Bitcoin mining

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MidwestMike
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Bitcoin mining

Post by MidwestMike » Mon Nov 27, 2017 9:14 am

electricity consumption.

Edit: The link is to an article written by Barry Ritholtz from his Big Picture blog.

BTW hovering your cursor over a link will display where the link goes.
Last edited by MidwestMike on Mon Nov 27, 2017 9:52 am, edited 1 time in total.

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Watty
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Re: Bitcoin mining

Post by Watty » Mon Nov 27, 2017 9:26 am

It would be good to edit your post to add a couple of sentences explaining what is relevant about that link.

MidwestMike
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Re: Bitcoin mining

Post by MidwestMike » Mon Nov 27, 2017 9:38 am

Watty wrote:
Mon Nov 27, 2017 9:26 am
It would be good to edit your post to add a couple of sentences explaining what is relevant about that link.
Nothing relevant regarding investing. I just thought the article would be of interest to readers here. If not, my bad!

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samsoes
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Re: Bitcoin mining

Post by samsoes » Mon Nov 27, 2017 9:44 am

MidwestMike wrote:
Mon Nov 27, 2017 9:38 am
Watty wrote:
Mon Nov 27, 2017 9:26 am
It would be good to edit your post to add a couple of sentences explaining what is relevant about that link.
Nothing relevant regarding investing. I just thought the article would be of interest to readers here. If not, my bad!
Naked links are against this site's Terms of Service. I've gotten nailed for this and have had such posts removed by the moderators. I suggest you edit the original post with additional explanatory information lest it suffers a similar fate.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. (Avatar is the statue of Gen. Warren at Little Round Top @ Gettysburg National Military Park.)

MidwestMike
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Re: Bitcoin mining

Post by MidwestMike » Mon Nov 27, 2017 9:48 am

MidwestMike wrote:
Mon Nov 27, 2017 9:14 am
electricity consumption.
The link is to an article written by Barry Ritholtz from his Big Picture blog.

BTW hovering your cursor over a link will display where the link goes.

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LadyGeek
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Re: Bitcoin mining

Post by LadyGeek » Mon Nov 27, 2017 4:54 pm

I agree about adding explanatory text - it helps the readers understand the context of the link. :wink:

MidwestMike - How is the cost of electricity related to investing in bitcoins?
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

MidwestMike
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Re: Bitcoin mining

Post by MidwestMike » Mon Nov 27, 2017 8:24 pm

LadyGeek wrote:
Mon Nov 27, 2017 4:54 pm
I agree about adding explanatory text - it helps the readers understand the context of the link. :wink:

MidwestMike - How is the cost of electricity related to investing in bitcoins?
It’s not, but Bitcoin is of interest here and I thought my link would be of interest too.

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yangtui
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Re: Bitcoin mining

Post by yangtui » Mon Nov 27, 2017 8:29 pm

LadyGeek wrote:
Mon Nov 27, 2017 4:54 pm
I agree about adding explanatory text - it helps the readers understand the context of the link. :wink:

MidwestMike - How is the cost of electricity related to investing in bitcoins?
If you want to mine crypto then the cost of electricity is critical.

Jack FFR1846
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Re: Bitcoin mining

Post by Jack FFR1846 » Mon Nov 27, 2017 8:54 pm

As my son and his friend used to mine bitcoin (friend still does), a practical consideration is to only mine when the house needs to be heated. The heat generated by the mining units heats the house, providing some use rather than wasting the heat.
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Valuethinker
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Re: Bitcoin mining

Post by Valuethinker » Tue Nov 28, 2017 6:26 am

Jack FFR1846 wrote:
Mon Nov 27, 2017 8:54 pm
As my son and his friend used to mine bitcoin (friend still does), a practical consideration is to only mine when the house needs to be heated. The heat generated by the mining units heats the house, providing some use rather than wasting the heat.
You live in New England? The highest electricity rates in the USA other than Southern California?

I do know the UK numbers without checking New England EIA stats. I suspect the price ratios are similar?

A kwhr of electricity costs me roughly 15p (say 22 cents USD).

A kwhr of natural gas costs me roughly 5.5p (say 8 cents) on 90% furnace efficiency. If I heated by oil then it would be more like 8 p (unlike gasoline, heating oil is only taxed here at 5%, as is all domestic energy).

I agree it's good to use waste heat but it's expensive heat unless you heat by electric resistance.

Valuethinker
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Re: Bitcoin mining

Post by Valuethinker » Tue Nov 28, 2017 8:31 am

LadyGeek wrote:
Mon Nov 27, 2017 4:54 pm
I agree about adding explanatory text - it helps the readers understand the context of the link. :wink:

MidwestMike - How is the cost of electricity related to investing in bitcoins?
Lady Geek

Via the mining mechanism. The algorithm makes it harder and harder to generate new coins, with each new one generated.

