Bitcoin Forum
December 18, 2017, 09:40:25 AM *
News: Latest stable version of Bitcoin Core: 0.15.1  [Torrent].
 
   Home   Help Search Donate Login Register  
Pages: [1]
  Print  
Author Topic: Is mining profitable? Um, duh?  (Read 1886 times)
the joint
Legendary
*
Offline Offline

Activity: 1806



View Profile
January 29, 2013, 07:39:12 AM
 #1

I often wonder about those who engage in the "Is it still profitable to mine?" debate, particularly those who fall on the "no" side of the fence.

Consider how many miners turned off their machines around Nov.-Dec. 2011 when BTC price approached $2.  Their reasoning was simple - they stopped because their little calculators told them that they'd be losing money by continuing to mine.

But what if they had continued anyway?  And what if they held onto those coins until today?  Would such foresight have changed their decisions?  Would they have continued to mine anyway?  I'm sure they would have if they knew that in early 2013 the coins they were mining would become almost 10 times as valuable.

This brings up another question: why did people give up CPU mining?  And why not continue to mine BTC with your *gasp* NVIDIA card?  After all, if so many people here believe that BTC value could reach five or six digits, then why aren't they squeezing out as much future profit as they possibly can?

So, what's your excuse?  Why did you stop mining?



1513590025
Hero Member
*
Offline Offline

Posts: 1513590025

View Profile Personal Message (Offline)

Ignore
1513590025
Reply with quote  #2

1513590025
Report to moderator
1513590025
Hero Member
*
Offline Offline

Posts: 1513590025

View Profile Personal Message (Offline)

Ignore
1513590025
Reply with quote  #2

1513590025
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1513590025
Hero Member
*
Offline Offline

Posts: 1513590025

View Profile Personal Message (Offline)

Ignore
1513590025
Reply with quote  #2

1513590025
Report to moderator
1513590025
Hero Member
*
Offline Offline

Posts: 1513590025

View Profile Personal Message (Offline)

Ignore
1513590025
Reply with quote  #2

1513590025
Report to moderator
Luno
Sr. Member
****
Offline Offline

Activity: 476


Current balance: 00$$/00BTC


View Profile
January 29, 2013, 08:10:07 AM
 #2

You are right. The is this common idea that miners sell right away and stops the second profiability goes in the red.

if you believe that price will rise, you are taking the same risk as someone who is long in Bitcoin on an exchange.

you are only mining at a loss if you sell your coins when their price is to low!!


 
 
           ▄████▄
         ▄████████▄
       ▄████████████▄
     ▄████████████████▄
    ████████████████████      ▄█▄                 ▄███▄                 ▄███▄                 ▄████████████████▀   ▄██████████

  ▄▄▄▀█████▀▄▄▄▄▀█████▀▄▄▄     ▀██▄             ▄██▀ ▀██▄             ▄██▀ ▀██▄             ▄██▀                   ██
▄█████▄▀▀▀▄██████▄▀▀▀▄█████▄     ▀██▄         ▄██▀     ▀██▄         ▄██▀     ▀██▄         ▄██▀        ▄█▄          ▀██████████████▄
████████████████████████████       ▀██▄     ▄██▀         ▀██▄     ▄██▀         ▀██▄     ▄██▀          ▀█▀                        ██
 ▀████████████████████████▀          ▀██▄ ▄██▀             ▀██▄ ▄██▀     ▄█▄     ▀██▄ ▄██▀                                       ██
   ▀████████████████████▀              ▀███▀                 ▀███▀       ▀█▀       ▀███▀      ▄███████████████████████████████████▀
     ▀████████████████▀
       ▀████████████▀
         ▀████████▀
           ▀████▀
║║


║║
.
.

║║
██
║║
.
.

║║
██
║║
.
║║


║║
casascius
Mike Caldwell
VIP
Legendary
*
Offline Offline

Activity: 1372


The Casascius 1oz 10BTC Silver Round (w/ Gold B)


View Profile WWW
January 29, 2013, 08:18:57 AM
 #3

Wouldn't this be like comparing someone who decided that the family budget didn't allow them to take a vacation to Las Vegas with someone else who decided to go and won a million dollar jackpot?

In November 2011, people were either in the process of leaving Bitcoin for dead, or seeing how low the price was gonna go before buying back in.  Either way, in November 2011, buying bitcoins instead of mining them was a more sensible decision.

I mined for a little while in early 2011.  My conclusion was that the initial money I spent on mining gear would have been better spent on bitcoins, but after selling the mining gear and factoring in a recovery of the residual value of the hardware, the net money I spent yielded more bitcoins via mining than buying.  It was an interesting experience.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
the joint
Legendary
*
Offline Offline

Activity: 1806



View Profile
January 29, 2013, 08:56:09 AM
 #4

Wouldn't this be like comparing someone who decided that the family budget didn't allow them to take a vacation to Las Vegas with someone else who decided to go and won a million dollar jackpot?

