Isn't Mining Economically Retarded?

[calchuchesta]

They are believers. They know Bitcoin will go up this decade because they aren't retarded, and they can afford the mining due being on a good position to not be fried with electricity bills etc. Its a sum of opportunities that put you on a good spot to be an efficient miner.

[lihuajkl]

Another advantage to mining is getting clean fresh coins that the money systems of banks and credit cards don't know you have.
That is priceless.

But this is really costly way to earn clean fresh coins. Why no go to localbitcoin.com and do the trading face by face without going through any third party?

[johnyj]

Bitcoin demand can be fulfilled by either mining or purchasing, when one of the option is cheaper, more capital will flow to that direction. So mining cost always adjust itself to be close to the exchange rate

The interesting thing is: If you dramatically improve the mining efficiency, you can scale your production and take a much larger market share, thus drive other miners to unprofitable, and extend the life time of your equipment. And this will also bring centralization. To counter this effect, the rest of the community will try to achieve more and more efficient mining all over the globe, thus raise the difficulty during the process, that is a fight for keeping the system decentralized, not for the profitability, so it will eventually send the mining cost higher than exchange rate

[jbreher]

Another advantage to mining is getting clean fresh coins that the money systems of banks and credit cards don't know you have.
That is priceless.

But this is really costly way to earn clean fresh coins. Why no go to localbitcoin.com and do the trading face by face without going through any third party?

Because by definition you will not be getting fresh clean coins. You will be getting coins with a history.

[jbreher]

...
for instance if i wanted to buy 200k coins today. i would cause coinbase's price to go from $360~ all the way above $1000. meaning if i had lets say $72million, you would think that equates to 200k coins at $360.. but no,,, as soon as i start buying some the price rises thus by the time i have bought 2000 coins the price could be in the $400 price range. by the time i get to 4000 coins it could be in the $500 price range.. and thus with 196k coins to go, its becoming more and more expensive to just buy the amount of coins i like.

however by mining them i can grab coins and never need to touch an exchange, thus getting closer to the 200k coin figure i want, than i would have simply buying them.

That's very good point, franky!

No - it seems rather boneheaded.

To get 200K coins, you would need to spend nearly two months as being the only miner in existence. (3600 coins/day * 60 days ~= 200Kcoins). As if anyone could be 100% of all mining. You really think it would be harder to buy 200K on exchanges over two months?

[sandykho47]

1. I bet before a miner sold, they were use it to mine bitcoin & when it was sold, they got profit from mining & sold the miner. Double profit
2. As same as with number 1, they got more profit & they pass the risk to the user.
3. I agree too

And i think mining can't raise up bitcoin price too much :
First, the person/company have to sold their bitcoin to cover up mining tools & maintenance fee
Second, some miner just want to get profit in fiat, so they always sell the bitcoin & bitcoin price went down
Last, Miner only mine if they can get profit

[spooderman]

Well it's less retarded than mining uneconomically :S

[wickedgoodtrader]

The cost of mining is why bitcoin will fail. Miner producers are the only ones that win this game.

The only way this mining system works is if the price of BTC rises. It's like a ponzi.

Difficulty just went down for the first time in 2 years which shows mining is tapped out. If the price of BTC goes up, the hashrate will increase and everything works. BUT if the price of BTC falls, here's what happens.

Say it falls to $100 over the next year and a half. The hashrate will drop to 30% of what it is now. THEN ADD IN THE REWARD HALVE AT THAT TIME, the hashrate will drop another 50% on top of that. So we will be sitting at 15% hashrate of what we are at now which would seem fine and dandy because the network worked when it was only 15% of the size it is now. The problem is back then, there wasn't an available supply of power to attack the network. The miners didn't exist yet.

If we went to 15% now, there are loads of farms who had shutdown miners who could flip a switch and turn them back on and attack the network with ease. Why would they do this? Maybe they invest heavily in the "next" coin and make more money on that when they crush BTC and everybody moves to something else. They could make way more money doing that then having a warehouse full of worthless doorstops.


What is also stupid with mining is with every increase in BTC there is severe overhead pressure because miners dump coins on the market to buy more miners. Any spike in BTC will then be capped until mining is made unprofitable again.

