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The profit margins of a miner is pretty slim. If the price increases, mining becomes profitable, competition increases bringing down the profitability, likewise

The profit margins of a miner is pretty slim. If the price increases, mining becomes profitable, competition increases bringing down the profitability, likewise in reverse. So yes, you need money to mine, but whatever you mine, you pretty much have to turn around and sell it right away to cover your costs and keep a small profit.

Slartie 5y ago
That's exactly what I meant with "all crypto holders pay for it": in the state of equilibrium of costs and rewards, the huge costs are effectively paid by devaluing existing crypto holdings and via transaction costs. Is that good for crypto holders? No way! It's also not too good for miners of course, as they are in it for profit, not for rewards equaling costs. But fortunately for the miners, crypto mining is rarely in that state of equilibrium. In reality, mining does allow for a hefty profit margin to be reaped most of the time. Ask the miners if you don't believe me, they're not exactly used to just making "small profits". And who pays for that profit margin? Crypto holders and those making transactions with it - again! However you want to look at it, this coin looks crappy from both sides. Unless you're a miner.
- pinkybanana 5y ago
  > However you want to look at it, this coin looks crappy from both sides. Unless you're a miner. Depends on what you are comparing to. For me, Bitcoin is easier to understand than the fiat system we are currently using, and that's why I'm heavily invested in to it. In addition to miners making huge profits, there have been also cases where miner operations have turned sour, KnC Miner being one example. Yes, there might be better systems out there. But BTC has very clear and simple protocol rules which are easy to understand, and it has properties which are very lucrative (permissionless, decentralized, limited supply, easily verifiable and transferable and so on). Other consensus mechanisms fail to deliver their promise in as effective way.

Slartie 5y ago

That's exactly what I meant with "all crypto holders pay for it": in the state of equilibrium of costs and rewards, the huge costs are effectively paid by devaluing existing crypto holdings and via transaction costs. Is that good for crypto holders? No way! It's also not too good for miners of course, as they are in it for profit, not for rewards equaling costs. But fortunately for the miners, crypto mining is rarely in that state of equilibrium. In reality, mining does allow for a hefty profit margin to be reaped most of the time. Ask the miners if you don't believe me, they're not exactly used to just making "small profits". And who pays for that profit margin? Crypto holders and those making transactions with it - again! However you want to look at it, this coin looks crappy from both sides. Unless you're a miner.

pinkybanana 5y ago
> However you want to look at it, this coin looks crappy from both sides. Unless you're a miner. Depends on what you are comparing to. For me, Bitcoin is easier to understand than the fiat system we are currently using, and that's why I'm heavily invested in to it. In addition to miners making huge profits, there have been also cases where miner operations have turned sour, KnC Miner being one example. Yes, there might be better systems out there. But BTC has very clear and simple protocol rules which are easy to understand, and it has properties which are very lucrative (permissionless, decentralized, limited supply, easily verifiable and transferable and so on). Other consensus mechanisms fail to deliver their promise in as effective way.