Topic: Why do people think mining is less risky than buying, anyway? (Read 3349 times)

And anyone who cares about the price of a bitcoin...is demanding USD.

Shortage only comes in if there is a demand for it.

Price is all about supply and demand.

I think this point highlights the main issue in this thread.

There is not a BTC or mining shortage...there is a USD shortage. Simple economics would infer that bitcoins are thus cheap against USD.

I'm not evading taxes because my country doesn't recognize Bitcoin as a currency or commodity.

In fact, I maintain that the blockchain is just one big expression of our right to free speech.

I think that depends very much on your reasons for desiring anonymity. I mean, I can't speak for anyone else, but to the extent that I cultivate anonymity in my Bitcoin transactions, such attempts to mask my identity generally have bugfuck nothing to do with taxes or the evasion thereof.

A lot of pools and p2pool nodes don't keep logs of IP addresses etc - I know mine doesn't.

Surely it's just about choosing a reliable pool outside your tax authority's juristiction?

can't you just let the funds sit on mtgox and they will be mixed with other coins?

Or p2pool mine on TOR with rotating deposit addresses. That's not such a crazy thing, though, if you're willing to eat a high stale rate.

Actually, it's not given that whatever pool you mine on is going to know at least something about you. I mined for a long time on P2Pool thinking I was anonymous till I realized anyone could see what address I was mining to and given that the IPs that are doing the mining can be seen on the network you can kind of figured out a general idea of who is mining what.

If you really truly wanted to be 100% anonymous you'd have to solo mine on TOR, right?

I guess what I'm saying is that we are seeing people spend tens of thousands of dollars on FPGA mining setups. What I contend is that if you were to buy 7300 BTC for about $37,000 today, you will be able to sell 10 BTC per day for the next two years and make more money than if you were to buy $37,000 worth of FPGA-based mining equipment and sell whatever you mine every day over the course of the same two years.

$37,000 worth of mining equipment buys you about 28 gh/s at 1.5 megawatt (FPGA's and a DD-WRT router). That's maybe 18 coins per day, enough to justify solo-mining, probably. Certainly more than the 10 BTC that you'd be selling otherwise. But over time, if other people "buy-in" to mining Bitcoin, that difficulty that gets you the 18 coins per day is going to rise, meaning which do you think is more risky, selling 18 coins per day that is bound to drop over the next two years, or selling 10 per day over the next two years.

Right now I think it is the former that is the more riskier of the two, which is why I think it is better to buy and either hold or sell over time. It would seem to me that if you think the price or difficulty is going to be increasing for a while, you should be buying/holding and if you think the price or difficulty is going to be decreasing for a while, you should be selling/mining.

Of course, but I don't believe anyone saying they wouldn't cash out at some point. Buying stuff is cashing out as well at the current exchange rate. So, intending to hold longterm as of 15-20 years or more is not reasonable. I might hold on longterm, but I decide from week to week.

As much as I would want to believe in Bitcoin, holding them for the distant future is much too risky imo. At least for people who cannot sacrifice their entire investment just for fun. Reading about all the dangers left and right you must be either naive, ignorant or very rich to possibly lose your investment and not care about it. Even if this becomes a success story in the midterm (let's hope so) its future is far from certain.

Read up on -51% attack, ASICs and 51% attack, and what would happen to the image of Bitcoin if there's a monopolist
                -tainted coins, lack of trust, over-complexity for new adopters
                -banks or other players buying bitcoins in large amounts (volatility)
                -MtGox as an indispensible exchange (and what happens if it gets shut down somehow)
                -governments declaring Bitcoin illegal to use, and...
                -failure to reach wide-spread adoption, (price decrease)

People may scream FUD again now but unless you know about these issues and calculate them in you must be in a state of denial. BTC is a high risk investment, even if it looks like it's here to stay.

You are clearly out of place here!

To be honest I think they'd be more likely to notice your four-figure monthly power bills 

Well risky or not: No mining, no bitcoin; while no buying no value.
Thus mining is as vital to bitcoin as buying is, isn´t it?

good point

Don't forget that if you're only buying Bitcoins, you're relying on others to back the network. The security of bitcoin is in the power required to 51% the chain -- if I buy $1000 dollars of equipment and mine with it, I'm making bitcoin $1000 more secure (ish).

Depends on what you mean by a "fortune"?
$1K? Nope 
$10K? Probably not unless you cheat/lie/misreport other income
$100K? Good chance of getting caught
$1M? Your going to get caught

IRS uses something called lifestyle analysis to catch tax evaders with "non traditional income".

If you live in a $300K house, drive a $80K card, and take 3 vacations a year on your $30K in reported income they will want to have a chat.

So "earned a fortune"?  You better declare your non-cash income.  A couple grand? Meh IRS has bigger fish to fry.

Say you used giftcards all the time, would anybody even notice you earned a fortune in BTC, say from mining them? I don't get how the governments want to keep track whether you pay taxes for BTC income or not.

Actually you dont need to touch an exchange at all.. you can buy gold or silver with btc or get giftcards.. you can even buy gas with btc.. see: coinabul.com & spendbitcoins.com

Exactly, but you'd be covering yourself from total depreciation of your bitcoins.