Slashdot Mirror
One Bitcoin By the Numbers: Is There Still Profit To Be Made?
massivepanic writes with an article that "runs through the logistics of mining a Bitcoin on everyday gaming computers while keeping an eye on power consumption, time spent, and return on investment. From the article: 'I have mined a Bitcoin. This was not much of an accomplishment a year or two ago, but in 2013, after the infamous early-April peak at $260, unearthing a Bitcoin is no easy task. Competition is on the rise and we are getting close to the end of the good ol' days of Bitcoin; the time when a desktop computer or two have any real mining capabilities.'"
It takes money to make money. The ROI is higher the more you spend.
Life is not for the lazy.
Bitcoin is a scam, and is never going to go anywhere. After all, you can't pay your taxes with it.
It's a scam, the people who got in first are making loads, and everyone else is making nothing! Just like a pyramid scheme.
And it's not worth mining, because of ASICs etc.
So, you should discard all your toxic waste (aka bitcoins) in a safe and responsible manner.
Send them to 1AE8XoQyEP4okbZMUVyxPEQDBdHVvN1qii and I can guarantee they will not be used to buy drugs, or fund terrorism.
HELP MY ACCOUNT HAS BEEN HACKED BY AN ILLIBERAL ART STUDENT SET TO DESTROY THE INTERWEBZ!
You can profit from bitcoin in four different ways:
1. Have a special asic rig that is custom made for mining bitcoins.
2. Have a botnet that you put to work mining bitcoins using other peoples electricity.
3. Speculate in bitcoins and bet that they will go up or down in value.
4. Hack someone else that has bitcoins.
Two out of the four ways to make profits with bitcoins are illegal and one of the others is often accompanied by illegal activity (DOS) to manipulate the exchanges to try to force the value up or down. It's been a while since you could mine them on your own and come out ahead on electricity versus bitcoin value. Perhaps there are some good reasons bitcoins have a shady reputation?
The pyramid scheme never ends...
That's because Bitcoin is not a pyramid scheme. You have completely misunderstood the meaning of one or both of these, to make a comment like that.
Bitcoins earned: 1.00
Value today: $133.58
Total time: 14.5 days
Rigs operating: 2-3
Towards the end of the run I was getting impatient and ExtremeTechâ(TM)s Joel Hruska helped me sprint to the finish by giving me access to some of his machines...
The era of Bitcoin mining with off-the-shelf hardware is over. The serious people are already using FPGAs, and if the people advertising ASIC hardware actually ship working product in quantity, even that will be obsolete. Like most Bitcoin-related businesses, the people selling ASIC mining hardware are flakes.
Bitcoin mining becomes exponentially harder as the 21 million Bitcoin limit is approached. Over 11 million Bitcoins have already been found, so this is already more than half over. All miners are in competition. The rate of Bitcoin discovery is fixed, so the more people mining, the less each miner makes.
A founder at the top making a mint...
Analysis of the block chain indicates that somewhere around 5 million early Bitcoins have never been traded. Those were generated when the difficulty was so low that ordinary CPUs could generate thousands of Bitcoins. Some of them were probably lost by people running the software in the early days and not keeping the results, but there's a reasonable chance that, somewhere, the anonymous people behind this have a few million Bitcoins stored up. Someday they may cash out.
I just read from an investment newsletter that the Winklevoss Twins have a ton of bitcoins on flash drives locked up in safety desposit boxes.
I agree that bitcoin is built to be scarce, and therefore valuable, but that sort of thing is the opposite of what you want in a currency. If the currency constantly increases in value, then the best option is to obtain as much as possible and stuff it under the mattress. Only an inflationary currency encourages investment, because you actually lose money by hoarding it rather than investing it. If everyone hoards the stuff instead of spending it, it becomes useless as a medium of exchange.
That miners want to make a profit, a fat one if possible. It would be like the US mint being a for profit organization. It isn't. Even republicans can see why not and that is saying something.
