Bitcoin Miner does the math, calls it quits • Hacker News Board

Re: Bitcoin Miner does the math, calls it quits

#31

Post by Tichy » Wed, Jul 06, 2011, 2:04 PM UTC

wccrawford wrote: post #2

This isn't really news. I did the math a month ago and came to the same conclusion. That I could probably make a little money if I don't mind heating up my house (costing more in AC costs) and dealing with the noise of the computers running all the time. The projected profits, at the prices that day, were pretty sad. A week later I learned that the better the machines and programs get at producing bitcoins, the harde…

Those BitCoin miners could also be good gaming PCs. Once I take mine out of action, it will simply be a gaming PC that paid for itself. I actually bought a gaming PC off ebay for mining - of course if you just bought a crappy PC with a fast graphics card it might be different.

Re: Bitcoin Miner does the math, calls it quits

#32

Post by wccrawford » Wed, Jul 06, 2011, 2:05 PM UTC

MichaelApproved wrote: post #24

podperson wrote: post #16

Earlier quoted context omitted.

Only if more performance/watt machines haven't driven the output of your machines below the cost of electricity.

Wow. I know very little about mining and had no idea that the market moved that fast.

Yeah, that's the bit I learned a week after doing the calculations. When people first started, they were using CPUs. When GPU usage became available, CPU-miners became so horribly inefficient that electricity cost alone killed them.

Now, granted, I can't imagine anything being that much better than GPUs, but new GPUs are usually much more efficient than old ones, and they come out all the time. It could quickly became an arms race just to break even.

On top of that, apparently there's also a built-in cycle that makes it harder even if the machines don't change. The linked article touches on that briefly as part of his decision.

Re: Bitcoin Miner does the math, calls it quits

#33

Post by fr0sty » Wed, Jul 06, 2011, 2:06 PM UTC

pavel_lishin wrote: post #4

> The fact that every 2016 blocks (about 11 days), 100,800 new BTC are minted. That means that, to maintain the CURRENT price of $13.50, we'd need $1,360,000 of NEW MONEY entering the system every 11 days. I don't know anything about economics - literally nothing - but that doesn't seem right to me.

It isn't right. It would only be true if every miner was immediately liquidating the bitcoins they were awarded. Such a massive oversupply would likely overwhelm demand and push the price much lower.

In reality this is not what BTC miners are doing (from what I can see). They are mining and hording BTC for later use meaning that the mined coins require $0 to enter the system to maintain equilibrium.

Re: Bitcoin Miner does the math, calls it quits

#34

Post by JulianMorrison » Wed, Jul 06, 2011, 2:19 PM UTC

stonemetal wrote: post #29

JulianMorrison wrote: post #10

Seems pretty obvious to me that "mining" is a loser's game, you are fighting over what slice you get of a fixed size pie. By contrast, selling stuff for BTC actually grows the "market cap" of coins, that seems a lot more sensible. That said, I have a technical question. What happens to the BTC system if people mostly quit mining?

The system contracts and it becomes easier to mine. As long as the number of clients doesn't approach zero, transactions should be OK.

What about when the number of BTC has gotten close enough to 21 million that mining nearly never returns any new ones? The number of miners could fall to something approaching zero.

Re: Bitcoin Miner does the math, calls it quits

#35

Post by JonnieCache » Wed, Jul 06, 2011, 2:35 PM UTC

wccrawford wrote: post #2

This isn't really news. I did the math a month ago and came to the same conclusion. That I could probably make a little money if I don't mind heating up my house (costing more in AC costs) and dealing with the noise of the computers running all the time. The projected profits, at the prices that day, were pretty sad. A week later I learned that the better the machines and programs get at producing bitcoins, the harde…

>...if I don't mind heating up my house (costing more in AC costs) and dealing with the noise of the computers running all the time.

Have there ever been any cases of miners being raided by the police? Because these sound like similar problems faced by another profitable cottage industry that crosses my mind...

Re: Bitcoin Miner does the math, calls it quits

#36

Post by winthrowe » Wed, Jul 06, 2011, 2:38 PM UTC

JulianMorrison wrote: post #34

stonemetal wrote: post #29

Earlier quoted context omitted.

The system contracts and it becomes easier to mine. As long as the number of clients doesn't approach zero, transactions should be OK.

What about when the number of BTC has gotten close enough to 21 million that mining nearly never returns any new ones? The number of miners could fall to something approaching zero.

In addition to the block reward (currently 50 and approaching zero) the miner gets any transaction fees for transactions included in the block. At the present, the block reward massively exceeds the transaction fees, but that will eventually skew the other way.

Re: Bitcoin Miner does the math, calls it quits

#37

Post by joejohnson » Wed, Jul 06, 2011, 2:39 PM UTC

JonnieCache wrote: post #35

wccrawford wrote: post #2

This isn't really news. I did the math a month ago and came to the same conclusion. That I could probably make a little money if I don't mind heating up my house (costing more in AC costs) and dealing with the noise of the computers running all the time. The projected profits, at the prices that day, were pretty sad. A week later I learned that the better the machines and programs get at producing bitcoins, the harde…

>...if I don't mind heating up my house (costing more in AC costs) and dealing with the noise of the computers running all the time. Have there ever been any cases of miners being raided by the police? Because these sound like similar problems faced by another profitable cottage industry that crosses my mind...

Yeah, at least one: http://esspe.net/bitcoins-and-weed

Re: Bitcoin Miner does the math, calls it quits

#38

Post by klhutchins » Wed, Jul 06, 2011, 2:42 PM UTC

It seems like a shame that all that computational power is being wasted. I mean other than generating some hashes, what good does that really do? I think it'd be cool if somehow it tied into the folding@home type of stuff. Where the computations solved something meaningful, but there could also be some "monetary" incentive.

Re: Bitcoin Miner does the math, calls it quits

#39

Post by Synaesthesia » Wed, Jul 06, 2011, 2:44 PM UTC

gravitronic wrote: post #25

Synaesthesia wrote: post #3

I also did the math - figured I was better off buying Bitcoins than mining them. It's marginal though.

Out of interest - why did you buy bitcoins? For purchasing goods? Or for speculation (to re-sell when, you hope, the price goes up)?

Well I mined about 10, bought another 10, it's just speculation right now.

Re: Bitcoin Miner does the math, calls it quits

#40

Post by JonnieCache » Wed, Jul 06, 2011, 2:44 PM UTC

joejohnson wrote: post #37

JonnieCache wrote: post #35

Earlier quoted context omitted.

>...if I don't mind heating up my house (costing more in AC costs) and dealing with the noise of the computers running all the time. Have there ever been any cases of miners being raided by the police? Because these sound like similar problems faced by another profitable cottage industry that crosses my mind...

Yeah, at least one: http://esspe.net/bitcoins-and-weed

He mentions the power usage, people do get reported over that. However the police also check for unusual heat signatures coming out of buildings at night, that could also have been what happened.

Interestingly, in some jurisdictions (notably canada) looking through someone's roof with an IR camera constitues an invasion of privacy, and requires a warrant.

Looking forward to the future when Bitcoin gets banned, and we see documentaries with police officers breaking down makeshift barricades to gain entry to innocuous looking barns way out in the countryside, pulling back layers of plastic sheeting to find a state of the art datacenter inside, with racks of clustered GPUs, and one very dishevelled looking vietnamese nerd sleeping on a bare mattress.