Why is the demand still so high for Miners with returns like these?

[tymothy]

I paid cash for a BFL 60 gh/s unit at a pretty heavy markup in USD. While I don't think the unit will ever generate the number of bitcoins I could have bought by investing that money directly in bitcoins instead of the unit, I do expect the USD value of my BTC will eventually exceed what I paid.

[DeathAndTaxes]

I paid cash for a BFL 60 gh/s unit at a pretty heavy markup in USD. While I don't think the unit will ever generate the number of bitcoins I could have bought by investing that money directly in bitcoins instead of the unit, I do expect the USD value of my BTC will eventually exceed what I paid.

So you will lose funds.  You could have bought BTC instead.

If you buy a miner (a device which produces BTC) it doesn't matter what currency you spend it has an equivelent price in BTC.

If the price if 1 BTC and over the life of the miner (becomes becoming obsolete and going dark) it produces 0.99 BTC net (after electrical cost) then you lost.   You could have instead just held or bought 1 BTC and had 1 BTC.  The future exchange rate can't improve your return.

Simple version:
you always have the option of simply buying Bitcoins so for a miner to be more profitable it has to return MORE bitcoins than it purchase price.

[tymothy]

Simple version:
you always have the option of simply buying Bitcoins so for a miner to be more profitable it has to return MORE bitcoins than it purchase price.

Correct. It was not the most optimal decision for the best ROI. I'm chalking up the difference in returns to the value of the fun of having the unit, tinkering with it and it being a conversational piece. There's definitely a luxury non-investment component to my decision.

It's sort of like people who raise their own coop of chickens for eggs. They'll never be able to produce eggs as cheaply as efficient factory-farms or even big cage-free organic farms, but they do it anyway because it's kind of fun to make your own.

[Moebius327]

If everyone stop mining and start buying BTC instead of investing in mining, price will skyrocket. Maybe this is one of the reasons for the late spike.

[Nemo1024]

If everyone stop mining and start buying BTC instead of investing in mining, price will skyrocket. Maybe this is one of the reasons for the late spike.

If everyone stops mining, the network will collapse and the price will plummet.

Sadly, behind the veil of greed, people forget that the primary function of mining is transaction processing and securing of the network.

[smscotten]

If everyone stop mining and start buying BTC instead of investing in mining, price will skyrocket. Maybe this is one of the reasons for the late spike.

If everyone stops mining, the network will collapse and the price will plummet.

Sadly, behind the veil of greed, people forget that the primary function of mining is transaction processing and securing of the network.

This.

But also, say Moebius327 just mean "lots of people" and not literally everyone. It doesn't matter whether the network hashrate is cut to 10% or skyrockets to 100x what it is now. Either way the same number of Bitcoin get created. Sure, he's saying more people would be buying so I suppose demand increases some, but I'm not sure I'd call that a skyrocket.

[smscotten]

Personally, I think the block eruptors are going to make great stocking stuffers this year. I just wish there were green ones to go with the red ones.

[co5hike]

Investing to minng is better than buying BTC if you believe the Bitcoin will be very successfull project, because if you just buy BTC, you dont increasing difficulty, and increased difficulty means more secure system thus very successfull longterm project

[Its About Sharing]

Something that I've added elsewhere that warrants a mention here:

I have the feeling, and it makes sense, that companies and large money getting into or already into mining, are going to (or have already started) rolling money in purchasing BTC's. They are supporting their mining investment. They may then hold coins that are mined and "invest" in BTC's via purchasing them outright. It is a very small market, all considered, so they can theoretically prop it up and start some buying. Greed takes place when the price starts moving away. They only need get it started, here an there.

So, they are supporting a new business in a similar way that many businesses do. E.g. - Amazon sold books at no profit to even a loss, in building up their business.

[nwfella]

If everyone stop mining and start buying BTC instead of investing in mining, price will skyrocket. Maybe this is one of the reasons for the late spike.

If everyone stops mining, the network will collapse and the price will plummet.

Sadly, behind the veil of greed, people forget that the primary function of mining is transaction processing and securing of the network.

This.

But also, say Moebius327 just mean "lots of people" and not literally everyone. It doesn't matter whether the network hashrate is cut to 10% or skyrockets to 100x what it is now. Either way the same number of Bitcoin get created. Sure, he's saying more people would be buying so I suppose demand increases some, but I'm not sure I'd call that a skyrocket.

Same number of Bitcoin will ultimately get created true. However, it's the amount of time that its going to take to create that finite amount of bitcoin that is going to be seriously reduced by exponentially increasing network hashrate. I too would agree that the money seems to be starting to flow into actual BTC value now that large mining players have already dumped large amounts of cash into 1st and 2nd gen ASIC pre-orders.

[Its About Sharing]

If everyone stop mining and start buying BTC instead of investing in mining, price will skyrocket. Maybe this is one of the reasons for the late spike.

If everyone stops mining, the network will collapse and the price will plummet.

Sadly, behind the veil of greed, people forget that the primary function of mining is transaction processing and securing of the network.

This.

But also, say Moebius327 just mean "lots of people" and not literally everyone. It doesn't matter whether the network hashrate is cut to 10% or skyrockets to 100x what it is now. Either way the same number of Bitcoin get created. Sure, he's saying more people would be buying so I suppose demand increases some, but I'm not sure I'd call that a skyrocket.

Same number of Bitcoin will ultimately get created true. However, it's the amount of time that its going to take to create that finite amount of bitcoin that is going to be seriously reduced by exponentially increasing network hashrate. I too would agree that the money seems to be starting to flow into actual BTC value now that large mining players have already dumped large amounts of cash into 1st and 2nd gen ASIC pre-orders.

