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gowlerk

Crypto pricing and cost of mining it

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Posted (edited)

I'm one of those who never trusted and never "invested" in any of this fad. The people I know who have are among the least sophisticated working class dreamer investors that I know. Which made me think of the fact that there's one born every minute. That did not stop me from watching in wonder and doing my best to understand this market for currency with no government involvement. Now I'm wondering if the current pricing still allows for those invested in mining it to make a profit. There is a lot of energy and hardware being wasted on it. And if they stop mining it how is the blockchain going to be maintained?

Edited by gowlerk

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1 hour ago, gowlerk said:

market for currency with no government involvement

That was the biggest selling point of crypto, and one of the reasons I even considered getting into it.

However, crypto failed for a few reasons. One, Bitcoin (and probably other Proof of Work coins) was deflationary. There was only a limited number going to be mined. This discourages actually using it. Their counterargument was that you can divide a bitcoin into so many sub-units, but this doesn't fix the underlying issue.

Second was the transactions - it was too slow, too inefficient, too expensive to actually use as a currency. Currency that you can't use as currency is about as valuable as a main canopy that doesn't fly. At least to me.

(on the above note - some can argue that crypto can be a store of value, like diamonds. But I think diamonds are ridiculously overvalued - they're useful in some tools like drill bits but their cost is more about suckers believing De Beers' marketing than anything else)

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2 minutes ago, olofscience said:

But I think diamonds are ridiculously overvalued - they're useful in some tools like drill bits but their cost is more about suckers believing De Beers' marketing than anything else)

Try to sell your diamonds if you bought them retail. They are nearly worthless. BTC may or may not be the same, there are enormous differences. One thing for sure is that without technology they are worth nothing. Less than thin air.

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9 minutes ago, olofscience said:

I think diamonds are ridiculously overvalued - they're useful in some tools like drill bits but their cost is more about suckers

Ya, it's hard to put a price on a lifetime of blowjobs. . .

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(edited)
2 hours ago, olofscience said:

Insightful contributions as ever /s

One of the many things I've learned from this place is that there's no point in writing multiple paragraphs when you can both effectively and obnoxiously illustrate YOUR point in one sentence - perhaps even with a bit of humor, if that's still a thing. 

Everyone who read that knows exactly what I'm talking about and it demonstrates how fucked up the mindset in this country really is - but what do you expect when it's deliberately chosen to be run by the 'best' of two evils?

 

2 hours ago, olofscience said:

Oh you're back.

Yes, unfortunately.  Awhile back I signed up on poker forum strictly for business issues, but I just had to click the 'supreme court' thread, didn't I?

Of course they were losing their mind as expected and even understandably so to a certain extent.  I was expecting it to be pretty bad especially since (to that community) it was a bit reminiscent of poker's Black Friday when many guys lost their livelihood and essentially had to move out of the country. (It's nice to see it coming back as a regulated market, but interestingly enough, only on a state by state basis.)

Anyway, there were some pretty unwarranted and off-putting remarks that gave me an imbalanced view of the left in general, so I figured I'd come here to read a bit and gain some perspective from several of the left leaning democrats/liberals/progressives that I still admire here - they may or may not know who they are, but in any event, you're certainly not one of them.

 

 

Anyway, sorry for the thread drift Ken, but let's face it, for the most part nobody really cares about crypto let alone mining crypto.  much of the gains over the last couple years or so came from stimulus checks that people didn't need, so it was a perfect time for those with a piqued interest.  Some made out, others not so much - but again no harm no foul.  The biggest losers in the end will be the greedy and bad actors.  Now that the charred forest is being cleared, there is room to grow.

Edited by Coreece

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10 hours ago, Coreece said:

but in any event, you're certainly not one of them.

Aw, I'm flattered.