[QuestionAuthority]

The cost of mining is why bitcoin will fail. Miner producers are the only ones that win this game.

The only way this mining system works is if the price of BTC rises. It's like a ponzi.

Difficulty just went down for the first time in 2 years which shows mining is tapped out. If the price of BTC goes up, the hashrate will increase and everything works. BUT if the price of BTC falls, here's what happens.

Say it falls to $100 over the next year and a half. The hashrate will drop to 30% of what it is now. THEN ADD IN THE REWARD HALVE AT THAT TIME, the hashrate will drop another 50% on top of that. So we will be sitting at 15% hashrate of what we are at now which would seem fine and dandy because the network worked when it was only 15% of the size it is now. The problem is back then, there wasn't an available supply of power to attack the network. The miners didn't exist yet.

If we went to 15% now, there are loads of farms who had shutdown miners who could flip a switch and turn them back on and attack the network with ease. Why would they do this? Maybe they invest heavily in the "next" coin and make more money on that when they crush BTC and everybody moves to something else. They could make way more money doing that then having a warehouse full of worthless doorstops.


What is also stupid with mining is with every increase in BTC there is severe overhead pressure because miners dump coins on the market to buy more miners. Any spike in BTC will then be capped until mining is made unprofitable again.

You will be attacked in 5 - 4 - 3 - 2........

[jonald_fyookball]

The cost of mining is why bitcoin will fail. Miner producers are the only ones that win this game.

The only way this mining system works is if the price of BTC rises. It's like a ponzi.

Difficulty just went down for the first time in 2 years which shows mining is tapped out. If the price of BTC goes up, the hashrate will increase and everything works. BUT if the price of BTC falls, here's what happens.

Say it falls to $100 over the next year and a half. The hashrate will drop to 30% of what it is now. THEN ADD IN THE REWARD HALVE AT THAT TIME, the hashrate will drop another 50% on top of that. So we will be sitting at 15% hashrate of what we are at now which would seem fine and dandy because the network worked when it was only 15% of the size it is now. The problem is back then, there wasn't an available supply of power to attack the network. The miners didn't exist yet.

If we went to 15% now, there are loads of farms who had shutdown miners who could flip a switch and turn them back on and attack the network with ease. Why would they do this? Maybe they invest heavily in the "next" coin and make more money on that when they crush BTC and everybody moves to something else. They could make way more money doing that then having a warehouse full of worthless doorstops.

You're saying miners will drop out because they can't compete, but
they'll somehow be able to jump in later (when other miners drop out)
and successfully attack the network?   Yeah right.  Even if  they
turn back on, they will make more money mining than attacking.
Attacking Bitcoin so another coin can rise?  Never gonna happen.

What is also stupid with mining is with every increase in BTC there is severe overhead pressure because miners dump coins on the market to buy more miners. Any spike in BTC will then be capped until mining is made unprofitable again.

This doesn't make sense either.  Miners are ALWAYS dumping
coins on the market.  So what?

[malaimult]

The cost of mining is why bitcoin will fail. Miner producers are the only ones that win this game.

The only way this mining system works is if the price of BTC rises. It's like a ponzi.

Difficulty just went down for the first time in 2 years which shows mining is tapped out. If the price of BTC goes up, the hashrate will increase and everything works. BUT if the price of BTC falls, here's what happens.

Say it falls to $100 over the next year and a half. The hashrate will drop to 30% of what it is now. THEN ADD IN THE REWARD HALVE AT THAT TIME, the hashrate will drop another 50% on top of that. So we will be sitting at 15% hashrate of what we are at now which would seem fine and dandy because the network worked when it was only 15% of the size it is now. The problem is back then, there wasn't an available supply of power to attack the network. The miners didn't exist yet.

If we went to 15% now, there are loads of farms who had shutdown miners who could flip a switch and turn them back on and attack the network with ease. Why would they do this? Maybe they invest heavily in the "next" coin and make more money on that when they crush BTC and everybody moves to something else. They could make way more money doing that then having a warehouse full of worthless doorstops.


What is also stupid with mining is with every increase in BTC there is severe overhead pressure because miners dump coins on the market to buy more miners. Any spike in BTC will then be capped until mining is made unprofitable again.

