Crooks Will Render Mining Unprofitable

[Zetler]

Isn't it just a matter of time before the cost of electricity becomes higher than the value of mined bitcoins?

In the short run, say next six months, the trend will be more professional data centers. These have economies of scale and cheap electricity. Obviously Average Joe will not make money anymore with his Antminer.

From 2015 I believe even the data centers will lose. People with free electricity will learn that mining generates a "free" income. Some have free electricity on their rental contracts. Others are illegally connected. There will even be some who deliberately mine at a loss. Say you own a business. The cost of electricity reduces the profit, hence taxes, while the mined bitcoins are never reported. For employees it becomes even more lucrative as the employer takes the cost.

These ways of mining are mostly illegal, but I believe enough people will do it anyway. Another, more honest, use of miners is for heat. Canadians, Scandinavians and Russians should all be mining 

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shhh, keep quiet or the boss might find out

[windpath]

Isn't it just a matter of time before the cost of electricity becomes higher than the value of mined bitcoins?

I think is true for many "older" (use the term lightly) miners, but if you look at the new hardware coming online now, it is not only faster but much more efficient....

Example:

BFL 10 GH/s cube (still for sale, but who is buying these things???)
Price: $349
Consumption: 3 to 4 Watts Per GH/s Per Chip

Antimer S1 180 GH/s
Price: $400
Consumption: ~2 Watt Per GH/s

Antimer S2 1TH/s
Price: $3,599
Consumption: ~1 Watt Per GH/s

Spoondoolies-Tech SP30 Yukon 5.4TH/s
Price: $11,995
Consumption: ~0.38 Watt Per GH/s

[ChuckBuck]

What does mining have to do with crooks?  Still trying to wrap my head around the title.

[Zetler]

What does mining have to do with crooks?  Still trying to wrap my head around the title.

A crook (a dishonest person, especially a sharper, swindler, or thief) will mine using illegal free electricity. An honest miner will not.

In the short run honest miners will invest in new equipment that uses less and less W/GH/s. This will enable them to make a profit for a while. But it also means that older mining equipment will be useless. They will be sold at eBay for almost nothing. Say $50 for an antminer.

I imagine especially students who have access to un-metered electricity will pick up these. Even if one miner generates only $1/day, some cheap-ass eastern europens will run, say, three of these at no cost and cash in $1000 a year.

[jimmothy]

How many people using their apartments free electricity do you think are mining?

At most there are a few hundred people each limited to 1kw max. This doesnt even compare to a knc 10mw datacenter.

Unless rent and hardware are free this situation is not realistic.

[Soros Shorts]

"Crooks" stealing < 1kW of free electricity from their apartments, dorm rooms, office -> decentralized hashing.

This is not really a bad thing for Bitcoin.

[nostradamus]

1. There is no such thing as free electricity, only electricity that someone else is paying for. Thus, it can never scale; the boss/landlord/grandma is going to notice.

2. The cost of electricity is only 1 factor in an entities ability to deploy hashing power. Large operations that can build equipment for a fraction of the $/GH will always dwarf even the largest army of power moochers.

3. If this scenario actually existed, it would mean extreme decentralization, which actually would be great.

[samsonn25]

It costs data centers more cost overall than average Joe to run a machine because a slight savings in electrical rate is offset by paying rent for the space.

The bigger advantage is they can run more machines because of more space and power available.

Manufacturers who mine also also have another advantage in that they get their machines at the "real wholesale manufacturing cost".

[Meech]

shhh, keep quiet or the boss might find out

Believe me would have liked to try it myself in one of many empty back offices.  Forced to go to cloudhashing or hosting for the future.  Heaters being sold for summer.

[VinCeCream]

"Crooks" stealing < 1kW of free electricity from their apartments, dorm rooms, office -> decentralized hashing.

This is not really a bad thing for Bitcoin.

The opposite actually.

[BSIG]

Isn't it just a matter of time before the cost of electricity becomes higher than the value of mined bitcoins?

In the short run, say next six months, the trend will be more professional data centers. These have economies of scale and cheap electricity. Obviously Average Joe will not make money anymore with his Antminer.

From 2015 I believe even the data centers will lose. People with free electricity will learn that mining generates a "free" income. Some have free electricity on their rental contracts. Others are illegally connected. There will even be some who deliberately mine at a loss. Say you own a business. The cost of electricity reduces the profit, hence taxes, while the mined bitcoins are never reported. For employees it becomes even more lucrative as the employer takes the cost.

These ways of mining are mostly illegal, but I believe enough people will do it anyway. Another, more honest, use of miners is for heat. Canadians, Scandinavians and Russians should all be mining 

keep it on the down low..