Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Can I Make a Living Off Bitcoin Mining? Probably Not

decryption.wordpress.com

Post reply on HN
Print view View original

21–30 of 47 posts

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#21

Post by caf »

Tichy wrote: post #16
raverbashing wrote: post #7

Which is funny, even after all the math and concluding that, no, you can't turn a big profit, people still do it. I mean, ok, you benefit the bitcoin community with it, still... Not to mention the maintenance costs (assembling the rigs, wiring, parts that stop working, etc)

I did it for fun two years ago and made a plus. Since the future price of Bitcoin is unknown, at the end of the day you can not really decide if mining is profitable with maths. I stopped mining when I generated less money than I spent for electricity (the gear had already been paid off). However, back then the exchange rate was maybe 5$. If I had known that it would be 100$ two years later, perhaps I could have mine…

Even if you'd known that the exchange rate would eventually rise to $100, once the cost of electricity exceeded the current market price of the bitcoins produced the rational thing to do would have been to turn off the rig and use the money to buy bitcoins on the open market instead of mining them.

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#22

Post by wintersFright »

skriticos2 wrote: post #19
wintersFright wrote: post #10

Earlier quoted context omitted.

Is it deflationary because of the 21 million limit? That limit won't hit until 2140. Or is it deflationary because the projected velocity will go up faster than the mining output?

Please don't mix supply with perceived value. It's deflationary in the sense that with passing time each coin is worth more than before. There is some correlation with money supply, but deflation ultimately means: how much can you buy for a set amount of currency. The inflation/deflation of the US dollar for instance is measured by statistics like the CPI, which boils down to how much consumer goods you can buy. If y…

OK, so with passing time, coins are worth more than before because the usage demand is increasing faster than the mining supply. I'm not sure if that is your argument though?

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#23

Post by wintersFright »

nwh wrote: post #4

The story ultimately ends when Anthony decides to switch to Litecoin mining, and gets rather burnt by the whole experience. http://reckoner.com.au/2013/07/my-three-months-as-a-litecoin...

The finale if anyone missed it http://reckoner.com.au/2013/08/im-done-mining-litecoin/

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#24

Post by PeterisP »

nwh wrote: post #14
PeterisP wrote: post #12

Earlier quoted context omitted.

Bitcoin mining is not a "job" (requiring effort) but an investment - requiring capital. So in the long run, it shouldn't be possible to get a return on bitcoin mining much above normal market interest rates, since if the return would be higher (as it was just recently) then an investor can buy/build large amounts of ASICs and drive bitcoin price down.

There's certainly people who have lucked out and made a considerable amount of money that would, for all intents, be a replacement job for them. Some of the early Avalon machines would have been making hundreds of dollars a day when they were received. Even earlier miners on CPUs would be rolling in hundreds of thousands of dollars.

They may have made a great investment with a large, quick return - but it's not a job because:

(a) the income from the Avalon machine likely is much less now than initially, and is likely to shrink rapidly - so it's not a sustainable future income;

(b) keeping the income at the same level can't be done by spending your time, but by investing lots more money again and again;

(c) you (and anybody else) can increase that income hundredfold by buying hundred times more machines - i.e., it is limited by capital, not by time/effort.

It sure is income, but with very different characteristics. It's even very different from classic 'passive income' investments like dividend stocks or rental real estate - such 'passive income' investments are with rather sure long-term returns; but bitcoin mining gear produces very volatile short-term returns, and is likely useless in the long run as the device you buy now will after a couple years likely earn less than the electricity cost.

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#25

Post by gaius »

nwh wrote: post #6
nodata wrote: post #5

What does doing it "full time" mean? Is he sitting there watching the machines?

Not casually. I've a little ASIC device sitting in the corner, but it's more a mild curiosity than any actual income. I've made a lot more money reselling the devices than I have mining with then.

In any gold rush, sell shovels.

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#26

Post by Tichy »

caf wrote: post #21
Tichy wrote: post #16

Earlier quoted context omitted.

I did it for fun two years ago and made a plus. Since the future price of Bitcoin is unknown, at the end of the day you can not really decide if mining is profitable with maths. I stopped mining when I generated less money than I spent for electricity (the gear had already been paid off). However, back then the exchange rate was maybe 5$. If I had known that it would be 100$ two years later, perhaps I could have mine…

Even if you'd known that the exchange rate would eventually rise to $100, once the cost of electricity exceeded the current market price of the bitcoins produced the rational thing to do would have been to turn off the rig and use the money to buy bitcoins on the open market instead of mining them.

True, I just thought of that and came back here to add that :-)

What the Bitcoin experiment taught me is that I am not a very good investor... The good part of mining was that I did it for fun, so there wasn't much to lose. The mining rig is now my new gaming computer. So even if I hadn't made any money at all, at least I would have gained a new gaming rig. In that sense it was a good speculation, for me personally (no real downsides but potential upsides).

I felt that by mining I also supported the idea of BitCoin, so it had ideological value for me, too.

Re: Can I Make a Living Off Bitcoin Mining? Probably Not

#27

Post by junto »

gaius wrote: post #25
nwh wrote: post #6

Earlier quoted context omitted.

Not casually. I've a little ASIC device sitting in the corner, but it's more a mild curiosity than any actual income. I've made a lot more money reselling the devices than I have mining with then.

In any gold rush, sell shovels.

This is a great analogy!
Post reply on HN