The Mining Play

Crypto Mining ⚒ & Trading


#42

IMO, due to the nature of cryptocurrencies and how they are created, you will always have a higher percentage of worthless cryptocoins. It’s due to the fact “regulation” of the coins occurs through market forces rather than government regulation. If someone creates a coin to benefit themselves and not the market, the market can just ignore the coin and it eventually disappears. I feel the the government regulated financial markets work in the opposite fashion. Those on the inside, can coordinate and collude to their own benefit, and hide behind the “government regulations” saying "we followed the letter of the law. In the meantime, the regular investor gets hurt.

You have already seen this global community oversight through the hard forks in BTC in 2017, namely Bitcoin Cash and Bitcoin Gold where very large Chinese based miners (those mining millions of USD of coins per day) tried to get BTC algo changed to their benefit. The rest of the BTC community said no. BTC currently at 11.6k, while BTH at 1.6k and BTG at 213 dolars, 10% & 1.5%. The global community has spoken.

IMO, investors have to change the way they think about investing when approaching cryptocurrencies. Yes, it doesn’t have government regulation, but isn’t that the true definition of a free market? Cryptocoins took a hit this week due to the claims of more attempted regulation by China and South Korea. But China’s previous regulations have failed and longtime cryptocoin investors in South Korea aren’t worried about the new alleged regulations. https://www.investing.com/news/stock-market-news/old-hands-in-south-korea-bitcoin-market-unfazed-by-threats-of-ban-1118186 IMO, those coins have now changed hands from the weaker uneducated investor to the stronger investor more likely to hold the coins. True market forces at work.

IMO cryptocoins are here to stay as a hedge against every government. If they US wants to regulate my trading, mining, or coins, I can easily switch to another exchange in Singapore, Germany, Britain, etc. And if they want to regulate, I can easily change again. IMO you will not get world government unanimity on cryptocoins. They can’t agree on a nuclear North Korea, cryptocoins, no way.

I remain very bullish on cryptocoins due to their free market nature and inability of governments to regulate them. Does that mean I will dump every single dollar I owe into them? No. Just like I wouldn’t do the same with any other one investment. But I sure as hell have added it to my portfolio and I am increasing my cryptocoins everyday through mining them.


#43

Great post, jak. Care to share any coins/tokens that you’re particularly bullish on?


#44

Robert Shiller said bitcoin reminds him of “tulip mania” centuries ago in the Netherlands.

Tulip mania (Dutch: tulpenmanie) was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.[2] It is generally considered the first recorded speculative bubble;

At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker.


#45

Robert Shiller - the same guy that one month ago said it’s okay to play with BTC and it’s impossible to know if it’s gone too far.

Also, you’d think a scholar of his stature would know that historians have largely debunked the myth that is tulip mania.


#46

It was no myth. https://en.wikipedia.org/wiki/Tulip_mania

I think tulips are a better investment; they are beautiful after all!


#47

https://muse.jhu.edu/article/245479

http://press.uchicago.edu/Misc/Chicago/301259.html

There are countless others but I’ll defer to these rather than Wikipedia.


#48

Looking at the links you provided. It doesn’t debunk the tulip bubble at all. Rather it suggests only a relative small segment of the population was involved in the mania…and true to form only a small segment of the current population is involved with the bitcoin pyramid scheme. Any way, I have wasted enough time here. I’ve look into it enough to know to avoid. Good luck all!


#49

You went from tulip mania to pyramid scheme. I’m done as you’ve shown you really are clueless when it comes to BTC and crypto in general. I’ll take my 15x vs the -95% in the “next week” stock.


#50

Blame it on Medinah…it has made me risk adverse!


#51

There’s always going to be doubters, But the future will prove them wrong.


#52

Remember this famous phrase lol, A Gold Mine Is a Hole in the Ground with a Liar at the Top, we all know it’s not true, well maybe sometimes ah ah, same thing for the tulip mania and cryptos thing.


#53

MG I hope they make a lot of money better than being stuck with this Piece ____I let you fill in the blank still No News and a 95% loss on paper.


