but now I invested some money into ASIC technology. Hopefully I'll be mining again with it soon.

[cryptodrifter]

I figure why not. I am mining diff types of coins too so there is that.

And since its winter... free house heating!

[mjc]

For me the Electricity costs are less than 10% of what I"m making, So I'm still making 90%.  Why would I stop?

[Pardo]

For me the Electricity costs are less than 10% of what I"m making, So I'm still making 90%.  Why would I stop?

Nice numbers

[AndCycle]

I am not really here for the topic, sorry about this post,
I just wanna contact gyverlb due to I am a super noob on board that can't send message, hope he will read this,

hi there gyverlb, I just read about your guide about P2Pool two days ago and that really helpful,
but there is something that I need to confirm,

which port exactly do bitcoind need for P2P connection? 8332 or 8333?
the man page said 8332 is for RPC connection so I think you made a typo in your guide?
or I misunderstood the document?

hope you can enlighten me, thanks.