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3.5 bitcoin is roughly $450. If you bought one now and started it running in September, you will likely never break-even or make a profit: http://mining.thegen

3.5 bitcoin is roughly $450. If you bought one now and started it running in September, you will likely never break-even or make a profit: http://mining.thegenesisblock.com/a/a65c154190 http://mining.thegenesisblock.com/a/a65c154190

tibbon 13y ago
I think that's the point though right? Its an arms race with a nearly perfectly efficient market that will (in the future) not be a get-rich-quick scheme for miners. If there's profit to be made easily, the some people will react by mining more and then it 'fixes' the market. Assume that some people will act irrationally and mine inefficiently, or with the hope that the market will skyrocket- these people will bring the profit yield down to unprofitable levels by at least a few %. I liked mining with a GPU a while back, because I figured at least I could use the GPU for gaming as well and it just helped to keep me on the newer GPU cards with less guilt (since I want fancy GPUs, but almost never game so rarely use them).
- joosters 13y ago
  Not really. If you're trying to sell a bitcoin miner, you want at least the chance for the operators to make money. If you can take the specs of the box and calculate that you won't make a profit even if it was running right now, why would you buy it? The company selling them is going to do badly. It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up.
  - tlrobinson 13y ago
    "It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up." I'm sure that has happened quite a bit in actual gold rushes. People aren't always rational, and no one really knows exactly how fast the mining difficulty will increase.
    - ssharp 13y ago
      I don't know anything about BitCoin mining, but is there a way to get lucky mining BitCoins where you stumble upon some BitCoins using less computing resources than you should have? In other words, is mining a process open to probabilities or is it a process where you churn through a finite and predictable number of calculations before you dig up a coin? I'd have to think one of the things that would lead someone to buy a shovel is that they could get lucky and dig up some gold. If luck isn't a factor in BitCoin mining, then you're not even giving yourself a chance to overcome a negative expected value situation. It's like better a dollar on BlackJack and instead of dealing cards, they just give you back 99 cents. Nobody would play that game.
      - tlrobinson 13y ago
        Yes, mining is probabilistic. The more hashing power you have the more quickly you're likely to mine a block, but it could take more or less time depending on luck. Most miners now participate in pools, which smooths out your returns by working together to mine blocks more regularly, which are then distributed based on the amount of work each miner contributed. If you "solo mine" it might take, say, 1000 days to mine a block, but if you pool mine with 1000 other miners it might only take 1 day, giving you 1/1000 of a block reward each day (minus pool fees), vs 1 whole block reward every 1000 days (on average).
      - wmf 13y ago
        There is luck involved, but it's pretty small. http://bitcoinchain.com/pools http://bitcoinchain.com/pools
  - dragonwriter 13y ago
    > It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up. So, IOW, exactly like selling shovels to gold prospectors during a gold rush. Which is why the people selling shovels, or assaying services, or everything else that supports prospectors always, on average, do far better than prospectors during a gold rush. That changes when the rush starts to end and become more of a rational market.
  - miahi 13y ago
