Topic: Super Newbie here with some questions (Read 701 times)

Thank you all very much for the replies. Like I said, I am as new to mining as they get. Based on how much I have read though, I feel like i have been doing this for years. LOL

My goal is to earn a couple of BTC and hold onto them. I will then see what the price does. Based on the future, I may buy more, etc...

So I will stay away from solo mining and only work with pools.

If I can get an ASIC USB such as the Blue Fury for $150 or so, use it to increase my has rate and join a pool, I have a chance of making the money back.

My thought process is that since I am late to the game, I have a few choices:

1. Buy BTC and hope it increases in value.
2. Join a pool and simply keep the PC with video card I am using and see if I can make a few bucks (may never get a BTC).
3. Spend a couple of hundred dollars to upgrade what I am mining with to hopefully earn a BTC or two within the year.

As a side note, although I would like to become rich and retire with BTC, that will not happen. Instead, my plan is to learn more and more about BTC and hopefully one day be able to make money from it. At this point in the history of BTC, I feel that my time and money is best used to learn and possibly get my hands on a BTC or two.

Thank you so much for taking the time to respond and educating me.

I think if you aren't really good assembling your own computers and stuff i think just go in with a co op type group buy if you want to mine, I did and made money mining before i really new what it was about. Granted I could have bought in on a hashfast or bfl group mine and I would have lost money . You really have to do your research to make a profit especially with the fact that chances are you won't get a roi even if you aren't scammed and then there is scammers on both the group buy level and the hardware level.enjoy

Mining can still be profitable if you have access to cheap electricity and manage to acquire ASIC without overpaying.

On the other hand, there are many people who are mining at a loss.  While some may do it as a hobby, or for educational purposes, I suspect many continue to mine at a loss simply because they are not very good at figuring out the math to know if they are truly profitable or not.

If the bitcoin exchange rate continues to increase, it is possible to spend money mining, and end up at the end with bitcoins that are worth more than the amount spent on equipment and power.  However, often the miner would have been better off if they had simply exchanged their local currency for bitcoins instead of mining.

Hypothetical Example:
When bitcoin is exchanging at $200 per bitcoin, a user spends $1000 on mining equipment, then waits 6 months for delivery.  Once the equipment is delivered, the user starts spending $100 per month during the next 3 months mining.  During mining month 1, the exchange rate is $400. During month 2 it is $600, and during month 3 it is $800. By the end of 3 months of mining the difficulty has gotten so high that the user is mining less than 0.0000001 BTC mer month, and the exchange rate is $1000.  The miner manages to mine a total of 1.4 bitcoins and sells them all at the end of month 3 for $1400.

It would appear that this miner made a profit (They spent $1300 to acquire 1.4 bitcoins and sold them for $1400).  However, on closer inspection we see that if the miner had simply bought bitcoins in the beginning they'd have acquired 5 bitcoins.  If they spent the $100 per month on bitcoins during the 3 months of mining, then they'd have purchased another 0.25 + 0.1666 + 0.125 = 0.5416.  They could have sold this 5.5416 BTC at the same time they sold the 1.4 bitcoins and they'd have ended up with $5,541.60.  That's $4,041.60 more than they got by mining.  Even if they could find someone to buy the now useless mining equipment back from them at the full price they paid, they'd still be short $3,041.60.

When you buy mining equipment and mining power, all you're really doing is indirectly buying the bitcoins that the mining will get you.  If you believe that those bitcoins will hold enough value to turn a profit, then you are often better off just buying the bitcoins.



If you are solo mining with both machines (and if the machines have enough hashing power to actually solve a block in the next 3 years), then it is guaranteed that one machine will be awarded at least 25 BTC before the other machine gets any at all.  If you are mining in a pool, then the 2 machines should earn bitcoins at nearly the same rate.


This is not what mining does.


Generally? No.

But again, it depends a bit on whether you are talking about solo mining or mining in a pool,


It doesn't really.  If you are mining in a pool, then each machine will receive different work from the mining pool.  If you are solo mining, then each machine will be communicating with a different client and will therefore be working on slightly different transaction order.


No, there is only one route.

