3 ms·

Operating cashflow and depreciation curves are the most basic accounting principles out there, the author did not make anything up - he is applying a logical an

Operating cashflow and depreciation curves are the most basic accounting principles out there, the author did not make anything up - he is applying a logical analysis to publicly available data.

mirceal 4y ago
sorry, but what works for the printing press does not work for ebooks. If someone were to talk to you about the cost of printing and distributing books and how much X costs and depreciation over 10 years, you as an ebook seller would laugh them out of the room. Sure there are things that still apply across all businesses, but people seen to dance around the fact that the reason why depreciation model does not work for bitcoin mining is that it's highly correlated to advances that were made in the mining hardware + the huge role the cost of power (geographical location in the end) has on the whole profitability of things.
- salmonlogs 4y ago
  This is an invalid argument. Mining needs hardware, which loses value as new hardware is released and mining gets harder. Thus, it depreciates over time.
  - mirceal 4y ago
    the point is that you cannot compare apples to oranges and the constraints around bitcoin are NOT the same constraints like the ones around a vending machine. (so that applying the same model is probably a flawed approach)
    - ireflect 4y ago
      You misunderstood the vending machine analogy. The author argues that mining hardware is NOT like a vending machine, in terms of depreciation. Mining hardware becomes less productive over its lifespan, whereas a vending machine stays about the same until its broken. The author argues that these companies are applying the traditional “vending machine” depreciation even though, as you pointed out, it does not apply. And that’s the entire crux of how they’re overvaluing themselves.
    - _fizz_buzz_ 4y ago
      > the constraints around bitcoin are NOT the same constraints like the ones around a vending machine Exactly, that's the whole point of the article.
    - salmonlogs 4y ago
      Did you actually read the article?
wyager 4y ago
A flaw in GAAP is not Bitcoin's fault. The OP has no idea if people are actually using shitty GAAP accounting principles to evaluate these miners.

Operating cashflow and depreciation curves are the most basic accounting principles out there, the author did not make anything up - he is applying a logical analysis to publicly available data.

mirceal 4y ago

sorry, but what works for the printing press does not work for ebooks. If someone were to talk to you about the cost of printing and distributing books and how much X costs and depreciation over 10 years, you as an ebook seller would laugh them out of the room. Sure there are things that still apply across all businesses, but people seen to dance around the fact that the reason why depreciation model does not work for bitcoin mining is that it's highly correlated to advances that were made in the mining hardware + the huge role the cost of power (geographical location in the end) has on the whole profitability of things.

salmonlogs 4y ago
This is an invalid argument. Mining needs hardware, which loses value as new hardware is released and mining gets harder. Thus, it depreciates over time.
- mirceal 4y ago
  the point is that you cannot compare apples to oranges and the constraints around bitcoin are NOT the same constraints like the ones around a vending machine. (so that applying the same model is probably a flawed approach)
  - ireflect 4y ago
    You misunderstood the vending machine analogy. The author argues that mining hardware is NOT like a vending machine, in terms of depreciation. Mining hardware becomes less productive over its lifespan, whereas a vending machine stays about the same until its broken. The author argues that these companies are applying the traditional “vending machine” depreciation even though, as you pointed out, it does not apply. And that’s the entire crux of how they’re overvaluing themselves.
  - _fizz_buzz_ 4y ago
    > the constraints around bitcoin are NOT the same constraints like the ones around a vending machine Exactly, that's the whole point of the article.
  - salmonlogs 4y ago
    Did you actually read the article?

wyager 4y ago

A flaw in GAAP is not Bitcoin's fault. The OP has no idea if people are actually using shitty GAAP accounting principles to evaluate these miners.