What are miners doing with their profits?

[RealBitcoin]

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.


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.

[pawel7777]

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.

[Raimonn]

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.

[DarkStar_]

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.

[RealBitcoin]

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.

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

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.

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.

[Ferrero]

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.

[Yakamoto]

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.

[RealBitcoin]

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.

[Yakamoto]

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.

[DimensionZ]

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.

[SFR10]

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.

[tobacco123]

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.

[leowonderful]

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.

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.

[Yakamoto]

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.

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.

[TastyChillySauce00]

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

[allthingsluxury]

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

[RealBitcoin]

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.

[Hirose UK]

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

[roadbits]

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.

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.

[RealBitcoin]

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

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

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.

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?