Isn't Mining Economically Retarded?

[Ximp]

1. If a miner was more profitable than the price payed, wouldn't the mining companies use them instead of selling them?

2. If a cloud miner was more profitable than the price payed, wouldn't the mining companies use them instead of renting them?

3. Isn't it less risky to buy the coins upfront and not compete with the rising hashrate and diminishing returns?

In my opinion, there is an influx of math-deficient kids and young adults spending money to buy miners in hopes of getting rich. This causes an influx of miners and less buying pressure on the actual market. In time, this influx should slow down as the general group will realize the futility of buying miners, and thus the price will begin to rise again.

Am I missing something as to the advantage of mining?

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[pedrog]

1. They make more money selling than mining, although they also mine.

2. They are passing the risk, the miner might not be profitable, plus they charge a fee for hosting the miner.

3. I agree.

[GenTarkin]

Mining, its just another way of gambling ... trade or mine, pick ur poison.
In mining ur betting against diff.
In trading ur betting against price.
If you buy hashrate w/ fiat, ur betting against both price & diff.

But yes, in to many cases people dont know how to do basic math when comparing prices and possibility of ROI

[iluvpie60]

Mining is only for those with huge warehouses or extremely efficient miners with free electricity. Normal people don't have miners going anymore and if they do it is just a hobby so calm down.

[AJinNYC]

You're missing that mining hardware could last for years. Get a S3+ and use it for 2-3 years. You'll be more than profitable. Yes with difficulty increases every subsequent few months will be worth less than the prior, but it will still make money. If you break even after 8 months on hardware costs, and still maintain even the slightest revenue over power costs, then you're still in the green.

Then once it gets to the point where you're not maintaining profit to electric costs, sell it on eBay to somebody that has no clue and is just looking for mining hardware, and then buy a newer unit with that money you made from the sale.

[jonald_fyookball]

mining for retail consumers is economically retarded, yes.

Competition forces mining difficulty to the point where the profit margins are very thin and mining becomes economically infeasible except for those with the lowest costs, such as big players and those who have direct access to core hardware components. 

[JimboToronto]

Mining is only for those with huge warehouses or extremely efficient miners with free electricity. Normal people don't have miners going anymore and if they do it is just a hobby so calm down.

I heat my home electrically so the energy cost is nothing during heating season. My old BFL miner paid for itself well over a year ago so as long as it keeps running I'll use it until next spring, shut it down for the summer, and start it up again in the autumn.

[jonald_fyookball]

Mining is only for those with huge warehouses or extremely efficient miners with free electricity. Normal people don't have miners going anymore and if they do it is just a hobby so calm down.

I heat my home electrically so the energy cost is nothing during heating season. My old BFL miner paid for itself well over a year ago so as long as it keeps running I'll use it until next spring, shut it down for the summer, and start it up again in the autumn.

I think you were among the lucky ones who got fast enough delivery of your mining unit....many people lost money.

[AnswerQuestion]

Is it economically "retarded"? No, there is a chance you can earn more money via mining.

As mentioned above, buying a miner is essentially betting that the difficulty will not rise faster then a certain rate (as well as that the price of bitcoin will generally rise - to offset the cost of running the miner)

[franky1]

more money is wasted mining coal
more money is wasted mining gas
more money is wasted mining oil

lets take coal for instance.
the coal industry mines 2billion tonnes a year at between $40-$60 dollars a tonne.
thats a $80-$120 billion industry.. PER YEAR and once the coal has been burned thats the end of that coal, its gone.

the costs of mining bitcoin is not even 2% of the coal industry and once mined, bitcoins dont just burn into nothing. they circulate and can be swapped and traded as much as they like forever.

[sidhujag]

more money is wasted mining coal
more money is wasted mining gas
more money is wasted mining oil

lets take coal for instance.
the coal industry mines 2billion tonnes a year at between $40-$60 dollars a tonne.
thats a $80-$120 billion industry.. PER YEAR and once the coal has been burned thats the end of that coal, its gone.

the costs of mining bitcoin is not even 2% of the coal industry and once mined, bitcoins dont just burn into nothing. they circulate and can be swapped and traded as much as they like forever.

extrapolate in future and it can easily eclipse all of those.. It is economically retarded I agree but its just a consensus algorithm.. In the end the blockchain is the takeaway to all of this.

[IacceptBTC]

more money is wasted mining coal
more money is wasted mining gas
more money is wasted mining oil

lets take coal for instance.
the coal industry mines 2billion tonnes a year at between $40-$60 dollars a tonne.
thats a $80-$120 billion industry.. PER YEAR and once the coal has been burned thats the end of that coal, its gone.

the costs of mining bitcoin is not even 2% of the coal industry and once mined, bitcoins dont just burn into nothing. they circulate and can be swapped and traded as much as they like forever.

