Cryptocurrency mining

Thread Starter

wayneh

Joined Sep 9, 2010
17,153
Anyone else here a miner?

I'm sticking a toe in the water if I can get the right equipment. The days of CPU and GPU mining are fading or already long gone and there's virtually no way to make money without a dedicated ASIC machine. A computer that does just one thing, at full bore all the time. It's not easy to find a competitive ASIC machine without paying a prohibitive price.

It's an interesting market. There's a global supply/demand balance for hashing. That determines how many pennies you make per megahash or gigahash. If there's a lot of capacity online, the price goes down. When capacity dips, you get paid more.

Where I live, I have variable rate electricity and that, along with the hardware specs, determines my costs per gigahash. Back of the napkin analysis looks pretty good. I think I can pay off the rig in well under a year and then maybe make a little.

My goals are just knowledge and fun, but a buddy is looking at building a genuine business out of this. If you locate where electricity is cheap and leverage other resources (friends that do electrical work, family with outbuildings and spare electrical capacity, etc.), it looks like it could work.

Any words of wisdom?
 

xox

Joined Sep 8, 2017
577
The thing that really bothers me about Bitcoin and the like is they set a bad precedent. When the whole basis for an economic system is this kind of mechanism where magic numbers are constantly (and ever-increasingly!) being pulled from thin air, you quite naturally end up with a sort of arms race.

Imagine a dystopian future where people cannot even power their homes, simply because there are too many machines pulling precious power from the grid to make these computations. That future may not be as far off as we think. We really should be focusing on coming up with better approaches. (Proof-of-stake systems for example.)
 

Chris65536

Joined Nov 11, 2019
270
When the whole basis for an economic system is this kind of mechanism where magic numbers are constantly (and ever-increasingly!) being pulled from thin air, you quite naturally end up with a sort of arms race.
I'm pretty sure it's just the next bubble. No one will have seen it coming though.
 

shortbus

Joined Sep 30, 2009
8,797
Isn't taking something you didn't earn or isn't yours theft? The forum closed a thread a couple of months ago on someone doing this.
 

nsaspook

Joined Aug 27, 2009
8,653
The thing that really bothers me about Bitcoin and the like is they set a bad precedent. When the whole basis for an economic system is this kind of mechanism where magic numbers are constantly (and ever-increasingly!) being pulled from thin air, you quite naturally end up with a sort of arms race.

Imagine a dystopian future where people cannot even power their homes, simply because there are too many machines pulling precious power from the grid to make these computations. That future may not be as far off as we think. We really should be focusing on coming up with better approaches. (Proof-of-stake systems for example.)
The entire current Blockchain protected by processing power concept is self-destructive. Bitcoin mining is concentrated in China, where nearly two-thirds of all electricity is generated by coal power.
https://fortune.com/2021/04/20/bitcoin-mining-coal-china-environment-pollution/
One of the great Bitcoin unknowns has long been the amounts being produced, or "mined," in what's believed to be the top locale for mining the signature cryptocurrency: China's remote Xinjiang region. We got the answer when an immense coal mine in Xinjiang flooded and shut down over the weekend of April 17–18.

The blackout halted no less than one-third of all of Bitcoin's global computing power. "We'd seen estimates that high, but this shutdown confirms them," says Alex de Vries, an economist who runs the website Digiconomist, which tracks Bitcoin's energy consumption. "We also learned that the area in Xinjiang where all that mining happens is much smaller than previously believed. It underscores China's dominance in Bitcoin mining, and that dominance raises big security concerns."
It's a collectible with a current high value set by collectible holders, not a a reliable store of value.
 

Thread Starter

wayneh

Joined Sep 9, 2010
17,153
IMO it's a lot late on the curve for starting mining without Chinese electricity pricing (nearly free) with reasonable prices for equipment. The global chip shortage doesn't help either.
Getting your hands on competitive equipment is indeed a problem. But it is still profitable if you can. The Chinese government is cracking down on cryptocurrency, they apparently want to promote their own. Like anyone will trust that.
 