If you are looking for an analogy that you can wrap your head around, think of a mining machine more like a person rolling five 6-sided dice.  They keep re-rolling all 5 dice until they get a Yahtzee (all five dice land on the same number).  Once they roll a Yahtzee, they get 25 BTC and start all over. If a second person starts rolling their own set of dice at the eaxct same speed, will they get a Yahtzee at the same time?  Is there a shorter path that they can use when rolling those 5 dice?  If the second person rolls their dice twice as fast are they guaranteed to get a Yahtzee in half the time, or do they just have a better likely hood to do so?

Now, think of a pool as a group of people that agree to roll their dice as a team.  Everyone in the group has their own 5 dice to roll.  Everyone agrees that if any one of them gets a Yahtzee, then they will split up the 25 BTC among them all.  To keep the split fair (so one guy doesn't just roll his dice once or twice, and then wait for the group to win), they agree that the total number of rolls will be added up for each of them, and their share of the 25 BTC will be proportional to the number of times that they roll.  This means that someone who rolls their dice twice as fast as everyone else will receive twice as much of the 25 BTC as everyone else (and that someone who only rolls once or twice while the rest of the group rolls thousands of time will barely get anything at all).

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Welcome ccualumni!

Your questions are good.

First, regarding mining, now that ASICs are here, chips specially designed for mining, unless you treat it as a serious investment you are hard pressed to make any money by mining bitcoin.  However, there are other good reasons to mine, such as education, and OTHER coins (referred to as alts) that you can mine.  Another important note is that at any time, e.g. 12 months ago, mining was "unprofitable" and so mining, IMO, is just another way to speculate on bitcoin's price.

Your second question is tied to the idea of difficulty.  Difficulty has shot up exponentially due to the arrival of ASICs and the popular media attention bitcoin has received.  So by mining on your own you are not likely to find anything unless you have lottery like luck.  This is why almost all miners participate in a pool.  You received far fewer coins but you get a more regular pay out.

If you just want to play around with mining I'd recommend Bitminter.  It has a java app that is easy to get running.  You can always move to more serious operations if you want.   If you want to go the alt coin route, I'm told that DOGE is currently the coin to mine, but Bitminter is for BTC only.

I hope this helps, ask away, we were all new once.

Good Luck!

this is all I know.
1. most people cannot make profit mining bitcoin anymore because of the increase in mining difficulty and the cost of hardware, but it's still profitable to mine Scriptcoins.
2. yes and no. you don't need luck to generate coins from a block. to find finding a block (either solo mining or using a pool), however, you need the luck and hardware of the devil himself.  

that's all I know, sorry if it doesn't answer your question.

Edit:
btw, you don't need to worry about finding a block if you're using a pool, since some other miners can find it for the pool.


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Is my English bad?  

Based on my title, it is probably no surprise that I am a bit confused over bitcoins. I am on information overload and have read a great deal of stuff. The problem is that so much of what I have read gets contradicted elsewhere or two people tell you different things, etc...

I am hoping that some one can clear up a few questions for me. Some of these may simple to you, but I guess I am just curious.

1. I keep seeing here at this site that you cannot make money mining on your own. It also seems that you cannot pay for mining as the cost will not allow you to earn money. Given all of that, why are so many people still mining and trying to mine, etc? It would seem that if you are unlikely to make your money back, why is there so many people trying to mine?

2. Does luck have anything to do with finding a bitcoin through mining? If I start two identical mining rigs up at the exact time, what are the odds that one will find the bitcoin before the other? In other words, if we are trying to solve a mathematical equation to earn a bitcoin, would both mining rigs take the same path to earn the coin or would they go separate paths to get to the bitcoin? Hopefully this makes sense. The analogy I can think of is if three people were driving from Michigan to Florida and left at the same time. They each take a different route, but will eventually all get to Florida. The person that takes the shortest/quickest route should get their fastest. Would mining be like that? Depending on which route they take, will that allow one to get there faster. Or would the analogy be better as 3 cars leave Michigan and the fastest car who can drive the fastest gets there first?

I have more questions, but will ask them later.

I am as new and green to bitocins as they get, so these may sound a bit silly.