On: Ask HN: What is the Bitcoin price level at which m...

[mkempe]

Mining at a loss is not a good idea.

Say your [marginal] production cost is USD 100, but BTC market price is USD 50. You could spend USD 100 to make 1 BTC, or you could turn off your mining equipment and spend USD 100 to buy 2 BTC...

Added: and when the market price goes back up to say USD 1000, would you rather have the 1 or 2 BTCs in hand?

[semi-extrinsic → mkempe]

No, that's right.

But there are (perhaps edge) cases where your operation cost is essentially zero. A couple of friends are using their gaming rigs for altcoin mining, and simultaneously as space heaters (we live in cold climate). If they stopped mining, they'd have to turn on the actual space heaters, no electricity cost saved. And they already have the hardware, so no expense there either.

[mkempe → semi-extrinsic]

There has to be some additional power expense, otherwise mining rigs would be sold in the "space heater" aisle.

[semi-extrinsic → mkempe]

No, simple thermodynamics ensures us that when no significant mechanical work is being done by the rig acting on the environment, and no significant exchange of mass between the rig and the environment is happening, all net electric energy going into the box will come out again as heat.

The reason why mining rigs aren't sold in the space heater aisle is that people usually don't buy $2000 space heaters.

[ravitation → mkempe]

He still said you have to "beat [the] cost of operations/electricity"... Which is the production cost.

You just aren't trying to make a return on the cost of your initial investment (CapEx).

[dx034 → mkempe]

But once you have the hardware, you only need to pay electricity. And that means that current capacity will stay online until ~$1,000 in regions with low energy prices.

[oreo81 → mkempe]

You also edited after comment...

[mkempe → oreo81]

Indeed. I inserted "[marginal]" to qualify the production cost, and "Added:" a question to crystallize the profit options.

[oreo81 → mkempe]

You also swapped out 'sell' for 'turn off'.

[mkempe → oreo81]

Nope.

[oreo81 → mkempe]

OMG, your own archive even shows it!

[oreo81 → mkempe]

But then you no longer have your mining hardware to mine with when it does go back up...I don't think you understand any of this.

[anigbrowl → oreo81]

The other poster said turn it off, not scrap it.

[oreo81 → anigbrowl]

He edited his comment. He had previously said "sell" not turn off.

[mkempe → oreo81]

Absolutely not; you may have misread? If I had considered selling off the capital there would have been some USD amount attached to that sale!

[oreo81 → mkempe]

Where does the 100 dollars to spend on 2 coins come from? Turning off your rig would give you 100 like selling would. It's already established you're a liar though.

[mkempe → oreo81]

From the same place as the money to pay for electricity would have come from... It's a simple arithmetic problem; John has USD 100, he can either spend it on electricity (to produce 1 BTC) or he can buy 2 BTC. Obviously owning 2 BTC is better than owning just 1, so the more profitable path is to spend the money buying BTC instead of paying for electricity to mine at a loss. I hope this helps.

[oreo81 → mkempe]

That's wrong, you don't get the money you'd save on electricity up front like you would from selling your rig. You're just digging yourself a hole.