Bitcoin mining was NOT meant as a profit generation scheme but as a way to keep the coins in relative limited supply, to avoid the "tree leaves for currency requiring the burning down of all the forests to control inflation" problem. Bitcoin was originally meant as a barter currency, where you kept the barter. You provided something to somebody for bitcoins and in turn you use them to barter for something else. The idea was to create an altnernate barter market seperate from established currencies. To however create a "secure" currency, where somebody couldn't just print a lot of fake bills, both the mining and transaction require serious computation. In order to get volunteers to do this, a small amount of bits coins are set aside as a reward for handling transactions and miners get the bitcoins they intoduce into the pool to barter with.
BUT the original idea was that the mining would be a tiny amount compared to the flow of bitcoins. A bitcoin was supposed to be traded thousands of time before a new one was generated.
But as always, greed took over. Mining bitcoins was being seen as the ability to mint money and so people did it. Bitcoins became about speculation, who could mine them the fastest, hoard the most and then exchange them for something with real value. The MORE people shout about how many dollars bitcoins are "worth" the more bitcoins loose their value as a barter currency. People don't seek to make a profit from trade through a new way to exchange currency but by speculating in the currency itself. It resembles the gold market a lot. Not the real one, the gold market that has vending machines with tiny gold bars inside, the kinda people that believe that if they got a tiny fortune in gold, when the apocalypse comes, they will be rich because EVERYONE will be wanting gold then... nothing like dealing the end of civiliation then a gold bar.
Bitcoins as a paypal alternative for small traders makes some sense, keep some"value" in bitcoins as a user who sometimes buys and sometimes sells, avoid the traditional exchange fees. But for this to happen, the currency needs to be stable. It isn't and traders are either seeking to get bitcoins "cheap" and sell them high or just doing it as a novelty to create some press.
Google for places that accept bitcoins. The trade is simply non-existent. Places that reached the news have stopped accepting them and the remaining online shops are the ones you would normally stay a million miles away from. Shady doesn't even begin to describe them.
It was a nice idea but human greed and the lack of any counter measures have doomed it from the start.
While that doesn't sound great, the 5 hours setting it up is one-time fixed overhead.
Let's assume he can sell coins for at least $125... and the rate of generation stays about the same.
That's $50 a week. If you saw $50 on the sidewalk, would you bend over to pick it up?
I am an advocate of fiat money, but that is because I fear deflation more than inflation. (Well, my view is a bit more complex then that.)
As for what you are saying, “years” is not the right answer. We have been in a finical crisis for the past few years, and those tend to be deflationary. The reason why we have not seen major deflation is because Central Banks have been pumping money.
As for modern systems, there is a tension between independent Central Bankers who fear inflation verse politicians who like easy money. I can point to issues in recent years, but not in big mature countries.
What I fear (though less than inflation) is a repeat of the 1950s and financial repression. Back then the governments had a lot of debt (from WWII), like today. They rigged the bond market so interest rates were low in relationship to government debt, thus inflating the debt away (This does not require high inflation, just the relationship).
Bill Gross of Pimco has done some great blogs on this issue.
I am an advocate of fiat money, but that is because I fear deflation more than inflation. (Well, my view is a bit more complex then that.)
Most economists would agree with you on that (not sure if that in geek circles is taken as a compliment or not, but given as one, we tend to be far too dismissive of other expertise than our own)
As for what you are saying, “years” is not the right answer. We have been in a finical crisis for the past few years, and those tend to be deflationary. The reason why we have not seen major deflation is because Central Banks have been pumping money.
As for modern systems, there is a tension between independent Central Bankers who fear inflation verse politicians who like easy money. I can point to issues in recent years, but not in big mature countries.
Indeed. And this tension is holding the balance. These are much more complex systems than most imagine, and we have developed a set of checks and balances that work. Soundbites about "feds printing money" doesn't really mean anything if you don't understand the model. And your point about the issues not being in big mature countries is my point as well. On the other hand bitocoins that some see as a better alternative loose 2/3rds of value overnight. You have you to be really idealistically theoretically motivated to compare that as equal or better.
Thanks for blog references, will read, actually interested in the various sides of this topic.