Cryptocurrency Mining and GPUs

sechs

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#1
Cryptocurrency miners ate the GPU market. Mid-range cards are hard to find and everything else is overpriced.

I looked into mining for fun and profit, but it turns out the best bet was to sell my card, just like selling shovels to gold miners in a rush.

Last week, I sold my year-old reference RX 480 for about fifty bucks more than I paid for it. And I may have sold into a lull in the mining rush, as the card was going for a fifty bucks more than that a few weeks ago. Six months ago, it was worth about fifty bucks less than I paid for it.

There seem to be a lot of people in the community who think that cryptocurrency mining is going to crash soon. A lot of idiots got in over the last few months, overpaid for their equipment, and may never break even. Demand for new GPUs will dry up and used cards will flood the market.

What do you guys think about this? Is this really a "fad" that will correct itself in the coming months, or will the cryptocurrency miners create a new pricing level for graphics cards?
 

LunarMist

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#2
Cryptocurrency miners ate the GPU market. Mid-range cards are hard to find and everything else is overpriced.

I looked into mining for fun and profit, but it turns out the best bet was to sell my card, just like selling shovels to gold miners in a rush.

Last week, I sold my year-old reference RX 480 for about fifty bucks more than I paid for it. And I may have sold into a lull in the mining rush, as the card was going for a fifty bucks more than that a few weeks ago. Six months ago, it was worth about fifty bucks less than I paid for it.

There seem to be a lot of people in the community who think that cryptocurrency mining is going to crash soon. A lot of idiots got in over the last few months, overpaid for their equipment, and may never break even. Demand for new GPUs will dry up and used cards will flood the market.

What do you guys think about this? Is this really a "fad" that will correct itself in the coming months, or will the cryptocurrency miners create a new pricing level for graphics cards?
I thought it was already dead last year from the business perspective.
 

Stereodude

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#3
I think it all depends on whether a given cryptocurrency can be mined by ASICs or not. Bitcoin had it's day with GPU mining for a while. Then, the ASICs took over. That will probably happen again with Ethereum and GPU mining will go dormant until the next new'ish cryptocurrency gets hot.
 

Howell

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#4
What is the fundamental value in cryptocurrency/mining? Is its value a self fulfilling prophecy waiting for reality? I've never been accused of having vision for this sort of thing but are we talking about investing in beany babies here?
 

jtr1962

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#5
I never even heard of this until seeing this thread. To me it sounds like nonsense. Fake mines for fake currency. Or maybe I'm missing something. Definitely sounds like a fad to me, just like beany babies (or the baseball cards my late father "invested" in which are probably worth a few cents on the dollar, if that).
 

timwhit

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#6
Bitcoin has been worth quite a bit for years now. I don't think it's quite a fad. I stopped messing around with bitcoin after Mt Gox went under.
 
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#7
I still have quite a bit of bitcoin sitting around; did a fairly large ASIC farm a while ago. It did pay for itself and then some (double? Haven't sold the profits yet), but my timing was better than these guys.

1. Establish a relationship with the manufacturer and get the parts early. I managed to get in early and cheap by buying incomplete parts and doing the last bit of assembly myself (er, had someone do it).
2. Mine the crap out of it. Maximize your utilization, but get your electricity cheap and find a way to keep it cool without AC.
3. Sell the hardware while it is still expensive. The price of the hardware was still going up when I got out (total run was about a month).
 

Handruin

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#8
Cryptocurrency miners ate the GPU market. Mid-range cards are hard to find and everything else is overpriced.

I looked into mining for fun and profit, but it turns out the best bet was to sell my card, just like selling shovels to gold miners in a rush.

Last week, I sold my year-old reference RX 480 for about fifty bucks more than I paid for it. And I may have sold into a lull in the mining rush, as the card was going for a fifty bucks more than that a few weeks ago. Six months ago, it was worth about fifty bucks less than I paid for it.

There seem to be a lot of people in the community who think that cryptocurrency mining is going to crash soon. A lot of idiots got in over the last few months, overpaid for their equipment, and may never break even. Demand for new GPUs will dry up and used cards will flood the market.

What do you guys think about this? Is this really a "fad" that will correct itself in the coming months, or will the cryptocurrency miners create a new pricing level for graphics cards?
This correction will happen as it's always happened throughout the history of mining cryptocurrency. There is contention and split opinion right now in the bitcoin community regarding a proposed change to the block size of the block chain to rectify problems related to the amount of time and money needed to verify transactions. This puts a conflict between users of coins (payment transactions) and efficiency for miners. This could cause more turmoil as the community tries to resolve the problem. This flux and indecision in how to proceed is causing shifts of investment in other coins like Ethereum and Litecoin (among others).

Then there is Ethereum which has had a following and is currently in a downward trend causing some people to bail out. You may see a flood of cards on the market as people panic both in ditching coins and also selling hardware they can't afford to mine with.

You will also soon have Nvidia and AMD producing dedicated mining GPUs that can't be used for gaming. This will cause alterations in the normal market for GPUs as a possible shift happens for people wanting to buy these cards instead of gaming GPUs...but this is a tough change to predict without knowing the price point, performance, and availability of these dedicated mining GPUs.
 

Handruin

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#9
What is the fundamental value in cryptocurrency/mining? Is its value a self fulfilling prophecy waiting for reality? I've never been accused of having vision for this sort of thing but are we talking about investing in beany babies here?
The fundamental value is based on a supply and demand like many other markets and commodities. The value of mining comes from people playing a close-margin race for earning money based on hardware costs and electrical costs. They can often mine and sell on a market to someone who has a demand for them be it investing or other uses. Given a finite supply, there is an inherent supply problem and the mining aspect grows more-difficult the more people attempt to mine them. The mining is also used for verification of one or more transactions that occur through the block chain and when verified a transaction is register on the distributed block chain for all to see. A transaction could be me sending some amount of coin from one wallet to another.

