Topic: NY Post Troll Bait article on MIT $100 worth BTC per Student (Read 2621 times)

The costs of the miners have already been paid for and cannot be avoided.

Mining is essentially buying bitcoin on credit as electric bills are paid ~30 days after the electricity is used. So if someone could use $400 worth of electricity to mine one bitcoin then they could sell the bitcoin for $500, payoff the electric bill and keep the $100 (or only sell $400 worth of bitcoin, payoff the electric bill and keep the .2 BTC).

Here is the issue. Yes, if they have some extra fiat laying around they can buy it.

Here is the issue with saying they should just spend fiat on buying bitcoins.

Once you buy all the hardware and rent out a building and put servers in it and have extra parts and technicians and do maintenance and need tools and all that electricity, then you are then stuck with all these fixed costs then the variable costs of everything else.

the variable cost is more towards the electricity and the chance of getting bitcoins. if you get more bitcoins on average you are getting more variable profit and yada yada.

the cost of mining a bitcoin might be 90% invested in the fixed costs. so all the physical items/tools/technicians/servers/mining rigs/parts and whatever are 90%. so 90% of 500 USD = 450 bucks. so if you only need to spend another 50 dollars to mine a bitcoin you will do it(as the fixed costs are most likely already paid up front).


if you buy 1 btc at 500 bucks vs mining 10 btc for 500 bucks you are letting the fixed assests depreciate in value and have to take that into account.

obviously this only applies to what you already have bought, but you could divest and not replace things that break down and maybe instead buy bitcoins as things break. its more of a long term strat and it would involve weighing a lot of opportunity costs and that is very hard to do with btc.


so for anyone to simply say "short term" mininers should just buy btc, they are grossly not understanding everything involved and need to not post about things they have no idea about, as they are showing how much of a noob they are when it comes to financial matters.



do you really think miners are going to give a flying fuck about what some forum ppl have to say? pretty sure the miners are the higher echelon intelligence on this and not anyone talking on this forum(unless you are a miner or know a lot about it).

I think the truth is somewhere in the middle. Just like it always is when there is a fanatical divide.

sometimes i feel like the bitcoin fanatics live in this circlejerking echo chamber, and they think bitcoin is going to do a lot more than it is realistically going to do. and then there are other times when i see people who troll bitcoin.. i can't side with either party.

I thought that the $100 bitcoin giveaway was pretty cool. This guy needs to chill with that scam calling stuff lol

Exactly. I don't think they would. They would have no reason to continue to mine. In this example, if they wanted to spend $600 on bitcoin they might as well not give whatever small amount to the electric company in profits and instead buy bitcoin on an exchange and end up with more bitcoin then if they would have continued to use their miner.

As you've alluded to, the argument here must differentiate between the short run and the long run. A miner will continue to mine in order to either maximize his profit or minimize his loss as long as his revenue is greater than or equal to his variable costs. Revenue in this case must be denominated as BTC exchanged into whichever currency variable costs must be paid in. For example a miner's Variable Costs = Electricity Bill, which must likely be paid in his nation's fiat currency.

A miner is certainly capable of producing and holding BTC speculatively, hedging on BTC rising to cover his sunk costs ( = electricity used to mine aforementioned BTC). The miner's willingness to speculate does, relatively speaking, decrease supply and therefore should dampen BTC's price movements under its cost of production--but only slightly. I.E. a figure I read recently noted miners produce around BTC 3,600 while the market transacts BTC 60,000 where most miners sell the majority of their BTC immediately. So this speculative hoarding mentality, while it lasts, would have a debatable price impact; certainly not enough to mitigate any major negative events but perhaps enough to provide a semblance of stability within a certain price range.

