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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.'"
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?
And remember another old adage: "There's a sucker born every minute." Want to get some ROI? Don't mine bitcoin, sell bitcoin mining rigs. Like selling shovels and booze to miners in a gold rush, it's a great way to make sure you get the cash now, and leave someone else scrabbling in the dirt with all the risk that tomorrow's newer custom FPGA rigs and market prices will make today's mega mining cluster not worth the electricity to switch on.
As long as you know when to get out. Otherwise, you'd be just like the miner - left with a lot of spare equipment of no value. Inventory isn't free.
A bitcoin may cost more in electricity than the bitcoin is worth, but hell we can make up for it with volume!
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 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.
But bitcoin is extremely wasteful. At least with real coins the metals are still useful.
Bitcoin bits are infinity reusable. You could reuse those bits to make a picture, song, movie, spreadsheet, game, encryption key, etc.
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?
Bitcoin appears very strongly to have been designed so that the inventors and early adopters got the most money for free, the late adopters have a difficult time getting the money out of it, and may even be spending money to try to get some faster. At least with a real gold mine there was actual work and sweat required even by the first miners and they never lied and said they were doing this for the good of others or to try and create an alternative system.
Bitcoin mining is starting to move towards ASICs now.
But ignoring that even with FPGA while the FPGAs themselves are standard parts the boards usually aren't. Afaict most off the shelf boards for FPGAs fall into one of two categroies. Either they are PCIe/PXIe cards designed to move a lot of data over a bus system or they are hardware dev boards with loads of different interfaces for a developer to play with. Bitcoin mining needs neither of those, it just needs power and a way to get a tiny ammount of data in and out. The result is an off the shelf FPGA board is a poor value proposition for mining and a mining optimised FPGA board isn't much use for anything else.
I guess you could desolder the FPGAs from your no longer viable FPGA boards and then reball them and try and sell them but I think you'd find it pretty hard to find a buyer for such parts (afaict reballing voids the warranty) and if you did find one you'd have to sell them at a massive discount to fresh FPGAs from the manufacturer.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
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.
It's called a Ponzai scheme.
Which is sort of like a Ponzi scheme, but groomed very carefully over many years to be much smaller.