Not true. The cost of mining is directly tied to how many people are trying to mine. If the overall cost is too much then less equipment will be used to mine which will cause the cost to go down via lower difficulty.

Although mining manufacturers have profited handsomely in the past the reason they were able to do so is because they were early entrants into the ASIC market which was literally non-existant.

[fenican]

Bitcoin is already 60% or so off its highs. We've had only one drop in difficulty and, so far, no miners have appeared en-masse to attack the network. Not going to happen.

[notbatman]

I've been trolled haven't I, lol.

[cbeast]

Bitcoin is already 60% or so off its highs. We've had only one drop in difficulty and, so far, no miners have appeared en-masse to attack the network. Not going to happen.

You can only use ATHs for specific analysis. In statistics (IIRC) this is called variance and is mitigated by standard deviation to find degrees of freedom. I might have that backwards, but that's not really important to the point. The average price over the last year has not dropped nearly so dramatically. What people are discovering is that Bitcoin isn't going away and they will find new interest in its adoption.
Sorry, not meaning to attack your point. I just get tired of seeing the ATH stuff.

[jonald_fyookball]

Bitcoin is already 60% or so off its highs. We've had only one drop in difficulty and, so far, no miners have appeared en-masse to attack the network. Not going to happen.

You can only use ATHs for specific analysis. In statistics (IIRC) this is called variance and is mitigated by standard deviation to find degrees of freedom. I might have that backwards, but that's not really important to the point. The average price over the last year has not dropped nearly so dramatically. What people are discovering is that Bitcoin isn't going away and they will find new interest in its adoption.
Sorry, not meaning to attack your point. I just get tired of seeing the ATH stuff.

Those ATH may have been based on Mt Gox price manipulation, and there were a lot of bag holders suffering as a result.

[cryptworld]

today is only for people who had already a positive ROI and a large amount of miners
and even in that case,there is not a large economical profit

[Lauda]

The cost of mining is why bitcoin will fail. Miner producers are the only ones that win this game.

The only way this mining system works is if the price of BTC rises. It's like a ponzi.

Difficulty just went down for the first time in 2 years which shows mining is tapped out. If the price of BTC goes up, the hashrate will increase and everything works. BUT if the price of BTC falls, here's what happens.

Say it falls to $100 over the next year and a half. The hashrate will drop to 30% of what it is now. THEN ADD IN THE REWARD HALVE AT THAT TIME, the hashrate will drop another 50% on top of that. So we will be sitting at 15% hashrate of what we are at now which would seem fine and dandy because the network worked when it was only 15% of the size it is now. The problem is back then, there wasn't an available supply of power to attack the network. The miners didn't exist yet.

If we went to 15% now, there are loads of farms who had shutdown miners who could flip a switch and turn them back on and attack the network with ease. Why would they do this? Maybe they invest heavily in the "next" coin and make more money on that when they crush BTC and everybody moves to something else. They could make way more money doing that then having a warehouse full of worthless doorstops.


What is also stupid with mining is with every increase in BTC there is severe overhead pressure because miners dump coins on the market to buy more miners. Any spike in BTC will then be capped until mining is made unprofitable again.

You will be attacked in 5 - 4 - 3 - 2........

Because Bitcoin will not fail. Bitcoin can always adapt and evolve. He deserves to be attacked due to such statements.

[exoton]

Bitcoin is already 60% or so off its highs. We've had only one drop in difficulty and, so far, no miners have appeared en-masse to attack the network. Not going to happen.

The issue is that mining bitcoin is still profitable for the miners on an operating basis. This results in the miners not leaving in masse.

It is generally accepted that the difficulty, over the long term, will be determined by both the price of bitcoin and the price of electricity

[Dabs]

You can buy 200k bitcoins. Just wait for the auctions and bid. (You know, the ones from Silk Road, etc,, that the FBI, US Marshalls or other US goverment has.)

They may have a history, but since you bought it from a government auction, they are considered "clean".

Now, of course, everyone will know (or the gov will) how much you have, but if you're smart, you can slowly tumble it all around with different exchanges. Or you can just HODL for 10 years and cash out then, pay the proper taxes, and still make a lot of fiat.

[MicroGuy]

Yes. As mining is a massive waste of electricity.

The entire bitcoin network could be maintained using a single server.