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Author Topic: Why do people think mining is less risky than buying, anyway?  (Read 3308 times)
disclaimer201
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April 25, 2012, 06:38:44 PM
 #21

People may scream FUD again now but unless you know about these issues and calculate them in you must be in a state of denial. BTC is a high risk investment, even if it looks like it's here to stay.

Of course I've read about the issues surrounding Bitcoin. I've been reading about them, and discussing them, for over a year now. Guess what, I still prefer them over fiat.

This thread is comparing mining to buying, not whether or not you think Bitcoin is a sane investment. Anyone mining or buying has already made that decision for themselves.

Of course, but I don't believe anyone saying they wouldn't cash out at some point. Buying stuff is cashing out as well at the current exchange rate. So, intending to hold longterm as of 15-20 years or more is not reasonable. I might hold on longterm, but I decide from week to week.
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Raize (OP)
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April 25, 2012, 06:48:50 PM
Last edit: April 25, 2012, 07:17:43 PM by Raize
 #22

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It's very easy to obtain 100% anonymous (even brand new, freshly minted) Bitcoins through mining.

Actually, it's not given that whatever pool you mine on is going to know at least something about you. I mined for a long time on P2Pool thinking I was anonymous till I realized anyone could see what address I was mining to and given that the IPs that are doing the mining can be seen on the network you can kind of figured out a general idea of who is mining what.

If you really truly wanted to be 100% anonymous you'd have to solo mine on TOR, right?

I guess what I'm saying is that we are seeing people spend tens of thousands of dollars on FPGA mining setups. What I contend is that if you were to buy 7300 BTC for about $37,000 today, you will be able to sell 10 BTC per day for the next two years and make more money than if you were to buy $37,000 worth of FPGA-based mining equipment and sell whatever you mine every day over the course of the same two years.

$37,000 worth of mining equipment buys you about 28 gh/s at 1.5 megawatt (FPGA's and a DD-WRT router). That's maybe 18 coins per day, enough to justify solo-mining, probably. Certainly more than the 10 BTC that you'd be selling otherwise. But over time, if other people "buy-in" to mining Bitcoin, that difficulty that gets you the 18 coins per day is going to rise, meaning which do you think is more risky, selling 18 coins per day that is bound to drop over the next two years, or selling 10 per day over the next two years.

Right now I think it is the former that is the more riskier of the two, which is why I think it is better to buy and either hold or sell over time. It would seem to me that if you think the price or difficulty is going to be increasing for a while, you should be buying/holding and if you think the price or difficulty is going to be decreasing for a while, you should be selling/mining.
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April 25, 2012, 07:27:23 PM
 #23

Actually, it's not given that whatever pool you mine on is going to know at least something about you. I mined for a long time on P2Pool thinking I was anonymous till I realized anyone could see what address I was mining to and given that the IPs that are doing the mining can be seen on the network you can kind of figured out a general idea of who is mining what.

If you really truly wanted to be 100% anonymous you'd have to solo mine on TOR, right?
Or p2pool mine on TOR with rotating deposit addresses. That's not such a crazy thing, though, if you're willing to eat a high stale rate.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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April 25, 2012, 07:36:19 PM
 #24

Actually, it's not given that whatever pool you mine on is going to know at least something about you. I mined for a long time on P2Pool thinking I was anonymous till I realized anyone could see what address I was mining to and given that the IPs that are doing the mining can be seen on the network you can kind of figured out a general idea of who is mining what.

If you really truly wanted to be 100% anonymous you'd have to solo mine on TOR, right?
Or p2pool mine on TOR with rotating deposit addresses. That's not such a crazy thing, though, if you're willing to eat a high stale rate.

can't you just let the funds sit on mtgox and they will be mixed with other coins?

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April 25, 2012, 08:15:36 PM
 #25

Quote
It's very easy to obtain 100% anonymous (even brand new, freshly minted) Bitcoins through mining.

Actually, it's not given that whatever pool you mine on is going to know at least something about you. I mined for a long time on P2Pool thinking I was anonymous till I realized anyone could see what address I was mining to and given that the IPs that are doing the mining can be seen on the network you can kind of figured out a general idea of who is mining what.

A lot of pools and p2pool nodes don't keep logs of IP addresses etc - I know mine doesn't.

Surely it's just about choosing a reliable pool outside your tax authority's juristiction?
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April 25, 2012, 09:02:03 PM
 #26

Surely it's just about choosing a reliable pool outside your tax authority's juristiction?
I think that depends very much on your reasons for desiring anonymity. I mean, I can't speak for anyone else, but to the extent that I cultivate anonymity in my Bitcoin transactions, such attempts to mask my identity generally have bugfuck nothing to do with taxes or the evasion thereof.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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April 27, 2012, 01:40:06 AM
 #27

I'm not evading taxes because my country doesn't recognize Bitcoin as a currency or commodity.

In fact, I maintain that the blockchain is just one big expression of our right to free speech.
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April 27, 2012, 04:17:22 AM
 #28

I guess what I'm saying is that we are seeing people spend tens of thousands of dollars on FPGA mining setups. What I contend is that if you were to buy 7300 BTC for about $37,000 today, you will be able to sell 10 BTC per day for the next two years and make more money than if you were to buy $37,000 worth of FPGA-based mining equipment and sell whatever you mine every day over the course of the same two years.

I think this point highlights the main issue in this thread.

There is not a BTC or mining shortage...there is a USD shortage. Simple economics would infer that bitcoins are thus cheap against USD.
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April 27, 2012, 05:43:06 PM
 #29

I guess what I'm saying is that we are seeing people spend tens of thousands of dollars on FPGA mining setups. What I contend is that if you were to buy 7300 BTC for about $37,000 today, you will be able to sell 10 BTC per day for the next two years and make more money than if you were to buy $37,000 worth of FPGA-based mining equipment and sell whatever you mine every day over the course of the same two years.

I think this point highlights the main issue in this thread.

There is not a BTC or mining shortage...there is a USD shortage. Simple economics would infer that bitcoins are thus cheap against USD.

Shortage only comes in if there is a demand for it.

Price is all about supply and demand.

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April 28, 2012, 12:39:11 AM
 #30

I guess what I'm saying is that we are seeing people spend tens of thousands of dollars on FPGA mining setups. What I contend is that if you were to buy 7300 BTC for about $37,000 today, you will be able to sell 10 BTC per day for the next two years and make more money than if you were to buy $37,000 worth of FPGA-based mining equipment and sell whatever you mine every day over the course of the same two years.

I think this point highlights the main issue in this thread.

There is not a BTC or mining shortage...there is a USD shortage. Simple economics would infer that bitcoins are thus cheap against USD.

Shortage only comes in if there is a demand for it.

Price is all about supply and demand.


And anyone who cares about the price of a bitcoin...is demanding USD.
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