I don't think the OP is talking about how "green" bitcoin mining is, I think he is referring to how much economical sense it is to buy a miner.

[QuestionAuthority]

I thought so. That's why I stopped when I couldn't get a reasonable amount using video cards. The ASIC upgrade train seemed like a stupid ride to poverty. Buying btc is so easy compared to the hassle of maintaining equipment.

[notbatman]

1. If a miner was more profitable than the price payed, wouldn't the mining companies use them instead of selling them?

Yes.

I paid for a miner in November 2013 with delivery in February 2014. To this day I have not received a miner or a refund.

2. If a cloud miner was more profitable than the price payed, wouldn't the mining companies use them instead of renting them?

Yes.

I just got 23.5Gh/s on CEX.IO and after mining for about a day my balance is -0.00001348 BTC. CEX gets paid up front for the GHS/BTC, has kept all the mined BTC as maintenance fees and has virtually mined 1.3k Satoshis from my account. I now owe them additional BTC ontop of what they've mined with their hardware.

Cloud mining is icing on the cake.

3. Isn't it less risky to buy the coins upfront and not compete with the rising hashrate and diminishing returns?

No.

If you're mining and the fiat exchange rate goes up you make more fiat. If you're mining and the fiat exchange rate goes down you make less fiat.

In my opinion, there is an influx of math-deficient kids and young adults spending money to buy miners in hopes of getting rich. This causes an influx of miners and less buying pressure on the actual market. In time, this influx should slow down as the general group will realize the futility of buying miners, and thus the price will begin to rise again.

Am I missing something as to the advantage of mining?

Everybody is entitled to their own opinion.

Are you missing something? Well you seem to have a lot of questions, this is good. I should have asked more questions before my purchase.

[jonald_fyookball]

@notbatman,

seems like you're contradicting yourself here.

You are losing money on cloud mining, you got
screwed basically ordering mining gear,
and yet you dont agree its less risky
to just buy Bitcoins?

[Tomatocage]

In my opinion, there is an influx of math-deficient kids and young adults spending money to buy miners in hopes of getting rich. This causes an influx of miners and less buying pressure on the actual market. In time, this influx should slow down as the general group will realize the futility of buying miners, and thus the price will begin to rise again.

Am I missing something as to the advantage of mining?

You should have been around in 2010 or earlier when mining was even less profitable than it is now.

[bornil267645]

In my opinion I don't think it is, it's more of technical opportunity for the facilitated people.

[notbatman]

@notbatman,

seems like you're contradicting yourself here.

You are losing money on cloud mining, you got
screwed basically ordering mining gear,
and yet you dont agree its less risky
to just buy Bitcoins?

The question of risk was with regards to competition, the rising hashrate and diminishing returns. The risk in mining is from criminals and scam companies.

There's financial risk, then there's the risk some motherfucker is waiting around the corner for you with a sawed-off shotgun ready to decapitate you for the 20 in your pocket.

[lyth0s]

1. If a miner was more profitable than the price payed, wouldn't the mining companies use them instead of selling them?

2. If a cloud miner was more profitable than the price payed, wouldn't the mining companies use them instead of renting them?

3. Isn't it less risky to buy the coins upfront and not compete with the rising hashrate and diminishing returns?

In my opinion, there is an influx of math-deficient kids and young adults spending money to buy miners in hopes of getting rich. This causes an influx of miners and less buying pressure on the actual market. In time, this influx should slow down as the general group will realize the futility of buying miners, and thus the price will begin to rise again.

Am I missing something as to the advantage of mining?

1. If the miner cost them $600 to make and they can sell it for $1,200 immediately, they mostly would rather make the immediate profit instead of taking a risk, although many of them also mine.
2. If you have to remember immediate profit vs risk of increasing difficulties
3. Usually, yes. There are many exceptions though. Such as an early BFL jalapeno was super profitable, same with an early Antminer S1 (especially overclocked) and a few other miners (Neptune? I don't remember) were super profitable for a long time.\

I personally stopped buying miner and I now just buy BTC directly due to hashrates increasing too fast and not getting a > 100% ROI

[Q7]

1. If a miner was more profitable than the price payed, wouldn't the mining companies use them instead of selling them?
Mining *has* to be profitable or nobody would mine. You still need to covert to fiat to cover operation cost like paying for electricity where they only accept fiat. When the miner needs to eat food, not all eateries or restaurants accept bitcoin. The portion that he keeps will be betting on future price increase.

2. If a cloud miner was more profitable than the price payed, wouldn't the mining companies use them instead of renting them?
Ok now for this, it depends on how you look at it. selling cloud mining actually works more like betting on the future of bitcoin and take your gamble against difficulty changes and other scenario like for example mining yields getting higher due to other pools of miner exiting.