    It's actually selling the shovel and the mining grounds, you just have to invest the time to use the shovel. A good question is: if the miner is so good, why don't they just use it and profit? This actually happens, as many bitcoin miner sellers only deliver them after a waiting time.
    - speeder 13y ago
      ASICMiner actually started as a company that would make their own ASIC to mine on their own. What they are doing, is profiting for a market that pay crazy rates on mining machines, by having profits on short term, but I think as soon selling them become less profitable than mining, they will switch back to purely mining.
  - jessaustin 13y ago
    ...you want at least the chance for the operators to make money. If one is familiar with the apparatus of neoclassical economic theory, one might expect producers to want to maximize producer surplus at the expense of consumer surplus. That's possible to the extent that demand is fairly inelastic, and there are barriers (could be short-term!) to other producers entering the market.
3pt14159 13y ago
That assumes a certain growth in mining rate. This is predictable, but wrong. ASIC is the last wave of advancements. After this it will probably grow linearly until network becomes the bottleneck.
bradleysmith 13y ago
Yeah, no kidding. I got an opportunity to buy (10) USB BE's at 0.11BTC per and even had enough coin purchased at well under $100, and I'm still worried about break-even. Even if I make my money back, I know in the back of my mind the opportunity cost of selling the miners now makes mining with them a theoretical loss. They'll make great mementos of the early ASIC's anyway. People are getting rich quick (not a good thing) off of selling hardware to quick-to-decide geeks that like the idea of btc, and making money from a terminal line. I'll be the first to admit that I'm one of those geeks.
a-priori 13y ago
Someone with a better understanding of Bitcoins please correct me here if I'm wrong. But if I understand things correctly, mining is one way (the only way?) to get untraceable Bitcoins because they're created out of thin air by the network. By paying your electricity bill to run a miner, you're effectively converting your local currency into Bitcoins. As as long as you credit the mining reward to a wallet that has no connection to your real-world finances, and take other safety precautions, those coins would not be traceable to you. So this could be used to launder money through the Bitcoin network. The only evidence that you were doing something would be an abnormally large electricity bill. Mind you, without this turning into Office Space, I'm sure there's more effective ways to launder money... But if that's true, then I would expect the supply of mining capacity to settle above the point where it's profitable, because some fraction of miners don't really care about being profitable as long it's a reasonable loss.
- bdcravens 13y ago
  That's one way of looking at it. Keep in mind that it's not uncommon for electric companies to report huge jumps in electricity usage to the police, as high bills are considered evidence of marijuana growth, and have led to serious busts.
- deleted 13y ago
  [deleted]
- jessaustin 13y ago
  It's my impression that obtaining BTC isn't the interesting problem for most would-be launderers. After all, you just have to sell some CC #s or provide custom DDOS services or do whatever nefarious shit you do that makes laundering a good idea, and presto you have BTC. The real problem is trading those fat stacks of BTC for fast cars, palatial mansions, the intimate attentions of beautiful people, etc. without the fuzz connecting those riches back to the nefarious shit that earned them. That is, as for regular money laundering, the trick is make dirty funds clean. It's actually straightforward to obtain dirty funds in the first place, for a criminal. See here for more on this topic: https://news.ycombinator.com/item?id=6291546 https://news.ycombinator.com/item?id=6291546

