Bit coin mining... can it still be done profitably?
- Thread starter jem
- Start date
The guy that started Litecoin, Charles Lee, calls mining for bitcoin a "sucker's bet." That encapsulates it. You will spend big money nowadays on mining gear and:
-You don't know when and if you will get your gear ultimately. *Look up all the mining gear scams.
-You don't know how long until your gear becomes obsolete or what the resale value of the gear will be.
-Run the numbers on projected bitcoin production v. costs and ask, how is mining better than buying the coins outright?
-You could buy mining contracts instead and avoid the hassle of running the rigs, but the mining shares seem to be losers too.
*I have never mined but have looked into it. My opinion is informed. If someone else has experience and knowledge of mining that differs from mine, I am all ears.
-You don't know when and if you will get your gear ultimately. *Look up all the mining gear scams.
-You don't know how long until your gear becomes obsolete or what the resale value of the gear will be.
-Run the numbers on projected bitcoin production v. costs and ask, how is mining better than buying the coins outright?
-You could buy mining contracts instead and avoid the hassle of running the rigs, but the mining shares seem to be losers too.
*I have never mined but have looked into it. My opinion is informed. If someone else has experience and knowledge of mining that differs from mine, I am all ears.
Pardon my ignorance, but I still don't get bitcoin mining.
My understanding (?) is that miners use computers to "solve" problems, then get rewarded for their efforts with bitcoins.
But what are these "problems"? Random exercises for the Hell of it? If so why would their be a financial reward at the end? Or, is it "problems needed to be solved by somebody".. for which bitcoins are compensation? Who determines what those problems are?
Please enlighten....
My understanding (?) is that miners use computers to "solve" problems, then get rewarded for their efforts with bitcoins.
But what are these "problems"? Random exercises for the Hell of it? If so why would their be a financial reward at the end? Or, is it "problems needed to be solved by somebody".. for which bitcoins are compensation? Who determines what those problems are?
Please enlighten....
Mining is the heart of the Bitcoin-protocol. The miners are the Accountants of the Ledger which holds virtual/digital-properties. These accountants check and validate if properties are real (not double-spend or counterfeited) and who are the rightful owners.
This is nothing new (you don't need to solve a hard Sudoku puzzle for this) , but what is, is that this Ledger is distributed (not one central ledger nor central accountant) over thousands of places all over the world and this computerized Ledger is updated with tens of transactions every second... so who holds the real Ledger? (the one in Australia is different than one in America). This is solved by a Proof-of-Work protocol: every accountant has to solve a very hard Sudoku-puzzle for which once every about 10 minutes there is an accountant who really solves it first. This account's version of the Ledger will be the one which is the now the only valid Ledger, and all other accountants will honor that (more than 50% admits that the Sudoku is solved) and all the accountants will start to solve another Sudoku for the next 10 minutes.
To incentivize accountants (the Miners) to follow this procedure and keeping the distributed Ledger 100% valid, they get 25 Bitcoins for a solved Sudoku.
Hope this explains it a bit....
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1800 BTC are mined per day at the current rate. The daily reward will drop over time. The next time it drops is called the halving. BTC is at $355 as I speak. Do you have the specs on the machine you are thinking of buying/ building?
Not considering mining myself.
Oh, yes: a solo-miner will very likely not solve the puzzle twice (which is needed to be profitable).
Consider this: currently, for $10.000 you can buy (if you are lucky) a 8.000 Gh/s machine. With this machine and the current difficulty of the puzzle (244,314,890 Gh/s) you have a chance of 0.00003 to solve one puzzle. There are 144 puzzles a day: is 0.00432 change per day. So once per 231 days you could be lucky to solve one. But then you only break-even: you need two solves for a profit or 462 days.
It's even much worse, because the puzzle-difficulty is growing exponential. The current difficulty is 244,314,890 but 231 days ago this was 18,764,744. So a 13 times harder to solve puzzle. Compared to 462 days ago even 1600 times harder.
That is why every one who knows a bit of Bitcoin is telling: do not mine but buy Bitcoins instead: 462 days ago for $10.000 you could have 110 Bitcoins!
No currently they mine 3600 BTC per day.