Will mining bitcoins be unprofitable in the future?

[junshong]

http://cointerra.com/cointerra-announces-highest-performance-2-terahash-per-second-bitcoin-asic-mining-rig/
What if this is released? Will bitcoin difficulty soar high?

[djbooth007]

Difficulty will skyrocket throughout 2014. In general, mining will always be profitable either through btc/fiat price increase or miners dropping out and bringing difficulty down.
There should always be an equilibrium where mining is at least a tiny bit profitable.

[timk225]

Mining BitCoin is already unprofitable (at least, nowhere near as profitable as scrypt coins), but no one who spent hundreds or thousands on an ASIC wants to admit that.

[wormbog]

Once an ASIC miner is paid for, the purchase price becomes a sunk cost and no longer impacts the decision-making process. If you already own an ASIC, the only real question is, "Will I lose money by keeping this thing running?"

Now let's say that the day finally comes where the electricity to power from your ASIC is more expensive than the meager amount of coins it mines. Is it time to shut it down?

Nope. If you bought an ASIC in the first place, you likely believe your bitcoins will continue to get move valuable over time. They'll be worth $1000 each within a year or two, maybe sooner. So why not just keep mining, and promise to not sell the coins until they've appreciated enough to turn a profit?

The fact is, bitcoin mining is an addiction, just like leveling your WoW character or building your epic porn collection.

Look for Bitcoin Miners Anonymous groups to start appearing in your city by 2015.

[Operatr]

Mining BitCoin is already unprofitable (at least, nowhere near as profitable as scrypt coins), but no one who spent hundreds or thousands on an ASIC wants to admit that.

Until Bitcoin's market price increases, which miners are really counting on at this point

[reactor]

Nope. If you bought an ASIC in the first place, you likely believe your bitcoins will continue to get move valuable over time. They'll be worth $1000 each within a year or two, maybe sooner. So why not just keep mining, and promise to not sell the coins until they've appreciated enough to turn a profit?

There is nothing to validate this statement.  Interest isn't increasing, the only reason for value to rise is for people to continue fooling themselves that mining is still a good investment.  So at this point mining companies can be buying up BTC to inflate value to a false level so that every fool with a ROI calculator will suddenly say "Hey, at $140 these machines ROI again, BUY BUY BUY!".  It is an industry that is falling in on itself already, already pushing the community out was a mistake, now it is a question of who cashes out when and which of those straws is the breaking one.

[Bitweasil]

The fact is, bitcoin mining is an addiction, just like leveling your WoW character or building your epic porn collection.

No, it's not.

The value is in the mined coins, in securing the network, or in some combination of those.

"It's not worth running but I will continue doing so as a donation to the network security" is a reasonable position.

"It's not worth running so I will sell off my hardware" is also a reasonable position, and one I've taken with my FPGAs.

"It's not worth running but Flowers and Puppies and Infinite Bitcoin Price Rises will make it worth it!" is somewhere between insanity and stupidity.  Sadly common, though.

The current market for ASICs only makes sense if you assume that a large percentage of buyers are actually acting irrationally.  It's a weird market to predict now.

[DigitalHermit]

The current market for ASICs only makes sense if you assume that a large percentage of buyers are actually acting irrationally.  It's a weird market to predict now.

As I discussed in another thread, miners/buyers may be acting quite rationally in this market and yet the result will still be a negative outcome due to aggregate behavior:

https://bitcointalk.org/index.php?topic=286978.msg3074366#msg3074366

[Bitweasil]

In general, I agree with your analysis, and think it's quite reasonable.

However, there really aren't only two options one is forced to take - there is a third, the "Do nothing" or "Buy and hold" option.

If one assumes based on observation that a large number of people will buy miners trying to get ahead, "buy and hold" is the winning option.  Or just hold, if it's bitcoin holdings to start with.

I expect mining to level off eventually (a long while from now - 2-3 years total) with industrial miners (so industrial power built in very cheap electricity areas, racks with power supplies per rack, possibly oil cooling to reduce operating temperatures for overclocking, and generally a PUE around 1.1 or better) barely profitable.  I don't see a way for an individual at home to compete with this profitably.

I expect within another 6 months, the Avalon chips won't be worth running.

[shields]

Now let's say that the day finally comes where the electricity to power from your ASIC is more expensive than the meager amount of coins it mines. Is it time to shut it down?

Nope. If you bought an ASIC in the first place, you likely believe your bitcoins will continue to get move valuable over time. They'll be worth $1000 each within a year or two, maybe sooner. So why not just keep mining, and promise to not sell the coins until they've appreciated enough to turn a profit?

Erm, well the most profitable thing to do would be to shut it down and buy BTC up front with the electricity money in that case. You would have more BTC that way, whatever the value of them.

[timk225]

The biggest problem with BitCoin or any crypto-coin for that matter, is that it is a PERCEIVED value, with nothing tangible to back it, in the same way that U.S. Dollars are based on trust and general acceptance as a currency since American currency went off the gold standard in the early 70's.

If the zombie apocalypse ever happens and 90% of the world becomes zombies (I won't however, I can totally see myself on top of a building pulling off spectacular HEADSHOTS with my Ruger 10/22, and I'm just too damn cool and awesome to be a common zombie), U.S. Dollars and all other forms of conventional money will become instantly worthless.

So if anything ever happens to crypto-coins, like a huge hack or it is internationally outlawed, the value will go straight to hell.