10 hours ago, Coreece said:

Anyway, sorry for the thread drift Ken, but let's face it, for the most part nobody really cares about crypto let alone mining crypto.  much of the gains over the last couple years or so came from stimulus checks that people didn't need, so it was a perfect time for those with a piqued interest.  Some made out, others not so much - but again no harm no foul.  The biggest losers in the end will be the greedy and bad actors.  Now that the charred forest is being cleared, there is room to grow.

Lots of assumptions that I'll disagree with here, but at least this brings the discussion forward more than your previous comment. Took an essay, but you got there! See, that wasn't so hard, was it?

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(edited)
11 hours ago, Coreece said:

for the most part nobody really cares about crypto let alone mining crypto.

Technically it was interesting, enough to even get some large financial institutions' interest.

11 hours ago, Coreece said:

much of the gains over the last couple years or so came from stimulus checks that people didn't need

I don't think it's that clear-cut, BTC jumped to almost $20,000 in 2018, then it got hyped in 2021. Didn't change value much in 2020 when the stimulus checks were sent.

11 hours ago, Coreece said:

The biggest losers in the end will be the greedy and bad actors.

I have NO idea who will be the biggest losers in the end. I hope it's not poorer people hoping for a way out of their situation who were duped into this, but they always lose don't they? It's how the system is set up.

Edited by olofscience

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7 hours ago, olofscience said:
18 hours ago, Coreece said:

much of the gains over the last couple years or so came from stimulus checks that people didn't need

I don't think it's that clear-cut

Well it never is, is it?  But it's not unreasonable to conclude that they played a large role - even the confidence alone can create an upward trend.

 

7 hours ago, olofscience said:

BTC jumped to almost $20,000 in 2018

Then by early 2020 it had slowly declined to about $10,000.  After the WHO and Trumps covid announcement in March 2020 it dropped to $4,000 in one day.  After the first stimulus checks it rebounds back to $10,000 and pretty much stays there until the end of October 2020. 

 

7 hours ago, olofscience said:

it got hyped in 2021. Didn't change value much in 2020 when the stimulus checks were sent.

 By the end of November 2020 it gradually climbed to about 17-19k and then spikes to about $40,000 after the December 2020 and January 2021 Stimulus checks, and then to 65,000 in April 2021 with the $1400 dollar stimulus checks. . .

 

7 hours ago, olofscience said:
18 hours ago, Coreece said:

The biggest losers in the end will be the greedy and bad actors.

I have NO idea who will be the biggest losers in the end. I hope it's not poorer people hoping for a way out of their situation who were duped into this, but they always lose don't they? It's how the system is set up.

You're probably right, but I think there was plenty of warning about the risk with crypto and I don't think 'poorer' people were too surprised if they ended up losing a few thousand dollars on it.  Pretty sure they knew what they were getting into, but the potential for a quick fix was worth it to them, knowing that at any moment it could start bottoming out - tho maybe not as quickly as it did. 

And for the most part it was younger/newer investors, so maybe it served as a good lesson moving forward.

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Back to the cost of mining it. I now have a better understanding of the issue. There should be no problem. Supply and demand and the profit margin will take care of it. If it gets too expensive to mine some people will drop out and that will lower the cost. Although I don’t trust bitcoin it is a genius system.

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36 minutes ago, gowlerk said:

Back to the cost of mining it. I now have a better understanding of the issue. There should be no problem. Supply and demand and the profit margin will take care of it. If it gets too expensive to mine some people will drop out and that will lower the cost. Although I don’t trust bitcoin it is a genius system.

Pretty much, it's the same shit as anything else with larger companies sucking everything up.  Those that got in late won't have the capital to continue.  Larger companies will sell off their mined coins to cover operational costs - bonus if they have a good energy rate-lock.  Smaller and medium sized companies will either sell or merge, while others will be out for good especially if the price stays below 20k for an extended period.   With mining equities down, long term investors will start bottom-feeding when they're confident the timing is right.

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4 hours ago, gowlerk said:

If it gets too expensive to mine some people will drop out and that will lower the cost.

