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Bitcoin Miner does the math, calls it quits

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Re: Bitcoin Miner does the math, calls it quits

#61

Post by encoderer »

I'm a bitcoin speculator. So far, I've made a very good ROI on a relatively small (4 figure) investment. It's been a lot of fun, really.

MtGox, and other exchanges (though I've got less experience with them) publish raw market data. I've written some analysis tools using mongo and python, they run on an Ec2 instance and buy/sell automatically. I send myself an SMS when I make a trade.

It's been so much fun to build. It's like SimStockMarket (or SimForex) to me. I've always been fascinated by the high frequency trading platforms. Obviously mine isn't high frequency, but it was a chance to build a trading system that had enough skin in the game to be interesting but little enough to be a hobby and not a stressful investment.

I really don't see myself mining at all. That part has never interested me.

Re: Bitcoin Miner does the math, calls it quits

#62

Post by bestes »

klhutchins wrote: post #38

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.

The time and energy used to mine is what provides the security of bitcoins and transactions. I would not call it a waste; it is what enables bitcoin to exist as a currency.

Another way to think about it is to imagine that each of these GPU rigs is like a branch office of the Fed. (yes, I'm kind of joking here)

Re: Bitcoin Miner does the math, calls it quits

#63

Post by kragen »

As a market approaches being perfectly competitive, risk-adjusted profits approach zero. If I understand correctly, that's basic economics, and it's not limited to just Bitcoin. If you want to make money in a market, you either need a sustainable competitive advantage or non-average risk tolerance.

What could amount to a sustainable competitive advantage in Ⓑ? Reputation isn't it: the whole point of Ⓑ is that Ⓑ100 is computationally infeasible to counterfeit and equivalent to any other Ⓑ100. If you developed an especially money-efficient SHA-256 chip, or for that matter a pure Ⓑ-mining chip, you could perhaps remain profitable mining with it for a while, until the market caught up with you. (Does that depend on whether you use the chip yourself or sell it into the mining market where people compete with each other?)

Re: Bitcoin Miner does the math, calls it quits

#64

Post by ScottBurson »

teadrinker wrote: post #54
jonnathanson wrote: post #41

Earlier quoted context omitted.

Likely it will be a little worse than break-even, because there are always some people out there willing to attempt to generate coins even if what they are doing doesn't financially make sense, breaking the market. I'd guess that the percentage of miners and speculators in the BTC market who are economically irrational in their activities is a lot higher than most of us think it is. Ergo, I don't place too much faith…

Not to mention the lack of proper regulation. Particularly at the exchanges: http://nerdr.com/bitcoin-exchange-scam-bitcoins-are-worthles... I was days away from entering the Bitcoin marketplace until I read that. Now I realize it's speculation propping up an artificial market price. Saying that, I would be open to hearing opinions on estimates of the true value of a Bitcoin, based on it's use cases and value proposi…

I would be open to hearing opinions on estimates of the true value of a Bitcoin

Forget it. Nobody knows. It's a function of how big the Bitcoin economy gets, and how many Bitcoins people decide to keep in their wallets. (It's convenient to keep some amount, to save the hassle of doing conversions all the time, but the volatility of the currency may well dissuade most people from keeping large amounts.)

Re: Bitcoin Miner does the math, calls it quits

#65

Post by akanet »

encoderer wrote: post #61

I'm a bitcoin speculator. So far, I've made a very good ROI on a relatively small (4 figure) investment. It's been a lot of fun, really. MtGox, and other exchanges (though I've got less experience with them) publish raw market data. I've written some analysis tools using mongo and python, they run on an Ec2 instance and buy/sell automatically. I send myself an SMS when I make a trade. It's been so much fun to build.…

I'm a programmer with some liquid cash and an interest in doing things exactly like this for fun. Can you recommend any resources for getting started?

Re: Bitcoin Miner does the math, calls it quits

#67

Post by thesis »

akanet wrote: post #65
encoderer wrote: post #61

I'm a bitcoin speculator. So far, I've made a very good ROI on a relatively small (4 figure) investment. It's been a lot of fun, really. MtGox, and other exchanges (though I've got less experience with them) publish raw market data. I've written some analysis tools using mongo and python, they run on an Ec2 instance and buy/sell automatically. I send myself an SMS when I make a trade. It's been so much fun to build.…

I'm a programmer with some liquid cash and an interest in doing things exactly like this for fun. Can you recommend any resources for getting started?

Mt Gox has an API: https://mtgox.com/support/tradeAPI

Re: Bitcoin Miner does the math, calls it quits

#68

Post by ohashi »

fr0sty wrote: post #33
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.

That doesn't mean the math is wrong. What he's saying is each day the total value of bitcoins is going up by that amount because # of bitcoins * current price. He's also saying that it doesn't make sense, he sees irrationality in the behavior. If more bitcoins are added than value created, prices should go down, but aren't, they are stable. Something seems to be out of whack, the market isn't behaving rationally. Essentially bitcoins are becoming more overvalued as more get unlocked because supply is increasing faster than demand but the exchanges aren't reflecting that (yet).

Re: Bitcoin Miner does the math, calls it quits

#70

Post by URSpider94 »

teadrinker wrote: post #54
jonnathanson wrote: post #41

Earlier quoted context omitted.

Likely it will be a little worse than break-even, because there are always some people out there willing to attempt to generate coins even if what they are doing doesn't financially make sense, breaking the market. I'd guess that the percentage of miners and speculators in the BTC market who are economically irrational in their activities is a lot higher than most of us think it is. Ergo, I don't place too much faith…

Not to mention the lack of proper regulation. Particularly at the exchanges: http://nerdr.com/bitcoin-exchange-scam-bitcoins-are-worthles... I was days away from entering the Bitcoin marketplace until I read that. Now I realize it's speculation propping up an artificial market price. Saying that, I would be open to hearing opinions on estimates of the true value of a Bitcoin, based on it's use cases and value proposi…

The "true value" of a Bitcoin is zero -- it's just some bits on a computer. In the same way, the "true value" of paper currency is very close to zero -- I guess you could use it for note-taking. The market value of Bitcoin will depend on the demand to own Bitcoin, as opposed to any competing commodity or currency.
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