Thus the electricity cost keeps rising. One estimate is that 0.12% of world electricity consumption (about that of Ireland) is now consumed mining bitcoins. https://digiconomist.net/bitcoin-energy-consumption via http://www.antipope.org/charlie/blog-st ... d-tha.html

Higher monetary values make mining more economic so production can move back to higher cost countries. However the majority of mining is now done in places like China, where electricity is highly subsidised. Unfortunately it is also highly polluting (80% of Chinese electricity comes from coal and much from stations that lack modern emission controls) so that's not so good.

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jadd806
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Re: Bitcoin mining

Post by jadd806 » Tue Nov 28, 2017 8:59 am

Jack FFR1846 wrote:
Mon Nov 27, 2017 8:54 pm
As my son and his friend used to mine bitcoin (friend still does), a practical consideration is to only mine when the house needs to be heated. The heat generated by the mining units heats the house, providing some use rather than wasting the heat.
Does this even provide a noticeable amount of heat without multiple machines mining at once? I have a very high end gaming PC and when running the CPU and GPU under heavy load (a similar situation to cryptocurrency mining) I don't notice any change in temperature in the room.

Meanwhile I run my 3D printer for an hour (same room, same location as my PC) and it heats the room up by 5 degrees.

I don't really see the point of "mining" from a financial standpoint unless one has access to free or nearly free electricity. I remember I ran the math using Massachusetts electricity rates back when Bitcoin was at like $200. My conclusion was that the cost of the electricity would outweigh the value of the cryptocurrency gained through mining. The only way to be profitable in that situation was to bank on the future appreciation of the cryptocurrency. Buying the cryptocurrency outright was simply more efficient than mining it. I imagine this holds true today unless you live in China or have a rental agreement where utilities are included. Even then, you need to factor in wear and tear on your hardware.

northtexan
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Re: Bitcoin mining

Post by northtexan » Tue Nov 28, 2017 2:46 pm

I few weeks ago I decided to get into bitcoin by mining to minimize the risk of the volatility. My basis was that If I had money invested in hardware that I could resale if I needed to I would minimize my risk. I spent about $1200 on hardware which I got a good deal on. If I were to sell it on eBay now, based on recent auctions I would be able to get about $200 more than what I paid. So far I get about $5-6 a day in bitcoin with the electricity cost being about $0.80-0.90 a day. I do have risk by holding on to the bitcoin that I do mine but if it continues up it will pay for the hardware fairly quickly. It is a good hobby and I can always utilize the hardware to build a new desktop in the future.

It does create a lot of heat, but since it is the winter I turn off my heater and keep the miner going and it keeps my apartment(800 sqft) nice and warm.

Stormbringer
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Re: Bitcoin mining

Post by Stormbringer » Tue Nov 28, 2017 8:34 pm

Beware of websites that hijack your computer with Coinhive and other utilities to mine bitcoins.
"Compound interest is the most powerful force in the universe." - Albert Einstein

aristotelian
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Re: Bitcoin mining

Post by aristotelian » Tue Nov 28, 2017 9:15 pm

Here is a question that occurred to me. If the price of Bitcoin is determined by the difficulty to mine it, that means at least to a great extent the price is dependent on the price of electricity. (Particularly in China where a lot of the Bitcoin mining is taking place). Even when the demand for Bitcoin stabilizes, won't this mean that the price will always be in flux? How can that be acceptable for the purposes of becoming a digital currency?

Snailplant
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Re: Bitcoin mining

Post by Snailplant » Tue Nov 28, 2017 10:35 pm

aristotelian wrote:
Tue Nov 28, 2017 9:15 pm
Here is a question that occurred to me. If the price of Bitcoin is determined by the difficulty to mine it, that means at least to a great extent the price is dependent on the price of electricity. (Particularly in China where a lot of the Bitcoin mining is taking place). Even when the demand for Bitcoin stabilizes, won't this mean that the price will always be in flux? How can that be acceptable for the purposes of becoming a digital currency?
You have that backwards, the difficulty to mine it is determined by the price. If the price of bitcoins went up 10x, it is a larger incentive for people to invest in mining it causing the difficulty to go up. Likewise, if the price goes down, it's no longer profitable to mine due to electricity costs and the difficulty goes down until it once again becomes profitable. People believe China has lots of bitcoin mining because they think the miners are getting electricity at a fraction of the cost, so it becomes profitable for them to mine while it's prohibitively expensive for everyone paying full energy costs.

