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BTC under $500
- Thread starter TMCM
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Carbon_Rod
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Indeed.
Personally, I see the price being between $500 and $600 and staying there for the coming weeks.
butterfliesrpretty
2[H]4U
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oh damn 507 so tempted
I wonder why more people don't just buy BTC/LTC instead of mining it if they believe in it.
For example:
1. If I were to buy 1 BTC at today's current rate of around $500 I will have 1 BTC today.
2. But, If I were to buy 1 BTC worth of gear at the same price, let's say to mine Scrypt and convert to BTC... the approximate going rate is give or take 50 cents a kh/s. For $500 (again, all approximate numbers) I can get about 1 Mh/s. According to Waffle Pool, I can make 0.0045 BTC/day per Mh/s. For me to make 1 BTC, it will take... about 222 days (assuming it doesn't get any more difficult). To break even, it'll take additional days on top of that.
Honest question: Why do people mine? I'm confused. In both cases, regardless if the market goes up or down you still win/lose just like stocks. In #2, I feel you have much higher chances to lose through depreciation of gear + electricity + increase of difficulty.
***Excuse my numbers if they are completely off. This is a random thought I just had.
Dreamerbydesign
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Do you remember the beanie baby craze?
Carbon_Rod
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Yea... but I still don't get it... lol
Because, for me at least, my stuff is paid off... electricity here is pretty cheap, and so any LTC (or other coins) I generate are basically almost 100% profit no matter what price they are at. I don't have to figure out the easiest way to get my hard earned money into the system in the first place and those coins, once I have them in my wallet(s), don't feel so much like an investment.
Besides, the way I see it, if I generate the coins by mining them, if I happen to make a risky trade and lose a bit in the process, then it doesn't actually feel like a loss. I haven't invested any of my own funds into it so I can actually say for certain that I did not lose any of my own money. I guess the psychology of it is that I haven't yet equated those currencies to real world dollars so I will generally take more risks with them than if I had paid for them. This has proven both good and bad for me in the past. I've made some very risky trades that have made me a bit extra, and then there have been some risky trades that I've had to take small losses on because things didn't work out quite as planned. In the end though, I didn't actually lose anything because, like I said before, whatever I have generated is almost 100% profit for me.
Your numbers are mostly spot on. However, a few months ago, people were making an upwards of 0.01- 0.012 BTC per MH. Many people mining now have already paid of their gear and so it makes sense to continue since it's all pure profit.
Also if BTC goes back up to $900-1000 mining is going to be much more profitable again. I like having the slow and steady income GPUs bring instead of having to worry about timing the market. If everything crashes to zero, my GPUs are still worth something as well, probably would get 50% back on selling them worst case.
What you said above makes sense if the GPUs you are using were free at no cost to you. But, unless it was free... you have to make up that cost some how and it would take a lot of time to make up that cost even if the electricity is free. Now, if it was free... you are one of the few lucky outliers and kudos to you.
On a side note, it makes perfect sense that it helps you take risks in reinvestments within the crypto currency world. I guess that's one of the pros.
You made a pretty good point with early birds already making up the cost. You also made a good point that the value of BTC does affect the current profits. I guess in a perfect world we would have rising BTC value with increased difficulty. I guess that's asking for too much for now...
Dreamerbydesign
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What you said above makes sense if the GPUs you are using were free at no cost to you. But, unless it was free... you have to make up that cost some how and it would take a lot of time to make up that cost even if the electricity is free. Now, if it was free... you are one of the few lucky outliers and kudos to you.
On a side note, it makes perfect sense that it helps you take risks in reinvestments within the crypto currency world. I guess that's one of the pros.
If taking risk is considered a pro, count me out of that equation.
Carbon_Rod
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What you said above makes sense if the GPUs you are using were free at no cost to you. But, unless it was free... you have to make up that cost some how and it would take a lot of time to make up that cost even if the electricity is free. Now, if it was free... you are one of the few lucky outliers and kudos to you.
On a side note, it makes perfect sense that it helps you take risks in reinvestments within the crypto currency world. I guess that's one of the pros.
Actually, that's why I said "my stuff is paid off". It took some time to accomplish, but as of a couple months ago, anything I make now is almost 100% profit except for electricity costs. It also helps that some of the equipment I started with was also bought and paid for months prior to me even getting into mining.
