So does this mean that mining will truly become centralized eventually and only done by companies with very deep pockets? If so, Satoshi cannot be happy with this outcome wherever he or she is
Topic: What would you do? Mine with $40k or purchase Bitcoin? - page 2. (Read 2928 times)
Seems like everyone is recommending to just buy Bitcoin outright.
So does this mean that mining will truly become centralized eventually and only done by companies with very deep pockets? If so, Satoshi cannot be happy with this outcome wherever he or she is
So does this mean that mining will truly become centralized eventually and only done by companies with very deep pockets? If so, Satoshi cannot be happy with this outcome wherever he or she is
buying BTC and keep it until u have around 15-30% profit and sell it
it more profitable than buy mining eqp but use your money for bitcoin forex more risky than mining if you dont know how to
it more profitable than buy mining eqp but use your money for bitcoin forex more risky than mining if you dont know how to
Buying the coin requires about 10 clicks of a mouse and a few keyboard keystrokes.
Mining would require setting them up, testing, configuring, monitoring for failures and tracking income. All this wasted energy could be spent working to earn more coins.
I vote for buying, unless you want to solo mine your own clean coins.
Mining would require setting them up, testing, configuring, monitoring for failures and tracking income. All this wasted energy could be spent working to earn more coins.
I vote for buying, unless you want to solo mine your own clean coins.
It is an arms race and will be very difficult to ROI.
I would buy bit coin outright.
I would buy bit coin outright.
Definetly just buy btc and hold. There is no mining equipment on the market right now that you can reach a positive ROI. You can always buy later if you find a good deal.
How would you purchase 60TH worth of mining equipment with only $40k? Most miners are above $1 per GH/s so trying to figure out which miners you'd be buying
Trying to figure that bit out.
Trying to figure that bit out.
Agreed. You'd be lucky to get 30TH worth of mining equipment for 40k right now.
How would you purchase 60TH worth of mining equipment with only $40k? Most miners are above $1 per GH/s so trying to figure out which miners you'd be buying
Trying to figure that bit out.
Trying to figure that bit out.
Wouldn't recommend anymore than a 10/90 distribution (10% mining, 90% purchasing) at this point. Difficulty jumps are getting pretty serious again and more than likely will be for next 6-9 months at least. If profit is your motive mining sure ain't the answer.
Mining is almost unprofitable unless you make it big and quick 'cause difficulty rises almost every 10 days now and cloud mining only the one selling makes money, sorry 290 for 6TH a month?(that's cheap)
Because you are in Washington state which among the locations with lowest cost of electricity, I would do as much mining as your house/apartment can reasonably handle, and buy bitcoin with the remainder. You lose most of your competitive advantage (location) when you pay for hosting. Your hosting is ~$0.10/Kwh when 6Th is calculated using the efficiency of a KNC Neptune or similar.
Below is a paper I've written on bitcoin value and the mining difficulty:
Bitcoin Value and Mining Difficulty
It’s no coincidence that the value of Bitcoin goes up as the mining difficulty rises. There is a very important linkage between the two. To understand why, it is important to understand how mining affects the difficulty.
Mining for profit is very similar to a regular manufacturing business. You have capital costs which is the mining hardware (ASICS, GPUs, CPUs, and perhaps AC). Then you have your variable cost which is electricity. The goal is to maximize the profit, which means getting the most out of the hardware, and then knowing when to stop mining and sell the hardware. Most miners sell their newly mined bitcoin immediately to recoup their costs, which decreases the value of bitcoin because of the market sell pressure. Those that hold do better in most cases, and miners that hold also benefit the long-term value of Bitcoin -- more on this in another article.
How does this relate to the difficulty and price? Every miner looks at the cost of equipment, the cost of electricity and then makes two educated guesses. First, ‘How fast will the difficulty rise?’ And second, ‘How fast will the value of bitcoin rise?’ These two numbers are critically important and impossible to know in advance, but looking back at historical rates and projecting forward will give you an idea of what they might be.
Efficient market theory says that it will eventually be the same cost to purchase a bitcoin as it will be to mine a bitcoin. Why is this? Because if it’s cheaper to mine a bitcoin, miners will buy more hardware, burn more electricity, mine, and sell bitcoin into the market pushing the market rate down until mining is no longer profitable.
Why mine at all? Because the efficient market theory breaks down at the compressed timescales involved in bitcoin. Rational market forces haven’t gone away, but they simply can’t adapt as quickly as the bitcoin ecosystem changes. If you are prepared to mine when the price rockets on speculation and before the difficulty adjusts to compensate, there are significant profits to be made.
We’ve all heard stories from the early Bitcoin days, literally only a few years ago, when mining bitcoin with a laptop would yield blocks of fifty bitcoin. We’ve also heard stories of those same people turning off their computers because it just wasn’t worth it. “WHAT WERE YOU THINKING?!”, you want to scream knowing that those same bitcoins are now worth tens of thousands of dollars. But they were operating logically. The cost of electricity exceeded the value of the bitcoins at the time. It would have been better to buy them on the open market with the same money that would have been spent on electricity, although few did.
So what changed from those easy, breezy, laptop mining days? The difficulty has changed. By design, half of all the bitcoins that will ever be mined were mined in the first four years. Does this mean they were easier to find in the beginning? Yes, but not because they were just laying around. The careful and considered design of the software by its creator, Satoshi Nakamoto, makes them statistically easier to mine at the beginning and harder as more miners join the party. These details are controlled by the Bitcoin software, and while software can easily be changed, it’s necessary that all miners use software that follows the same rules. The rules are working well for the miners so it would be nearly impossible to change the rules.
