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If there's a functioning market, then there will be exactly as many miners as needed to make the value proposition slightly positive or even. Early miners took

If there's a functioning market, then there will be exactly as many miners as needed to make the value proposition slightly positive or even. Early miners took great risk in holding on to BTC to see if it would become more valuable. Many did not (my hand goes up) hold on to their BTC, thinking that it was a fad that would pass and didn't want to get left holding the bag. It's easy to underestimate the allure of being able to buy 2 pizzas with CPU power. That purchase made 10k BTC feel enormously valuable (as compared to anything else you could passively do with a home PC). (FWIW, I would've bought pizzas if I'd had the BTC at the time, instead I gave some away and forgot about the rest and formatted the hard drive.)

nosuchthing 9y ago
Early miners took great risk This is verifiability untrue, as early miners used the lowest amount of energy to produce and acquire the largest percentage of the total supply ever produced. Any rational "investor" trading capital or computational energy into BTC or similar minting algorithms would be deterred by this model as the losses increase while the network grows older.
- ballenf 9y ago
  The risk of which I spoke was to hold on to the BTC instead of spending it early on pizzas or other goods. No one had any idea that the value was going to go up so much. It could have easily gone the other direction meaning 100k BTC would be the price of a pizza, or more likely that no pizzeria would accept btc. And you might say, it wasn't risky because they hadn't spent anything to get the BTC in the first place but that ignores the reality of the moment in time. Even if you look at it as if they had played the lottery and won, once they have the item they are constantly taking risk by holding it when the value of the item in the future is unknowable.
  - abledon 9y ago
    I’d say most early miners were techies already making a fair amount of income compared to the average joe in the economy and mining was another fun hobby to throw a couple hundred bucks at or some old gpus at. I wouldn’t say it’s a big risk... maybe the same risk level of a junior programmer using some of his salary to buy a new Drone off eBay for some tech styled fun after work
- strgcmc 9y ago
  Chiming in with some 2011-2012 perspective for you, which is kinda-but-not-really-all-that-early. IMO you are wildly overblowing the "success" and apparent foreknowledge of early miners (i.e. you're displaying classic results-oriented thinking, because hindsight is 20-20 ofc). Anyways, anecdote != data, blah blah blah, make your own conclusions, blah blah. I worked at Microsoft, and one of my coworkers started talking about Bitcoin. He was always one of the more cutting-edge, cyberphunk type of people, and he said he got a group of his tech friends to agree to build a "mining farm" in their closet basically, mostly as an expensive hobby of sorts (he was a motorcycle guy, so he had no problem spending money on expensive hobbies). They spent around $25k-$30k buying GPUs overall; they had great difficulty acquiring their GPUs, as by the time they had decided to start this venture and went to the local Best Buys and Fry's and whatnot, all the good high-end GPUs were sold out already (meaning there was ample competition in the Seattle area already, as they talked to the Best Buy guys who were also puzzled by the sudden increase in demand for high-end GPUs). Eventually by late 2012, with the increasing competition for mining, the rise of ASICs, high volatility, and no way to foresee the future, last I heard they eventually liquidated everything, sold their hardware and their BTC, and had recouped their costs and made a small profit, but not much more than anyone with $25k-$30k could've made just gambling on some regular stock picks. In other words, they bought in at or around the bubble to ~$30 in mid-2011, and didn't hold out long enough to see the growth to $100-$200 in 2013. Myself, I dabbled with pool mining using just the single GPU in my own gaming PC for 3 months in the summer. I told my roommates and voluntarily increased my share of the electric bill (which went up by about $80-100/month, iirc). I received ~5 BTC, which at the then exchange rates, meant that I made like $50 or something silly after paying for electricity (but not counting the $2.5K gaming PC, which I bought earlier and without knowing about cryptocurrency). --- The point of this story is to say that, even fairly sophisticated and "hardcore" hobbyists, i.e. those willing to spend tens of thousands of dollars to dabble in Bitcoin, were by and large not minting millions and millions. Most people sold their coins along the way, either in the rise and falls between $0 to $1, or between $1 to $30, or between $30 to $1000, or between $1000 to $4000+. There was no grand conspiracy, and certainly no way to know that Bitcoin would actually survive (would you call this thriving?) to where it is today. Almost universally, unless you were on the cutting edge of the ASIC race for a long long time, for every old miner out there who spent thousands (millions?) on hardware, they would've been better off simply buying and holding bitcoin the whole time instead.
deleted 9y ago
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nosuchthing 9y ago

