As as long as you credit the mining reward to a wallet that has no connection to your real-world finances, and take other safety precautions, those coins would not be traceable to you. So this could be used to launder money through the Bitcoin network. The only evidence that you were doing something would be an abnormally large electricity bill.
Mind you, without this turning into Office Space, I'm sure there's more effective ways to launder money...
But if that's true, then I would expect the supply of mining capacity to settle above the point where it's profitable, because some fraction of miners don't really care about being profitable as long it's a reasonable loss.
See here for more on this topic: https://news.ycombinator.com/item?id=6291546
I liked mining with a GPU a while back, because I figured at least I could use the GPU for gaming as well and it just helped to keep me on the newer GPU cards with less guilt (since I want fancy GPUs, but almost never game so rarely use them).
If you can take the specs of the box and calculate that you won't make a profit even if it was running right now, why would you buy it? The company selling them is going to do badly.
It's like trying to sell shovels to gold prospectors, but for more money than the price of the gold that they'll dig up.
I'm sure that has happened quite a bit in actual gold rushes.
People aren't always rational, and no one really knows exactly how fast the mining difficulty will increase.
I'd have to think one of the things that would lead someone to buy a shovel is that they could get lucky and dig up some gold. If luck isn't a factor in BitCoin mining, then you're not even giving yourself a chance to overcome a negative expected value situation. It's like better a dollar on BlackJack and instead of dealing cards, they just give you back 99 cents. Nobody would play that game.
Most miners now participate in pools, which smooths out your returns by working together to mine blocks more regularly, which are then distributed based on the amount of work each miner contributed.
If you "solo mine" it might take, say, 1000 days to mine a block, but if you pool mine with 1000 other miners it might only take 1 day, giving you 1/1000 of a block reward each day (minus pool fees), vs 1 whole block reward every 1000 days (on average).
So, IOW, exactly like selling shovels to gold prospectors during a gold rush. Which is why the people selling shovels, or assaying services, or everything else that supports prospectors always, on average, do far better than prospectors during a gold rush.
That changes when the rush starts to end and become more of a rational market.
If one is familiar with the apparatus of neoclassical economic theory, one might expect producers to want to maximize producer surplus at the expense of consumer surplus. That's possible to the extent that demand is fairly inelastic, and there are barriers (could be short-term!) to other producers entering the market.
What they are doing, is profiting for a market that pay crazy rates on mining machines, by having profits on short term, but I think as soon selling them become less profitable than mining, they will switch back to purely mining.
I got an opportunity to buy (10) USB BE's at 0.11BTC per and even had enough coin purchased at well under $100, and I'm still worried about break-even. Even if I make my money back, I know in the back of my mind the opportunity cost of selling the miners now makes mining with them a theoretical loss. They'll make great mementos of the early ASIC's anyway.
People are getting rich quick (not a good thing) off of selling hardware to quick-to-decide geeks that like the idea of btc, and making money from a terminal line. I'll be the first to admit that I'm one of those geeks.
Pardon? Is there a stock market that trades in BTC?
It's all risky and low volume, as you might expect. Then there's also OTC with people doing auctions on forums, etc.
So the favorable interpretation would be that this is a toy exchange... The other possibility being a conveyor of unregistered securities.
ding ding ding
BTCTC also announced they were considering blocking all U.S. users to avoid confronting the SEC, even though I believe they run in another country.
If I a company builds hardware that can profitably mine bitcoins, it will keep the hardware and do the mining itself rather than selling it into the market.
It's entirely possible for a company to want to manufacture ASICs/boards and not want to run a server farm and deal with that level of IT for bitcoin mining.
The most plausible explanation I've heard is that these hardware companies need deposits to pay the development costs, then plan to run the chips themselves. Anyone who doesn't use such a strategy, is not expecting their customers to break even on their investment.
Which is a really awful comparison as real world mining requires things like:
- mining rights
- land title
- skilled workers
- processing plants that will take your ore
- government connections
Mining bitcoin requires only a computer or specialized gear.
Or in other terms, its an awful comparison as anyone can mine bitcoin, while only a very few select folks can mine in the real world.
In his case, someone who mines the bitcoins is implicitly making a bet on the future return, whose desired risk profile may be different from the hardware maker.
During the gold rush, eggs were selling for the modern equivalent of $83 each. Cheese was $700 per pound. And this was paid by miners who were making the equivalent of a few hundred bucks per day.
When crazy people want to give you a lot of money, you raise your prices. When they get over their madness, you can always lower them again.
The same thing is happening with mining hardware. Over the last two months, the difficulty has from 21m to 65m. My ASICs are generating 0.6 BTC per day versus 2 BTC / day in early July.
I cashed in 22BTC in January to buy two BFL Jalapenos. I paid an extra $100 each just last week to get the 2GH/s bonuses added, because I knew they'd be shipping soon. They just arrived with one bad power cord, I'm starting to recoup my losses now.
It's going to take some mental anguish to get myself over the idea that "I'll never have that much disposable money again, at least not in five more years of saving."
The calculator says I can still mine $512 in 43 days, but I'm skeptical it will be more like 75 or 120 days, given the pace of the various difficulty graphs that I've seen.
It's really true what they say, sell shovels.
I started with nothing but the computer on my back. I learned about bitcoin, started CPU mining when they were worth pennies. Accumulated 220 bitcoins through solo mining when blocks were worth 50 coins and learned to trade them at exchanges.
I bought and sold enough times that I was willing to add $50 to the mix. I made some bad trades and cashed out my $50 anyway in spite of the bad trades as $300, then bought in for $50 again.
Eventually I had 22BTC and the price was about $12.50. BFL was making their announcements about "shipping soon" again and I decided to take a risk and lay out $300 worth of bitcoins in mining equipment. I never paid $312. In fact I had already walked away with $300 separately.
Time passes. The price of a bitcoin approaches $300. I kick myself; I could have paid off all my student loans.
Time passes. The price of bitcoin is back around $115. It's getting harder to mine. I can't get back my 22BTC (or even close) with the GPU miner I'm using now. The community started to express doubt that BFL customers will get what they bargained for, as shipping deadlines continue to slip.
I keep my eye on the build queue and realize I'm next. I pay $200 (USD) to get 30% faster miners. At this point my GPU output is next to nothing. I'm making $6 twice a month... once a month.
Jalapenos arrive a few days ago. I plug them in (eventually) and I'm now mining 0.12 per day. I should have my $512 in about 43 days at the current difficulty. Next difficulty is estimated to be x1.32 on September 4, much sooner than that. I may never make back my $512 if this pace keeps up. Hopefully the exchange rates can keep pace with the difficulty.
At a minimum I should have made back my BTC investment in USD if the whole market does not go bust before then. Maybe it's 80 days. I still started with nothing and never risked more than $50, except for "play money."
It's all shoulda coulda "would have been" but you can see that 220 or even 22BTC is again well out of my reach.
I'll be happy for BFL when they release the Monarch line. It's still pretty easy for me to be not bitter when I'm at least breaking even.
Buying a new miner is a risky venture. Even in the face of the coming obsolescence of my existing (working) mining rig. Whether you use bitcoins or USD to do it.