In November 2011, people were either in the process of leaving Bitcoin for dead, or seeing how low the price was gonna go before buying back in.  Either way, in November 2011, buying bitcoins instead of mining them was a more sensible decision.

I mined for a little while in early 2011.  My conclusion was that the initial money I spent on mining gear would have been better spent on bitcoins, but after selling the mining gear and factoring in a recovery of the residual value of the hardware, the net money I spent yielded more bitcoins via mining than buying.  It was an interesting experience.

Well, I'd say it's a lot like your analogy except that I doubt that any budget limitations would have prohibited anyone from mining.  Mining may not have been profitable for a lot of people due to electrical costs and whatnot, but seriously, it couldn't have been that bad unless some dumb miners jacked their mining configurations. Besides, if they wanted to buy outright, they could have sold their gear for BTC.

If people sold their rigs for cash and sold all their BTC, I'd understand that.
If people sold their rigs for cash and kept all their BTC, I'd understand that.
If people kept mining and kept their BTC, I'd understand that.
If people kept mining and sold their BTC, I'dunderstand that.
If people stopped mining but kept their rigs and kept their BTC, I wouldn't understand that.
If people stopped mining but kept their rigs and sold their BTC is irrelevant  Cheesy

Luno
Sr. Member
****
Offline Offline

Activity: 476


Current balance: 00$$/00BTC


View Profile
January 29, 2013, 09:45:59 AM
 #5

The mining nation of the world has been the US. Last year the Russians were in the lead for a while. As mining gets more difficult, mining becomes less and less an option. Individual mining will be out of the question.

Your only chance will be to buy shares in a corprate scaled enterprise. Large capital investments in ASIC monster farms, but if they get competition from China, the profitability wil be determined by power costs, as it is now.

Mining is attractive when the price is going up, as you can recoup your investment if you time your sale of your coins.

In a falling market, people take their miners offline. As we approaches 21M mined coins, the race will be to get the last of them. A lot of businesses will loose big in the final race.

So however you view it, mining at best is a very risky business, more likely just down right stupid to put money in.

If you really want to get in, your best bet is to wait for a collapse in price, as used ASIC's will be a bargin then, but in such a scenario, the better option might still be to just buy coins.


 
 
           ▄████▄
         ▄████████▄
       ▄████████████▄
     ▄████████████████▄
    ████████████████████      ▄█▄                 ▄███▄                 ▄███▄                 ▄████████████████▀   ▄██████████

  ▄▄▄▀█████▀▄▄▄▄▀█████▀▄▄▄     ▀██▄             ▄██▀ ▀██▄             ▄██▀ ▀██▄             ▄██▀                   ██
▄█████▄▀▀▀▄██████▄▀▀▀▄█████▄     ▀██▄         ▄██▀     ▀██▄         ▄██▀     ▀██▄         ▄██▀        ▄█▄          ▀██████████████▄
████████████████████████████       ▀██▄     ▄██▀         ▀██▄     ▄██▀         ▀██▄     ▄██▀          ▀█▀                        ██
 ▀████████████████████████▀          ▀██▄ ▄██▀             ▀██▄ ▄██▀     ▄█▄     ▀██▄ ▄██▀                                       ██
   ▀████████████████████▀              ▀███▀                 ▀███▀       ▀█▀       ▀███▀      ▄███████████████████████████████████▀
     ▀████████████████▀
       ▀████████████▀
         ▀████████▀
           ▀████▀
║║


║║
.
.

║║
██
║║
.
.

║║
██
║║
.
║║


║║
dust
Hero Member
*****
Offline Offline

Activity: 840



View Profile WWW
January 29, 2013, 02:14:29 PM
 #6

But what if they had continued anyway?  And what if they held onto those coins until today?  Would such foresight have changed their decisions?  Would they have continued to mine anyway?  I'm sure they would have if they knew that in early 2013 the coins they were mining would become almost 10 times as valuable.
No. It is stupid to mine at a loss, even if one believes the value of BTC will buy higher in the future.  Instead of mining at a loss, it would be better to not mine at all and buy bitcoins on the market instead.  Mining at a loss is simply paying a premium to acquire BTC.

Cryptocoin Mining Info | OTC | PGP | Twitter | freenode: dust-otc | BTC: 1F6fV4U2xnpAuKtmQD6BWpK3EuRosKzF8U
dree12
Legendary
*
Offline Offline

Activity: 1246



View Profile
January 29, 2013, 02:15:44 PM
 #7

Mining never makes sense when unprofitable, even if Bitcoin will go up tomorrow. That's cause it is always the inferior option. Take the following comparison when mining was unprofitable:

Option A: Mine
Electrical bill: $5 / day.
Gross profit: 0.4 BTC / day @ $10 / BTC

Option B: Shut off the rigs and use electrical bill money to buy BTC instead
Investment: $5 / day
Gross profit: 0.5 BTC / day @ $10 / BTC

No matter which way the price of 1 BTC goes henceforth, Option B will have earned more money.
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!