#54

Karl’s BLOK has been up every day this week in tight trading. Nice pick Karl…


#56

Jak, since we opened this new thread for you guys to discuss this, maybe you could please post a brief explanation of how a bitcoin or similar crypto is “mined” and then traded or spent. How are some companies accepting it for payment?
I admit I haven’t taken time to research it, a short course in coin mining 101 might be informative to a lot of us who don’t understand the concept and make this thread more relevant to all who spend a lot time here.
Thanks!


#57

Similar to mining in the common sense of the word. Just like you would mine for gold, you mine for cryptocurrency, just using computer. Instead of posting a huge post over the process (trust me the remaining part of my post will be long enough), BTC Wiki https://en.bitcoin.it/wiki/Mining gives a good overview. Make sure to look at the links in the “see also” at the end. The process remains the same for other cryptocurrencies, the other cryptocurrencies just use different algorithms and provide different rewards. The computer you set up to mine works to confirm the transfer of a cryptocurrency from one user to another. Numerous other computer around the world also work to confirm this transaction. Once the transaction confirmed, the blockchain (ie: ledger) get updated to show the transfer. As a miner, I get rewarded for this work with cryptocurrency.

IMO, mining BTC coin directly, by yourself, individually would not be a profitable endeavor. You may have to mine for over a year, just to get one reward. Or you would have to spend millions of dollars to create a mining farm to do your mining. The difficulty (the amount of time it takes to confirm transactions to get a reward) are too high for small miners. What does a small miner do. Instead, small miners band together to mine in pools.

Mining pools are groups of small miners who work collaboratively to confirm the mining transactions to get the reward. If I combine my mining power with 10000 other small miners, we each take a small portion, and we could cut our reward time down to a few days. We then split the reward between everyone who contributed to confirming it. This improves my rewards, but BTC coin itself still requires a ton of work to get a reward. Even with the split, I may only earn a buck a day.

Cryptocurrencies are set up, however, to require more and more work to receive less and less reward as time goes on. Similar to mining precious metals from the ground. When BTC coin itself started mining years ago, it might have only taken confirming 10 transactions to get 100 BTC. Years later, now it may take millions of confirmations to get 10 BTC. The BTC algorithm only has a set number of coins that can ever be mined, 21 million (other cryptocurrencies have different limits). As time goes on, it will take longer and longer for less reward. Just like precious metals, those who have BTC (either through mining or trading) and hold their BTC without selling will see an increase in price. Just like buying and holding precious metals. Only so much precious metals exist and the more limited the market gets, the higher the price. So what can a small miner do; a buck a day sucks. Now we get into the arena of other cryptocurrencies.

Other groups have launched their own cryptocurrencies to rival BTC coin itself. Because they are based on the same principal of limited number of coins, but the coins are younger, I can get higher rewards for mining them.
Cryptocurrencies can serve other purposes than being just a unit of value. For example the coin XRP Ripple works as a clearhouse for confirming other transactions of value (ie: fiat currencies, commodities, frequent flier miles, etc). https://en.wikipedia.org/wiki/Ripple_(payment_protocol)

As you can see by the following link https://www.coinwarz.com/cryptocurrency numerous coins exist (these are just some of the big ones, many more exist). The market uses these coins for various reasons, but each pays a reward for confirming the transactions. As you can see by the list, BTC is only the 10th most profitable coin to mine right now. But just like a regular market, the profitability of a coin may rise and fall on a daily basis. What a small miner to do; I can’t sit around and switch my machines from one coin to another. We use multipools.

A mining multipool is just like a regular mining pool where small miners band together to mine. The difference occurs because the pool checks to see what coin has the most profitability and automatically sends the transactions to my miner which will generate the most profit. This allows me to set my miner to work only for this multipool, and they do the switching for me. The multipool owner takes a very small percentage for this work. This allows my miner to generate the most profit. I may now be making 5+ dollars a day. Further, besides pools which switch algorithms, you can have mining software which switches multipools. I use a software called Awesome Miner. This software allows me to designate which multipools I would like to mine from (some multipools have less owners fees or mine different sets of coins). The software then looks to see which multipool then provides the highest reward and switches between the pools and the coins within the pools to give me the best reward. I have now bumped my reward up to maybe 7+ dollars a day.

Mining different coins, creates its own issues, however, in now I may have 10 different coins. I don’t want 10 different coins because I only want the most stable coins. Most good multipools are set up with a autoexchange function. The multipool has an agreement with a cryptocoin exchange. I tell the multipool the coin in which they should reward me. The multipool then takes all the other coins I earn, automatically exchanges them on the coin exchange for the coin I want, then rewards me with the coin for which I asked. I only use multipools which have an autoexchange function.

