How does mining make money?

[WhereHere1]

ok I get how it makes money but, if all the miners are taking the 1060's and 1070's, holding them for a while and only gaining 50-100 for each and just storing them. When a large number of these gpu's are stocked again, the miners buy up again. Doesn't this mean they just have loads of money in stock that they are not going to sell? As more gpu's are being made, and amd soon get into the act. Then when a new gpu comes out less people will be buying the 1060's and 70's and the miners will be stuck with this huge stock of old gpu's? Plus they have more than likely paid VAT.

 

[Radox-0]

I doubt they care if they are stuck with the cards when new ones come out. As long as they have paid for the initial outlay and made a profit when mining all is good. They can either keep on mining as long as its profitable (taking into account electricity) or just sell it on for dirt cheap or much lower then the comparable card out at the time (will always be buyers) and still profit.

 

[andybird123]

Why do you think miners are storing graphics cards? They are using them, they dont care about resale value.

 

[Brazo]

Even if they initially make a loss, sit in the coin for long enough and it might go up in value.

 

[ubersonic]

Miners work the cards until they die then bin them and buy a replacement, resale value is irrelevant.

 

[bimbleuk]

ok I get how it makes money but, if all the miners are taking the 1060's and 1070's, holding them for a while and only gaining 50-100 for each and just storing them. When a large number of these gpu's are stocked again, the miners buy up again. Doesn't this mean they just have loads of money in stock that they are not going to sell? As more gpu's are being made, and amd soon get into the act. Then when a new gpu comes out less people will be buying the 1060's and 70's and the miners will be stuck with this huge stock of old gpu's? Plus they have more than likely paid VAT.

Miners are not miners if all they do is speculate on the price fluctuations of the hardware.

They mine directly to FIAT (money) or mine to build up a store of coins that can be sold later if the price goes up putting it simply. The cost of the GPU can be written off if the mining is very profitable, sold to recoup costs or in the current climate sold back to the market at a profit which has not always been the case in the past.

 

[VincentHanna]

I've got 2 Titan X Maxwells in my home PC

Should I be using them to mine whilst I'm at work, or does it kill the GPU's eventually?

#iknownothing

 

[Sargatanas2511]

The part that makes me more curious is what companies/individuals profit from the mining being done. Money isn't created out of nothing so who is benefitting on the other end of the mining program?

 

[Griffildur]

The part that makes me more curious is what companies/individuals profit from the mining being done. Money isn't created out of nothing so who is benefitting on the other end of the mining program?

the Russian mafia more than likely!

 

[ubersonic]

I've got 2 Titan X Maxwells in my home PC

Should I be using them to mine whilst I'm at work, or does it kill the GPU's eventually?

24/7 they would make just under a bitcoin a year, obviously if you're only running them say 8hr a day that would be around 1/3 of a bitcoin. It depends on your electricity costs really, but hey you would have a nice warm house to come home too lol.

 

[balky12]

The part that makes me more curious is what companies/individuals profit from the mining being done. Money isn't created out of nothing so who is benefitting on the other end of the mining program?

The greater fool theory at play. The digital currency is created and then regarding fiat it is all speculation.

But i am far from in the know.

 

[chroniclard]

Its a vast ponzi scheme, earlier you jump on a coin the more chance of making money.

If only I had pressed the buy button on that mining rig in bitcoins early days.

 

[ubersonic]

The part that makes me more curious is what companies/individuals profit from the mining being done.

The companies/individuals doing the mining (also GPU vendors) obviously.

Money isn't created out of nothing so who is benefitting on the other end of the mining program?

Think of it like mining gold. You do the work, you get the stuff, you can then sell the stuff at market value or keep it in the hopes value increases.

 

[Griffildur]

The companies/individuals doing the mining (also GPU vendors) obviously.



Think of it like mining gold. You do the work, you get the stuff, you can then sell the stuff at market value or keep it in the hopes value increases.

looks more like alchemy to me than actual gold mining ...

 

[Sargatanas2511]

The companies/individuals doing the mining (also GPU vendors) obviously.



Think of it like mining gold. You do the work, you get the stuff, you can then sell the stuff at market value or keep it in the hopes value increases.

So then what are these calculations that are being performed to mine actually doing? I am pretty certain that it isn't just 'busy work'. What do they do? What do they go toward?

 

[bimbleuk]

So then what are these calculations that are being performed to mine actually doing? I am pretty certain that it isn't just 'busy work'. What do they do? What do they go toward?

Hashing which is just a number guessing game. You get a reward for finding the number or solution first within a defined time or block I think. Though typically you do this in conjunction with others as on your own you are unlikely to do this. That's where the pool mining comes from. It's not cancer research or protein folding sadly.

 

[VincentHanna]

Speaking of which.

If all this processing power was going to cancer research I wonder where we would be with breakthroughs.

 

[Sargatanas2511]

Hashing which is just a number guessing game. You get a reward for finding the number or solution first within a defined time or block I think. Though typically you do this in conjunction with others as on your own you are unlikely to do this. That's where the pool mining comes from. It's not cancer research or gene folding sadly.

Now it just sounds like digital bingo! .

 

[andybird123]

The part that makes me more curious is what companies/individuals profit from the mining being done. Money isn't created out of nothing so who is benefitting on the other end of the mining program?

I might not have this exactly right but I will have a stab at it

bitcoin needs a network to track and approve transfers which is heavily encrypted, the miners provide the network and are rewarded with new coins... not all of the power available is actually needed for that work though, which is why the newly generated coins are basically dolled out on a lottery system, the more people are providing hashing power, the less likely you are to "win" this lottery which is what they mean when they talk about the difficulty increasing... basically if you are trying to help provide the network but there are too many people trying to do the same thing, then it becomes cost ineffective as the electricity you are using isn't being returned in you being awarded for completing someone else's transaction

pools exist for much the same reason as lottery syndicates, the more power a single syndicate or pool can collect together the more likely those members are to win something as opposed to nothing and the winnings are then split

so to answer your question, the people benefiting from the mining are the people wanting to perform transactions using bitcoins

 

[ubersonic]

If all this processing power was going to cancer research I wonder where we would be with breakthroughs.

That's actually what it was used for prior to bitcoin.

I've said it multiple times, but F@H really should just create an unmineable crypto currency then hand it out as reward for folding, would attract many users back.