tibbon 13y ago

I think that's the point though right? Its an arms race with a nearly perfectly efficient market that will (in the future) not be a get-rich-quick scheme for miners. If there's profit to be made easily, the some people will react by mining more and then it 'fixes' the market. Assume that some people will act irrationally and mine inefficiently, or with the hope that the market will skyrocket- these people will bring the profit yield down to unprofitable levels by at least a few %. I liked mining with a GPU a while back, because I figured at least I could use the GPU for gaming as well and it just helped to keep me on the newer GPU cards with less guilt (since I want fancy GPUs, but almost never game so rarely use them).

joosters 13y ago
Not really. If you're trying to sell a bitcoin miner, you want at least the chance for the operators to make money. If you can take the specs of the box and calculate that you won't make a profit even if it was running right now, why would you buy it? The company selling them is going to do badly. It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up.
- tlrobinson 13y ago
  "It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up." I'm sure that has happened quite a bit in actual gold rushes. People aren't always rational, and no one really knows exactly how fast the mining difficulty will increase.
  - ssharp 13y ago
    I don't know anything about BitCoin mining, but is there a way to get lucky mining BitCoins where you stumble upon some BitCoins using less computing resources than you should have? In other words, is mining a process open to probabilities or is it a process where you churn through a finite and predictable number of calculations before you dig up a coin? I'd have to think one of the things that would lead someone to buy a shovel is that they could get lucky and dig up some gold. If luck isn't a factor in BitCoin mining, then you're not even giving yourself a chance to overcome a negative expected value situation. It's like better a dollar on BlackJack and instead of dealing cards, they just give you back 99 cents. Nobody would play that game.
    - tlrobinson 13y ago
      Yes, mining is probabilistic. The more hashing power you have the more quickly you're likely to mine a block, but it could take more or less time depending on luck. Most miners now participate in pools, which smooths out your returns by working together to mine blocks more regularly, which are then distributed based on the amount of work each miner contributed. If you "solo mine" it might take, say, 1000 days to mine a block, but if you pool mine with 1000 other miners it might only take 1 day, giving you 1/1000 of a block reward each day (minus pool fees), vs 1 whole block reward every 1000 days (on average).
    - wmf 13y ago
      There is luck involved, but it's pretty small. http://bitcoinchain.com/pools http://bitcoinchain.com/pools
- dragonwriter 13y ago
  > It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up. So, IOW, exactly like selling shovels to gold prospectors during a gold rush. Which is why the people selling shovels, or assaying services, or everything else that supports prospectors always, on average, do far better than prospectors during a gold rush. That changes when the rush starts to end and become more of a rational market.
- miahi 13y ago
  It's actually selling the shovel and the mining grounds, you just have to invest the time to use the shovel. A good question is: if the miner is so good, why don't they just use it and profit? This actually happens, as many bitcoin miner sellers only deliver them after a waiting time.
  - speeder 13y ago
    ASICMiner actually started as a company that would make their own ASIC to mine on their own. What they are doing, is profiting for a market that pay crazy rates on mining machines, by having profits on short term, but I think as soon selling them become less profitable than mining, they will switch back to purely mining.
- jessaustin 13y ago
  ...you want at least the chance for the operators to make money. If one is familiar with the apparatus of neoclassical economic theory, one might expect producers to want to maximize producer surplus at the expense of consumer surplus. That's possible to the extent that demand is fairly inelastic, and there are barriers (could be short-term!) to other producers entering the market.

3pt14159 13y ago

That assumes a certain growth in mining rate. This is predictable, but wrong. ASIC is the last wave of advancements. After this it will probably grow linearly until network becomes the bottleneck.

bradleysmith 13y ago

Yeah, no kidding. I got an opportunity to buy (10) USB BE's at 0.11BTC per and even had enough coin purchased at well under $100, and I'm still worried about break-even. Even if I make my money back, I know in the back of my mind the opportunity cost of selling the miners now makes mining with them a theoretical loss. They'll make great mementos of the early ASIC's anyway. People are getting rich quick (not a good thing) off of selling hardware to quick-to-decide geeks that like the idea of btc, and making money from a terminal line. I'll be the first to admit that I'm one of those geeks.

a-priori 13y ago

Someone with a better understanding of Bitcoins please correct me here if I'm wrong. But if I understand things correctly, mining is one way (the only way?) to get untraceable Bitcoins because they're created out of thin air by the network. By paying your electricity bill to run a miner, you're effectively converting your local currency into Bitcoins. As as long as you credit the mining reward to a wallet that has no connection to your real-world finances, and take other safety precautions, those coins would not be traceable to you. So this could be used to launder money through the Bitcoin network. The only evidence that you were doing something would be an abnormally large electricity bill. Mind you, without this turning into Office Space, I'm sure there's more effective ways to launder money... But if that's true, then I would expect the supply of mining capacity to settle above the point where it's profitable, because some fraction of miners don't really care about being profitable as long it's a reasonable loss.

bdcravens 13y ago
That's one way of looking at it. Keep in mind that it's not uncommon for electric companies to report huge jumps in electricity usage to the police, as high bills are considered evidence of marijuana growth, and have led to serious busts.
deleted 13y ago
[deleted]
jessaustin 13y ago
It's my impression that obtaining BTC isn't the interesting problem for most would-be launderers. After all, you just have to sell some CC #s or provide custom DDOS services or do whatever nefarious shit you do that makes laundering a good idea, and presto you have BTC. The real problem is trading those fat stacks of BTC for fast cars, palatial mansions, the intimate attentions of beautiful people, etc. without the fuzz connecting those riches back to the nefarious shit that earned them. That is, as for regular money laundering, the trick is make dirty funds clean. It's actually straightforward to obtain dirty funds in the first place, for a criminal. See here for more on this topic: https://news.ycombinator.com/item?id=6291546 https://news.ycombinator.com/item?id=6291546