Thread Starter

wayneh

Joined Sep 9, 2010
17,153
Isn't taking something you didn't earn or isn't yours theft? The forum closed a thread a couple of months ago on someone doing this.
There’s no theft. A willing supplier (a miner) sells computing work to a willing buyer. The price is constantly changing to balance global supply and demand. Since computing power is the ultimate commodity, it’s quite competitive.
 

nsaspook

Joined Aug 27, 2009
8,653
In other words, exactly like a currency.
No, a real currency is backed by the force of governments using guns and prisons with the primary objective of stability and control of the money supply. People rate the 'value' of bitcoin to actual currencies, that's why there are exchanges where 'collectors' can trade their Bitcoin electronic trinkets for actual money. I'm not opposed to Bitcoin or other cryptocurrencies' I just don't fall for hype, in fact I was mining back in the days when a fast PC single core cpu had a change of cracking the block code for a Bitcoin. IMO the ultimate fate of most cryptocurrencies is unknown and unknowable now.
 
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Thread Starter

wayneh

Joined Sep 9, 2010
17,153
... stability and control ...
Dude, I'm pretty sure you lived through the Jimmy Carter era. My first mortgage was 15%. "Stability and control" is not the way I remember it. When it starts again, and we're dangerously close, it's going to be far worse than then.
 

nsaspook

Joined Aug 27, 2009
8,653
Dude, I'm pretty sure you lived through the Jimmy Carter era. My first mortgage was 15%. "Stability and control" is not the way I remember it. When it starts again, and we're dangerously close, it's going to be far worse than then.
My VA house load was 13%. The current weekly changes in exchange values for Bitcoin make that era look very stable.
 

Thread Starter

wayneh

Joined Sep 9, 2010
17,153
There is zero reason why crypto won't have the same fate in 10 years. We just don't know.
True. The hypothesis is that distributed 'control' is less likely to crater than a fiat currency. It's a believable hypothesis but testing may take a century or more. We DO know that fiat currencies fail fairly often. The USD has been an exception because of American exceptionalism.
 

djsfantasi

Joined Apr 11, 2010
7,825
Dude, I'm pretty sure you lived through the Jimmy Carter era. My first mortgage was 15%. "Stability and control" is not the way I remember it. When it starts again, and we're dangerously close, it's going to be far worse than then.
My first mortgage was 14%.

I re-mortgaged several times, taking cash out of equity while maintaining my ever affordable payments. Invested in my home. Then ultimately a second home. If you hit the curve at the right spot, you can make out.
 

xox

Joined Sep 8, 2017
577
My first mortgage was 14%.

I re-mortgaged several times, taking cash out of equity while maintaining my ever affordable payments. Invested in my home. Then ultimately a second home. If you hit the curve at the right spot, you can make out.
Nice!
 

Thread Starter

wayneh

Joined Sep 9, 2010
17,153
If you hit the curve at the right spot, you can make out.
A major decision my wife and I had to make in the mid-80s was, when buying a house, whether to liquidate assets or to leave them alone and borrow instead. We chose to borrow and the rest is history. The funds we left invested in the market grew WAY faster than our mortgage rate.
 

nsaspook

Joined Aug 27, 2009
8,653
True. The hypothesis is that distributed 'control' is less likely to crater than a fiat currency. It's a believable hypothesis but testing may take a century or more. We DO know that fiat currencies fail fairly often. The USD has been an exception because of American exceptionalism.
The problem with Bitcoin is that distributed 'control' is a myth. China controls mining and miners control Bitcoin because the money is in mining not transaction fees. Mining will end when 21 million 'coins' are mined. The block-reward regime will then end and maybe turn in to a transaction-reward regime with a small fraction of the profits made before. What's to stop miners from just increasing the number of coins by X times to keep the gravy train rolling or saying old coins that have never been traded will be mined again? If coin holders don't go along they can't make new transactions without miners, only view old ones in the Blockchain ledger.

And there there is always the insider problem on the whole network.
https://decrypt.co/51042/a-hypothetical-attack-on-the-bitcoin-codebase

Only six men can approve changes to Bitcoin’s code. Here’s what might happen if some—or all—of them were compromised.
While Bitcoin’s network is decentralized, this is arguably the most centralized element—and potentially its biggest weakness. What would happen if someone managed to infiltrate this code, and inserted a bug into the Bitcoin network itself? Could a government make a concerted effort to shut the whole system down?
Unlikely but a more likely attack will be on directly the cryptographic “one-way function” system. If a 10 minutes mark crack is found on the factoring system by a future QM code cracker all bets are off the table.
 
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