Valuethinker
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Re: Bitcoin mining

Post by Valuethinker » Wed Nov 29, 2017 7:56 am

northtexan wrote:
Tue Nov 28, 2017 2:46 pm
I few weeks ago I decided to get into bitcoin by mining to minimize the risk of the volatility. My basis was that If I had money invested in hardware that I could resale if I needed to I would minimize my risk. I spent about $1200 on hardware which I got a good deal on. If I were to sell it on eBay now, based on recent auctions I would be able to get about $200 more than what I paid. So far I get about $5-6 a day in bitcoin with the electricity cost being about $0.80-0.90 a day. I do have risk by holding on to the bitcoin that I do mine but if it continues up it will pay for the hardware fairly quickly. It is a good hobby and I can always utilize the hardware to build a new desktop in the future.

It does create a lot of heat, but since it is the winter I turn off my heater and keep the miner going and it keeps my apartment(800 sqft) nice and warm.
The economics do shift with the rising price of bitcoin.

What is your electricity cost per kwhr? Texas retail is relatively high (much lower than California or New England, though)?

Did you buy specialized hardware? Ie a bitcoin engine?

Valuethinker
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Re: Bitcoin mining

Post by Valuethinker » Wed Nov 29, 2017 7:58 am

Snailplant wrote:
Tue Nov 28, 2017 10:35 pm
aristotelian wrote:
Tue Nov 28, 2017 9:15 pm
Here is a question that occurred to me. If the price of Bitcoin is determined by the difficulty to mine it, that means at least to a great extent the price is dependent on the price of electricity. (Particularly in China where a lot of the Bitcoin mining is taking place). Even when the demand for Bitcoin stabilizes, won't this mean that the price will always be in flux? How can that be acceptable for the purposes of becoming a digital currency?
You have that backwards, the difficulty to mine it is determined by the price. If the price of bitcoins went up 10x, it is a larger incentive for people to invest in mining it causing the difficulty to go up. Likewise, if the price goes down, it's no longer profitable to mine due to electricity costs and the difficulty goes down until it once again becomes profitable. People believe China has lots of bitcoin mining because they think the miners are getting electricity at a fraction of the cost, so it becomes profitable for them to mine while it's prohibitively expensive for everyone paying full energy costs.
In addition, bitcoin was a way around Chinese foreign exchange controls. A way to get Renimbi into something else. Stock market in China is hugely volatile and there have been clampdowns on property speculation (and bad signs of what has been called the world's largest bubble, ever). So bitcoin becomes a legitimate investment.

And now the authorities are clamping down.

inbox788
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Re: Bitcoin mining

Post by inbox788 » Wed Nov 29, 2017 4:20 pm

yangtui wrote:
Mon Nov 27, 2017 8:29 pm
LadyGeek wrote:
Mon Nov 27, 2017 4:54 pm
I agree about adding explanatory text - it helps the readers understand the context of the link. :wink:

MidwestMike - How is the cost of electricity related to investing in bitcoins?
If you want to mine crypto then the cost of electricity is critical.
Mining bitcoin consumes real resources like electricity and processors. I'm not sure how this economic activity isn't like breaking windows.
https://en.wikipedia.org/wiki/Parable_o ... ken_window
http://fortune.com/2017/10/09/bitcoin-c ... nvda-gpus/

"Bitcoin’s current estimated annual electricity consumption stands at 29.05TWh."
"equivalent of 0.13% of total global electricity consumption."

Not sure I believe that number given computers and related equipment use 32 Billion kWh here in the US.
https://www.eia.gov/tools/faqs/faq.php?id=96&t=3

northtexan
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Re: Bitcoin mining

Post by northtexan » Thu Nov 30, 2017 10:52 am

Valuethinker wrote:
Wed Nov 29, 2017 7:56 am
northtexan wrote:
Tue Nov 28, 2017 2:46 pm
I few weeks ago I decided to get into bitcoin by mining to minimize the risk of the volatility. My basis was that If I had money invested in hardware that I could resale if I needed to I would minimize my risk. I spent about $1200 on hardware which I got a good deal on. If I were to sell it on eBay now, based on recent auctions I would be able to get about $200 more than what I paid. So far I get about $5-6 a day in bitcoin with the electricity cost being about $0.80-0.90 a day. I do have risk by holding on to the bitcoin that I do mine but if it continues up it will pay for the hardware fairly quickly. It is a good hobby and I can always utilize the hardware to build a new desktop in the future.

It does create a lot of heat, but since it is the winter I turn off my heater and keep the miner going and it keeps my apartment(800 sqft) nice and warm.
The economics do shift with the rising price of bitcoin.

What is your electricity cost per kwhr? Texas retail is relatively high (much lower than California or New England, though)?

Did you buy specialized hardware? Ie a bitcoin engine?
my electric costs are about 10 cents per kWh at the moment. I am about to renew my electric contract thought and hope to bring it down.

I basically built my own computer. I use 2 brand new top of the line graphics cards and one graphics card that is a year old.

BTW I am not mining bitcoin. I am mining alternative coins which then get transferred into bitcoin. Directly mining bitcoin required specialized mining hardware. The alternative coins can be mined with CPUs and GPUs.

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