Actually it won't - the energy cost of mining a bitcoin is fixed (ish). Mining rate is measured in hashes per second (or millions or billions of hashes per second) and there's a specific number you need to find to mine a block.

What's not fixed is the price of bitcoin - if bitcoin is high, then it's "worth it" to spend more energy on mining it. If bitcoin value is (or will be) below the electricity cost to mine it, then you might as well do something else with your equipment...like something actually useful, like solving protein folding.

 

It's an incredibly wasteful system, at its peak it was using more than a small country's worth of electricity, to find arbitrary bit sequences that meet an arbitrary hash requirement. And it's designed to keep increasing the hash difficulty, wasting even more electricity. The designer assumed that improving computer chips would cancel out the increasing hash difficulty by consuming less electricity per hash. But that's not a given - Intel for one was stuck on the 14nm process node for years and years.

4 hours ago, gowlerk said:

it is a genius system.

It is, unfortunately its complexity also fools a lot of people who don't understand it so they throw their money at it.

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(edited)
3 hours ago, olofscience said:

What's not fixed is the price of bitcoin - if bitcoin is high, then it's "worth it" to spend more energy on mining it. If bitcoin value is (or will be) below the electricity cost to mine it, then you might as well do something else with your equipment...like something actually useful, like solving protein folding.

No doubt, even using a Bitmain AntMiner today at $.10/kwh will bring a loss of about -$1.75 per day. Compare that to [email protected] which will only cost about $100-200 per year -  and you can even use an old playstation3.

 

3 hours ago, olofscience said:

It's an incredibly wasteful system, at its peak it was using more than a small country's worth of electricity, to find arbitrary bit sequences that meet an arbitrary hash requirement. And it's designed to keep increasing the hash difficulty, wasting even more electricity. The designer assumed that improving computer chips would cancel out the increasing hash difficulty by consuming less electricity per hash. But that's not a given - Intel for one was stuck on the 14nm process node for years and years.

Just FYI

https://cryptopotato.com/intel-launches-new-energy-efficient-chip-for-bitcoin-mining

 

https://www.perpetualindustries.com/gem-cryptomining.html

 

Edited by Coreece

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19 minutes ago, billvon said:
On 6/29/2022 at 4:26 PM, Coreece said:

for the most part nobody really cares about crypto let alone mining crypto. 

After six fairly lengthy posts - sounds like you do.

Well ya, I'm nobody, right?

Made the comment because after several attempts to talk about crypto in the past, it never really took off.  Just comments about how it's just a scam and it'll never work and how all those people are just a bunch of idiots. . .you know, the usual.

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3 hours ago, Coreece said:

Just comments about how it's just a scam and it'll never work

I actually wish it would work. I don't think "those people" are idiots - when bankers got away with the 2008 crash getting even richer, it got me interested in cryptocurrency. Bankers get a huge cut right now for being the first middleman when a central bank creates fiat currency. They get additional cuts for moving bits around that cost them next to nothing. So I can see the attraction for a digital currency that cuts out the middleman. In Clayton Christensen's terms, this industry is ripe for disruption.

Unfortunately, it's clear now that proof of work cryptocurrencies are not the silver bullet...yet.

There's now Proof of Stake cryptocurrencies coming out, but I still doubt they've fixed the flaws to be actually useful. I wish I knew how to fix the flaws, but hopefully some clever people are working on it and will hit upon the solution eventually. In the meantime I do feel sorry for people who got into the current crypto hype and lost money.

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6 hours ago, Coreece said:

Well ya, I'm nobody, right?

Made the comment because after several attempts to talk about crypto in the past, it never really took off.  Just comments about how it's just a scam and it'll never work and how all those people are just a bunch of idiots. . .you know, the usual.

Sometimes, the truth hurts.

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30 minutes ago, ryoder said:
7 hours ago, Coreece said:

Well ya, I'm nobody, right?

