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. 
Topic: Isn't Mining Economically Retarded? (Read 5100 times)
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.
i was thinking to start cloud mining but after these posts im not going to do that
mining is used to make sure the network is stable
@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
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
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?
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.
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.
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.
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 ROI3. 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?
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
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 
Yes. As mining is a massive waste of electricity.
The entire bitcoin network could be maintained using a single server.
The entire bitcoin network could be maintained using a single server.
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.
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.
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
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.
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........
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
and even in that case,there is not a large economical profit
legendary
Activity: 1302
Merit: 1008
Core dev leaves me neg feedback #abuse #political
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.
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.
I've been trolled haven't I, lol.
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 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. 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.
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.
Jump to: