Isn't Mining Economically Retarded?

[exoton]

Yes. As mining is a massive waste of electricity.

No. Banks, and credit card processing companies (visa, mastercard and amex) all use similar amounts of electricity on a per transaction and a per dollar sent basis.

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

Also not true. This would create a central authority that would control the blockchain, which is not what bitcoin is about

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[cyberpinoy]

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

Doyou understand the meaning of ROI and the time it takes to get that? If you spend 100,000 dollars on a  restaurant will you make 100,000 dollars the first day you are opened? No its called ROI. But if you spend 100,000 dollars on a restaurant and run your business well please your customers will you make 100,000 dollars profit in a year? Maybe. Mining Bitcoins is no different, except we dont have to please any customers to secure our business, we just have to buy a couple more machines every 2 weeks to compensate for the rise in the difficulty.

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

Again ROI brother ROI

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

I dont know ask a few of the idiots who bought into the hype when the coins were 1100 dollars a coin, where do you think they are sitting right now? Pretty far from profitable huh?

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?

In my opinion, there is an influx of math-deficient, lack of business economics, lack of the bitcoin protocol and how it works, lack of currency trading logic and ROI understanding in your whole post. I think you need some more research on a few things before you start criticizing others on what you "think" is right and wrong

Sorry to be so blunt, Im Just saying

[botany]

Yes. As mining is a massive waste of electricity.

No. Banks, and credit card processing companies (visa, mastercard and amex) all use similar amounts of electricity on a per transaction and a per dollar sent basis.

As more and more bitcoin miners enter the frame, the electricity used in mining would increase, without any corresponding increase in the capacity of the network. So in that sense, the amount of electricity used per transaction can increase.
I am not sure if the amount of electricity used by banks is comparable on a per transaction basis to bitcoin. Even if it is, I don't think it varies as much as the electricity used by the bitcoin network.

[fran2k]

The point is that the network is spending 25 x 144 x 365 = 1.314.000 BTC/y. in securing the network and sustaining a wasteful business which is now not really decentralized as the economies of scale rules the mining.

This 500 MUSD could be spent in something that add ups really value to the network. At the beginning it was a good way for the initial bitcoin distribution and was really decentralized but now I strongly think that we should came with something better.

[Flashman]

in securing the network and sustaining a wasteful business

So, obviously something like public sewers and water supply are only justifiable on a public health basis until the population is generally healthy, at which point it should be turned off and cheaper method of health preservation should be sought?

[achimsmile]

@OP:

That's why proof of stake was invented.

You might not like it, but most of those PoS coins are actually working...

Currently I'm forging Nxt on a rasperry pi, using 2-3 Watt. It does not make me much money, but the entire system is using a tiny tiny fraction of BTC electricity, and it works.
Have been doing PoS transactions for a year now, and I sleep better with the noiseless raspi beside my bed than with the miners I had

[Built]

mining is used to make sure the network is stable

[elephantas1]

i was thinking to start cloud mining but after these posts im not going to do that

[halfawake]

Yeah, I'm inclined to agree with the OP.  Mining seems pretty bad from an economic standpoint unless you happened to be one of the lucky ones who found out about Bitcoin in 2009 and did a bunch of CPU mining when that was still possible.  I'm more concerned about the environmental issues with mining than the economic ones personally though, considering how much energy miners use, although I do think that if we ever get to the point where bitcoin takes over fiat (highly unlikely, but we can hope), the energy miners use would likely be less than all the energy banks & the Federal Reserve uses.

[malaimult]

Yeah, I'm inclined to agree with the OP.  Mining seems pretty bad from an economic standpoint unless you happened to be one of the lucky ones who found out about Bitcoin in 2009 and did a bunch of CPU mining when that was still possible.  I'm more concerned about the environmental issues with mining than the economic ones personally though, considering how much energy miners use, although I do think that if we ever get to the point where bitcoin takes over fiat (highly unlikely, but we can hope), the energy miners use would likely be less than all the energy banks & the Federal Reserve uses.

Mining is much more competitive now then it was when GPU/CPU was profitable. Today you need to have access to cheap electricity and be able to buy enough mining equipment to command a discount from the manufacturers.