Bitcoin Mining for Fun and Profit

[Reub]

I'm thinking of getting in now. Do you think it's too late?

[AgAuMoney]

Right now the 60sec weighted average just dropped below $140.

It's all craziness!  The market is almost frozen.  All it will take to crash it is a few big holders starting to cash out.


So...  The deepest previous crash was from $33 to about $2.  How low is it going to crash this time?

All the way to $0.00 and never come back?

Or a correction from wherever it starts and eventually starts working back up...

A 50% to less than 100% correction?

A 10% to less than 50%?

Less than 10%?


I'm thinking it will lose at least 50%, but will start working back up.  But 50% from where?  The longer this craziness goes on, the deeper it will fall.

[MachineGhost]

From Mt. Gox:

Database access error, please retry later

LOL!  I'm glad my money is out.

If there were reliable charts, some Fibo analysis could probably pinpoint some potential bottoms.  I imagine transactons are operating all on emotion right now.

[Storm]

From Mt. Gox:

Database access error, please retry later

LOL!  I'm glad my money is out.

If there were reliable charts, some Fibo analysis could probably pinpoint some potential bottoms.  I imagine transactons are operating all on emotion right now.

BTW, if you just email MtGox they increase your daily withdraway limit to $10,000.  I'm still transferring my money out...

[melveyr]

Storm, what kind of gains have you had on your bitcoin adventure? Probably a bundle!

[Storm]

Storm, what kind of gains have you had on your bitcoin adventure? Probably a bundle!

Pretty good returns - I invested about $700 for a graphics card and about $100 worth of electricity a month for 18 months.  I cashed out about 133 bitcoins for $89 each or $11,837.  I should have probably sold 10 bitcoins a day to dollar cost average out, but I was afraid it would collapse sooner.  Honestly, the current price looks like the bull trap in this graph:

[melveyr]

This guy borrowed 30K of USD to buy bitcoins one month ago...
http://www.reddit.com/r/Bitcoin/comment ... ed/c8ehaox

It's looking good for him thus far 

[MachineGhost]

This guy borrowed 30K of USD to buy bitcoins one month ago...
http://www.reddit.com/r/Bitcoin/comment ... ed/c8ehaox

It's looking good for him thus far 

Its like the dot.com bubble all over again.

[Storm]

This guy borrowed 30K of USD to buy bitcoins one month ago...
http://www.reddit.com/r/Bitcoin/comment ... ed/c8ehaox

It's looking good for him thus far 

Yeah, that's kind of crazy - he actually didn't have any savings, only student loan debt, and took out max. credit card loans invested in Bitcoin.  Sure, it paid off for him - hopefully he's smart enough to cash out while he still can.  I'm happy some people got rich off this bubble.  To me, personally, this was a nice little surprise return that helps pay for a couple home improvement projects I'm trying to do right now, but honestly I look at this as luck, and don't plan on retiring tomorrow.

I am, however, still mining with my one computer...  That thing is generating about $15 a day right now for $3 a day of electricity... 

[MachineGhost]

I am, however, still mining with my one computer...  That thing is generating about $15 a day right now for $3 a day of electricity... 

What's going to happen to your $15/day once the ASIC miners hit the network?

[annieB]

Bits getting lots of coverage on Bloomberg TV.

[rocketdog]

This guy borrowed 30K of USD to buy bitcoins one month ago...
http://www.reddit.com/r/Bitcoin/comment ... ed/c8ehaox

It's looking good for him thus far 

That's a sure sign of a bubble. 

[melveyr]

Yeah after reading through the subreddit for a little bit I can tell there is kind of cult mentality happening. What a wild market! I just don't see the ultimate utility of the currency, so I don't think I would go long.

I see value in the USD because I need USD to pay my taxes and purchase government services, but what floor is there for bitcoin?

[dualstow]

Online currency bitcoin had 20 percent knocked off its price overnight on Thursday as one of its major exchanges became the victim of a hacking attack leading to a sell-off in the virtual currency after reaching an all-time high.

http://finance.yahoo.com/news/bitcoin-h ... 48677.html

[AgAuMoney]

None.  Even if there was a good supply of services that took bitcoin, the fact that they have to pay taxes in USD means that price levels in bitcoin will adjust given changes in the BTCUSD.  The only way it can avoid that is to maintain a close economy by wholesale tax evasion.

No floor, but USD is not the only currency in the world.  With the ease of transferring bitcoin, it makes it easier to leverage any price advantage anywhere.

