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As we've learned from oil production lately, quite a number of people/companies are willing to do things that are "globally unprofitable". E.g. if you adopt th
by semi-extrinsic 9y ago
As we've learned from oil production lately, quite a number of people/companies are willing to do things that are "globally unprofitable".
E.g. if you adopt the mindset that your CAPEX is a sunk cost, which is reasonable if you already own something nobody wants to buy (unprofitable oil or mining rig), your break even becomes much lower (just has to beat cost of operations/electricity).
With mining it's even more difficult, since mining at an "unprofitable" point in time could later actually become a very profitable venture if the price goes back up, assuming that the mining difficulty also goes down in unprofitable times.
- mkempe 9y agoMining at a loss is not a good idea. Say your [marginal] production cost is USD 100, but BTC market price is USD 50. You could spend USD 100 to make 1 BTC, or you could turn off your mining equipment and spend USD 100 to buy 2 BTC... Added: and when the market price goes back up to say USD 1000, would you rather have the 1 or 2 BTCs in hand?
- dx034 9y agoBut once you have the hardware, you only need to pay electricity. And that means that current capacity will stay online until ~$1,000 in regions with low energy prices.
- oreo81 9y agoBut then you no longer have your mining hardware to mine with when it does go back up...I don't think you understand any of this.
- anigbrowl 9y agoThe other poster said turn it off, not scrap it.
- oreo81 9y agoHe edited his comment. He had previously said "sell" not turn off.
- mkempe 9y agoAbsolutely not; you may have misread? If I had considered selling off the capital there would have been some USD amount attached to that sale!
- oreo81 9y agoWhere does the 100 dollars to spend on 2 coins come from? Turning off your rig would give you 100 like selling would. It's already established you're a liar though.
- mkempe 9y agoFrom the same place as the money to pay for electricity would have come from... It's a simple arithmetic problem; John has USD 100, he can either spend it on electricity (to produce 1 BTC) or he can buy 2 BTC. Obviously owning 2 BTC is better than owning just 1, so the more profitable path is to spend the money buying BTC instead of paying for electricity to mine at a loss. I hope this helps.
- oreo81 9y agoThat's wrong, you don't get the money you'd save on electricity up front like you would from selling your rig. You're just digging yourself a hole.
- ravitation 9y agoHe still said you have to "beat [the] cost of operations/electricity"... Which is the production cost. You just aren't trying to make a return on the cost of your initial investment (CapEx).
- semi-extrinsic 9y agoNo, that's right. But there are (perhaps edge) cases where your operation cost is essentially zero. A couple of friends are using their gaming rigs for altcoin mining, and simultaneously as space heaters (we live in cold climate). If they stopped mining, they'd have to turn on the actual space heaters, no electricity cost saved. And they already have the hardware, so no expense there either.
- mkempe 9y agoThere has to be some additional power expense, otherwise mining rigs would be sold in the "space heater" aisle.
- semi-extrinsic 9y agoNo, simple thermodynamics ensures us that when no significant mechanical work is being done by the rig acting on the environment, and no significant exchange of mass between the rig and the environment is happening, all net electric energy going into the box will come out again as heat. The reason why mining rigs aren't sold in the space heater aisle is that people usually don't buy $2000 space heaters.
- oreo81 9y agoYou also edited after comment...
- lb1lf 9y ago-Why mine at a loss? Even with the outrageous transaction costs, you could just buy at the going rate and be left with way more bitcoin when/if the market rebounds... Edit: ninjaed by mkempe.
- ravitation 9y agoHe still said you have to "beat [the] cost of operations/electricity"...
- jungturk 9y agoMining at a loss might make sense for a while if you've made hosting/power commitments.
- ravitation 9y agoThat fits into what OP said. Because then, like your mining equipment, your electricity cost essentially becomes part of your CapEx, and your operational expenditures (OpEx) become almost zero (for Bitcoin mining anyway).
- HenryBemis 9y agoFrom CNBC: https://www.cnbc.com/2018/01/16/bitcoin-headed-to-100000-in-2018-analyst-who-forecast-2017-price-move.html https://www.cnbc.com/2018/01/16/bitcoin-headed-to-100000-in-... I know it's just "one analyst", but I don't mind investing (gambling) on something that may give me a x10 yield.
- andrei_says_ 9y agoWhich make me think what would happen if the oil was taxed with the expected environmental impact cost.