And what happens as bigger and bigger money gets into mining and doesn't need to sell coins? And what happens when they re-invest into purchasing actual BTC's.
Seems like the future market could actually get cornered. In other words, lots of the remaining coins to be mined, might, NOT be sold for a while (till the price is where they want it).

[DeathAndTaxes]

And what happens as bigger and bigger money gets into mining and doesn't need to sell coins? And what happens when they re-invest into purchasing actual BTC's.
Seems like the future market could actually get cornered. In other words, lots of the remaining coins to be mined, might, NOT be sold for a while (till the price is where they want it).

Over 60% of all coins have already been mined.
Daily minting rate is down to 0.03% of total supply (and falling).
The amount of coins traded daily is a magnitude more than minting.

Simply put newly minted coins are a small and shrinking portion of the total supply.

[smscotten]

Same number of Bitcoin will ultimately get created true. However, it's the amount of time that its going to take to create that finite amount of bitcoin that is going to be seriously reduced by exponentially increasing network hashrate. I too would agree that the money seems to be starting to flow into actual BTC value now that large mining players have already dumped large amounts of cash into 1st and 2nd gen ASIC pre-orders.

Let's just be clear about this. (With a little room for error of course) over any given month exactly the same amount of Bitcoin will be created. Not "ultimately" as in over the life of the coin, but "ultimately" over any given day (there will be variance here), week (less variance), or month (even less). The only time that more or less Bitcoin is created is before or after the block reward is halved. This will be just as true if the network is running 50 hashes per second or 50 exahashes per second.

The only thing that is different is how long it takes a given individual to get some of that, if that individual is not increasing his or her own hashrates proportionately to the sum of everyone else's hashrates.

That might be exactly what you meant, but what you said about "the amount of time that it's going to take to create that finite amount of Bitcoin […] is going to be seriously reduced" made it sound very much like you're working on a misconception. If I was wrong about that I apologize.

[Its About Sharing]

And what happens as bigger and bigger money gets into mining and doesn't need to sell coins? And what happens when they re-invest into purchasing actual BTC's.
Seems like the future market could actually get cornered. In other words, lots of the remaining coins to be mined, might, NOT be sold for a while (till the price is where they want it).

Over 60% of all coins have already been mined.
Daily minting rate is down to 0.03% of total supply (and falling).
The amount of coins traded daily is a magnitude more than minting.

Simply put newly minted coins are a small and shrinking portion of the total supply.

roughly 1800 coins are mined at a day. At a current cost o $120 we are talking $216,000 per day or $1,512,000 per week or $6,552,000 per month. That is a pretty damn big number and think about when BTC hits higher values. Those few coins become more valuable, if BTC is becoming more valuable. What will be cheaper, mining a coin or buying one? Gamble? Etc.

So, if we are talking a finite supply, we can see how the value of those coins might come at a premium - at some point in time. Sort of like gold mining.
When, or rather if, the price of BTC's are exceedingly high, then mining even fewer BTC's will still hold lots of value. Perhaps a fraction will hold much more value than whole BTC today.

great value. Really, if BTC is successful, it is just a matter or time. This year, next year, etc?

I get the feeling we have lots of growth in store for us...

We are still in the early adoption phase...

[terman45x]

I was just wondering with the increasing difficulty why the demand is still there for some seemingly high priced (though somewhat readily available) miners that don't seem like they can break even.

I believe it has something to do with impatient and sometimes irracional nature of humans

[bobsag3]

I paid cash for a BFL 60 gh/s unit at a pretty heavy markup in USD. While I don't think the unit will ever generate the number of bitcoins I could have bought by investing that money directly in bitcoins instead of the unit, I do expect the USD value of my BTC will eventually exceed what I paid.

IM with you here. Also having the machine mining the coins over time gives me less incentive to spend them.

[jspielberg]

roughly 1800 coins are mined at a day. At a current cost o $120 we are talking $216,000 per day or $1,512,000 per week or $6,552,000 per month. That is a pretty damn big number and think about when BTC hits higher values. Those few coins become more valuable, if BTC is becoming more valuable. What will be cheaper, mining a coin or buying one? Gamble? Etc.

Double all your numbers... ~3600 coins are minted per day.
25 coins per block found * (6 blocks found per hour) * (24 hours per day) = 3600 BTC

[Dalkore]

I was just wondering with the increasing difficulty why the demand is still there for some seemingly high priced (though somewhat readily available) miners that don't seem like they can break even.

Because emotion and greed appear to overpower rational thought and impair basic math skills.

Bingo and now collectively we will see what happens and pay that price.  I will repeat it again, we are in a zero-sum game inside of an ASIC arms-race.

[Its About Sharing]

I was just wondering with the increasing difficulty why the demand is still there for some seemingly high priced (though somewhat readily available) miners that don't seem like they can break even.

Because emotion and greed appear to overpower rational thought and impair basic math skills.

Bingo and now collectively we will see what happens and pay that price.  I will repeat it again, we are in a zero-sum game inside of an ASIC arms-race.

Well, nothing wrong with breaking even if you are helping the network, not to mention doing a hobby. For a lot of guys this is a hobby. Outside of metal detecting, I don't see many hobbies that can pay for themselves. And for many, I bet they can write off the miners and such as expenses.

Not saying it still isn't a risky game to play, I agree. There are scams out there to boot.

[Chronikka]

A lot of people go back and forth on ROI but the way I look at is, all I need to do is break even mining BTC with my block erupters. Nobody is going to make it rich with them but even as the difficulty skyrockets and bitcoin becomes unminable, I will still have the hardware in hand, which I can turn toward any alt sha256 coin. Nobody is considering in their ROI calculations that the physical miner itself has value. You can either sell it for cash or bet on its long term value for mining alt coins.