The above is the basic functionality of mining. A well set up small miner with with 4-5 machines costing less than $10k total to set up could easily earn $40-50 bucks a day. I have machines which have run for 3+ years so I have spread the start up cost over time and I am definitely in the black. I like the mining function to serve as an offset against price swings in the crypto market. It works just like dividends with stocks and the idea of dollar cost averaging. I haven’t focused on too much trading of cryptos, but I have done some.

This gets us into [quote=“TexHorn, post:43, topic:2189”]
Care to share any coins/tokens that you’re particularly bullish on?
[/quote]

IMO, I do not like to hold any other the smaller coins. I prefer to have coins with a significant trading volume. In this way I know I would not get stuck with a coin I could not trade or would get little value as no one else wishes to buy it. If you use the link above and change the sort from profitability to exchange volume, you can see BTC dwarfs all the other ones. This link gives an overview of the bigger coins. http://www.visualcapitalist.com/comparing-bitcoin-ethereum-cryptos/ I posted above about my opinion on BTC. IMO, I would have it as a hold until the hard forking issues resolve themselves. IMO I like ETH Etherium https://en.wikipedia.org/wiki/Ethereum, XRP Ripple, and XMR Monero https://en.wikipedia.org/wiki/Monero_(cryptocurrency) for different reasons. ETH and XMR’s ability to be used for other businesses and transactions (see proposed uses) IMO shows a potential for enormous growth into everyday use unrelated to cryptocurrencies, giving them a staying power other cryptocoins may not have. XMR’s ability to be untraceable has many benefits. In effect XMR is cryptocurrencies version of cash. People may say it can be used for illicit transactions, true, but I don’t see drug dealers using debit cards, but greenbacks. Cash will always have its place and IMO XMR is cryptocash.

The above is just a very short overview. I have, and will continue to research a lot on cryptocurrencies and find new info, uses, etc. all the time. Please don’t take any of the above as investment advice! Just like any investing, cryptocurrencies involve risk. I have only provided my opinion. I have decided to make cryptocurrencies as part of my portfolio, but they are NOT my total investments, you need to make your own decisions and reach your own comfort level. IMO, cryptocurrencies are here to stay and a person could generate some very good wealth from them.


#58

Thank you so much, jak, on behalf of the readers of this thread!
So if I read this correctly, the mining part is like setting up servers to crowd compute research data, except with “accounting” for the transactions. (Or that music sharing thing which used private personal computers)
And yes, readers are warned that this is risky as most investing is, and the forum is provided solely for discussion and will not be liable for any use of the information presented here. :money_with_wings:


#59

Major companies see the benefit of the blockchain tech which underlies all cryptocurrencies.


#60

I believe blockchain technology is here to stay and those companies providing or supporting that technology will make out that is why I like BLOK.

As far as cryptocurrencies go, I believe right now it is more like the wild west. There will be winners and losers, but time will shake out the losers it just too early stage to tell right now. When you get companies that have nothing to do with cypto currencies changing their name and flying through the roof. without any basis for it, it is a little too scary. Like LONG Island Ice tea ( now Long blockchain) and a fruit company in China just on a name change or announcing they are going into crypto mining the stock goes up 3-4 times.


#61

Hadn’t really looked into BLOK or BLCN until recently. Although they do have a connection to blockchain technology, they seem to be more of a tech ETF. This article provides a good summary. https://themarketmogul.com/new-blockchain-etfs/ This fact doesn’t mean they aren’t good, or bad, investments, just that they may only have a peripheral connection to blockchain technology companies.

It did turn me onto Overstock. Seems like Overstock’s CEO is embracing cryptocurrencies, interesting.
http://money.cnn.com/2017/12/18/news/companies/overstock-ico-ceo-byrne/index.html
https://seekingalpha.com/article/4134692-overstock-perfect-stock-blockchain-play (make sure to read the linked articles)


#62

Interesting article on how blockchain may come into play with Gold!

http://www.kitco.com/news/2018-01-23/LBMA-Looking-Into-Blockchain-To-Boost-Gold-Supply-Integrity.html