From my understanding electric bills should come monthly or bi-monthly, so the short run should probably be defined as a month to be safe. Other fixed costs, like lease/loan payments, would not be considered until the miner could 'cut his losses' so to speak and minimize his loss by exiting the market. However mining is global, with widely varying costs, which would give a wide range of 'resistance points' of varying tolerance for each mining operation, thereby weakening any mitigating effects we see in BTC prices.


tl;dr:
Great point! This is true, however this argument has the same 'sunk costs' caveat. Miners would only cease production if BTC cost more to produce in electricity (variable costs) than they have reason to believe they could earn (speculating on price fluctuations) in the interim between now and their fixed costs being due. You would be absolutely correct that such a miner would cease operations if they expected BTC prices to stay depressed under their variable cost of production until they could have an opportunity to exit the market. However contracts such as leases can force participants to continue operating in their market (at a loss) by limiting their ability to freely exit that market, which equate to mining BTC at a net loss for a duration.


My first post!

If the value fell below what it costs to mine for more then a short period then no miners would not continue to mine. This would not be a sudden occurrence as miners would be taken offline gradually, which would cause the difficulty to decrease until the cost of mining plus some amount of return on investment would be less then the amount that the mined bitcoin can be sold for on exchanges.

I think wasserman is arguing that there's different no mathematical guarantee (cryptographically) for a link between price and value.
If value tanked (due to numerous reasons) would miners still be mining? Would the value be guaranteed by the price, or vice versa, or are we talking complex market dynamics not being the same as cryptographically secured networks?

I think these miners would actually be more or less stupid because they would be paying $600 for something that they could be paying $500 for elsewhere.

The hashrate does not go down because there are much more efficient miners that are added more quickly then the less efficient miners will be taken offline.

The big US media is a joke. They have no idea what they are talking about and they are too compromised to certain causes to worry about giving quality contend and stuff

"MIT students engineering bitcoin scheme"
"Dear John: I won’t budge on bit-‘cons’"
"Dear John: Once again — Bitcoin is a joke"
"Dear John: Take this bitcoin of advice"

I expect many more from this guy in the near future as bitcoin continues to grow and attract more attention. Even if bitcoin achieved "mass adoption", was worth hundreds of thousands in relation to USD, and was used by millions of people on a daily basis.....this guy would still go to his grave writing negative on bitcoin and arguing fiat money is better because its "backed". All for more page views on his articles and more $ for him.

That's why the worlds greatest computer scientist go to MIT and he writes for a tabloid. I think I'll follow MIT, but hey if I need to know anything about celebrity dating, I'll be sure to check the New York Post.

If it costs them $600 to mine 1 BTC but bitcoin is only selling for $500 then why would they not stop mining and then use the $600 to buy 1.2 BTC on an exchange? If they were to continue to mine they would be essentially paying above market rate for something they can easily pay the market rate for.

I don't think there is any actual guarantee that bitcoin will rise in value. If this was the case then no one would ever sell.

A market resistance point is not a mathematical reason to trust Bitcoin. Bitcoin is a complex system and you trust that it works as a whole, not just one part of it.

actually SMART miners that know what bitcoin is do not sell at a loss, they continue to mine. they just hoard instead of sell, if miners stopped mining. we would see the hash rate drop..
only a small amount of dumb miners with a small amount of power would quit. but th majority do not give up

thus the hashrate does not drop. which means your point is disproved.

instead the hoarding dries up the amount of coins that are being sold at spread and dries up the amount of bitcoin being put as 'waiting orders' on the sell wall. which causes a supply shortage and a higher demand, to cause the price rise.

this has happened around the reward halving and also all the time for the last 5 years as the hashrate has been rising. maybe its best you start observing charts and correlations of different data sources, rather than forming opinions based purely on your imagination

I passed it along to them.

I think you have this backwards. If it cost miners $500 to mine a bitcoin they will not mine unless bitcoin is selling for at least $500. Since the bitcoin that miners sell only makes up a small percentage of the market the rest of the people who hold bitcoin can sell enough so that the price could fall below the cost of mining.

Nice job, waiting to see how it goes...