Not only are there fewer bitcoins to mine, the restricted number of bitcoins are distributed proportionately among the miners based on the resources they marshal for mining. Add more miners and each miner gets fewer bitcoins until some miners drop out because their mining equipment is not as efficient or their electricity costs are too high.
Mining is a great way to equitably distribute bitcoin, but it simultaneously does two interesting things. First, it takes value away from bitcoin because resources are spent on mining equipment and electricity instead of purchasing bitcoin on the open market. Second, it increases the mining difficulty making each new bitcoin more expensive to obtain and therefore more valuable. These two competing forces are in tension.
Back to the original premise that bitcoin’s value rises when the difficulty rises. When the difficulty rises to the point that mining is unprofitable, it makes more sense to purchase bitcoin which adds buying pressure to the market and the price rises. Resources that would go to mining will go to purchasing bitcoin instead. The buyers of bitcoin force the market price up. The value of a single bitcoin is dependent on a high difficulty. The mining difficulty is dependent on a high price. They can both go up, or both go down, but they will not separate - at least for very long.
Below is a paper I've written on bitcoin value and the mining difficulty:
Bitcoin Value and Mining Difficulty
It’s no coincidence that the value of Bitcoin goes up as the mining difficulty rises. There is a very important linkage between the two. To understand why, it is important to understand how mining affects the difficulty.
Mining for profit is very similar to a regular manufacturing business. You have capital costs which is the mining hardware (ASICS, GPUs, CPUs, and perhaps AC). Then you have your variable cost which is electricity. The goal is to maximize the profit, which means getting the most out of the hardware, and then knowing when to stop mining and sell the hardware. Most miners sell their newly mined bitcoin immediately to recoup their costs, which decreases the value of bitcoin because of the market sell pressure. Those that hold do better in most cases, and miners that hold also benefit the long-term value of Bitcoin -- more on this in another article.
How does this relate to the difficulty and price? Every miner looks at the cost of equipment, the cost of electricity and then makes two educated guesses. First, ‘How fast will the difficulty rise?’ And second, ‘How fast will the value of bitcoin rise?’ These two numbers are critically important and impossible to know in advance, but looking back at historical rates and projecting forward will give you an idea of what they might be.
Efficient market theory says that it will eventually be the same cost to purchase a bitcoin as it will be to mine a bitcoin. Why is this? Because if it’s cheaper to mine a bitcoin, miners will buy more hardware, burn more electricity, mine, and sell bitcoin into the market pushing the market rate down until mining is no longer profitable.
Why mine at all? Because the efficient market theory breaks down at the compressed timescales involved in bitcoin. Rational market forces haven’t gone away, but they simply can’t adapt as quickly as the bitcoin ecosystem changes. If you are prepared to mine when the price rockets on speculation and before the difficulty adjusts to compensate, there are significant profits to be made.
We’ve all heard stories from the early Bitcoin days, literally only a few years ago, when mining bitcoin with a laptop would yield blocks of fifty bitcoin. We’ve also heard stories of those same people turning off their computers because it just wasn’t worth it. “WHAT WERE YOU THINKING?!”, you want to scream knowing that those same bitcoins are now worth tens of thousands of dollars. But they were operating logically. The cost of electricity exceeded the value of the bitcoins at the time. It would have been better to buy them on the open market with the same money that would have been spent on electricity, although few did.
So what changed from those easy, breezy, laptop mining days? The difficulty has changed. By design, half of all the bitcoins that will ever be mined were mined in the first four years. Does this mean they were easier to find in the beginning? Yes, but not because they were just laying around. The careful and considered design of the software by its creator, Satoshi Nakamoto, makes them statistically easier to mine at the beginning and harder as more miners join the party. These details are controlled by the Bitcoin software, and while software can easily be changed, it’s necessary that all miners use software that follows the same rules. The rules are working well for the miners so it would be nearly impossible to change the rules.
Not only are there fewer bitcoins to mine, the restricted number of bitcoins are distributed proportionately among the miners based on the resources they marshal for mining. Add more miners and each miner gets fewer bitcoins until some miners drop out because their mining equipment is not as efficient or their electricity costs are too high.
Mining is a great way to equitably distribute bitcoin, but it simultaneously does two interesting things. First, it takes value away from bitcoin because resources are spent on mining equipment and electricity instead of purchasing bitcoin on the open market. Second, it increases the mining difficulty making each new bitcoin more expensive to obtain and therefore more valuable. These two competing forces are in tension.
Back to the original premise that bitcoin’s value rises when the difficulty rises. When the difficulty rises to the point that mining is unprofitable, it makes more sense to purchase bitcoin which adds buying pressure to the market and the price rises. Resources that would go to mining will go to purchasing bitcoin instead. The buyers of bitcoin force the market price up. The value of a single bitcoin is dependent on a high difficulty. The mining difficulty is dependent on a high price. They can both go up, or both go down, but they will not separate - at least for very long.
hey all
i am new to the forum and have a question as it seems there are much brighter people on this forum than myself.
would you purchase mining hardware (60TH total) and mine or invest that money and just purchase Bitcoin?
i can get the hardware hosted near me in Wa State at a rate of $290 per 6th.
i just paid off my debt and have roughly $40k leftover to invest in this type of endeavor.
appreciate your input,
S
i am new to the forum and have a question as it seems there are much brighter people on this forum than myself.
would you purchase mining hardware (60TH total) and mine or invest that money and just purchase Bitcoin?
i can get the hardware hosted near me in Wa State at a rate of $290 per 6th.
i just paid off my debt and have roughly $40k leftover to invest in this type of endeavor.
appreciate your input,
S
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