Having done much more trading than mining in the past I can tell you the answer to this. It's because it depends on what your version of "believing in it" is, and there's two distinct versions. Here's the shortest version of it I can come up with.
Keep in mind most miners are traders to some degree, but a lot of traders are not miners at all and never have been.
Either you're:
A) Trying to make money solely by trying to increase the value of the currency (trader), or
B) Trying to make money by exchanging electricity for the currency. (miner)
By traders I mean in particular the ones with many-digit cash in it.
To a trader, a miner is inflation and dilution. They're putting more currency in circulation and devaluing the currency. Particulary miners mining altcoins. To the big boy btc traders altcoin miners are the absolute spawn of hell and all altcoins (or ones they don't have a stake in) are scams. Traders absolutely rely on the value of their coin to go up because if it doesn't they lose money, because they're not "creating" any coins.
"Believing in it" to a trader is anything that makes the value go up above all else. Any mining other than that required to secure the blockchain is dilution, but traders don't help secure the blockchain.
To a miner, a trader is market uncertainty. Their large market trades fluctuate the market, make it more difficult for the miner to make money, and can temporarily or permanently make a coin completely unprofitable to mine. A miner does want the market go up, but more than anything they want to keep it stable so, since they're "creating" coins, those coins have a reliable value to the miner. A miner can still make money if the market goes down, a trader never can (unless there's some crypto-derivatives I haven't seen). To a miner, a trader that can manipulate market prices with their trades and possibly make mining unprofitable is the absolute spawn of hell.
"Believing in it" to a miner is anything that keeps mining profitable above all else. The market going up is great, but not required as long as they can extract X value from mining. Miners help secure the blockchain.
The only common ground between a strict trader and a strict miner is securing the blockchain of what you have money in/are mining. Blockchain compromised, everyone loses (probably). Trying to stay non-judgemental but to be honest, due to the fact that miners are also traders but a lot of traders don't and have never mined, there is much more hate-spewing by traders than miners. They have nothing to lose from it.
In my opinion, actively helping secure the blockchain is "believing in it", but that's solely my opinion.
If you want to read some of it check out the bitcointalk thread on the "auroracoin 51% attack" (which may or may not have happened). It won't take long to figure out who the traders and miners are and the vitriol is particularly fierce.
I, as a foreign currency trader see that you seem to have a good grasp of the situation. The only thing I might add is that the miners are the ones actually creating wealth.(basically a paraphrase of what you said) Traders are just capitalizing on it. Current market dip could also be because a number of people are cashing out. I have not looked into the quantity of coins in the open market, nor do I know if that info is openly available.
Traders getting ticked off at the miners is craziness in action. They know how many coins are going to be available but they(traders) want to keep the value artificially high. They should forget about that and focus on the volatility only. I am not an ALT-coin trader but they should have an exchange that is patterned after foreign currency where you can make a profit in either direction. Because they do not that may be why the IRS concluded it is property rather than a "true currency".
Carbon_Rod
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I would actually like to offer a differing opinion on the current market and the reason for the "dip".
In my opinion, this isn't a "dip", it's the market finally realizing there's too much crap out there and not enough investors to go around. There's only a limited population of people who know about cryptos. Even fewer that are brave enough to want to actually invest in them. Lately, there have been too many junk crap coins released that are created just for shits and giggles or as a joke or a money grab or whatever. Too many of those coins have no business even existing in the first place. They were put on the market, had their 15 minutes of fame and now they offer no return. Well, who wants to mine/invest in a coin that offers no return? And with so many coins now not providing any return, what motivation is there to trust the next one? That's why the market is responding this way. Why should I buy up millions or billions of this next DOGEcoin clone (which has just had a couple of variables changed in its code) when it doesn't have the same exposure, the same hype, the same community, the same utility, and it will only be sitting at 1 Satoshi per coin in a matter of a week just like the last DOGEcoin clone?
If there's any similar situation in history, this would be just like the dot-com bubble of the 90's. And the market seems to be correcting the same way as well. Deflating all of the imaginary value that these coins have... if that puts most of these crap alt coins in the basement, great.
Like I said before, the market has already picked its winners of which there are maybe a dozen coins, if that (there are some obvious ones). The rest of what's left are just garbage -- copycats, charlatans, scams, jokes, money grabs, etc. which will eventually just die off.