I am a bitcoin miner and I have made a 8 BTC profit this year taking into account electricity fees. A common misconception is that you need to actually mine bitcoins to mine bitcoins. Instead over the last few months smart miners have been ditching their Bitcoin ASICS and instead have been using old GPU rigs and new scrypt(aka Litecoin) asics to mine through auto profit switching alt-coin pools. These pools automatically mine the most profitable alt-coins like Litecoin and Dogecoin, then take the earnings and automatically trade them on exchanges for Bitcoins. While obviously profits are down compared to last fall, I am still making a nice ROI everyday, even from the very first GPU rig I ever built.
This week CEX/Ghash.io the largest bitcoin mining pool just launched their own auto-switching pool https://ghash.io/MULTI (Warning must sign up through CEX.IO). This will probably be the biggest one soon as its hashrate has tripled today already, but for the last few months the big three have been the following:
What's the ballpark cost of the hardware that you used to get those 8 BTC?
(It's interesting information for observers, of course people are turning on hardware that will run profitably, but mild opportunities aren't going to drive a whole lot of purchases)
Edit: If you have the rough 'replacement costs' floating around in your head that's interesting too. So not your actual costs, the approximate cost of bringing equivalent power online right now.
> These pools automatically mine the most profitable alt-coins like Litecoin and Dogecoin, then take the earnings and automatically trade them on exchanges for Bitcoins.
So these pools help you mine the most profitable alt coins and then automatically exchange them into BTC, which has lost roughly half its value since the beginning of the year and a third of its value in the past month? That makes no sense.
At one point, people used Graphic Cards (or, more specifically their GPUs) to mine Bitcoins. Over the last couple years, dedicated ASICs eliminated graphic cards, to the point where (according to eBay) - a $30 USB dongle [1] @ 1.6GH/s is more efficient than any graphic card [2] which top up around 1GHs/ at the high end.
Given that a lot of graphics cards were purchased for the sole purpose of mining bitcoins - I'm wondering if there is a huge surplus of cheap graphic cards out there now?
Strangely enough - eBay still shows graphic cards that were popular for mining, like the ATI Radeon 5970, still selling for around $300. [3]
I'm guessing that's evidence that the graphic card market wasn't wildly impacted by bitcoin mining?
People still use GPUs for mining scrypt-based coins (LiteCoin, DogeCoin, etc), though ASICs for those started hitting the market recently and profitability has slumped with bitcoin prices and difficulty increases.
In January I was looking to buy AMD graphics card(s) for numerical work using OpenCL. That time (roughly) corresponded to the peak in Litecoin prices. The best card - 7990 was generally sold out, and was going for about £600 on ebay.
Since then, Litecoin has dropped massively in value [1], and I am seeing sellers offloading eg "16 GPU cards + mining rig" on ebay. 7990 cards are now selling at around £300.
There might be other factors at play - eg the newer (and slightly better) R9 290X, or the anticipated arrival of dedicated Litecoin miners [2] - but mainly I think it is the price drop.
Bitcoin is a bubble, but not in a bad way. All monetary goods display a "bubble" phenomenon. Their price cannot be explained by their use demand alone but by a monetary premium. This is true for gold and it's true for the dollar (which has no use value at all, unlike gold). This idea is explained best by MM in his bubble theory of money:
And approximately at the same time the bitcoin bubble ends, and the so called experts and analysts are proclaiming the death of crypto currencies, that's when you will know that crypto currencies are finally on their way toward the mainstream. At least that's how things typically work when bubbles form around new technology (eg the internet).
For someone of low access to capital, a dollar probably has substantially more use-value than the same value (less than 25 mg) of gold. The dollar can serve as insulation, can be burned for heat, can stuff a pillow... there's better substitutes for all these things, of course, but the values of these things are so far away from their use value it's amusing that we consider use value much at all. None of which undermines the point that "use as money" can give things value, of course.
While I'm not sure if you're joking about mining as theft, if you're not, what you're saying makes perfect sense. Non ASIC based cryptocurrencies provide one of the greatest botnet monetization schemes I can imagine. Low-risk, hard to trace.
There's no such thing as a free lunch, and many people believed they could mine one lunch at no (or very little) cost and expect that lunch to last forever. That's very unfortunate, but who wouldn't see that such a utopia would come to an end. It's like thinking that electric cars will replace other cars in 10 years or 20 years (there's too much at stake , the environment being last on the list).
Even if the public was to embrace a such a "currency", governments would step in (and they did) realising they would have no control. The very fact that it became an object of speculation and was making people richer meant it wasn't a currency anyway, it was no better than property, therefore spawned a bubble as a natural phenomenon.
Bitcoin, like Punk certainly isn't dead.
Bitcoin sounded and looked like the sex pistols a year ago, now it sounds and looks like Green Day.
This week CEX/Ghash.io the largest bitcoin mining pool just launched their own auto-switching pool https://ghash.io/MULTI (Warning must sign up through CEX.IO). This will probably be the biggest one soon as its hashrate has tripled today already, but for the last few months the big three have been the following:
http://www.clevermining.com/ http://wafflepool.com/ https://www.scryptguild.com/
This is an always up to date profitability comparison of these pools vs. straight Litecoin mining made by Bitcointalk user Suchmoon: https://docs.google.com/spreadsheets/d/1VOAhFX1XRizdaTp71qnY...