Made the comment because after several attempts to talk about crypto in the past, it never really took off.  Just comments about how it's just a scam and it'll never work and how all those people are just a bunch of idiots. . .you know, the usual.

Sometimes, the truth hurts.

lmao, I totally had you in mind when I wrote that.  But ya, given how everything's going so well in the world today, it's absolutely mind-blowing how this possibly could've happened. . .

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(edited)
16 hours ago, olofscience said:

In the meantime I do feel sorry for people who got into the current crypto hype and lost money.

I think with bitcoin there were plenty of warning signs and opportunities to sell.  Even if you got in during that 1st year of covid you still either broke even or doubled your money even at today's price. I never invested in BTC, just used it to buy some security software and fund a few (very small) offshore investments. It was just easier that way.

I'm hearing more horror stories about Luna, I mean it was a new stablecoin  - "A cryptocurrency designed to hold a steady value, in sharp contrast to the extreme price volatility seen for Bitcoin and other tokens. Stablecoins are meant to be useful, not to make their owners rich by soaring in value." -   and after just a couple years it was completely wiped out in one day.

 

To keep the thread on topic, there were also a ton of big losers that bought into crypto cloud mining contracts.  I know of one guy that invested 40k in an open-ended deal.  After he made half of it back it started to lose money, so they sent him a letter saying that his contract is mining less than the daily maintenance fees required, so they're going to terminate the contract in 60 days or he could upgrade to a newer premium plan at a discount.

So basically, they used his money to build a better facility with more powerful miners, and then wanted to charge him more so he can lose less.  Apparently a lot of people got burned this way - and then they just keep building these massive mining farms that in a sense make it less "decentralized," if you will.

 

There was another guy who successfully mined on his own, but he put up $1000 just to see what this cloud mining was about.  He made $5,000, but had he just invested in the crypto itself, he would've made double that.

 

 

Edited by Coreece

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Crypto is an interesting underlying tech concept (blockchain) that will never do in the real world what it's proponents claim it can. It's a market that's absolutely saturated with charlatans and grifters, because the thing that makes it attractive to a certain personality type - "Hey isn't it cool how this is unregulated and a pure free market, no government interference, whoo!" - is the exact thing that attracts the scams.

You can do cool things with crypto, but what it's *actually* used for is a giant ponzi casino. I've made thousands off it in recent years, but if it all went to zero tomorrow I won't have lost a cent of my own money.

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42 minutes ago, mistercwood said:

Crypto is an interesting underlying tech concept (blockchain) that will never do in the real world what it's proponents claim it can. It's a market that's absolutely saturated with charlatans and grifters, because the thing that makes it attractive to a certain personality type - "Hey isn't it cool how this is unregulated and a pure free market, no government interference, whoo!" - is the exact thing that attracts the scams.

You can do cool things with crypto, but what it's *actually* used for is a giant ponzi casino. I've made thousands off it in recent years, but if it all went to zero tomorrow I won't have lost a cent of my own money.

The value of your current crypto holdings is your money; if it goes to zero you will have lost your money. That's reality. 

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Just now, JoeWeber said:

The value of your current crypto holdings is your money; if it goes to zero you will have lost your money. That's reality. 

In an absolutist sense, I guess? I put in a specific amount when I started, and I withdrew that same amount about six months later. I have continued to withdraw chunks as the market reached new highs, but none of my original capital has been at risk since late 2017. I liken it to playing with my winnings from a casino - if I go bust, I am no worse off than when I first walked in the door.

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3 minutes ago, mistercwood said:

In an absolutist sense, I guess? I put in a specific amount when I started, and I withdrew that same amount about six months later. I have continued to withdraw chunks as the market reached new highs, but none of my original capital has been at risk since late 2017. I liken it to playing with my winnings from a casino - if I go bust, I am no worse off than when I first walked in the door.

If you lose it, in an absolutist sense, it will no longer be yours. I eschew the idea that it's playing with the houses money. It's not theirs, it's yours. I watched a lot of people not log a win and end up with skittah. 

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