Topic: Mining eats whole BTC value. (Read 1865 times)

Another point about mining new coins every day is that these new coins are generally going to end up in the "hands" of people who have small/no amounts of bitcoin, allowing the percentage of bitcoin held by large holders to decrease

This is also why the BTC price has remained mostly the same. More and more people find out about it and want to buy it, and the new 3600 that appear everyday are somewhat unsatisfying those needs, so it may be increasing in the amount of available coins, but it is growing slower than the demand for them.

Supply < Demand

That's also why the BTC price is going to continue increasing; 21 million coins for potentially 2+ billion people. That's 0.0001050 per person, at 2 billion person demand, if divided equally. That's AFTER everything has been mined. We have 13 million coins, and about 5-10 million people use them in some way. That's 0.25% of the potential amount (2 billion, just work with it) of people that will use it. $600 is 0.25% (possibly) of the potential value of Bitcoin on the future.

To the moon!

This is only temporary. The block subsidies are mean to give miners an incentive to mine until the time comes that TX fees will make it worthwhile to mine.

Another point is that the increased demand for for bitcoin should, in theory, account for more then the increased supply for bitcoin provided by miners.

We have 25 new bitcoin every blocks, 3600 every day (with 144 blocks).
Shouldn't bitcoin be inflationary (increase in "bitcoin supply") 

The profitability of mining does not affect the exchange rate. Miners have no control over the exchange rate. The collective of all miners lost money over the two years because the spent more on mining than the bitcoins that they mined.

!!! Difficulty for Bitcoin roughly doubles every ~3 months (or ~100 days) !!!

Meaning that I think this guy has a point.  That means that for any mining hardware you have, your gross return (IE: not including your mining costs) will drop by about half every 100 days.  If that $2,000 1 TH miner you just bought is getting you $1000 worth of bitcoins in 100 days.  That means at 200 days, you'll only have mined $1,500.  In 300 days you'll have a total of $1750, in 400 days you'll have $1875.  That's if the price remains the same on bitcoin.

Basically, what it comes down to, is that mining bitcoins is only going to work really well for you if you get a great deal on the hardware, have a good deal on electricity, and or the price goes up on Bitcoins.  But what is likely the case is most people are wagering on the latter.

Of course not, the mined coins will still be circulated, and if no miner makes money on mining at all than they will have to increase the price of bitcoin, thus the value would rise.

Individual miners may make losses, but the collective of all miners combined will always make a profit.

ok so it may be mining consumes the prices of all the Bitcoin it produces at time of sale

There must be something that you don't understand. The only relationship between the cost of mining bitcoins and their value is that the cost will generally not exceed the value. The cost of mining does not consume the value of the mined bitcoins.

ok so it may be mining consumes the prices of all the Bitcoin it produces at time of sale of those bitcoins but can not consume any already mined coins value.

An already mined value coin gain value starting from zero (as mining consumed all value at time of sale ) from utility of use. Ie that people use it for transactions and payment.

and when I say mining I don't mean an individual but the whole mining market as that will come close to BTC value at time (t). Of course there will be overuns and under shoots and thats when you see people leave or take up mining.

However mining is giving security to the blockchain....so there must be something in the equation that allows that to be rewarded and costed out....have to think a bit more on that.

It may that value from already mined coins can be got at but over the whole usage as that reflects the security and transactions value of current coins, and that is discounted into current price

Mining consumes value, but not the value of the bitcoins.

That is a very bad example
People would buy BTC instead of mining in the scenario you speak of.

EG :-

Current BTC price = 100$
I buy a machine to mine Bitcoin which costs 10,000$.
It mines only 50 Bitcoins , but the Bitcoin price triples to 300$
I sell my Bitcoins and have a 5,000$ profit.

Instead , if I had just bought Bitcoins with my 10,000$ , I would have 100 Bitcoins and would get a 20,000$ profit.

It is profitable to mine only if you will mine more Bitcoins than the price of the device in Bitcoins initially and the total price of all maintenance and electricity in Bitcoins at the time of usage.

I think Bitcoin is a deflationary currency. So, like gold, silver or even land, there is a finite amount of bitcoins and so the value tends to increase over time.

This is why it is still profitable for miners.

You're making an error in assuming mining profitability relates to BTC price or its viability, I think. There can be value on the table by miners shutting their units off. This slightly decreases security of network as a whole, but not by some shocking margin which'd affect price, only the bottom line of miners still operating -- miners can make mining profitable for others by shutting off their rigs if they so choose, or they can move their rigs to a location where electricity is cheaper - but it's not really relevant to Bitcoin as a whole. There was a concern when ASICs were first coming off the line that the insecurity of not having many different people running ASICs could leave BTC vulnerable, but we managed to get out of that unscathed and the issue where someone could swoop in with a $M or so and take over the vast majority of the network's mining power passed.

Mining is fairly irrelevant to BTC market, and becoming increasingly so. At next halving, mining impact will be minimal, while it becomes nearly non-existent in halving, further diminished by increasing number of coins in circulation.

You should think of mining as an industry completely separated from Bitcoin, so long as the number of miners are able to reasonably secure Bitcoin, which they currently are (though it's been a while since I've seen revised numbers on the cost to manufacture enough ASICs at cost to control vast majority of network). Though, as BurtW will tell you, controlling majority of mining power isn't some Bitcoin-ending catastrophe, but it's a problem which is monitored nonetheless and'd be discussed if it became a concern again (ignoring similar but different GHash issue).

but then does not mining ultimately consume all value of BTC??

or whatever value it leaves on the table.

Eg say BTC is more efficient with mining that FIAT which is expensive to maintain handle make, use, dispose and for banks to maintain that system.

The

FIAT - difference Value = cost mining(t) = the amount at (t) left on the table so to speak.

sure some miners will over estimate this value and go broke. My larger concern is that the mining must ultiamtely consume entire value difference as long as it leaves the money on the table.


This makes me think that POS will prevail as mining is near zero cost, just a node maintain, or some other non mining way. Even say POS has issues, they are software and can be sorted.

There seems to eb no way to get around the mining issue in a system geared for mining.

I am not saying BTC will nto go to 10K or 100K I think it will, but its sort of like pushing against a massive head wind

There is no guarantee that mining is profitable. For many miners, it is not profitable.

Dude drugs r bad mmmkay

Well, the output:energy ratio is still positive, but the real dinger is when you have to pay off mining equipment.

That why you're going to see a lot of people saying that it's not profitable to mine, since the only real mining you can get these days is with ASICs, and even then the GH/s:$$$ ratio is way off.

If I could mine, chances are I would be able to pay off the electricity without issue. The problem is the price of the hardware itself, unless you use it for other things as well.

E.x. I have an ASIC that runs at 1TH/s and uses 1200 Watts. The TH/s alone generates quite a lot of BTC, about $0.25 or something, probably a bit more, and a KW/h (Kilo-watt hour) costs around $0.10. So even if the ASIC ran through 2 cycles of power, I would still make a $0.05 profit, regardless how minuscule it may be.

Regardless, it is still a positive ratio. That's what keeps some people mining.

huh

Can some one explain to me how mining will not eat all BTC value. Eg any value left on the table will make mining profitable to the point of BTC value.