Topic: Don't listen to all the propagandists. Mining is fine. - page 4. (Read 10296 times)

When it comes abstract mathematical metrics derived from the interaction of complex human behaviour, past performance does not predict future performance. This is economics 101.

Difficulty is not a physical object. It does not obey Newton's first law. Abstract, arbitrary metrics generally don't. (And when they look like they do, it's usually just because they haven't changed yet. See: LTCM. See: Housing prices. See: Tulips. When stuff looks predictable, it's usually because you're suffering from selection bias.)

This ^^^^

 

If you're chicken enough to lose money, then don't even think about Bitcoin.

Chickens!

You are absolutely correct that in the worst case, you still have hardware you can sell or use.  In the worst case of investing directly you have nothing.

As far as network growth, I wouldn't say it easily go down to 2%/day because it hasn't in the last year.  That being said, it will have to slow down at some point because there are only so many GPUs out there.  When that happens no one knows, but betting it will happen next week is a risky bet.  Of course, once someone makes some custom ASIC arrays the game is over for everyone.

Mining is lower profit, but it's also lower risk. You can sell your rig, you can use it on other projects, or you could play games with it. Mining can also remain profitable even if the price goes down, especially if, as the price goes down, network growth rate decreases.

Your extrapolation of the difficulty growth is still just a guess. There is no reason why difficulty has to keep growing at that rate. It could easily fall to 2%.

In conclusion, mining makes as much sense now as it did on May 1st. Which is to say, it's anyone's guess what will happen.

Sorry, I misspoke.  I should have said that mining isn't profitable at the current price, and is less profitable than investing in bitcoins directly with increasing prices.  The only thing I am predicting is that the network continues to grow at 4%/day, which it has on average over the last year.  Almost perfectly.

Check out http://bitcoin.sipa.be/  to see just how perfectly.  As long as that remains the same, you won't make as much money as just investing in bitcoins.

So yes, I would have said in April that mining is less profitable too.  If you had bought $1,000 in bitcoins you would have $20,000 in bitcoins now.  Did anyone buying $1000 worth of mining equipment make $20,000 in that same time period?

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I think it's cool that you're trying to learn how to be an amateur investment advisor.

So here's a lesson: risk is the single most important variable in an investment.

Buying bitcoins is, by a fundamental law of the universe, always going to be more potentially profitable than mining because it is higher risk.

Mining is lower risk, but also lower expected returns.

An investor's choice of where they should put their money and time depends on their risk profile.

Is the investor looking for a high risk, high yield investment, and is comfortable taking losses but still acting rationally? He should buy bitcoins.

Is the investor running tighter on money and can't afford to lose much, but also isn't aiming to make more? Is the investor willing to invest personal time and effort managing his investment? If yes he should consider mining.

Variables that matter for deciding about an investment in bitcoins:
- Your risk profile
- Your beliefs about future price
- Your skills (Are you capable of trading wisely? Avoiding panic? Not getting scammed?)
- Your interests (Does system administration turn you on?)

Things that don't matter:
- Other people's calculations about difficulty increases
- Bogus ROI calculations based on unknowable assumptions
- Stuff your competition says to discourage you from competing with them
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Difficulty increases aren't just an assumption, look at the graph of the last year.  What I am saying is that as long as difficulty increases are growing at the current rate, mining will never be as profitable as investing directly.  At the current rate, you have to have an increase in bitcoin value to compensate for the increase in difficulty to just break even.  So indirectly, you are speculating on the increasing value of bitcoins when you mine.

Now, if the growth of computing horsepower slows down to 2% or less, then mining obviously is the better option.  Like for the first year of bitcoin's existence when the growth was flat.

I think it's cool that you're trying to learn how to be an amateur investment advisor.

So here's a lesson: risk is the single most important variable in an investment.

Buying bitcoins is, by a fundamental law of the universe, always going to be more potentially profitable than mining because it is higher risk.

Mining is lower risk, but also lower expected returns.

An investor's choice of where they should put their money and time depends on their risk profile.

Is the investor looking for a high risk, high yield investment, and is comfortable taking losses but still acting rationally? He should buy bitcoins.

Is the investor running tighter on money and can't afford to lose much, but also isn't aiming to make more? Is the investor willing to invest personal time and effort managing his investment? If yes he should consider mining.

Variables that matter for deciding about an investment in bitcoins:
- Your risk profile
- Your beliefs about future price
- Your skills (Are you capable of trading wisely? Avoiding panic? Not getting scammed?)*
- Your interests (Does system administration turn you on?)**

Things that don't matter:
- Other people's calculations about difficulty increases
- Bogus ROI calculations based on unknowable assumptions
- Stuff your competition says to discourage you from competing with them


*Lots of people who attempt to become traders end up losing their shirts because they panic. The ideal trader is a person who is rational and level-headed even when others scream that the sky is falling. Not every personality type is a good trader: people with the letter "F" in their MBTI are often naturally bad traders for instance and tend to buy high and sell low despite their best intentions. If you have an "F" in your MBTI you should consider if you can handle the pressure of knowing you could lose all your money.

**Running a bitcoin machine is like buying a pet. It takes regular maintenance and a non-zero recurring time investment. It also requires a variety of computer skills that many miners take for granted, but which newbies may not have and may not have an interest in learning.

Sorry, I misspoke.  I should have said that mining isn't profitable at the current price, and is less profitable than investing in bitcoins directly with increasing prices.  The only thing I am predicting is that the network continues to grow at 4%/day, which it has on average over the last year.  Almost perfectly.

Check out http://bitcoin.sipa.be/  to see just how perfectly.  As long as that remains the same, you won't make as much money as just investing in bitcoins.

So yes, I would have said in April that mining is less profitable too.  If you had bought $1,000 in bitcoins you would have $20,000 in bitcoins now.  Did anyone buying $1000 worth of mining equipment make $20,000 in that same time period?

Thank you for stating what I should have said in the first place...I am the "guy following the troll". LOL
He is starting multiple threads with the same garbage...not one of his threads is a new argument...all of them are negative.  Spreading FUD

Stating facts isn't the bullshit part.

The bullshit part is when you tell people "you won't ever break even" when YOU DON'T KNOW THAT.

Did you tell those people that by your same calculations, mining would be considered unproftaible in may? In april? In march?

Because all these calculations are the exact same calculations done for the last year, and these calculations say very little, because the people who do these calculations (you!) cannot predct the single important factor that actually matters: price.

All ROI calculations are bogus because all ROI calculations make assumptions about price. Any conclusion other than "I don't know what's going to happen, your guess is as good as mine. Just depends where you think the price will go." is bullshit.

But thats not true. If you were really mining you would know that our output trends have denied all conventional trending and still continue to turn a profit.

secondly. As in my case, my miners mine so can have bitcoin to trade. So lets say that im running 1300mhs and i make 1.7 coins per day (relally low for that output, but proving a point) with that 1.7 over 7 days I will have close to 15 and a $2 move on that 3 times in that period would close to dubble my income. On an average week I see under 20btc mining ,and over 60 in profit in trading.

The threshold I mentioned contains the difficulty information. But really the difficulty doesn't matter. All that matters is the price. If the difficulty mattered, then people would have stopped mining at 250k. Bitcoins were actually MORE profitable when the difficulty rose to 450k and then 550k, and LESS profitable at 250k. Why? Because all that matters is the price.

I am having the same problem in my mining thread.  One guy follows my threads around to tell me how I am a troll and liar, but won't refute the facts I have put out.

The fact remains that because the network is doubling every 18 days, your output halves every 18 days and you won't ever break even because of that.  The mining calculators don't take that into consideration.

Again, I'm not going to lower myself to calling names.

Where have I lied? No one has showed me a single "lie" that I have posted.

I'm just telling them to use their heads and be rational. That is all.

Nobody needs to "encourage" any newbie -- greed (which is part of human nature) does that role just fine. My "job" is to balance things, to help people think more clearly.

Well, it doesn't matter because the network is growing at 4% per day no matter what is said in this forum.  To think we have the power to change that is quite a conceit.

It is also betting that difficulty increases don't grow fast enough to destroy your profits.  Right now the difficulty doubles every 18 days, so your output halves every 18 days.  That is a big problem

People just seem to have such insane ROI expectations for mining that it is insane, just because you cant make your hardware costs back in a month doesn't mean there is no potential for profit in it anymore.

Your calculations are stupid for the same reason that the same calculations were stupid back in may, and in april before that, and in march before that. They're the same calculations.

Profitability depends on one thing: price of bitcoins. Since you can't predict this, you can't predict profitability.

Mining is betting that the bitcoin price will stay above a certain threshold. Buying coins is betting that the bitcoin price will go up.

Each bet has different risk profiles and can be approached differently, but both of them are just bets on the price of bitcoins, same as they were back in may.

There is nothing inherantly less profitable about the current moment than there was back in May - in fact it is easy to argue that bitcoins are a smarter and safer bet now than they were then.

Since I'm a miner, telling the truth goes against my self-interest. But the reason I don't mind telling the truth is because I do this primarily as a hobby, for fun, and because I think bitcoins are cool and have a future. I also think the long-term health of bitcoins will be bolstered by more people invested in them, by more miners, more decentralization, more activity, more interest.

So if a newbie reads my post and goes and buys mining hardware I will lose a bit of money in the short-term because of that, but in the long-term I don't mind.

Also, I just generally am pissed off by all you douche bags with your fear mongering and discouragement. I don't like you lying assholes on a personal level - the way you say one thing and do something else.

I'm paying $0.31/kwh(fk'n ca), I'll be shutting down at $6-7  or the next few difficulty increases, whichever kills profitability for me first.

I'm still mining...enough said.

I'll stop mining if it becomes unprofitable.  We're not even close yet.

Can't we just have big sticky saying "Buying mining hardware is risky, buying BTC is risky, You don't like risks go somewhere else"  So we don't have to read these posts 15 times a day?