Early miners took great risk This is verifiability untrue, as early miners used the lowest amount of energy to produce and acquire the largest percentage of the total supply ever produced. Any rational "investor" trading capital or computational energy into BTC or similar minting algorithms would be deterred by this model as the losses increase while the network grows older.

ballenf 9y ago
The risk of which I spoke was to hold on to the BTC instead of spending it early on pizzas or other goods. No one had any idea that the value was going to go up so much. It could have easily gone the other direction meaning 100k BTC would be the price of a pizza, or more likely that no pizzeria would accept btc. And you might say, it wasn't risky because they hadn't spent anything to get the BTC in the first place but that ignores the reality of the moment in time. Even if you look at it as if they had played the lottery and won, once they have the item they are constantly taking risk by holding it when the value of the item in the future is unknowable.
- abledon 9y ago
  I’d say most early miners were techies already making a fair amount of income compared to the average joe in the economy and mining was another fun hobby to throw a couple hundred bucks at or some old gpus at. I wouldn’t say it’s a big risk... maybe the same risk level of a junior programmer using some of his salary to buy a new Drone off eBay for some tech styled fun after work
strgcmc 9y ago
Chiming in with some 2011-2012 perspective for you, which is kinda-but-not-really-all-that-early. IMO you are wildly overblowing the "success" and apparent foreknowledge of early miners (i.e. you're displaying classic results-oriented thinking, because hindsight is 20-20 ofc). Anyways, anecdote != data, blah blah blah, make your own conclusions, blah blah. I worked at Microsoft, and one of my coworkers started talking about Bitcoin. He was always one of the more cutting-edge, cyberphunk type of people, and he said he got a group of his tech friends to agree to build a "mining farm" in their closet basically, mostly as an expensive hobby of sorts (he was a motorcycle guy, so he had no problem spending money on expensive hobbies). They spent around $25k-$30k buying GPUs overall; they had great difficulty acquiring their GPUs, as by the time they had decided to start this venture and went to the local Best Buys and Fry's and whatnot, all the good high-end GPUs were sold out already (meaning there was ample competition in the Seattle area already, as they talked to the Best Buy guys who were also puzzled by the sudden increase in demand for high-end GPUs). Eventually by late 2012, with the increasing competition for mining, the rise of ASICs, high volatility, and no way to foresee the future, last I heard they eventually liquidated everything, sold their hardware and their BTC, and had recouped their costs and made a small profit, but not much more than anyone with $25k-$30k could've made just gambling on some regular stock picks. In other words, they bought in at or around the bubble to ~$30 in mid-2011, and didn't hold out long enough to see the growth to $100-$200 in 2013. Myself, I dabbled with pool mining using just the single GPU in my own gaming PC for 3 months in the summer. I told my roommates and voluntarily increased my share of the electric bill (which went up by about $80-100/month, iirc). I received ~5 BTC, which at the then exchange rates, meant that I made like $50 or something silly after paying for electricity (but not counting the $2.5K gaming PC, which I bought earlier and without knowing about cryptocurrency). --- The point of this story is to say that, even fairly sophisticated and "hardcore" hobbyists, i.e. those willing to spend tens of thousands of dollars to dabble in Bitcoin, were by and large not minting millions and millions. Most people sold their coins along the way, either in the rise and falls between $0 to $1, or between $1 to $30, or between $30 to $1000, or between $1000 to $4000+. There was no grand conspiracy, and certainly no way to know that Bitcoin would actually survive (would you call this thriving?) to where it is today. Almost universally, unless you were on the cutting edge of the ASIC race for a long long time, for every old miner out there who spent thousands (millions?) on hardware, they would've been better off simply buying and holding bitcoin the whole time instead.

deleted 9y ago

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