[Storm]

I am, however, still mining with my one computer...  That thing is generating about $15 a day right now for $3 a day of electricity... 

What's going to happen to your $15/day once the ASIC miners hit the network?

Litecoin mining is where it's at right now.  I can generate about 6 LTC per day and the exchange rate has been fluctuating between $3.50 and $6 each.  Also, Litecoin uses the S-Crypt algorithm, which ASICs are currently unable to hash.  Even if you just want Bitcoins, it's still more efficient for me to mine LTC and exchange them into BTC at a rate of 0.03 BTC per LTC, because I can get a total of 0.18 BTC a day after exchanging, vs. only 0.06 BTC a day just mining.

[AgAuMoney]

None.  Even if there was a good supply of services that took bitcoin, the fact that they have to pay taxes in USD means that price levels in bitcoin will adjust given changes in the BTCUSD.  The only way it can avoid that is to maintain a close economy by wholesale tax evasion.

USD is not the only currency in the world.  With the ease of transferring bitcoin, it makes it easier to leverage any price advantage anywhere.

Nitpicking because the forex pairs handle everything else.  It's like you're getting upset if I only quote XAUUSD and not every single gold/currency pair in the world.

In this case the nits are elephants.

My point is that bitcoin doesn't care about any one currency so it won't matter how many pairs you cite.  It is no longer a 1:1 relationship but a 1:many.  Prices will not necessarily adjust based on a single currency or taxes in that currency because bitcoin is so easily transferred to another regime.

Gold is not nearly as easily spent or transferred to another party or another jurisdiction, which is the factor which transforms your nits into elephants.

Instead of thinking XAU to {CurrencyOfChoice} and trying to substitute bitcoin for XAU, think instead iron ore to the FTSE Global All Cap Index.  Neither one has any controlled or controlling relationship to any currency but both are influenced by many currencies.  You can quote iron ore as part of a pair, but any pair is artificial and only for your convenience, not a limit.  Unlike iron ore, there is essentially no cost in time or value to transfer bitcoin instantly to CHY, XAU, XPT, AUD, CAD, USD, JPY, BHD, OMR, MUR, MXN, XPD, etc. either simultaneously or linearly.

The difference is huge.  It is the financial equivalent of a room temperature superconductor or a real-time adjustable friction coating for any surface or replacement body parts on demand or whatever paradigm busting invention people have been failing to make.

Bitcoin is an entirely new way to track (account for) and transfer value, and requires a whole new way of thinking about value relationships.

This is, I suspect, why the FinCEN advisory letter came out last month.  That letter was an attempt to squeeze bitcoin into the existing model and the varied reaction to it indicates the confusion such a perspective causes in people with various understanding of the various aspects of bitcoin.

[flyingpylon]

Wow... BTC is going crazy!  $235 as I write this.

I bought in for a little "geek entertainment" (kind of like dropping a few bucks into a slot machine in Vegas) and I have to say I am getting my money's worth!

... and now the high is $239!

Anyone know of a dutch tulip store that accepts bitcoin? 

[MachineGhost]

I'm really regretting not using some charts now!

[Storm]

Wow... BTC is going crazy!  $235 as I write this.

I bought in for a little "geek entertainment" (kind of like dropping a few bucks into a slot machine in Vegas) and I have to say I am getting my money's worth!

... and now the high is $239!

Anyone know of a dutch tulip store that accepts bitcoin? 

I told you guys - any time I sell something that is a great buy indicator!    On a daily basis I find myself counting how much money I would have had if I didn't sell my BTC... My exit strategy sucks.

[Storm]

A cool site to check out is this one:

http://bitcoinity.org/markets?exchange=mtgox

[MachineGhost]

A cool site to check out is this one:

http://bitcoinity.org/markets?exchange=mtgox

Cool site.  The question is, where is all the demand coming from?!!

And how do the exchangers hedge off their Bitcoin risk?

[flyingpylon]

A cool site to check out is this one:

http://bitcoinity.org/markets?exchange=mtgox

That's the one I have been watching... it's quite addictive.  It would be even cooler if it made pinball machine noises as trades were executed and then a loud "pop" when hitting an all-time high!

[MachineGhost]

What risks?  They don't do market making.

edit: serious question.  I apologize if the tone seems off. 

The risk of holding Bitcoins to do exchanges into other currencies.  Don't they have to hedge the value of Bitcoins so they don't have profits or losses in currency terms?

[Jake]

Looks like today will end in tears for some and riches for others in the Bitcoin world.