This is not like investing in Beany babies because a Bitcoin can be used for actual purchase of goods and services directly. Where as Ty the maker of Beany Babies could decide to increase/decrease production thereby altering some amount of perceived rarity to inflate/deflate value, this does not happen with Bitcoin. There will only ever be 21 million Bitcoins and no one authority controls the discovery. This is done by a globalized block chain. Bitcoins as money can also be transferred without a single centralized bank or government controlling your transaction. The valuation of a Bitcoin to local fiat is not easily understood and is subject to high volatility, zero regulation, and a higher chance of loss due to user error for those who don't understand the safety of using a wallet and coins. I've mined alternate coins (Dogecoin) and converted them to Bitcoin (BTC) and then purchased legal software with these coins without ever having to use USD. I've also mined alt coins, converted them to BTC, and then legally converted them to USD through a service (Coinbase). I still have some amount of BTC in my wallet that I'm holding onto for no real reason other than to have them and see what happens. It's plausible I may decide to pay for some other goods if I decide to in the future.

There are many reasons why Bitcoin and the like are here to stay for the foreseeable future. There are both good and bad reasons people use them like anything in life. You could launder money through BTC or even pay for illegal goods and services because of the increased amount of anonymity with using a BTC vs USD (or any local fiat). You may also just want to send money to someone without any bank or government knowing when it really is none of their business.
 

sechs

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#11
I think it all depends on whether a given cryptocurrency can be mined by ASICs or not. Bitcoin had it's day with GPU mining for a while. Then, the ASICs took over. That will probably happen again with Ethereum and GPU mining will go dormant until the next new'ish cryptocurrency gets hot.
I can't speak to other cryptocurrencies, but Ethereum is ASIC resistant. That's part of the reason that the GPU situation has gotten so bad.

With Bitcoin, once ASICs came in, GPU mining basically died. With Ethereum, it'll be until be either until it becomes too unprofitable, or they change to proof of stake.
 

sechs

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#12
This correction will happen as it's always happened throughout the history of mining cryptocurrency. There is contention and split opinion right now in the bitcoin community regarding a proposed change to the block size of the block chain to rectify problems related to the amount of time and money needed to verify transactions. This puts a conflict between users of coins (payment transactions) and efficiency for miners. This could cause more turmoil as the community tries to resolve the problem. This flux and indecision in how to proceed is causing shifts of investment in other coins like Ethereum and Litecoin (among others).
There does seem to be a lot of hand wringing over the August 1 deadline. The fear of a hard fork (Bitcoin splitting into two currencies) is high. This happened to Ethereum, and it seems to have done quite well.

Then there is Ethereum which has had a following and is currently in a downward trend causing some people to bail out. You may see a flood of cards on the market as people panic both in ditching coins and also selling hardware they can't afford to mine with.
Like this guy?

I still see people getting into cryptocurrency mining, thinking that it's a quick buck. Even if it's not Ethereum, they'll mine something else.

You will also soon have Nvidia and AMD producing dedicated mining GPUs that can't be used for gaming. This will cause alterations in the normal market for GPUs as a possible shift happens for people wanting to buy these cards instead of gaming GPUs...but this is a tough change to predict without knowing the price point, performance, and availability of these dedicated mining GPUs.
This struck me as a bad idea, as, unless they can be used in SLI or Crossfire, they'll have little resale value once they can't be used for mining.

One of the saving graces of GPU mining is that you can dump your equipment on the market and extract some value from it when it's no longer useful (like 2GB cards for Ethereum).
 

sechs

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#13
Are people making profit $10K, $100K or what annually?
I'm sure that there are people who are, but these are bigwigs with hundreds of GPUs running.

I saw that, before a recent difficulty increase in Ethereum mining, a big miner left and cashed out. At the time, he liquidated Ethereum worth hundreds of thousands.
 

jtr1962

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#16
I've always thought it was rather like a Ponzi or pyramid scheme.
Seems that way to me also. Just reading about it a bit yesterday, it seems the first ones in get rich. Once the word spreads, mining quickly becomes an arms race where you've lucky to break even. While that's happening the cryptocurrency rises in value to reflect the added difficulty mining but just enough to at best cover mining costs. Those who got in early of course made out like bandits. Everyone else, not so much. Investing in bitcoin, as opposed to mining it, seems equally hit or miss. The market rises or falls depending upon noise about regulation, forking, changes to block size, etc. Not for the faint of heart.
 

jtr1962

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#17
After reading this I'm seriously thinking of putting about $5K into bitcoin after August 1. To me it seems there's not much downside. Worst-case unless bitcoin completely crashes I won't lose my principal. The upside though seems huge. I'm skeptical of $500K BTC but even if it goes to $20K in a few years that's a pretty good return if I can get in at ~$1K per bitcoin.
 
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jtr1962

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#24
How are munitions related to currency? Maybe heavy metals like Au?
He means they'll still be viable decades from now, either to use for their intended purpose, or to trade for other goods. Can't say the same about either bitcoin or the US dollar. Maybe Bitecoins will be worth something though. At least they'll have intrinsic value as dentures.
 

jtr1962

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#27
People bet on gold, and that is just a hunk of metal that's pretty....
Ironically, the only thing which gives gold its value is its scarcity (same as bitcoin). If a solid gold asteroid hit Earth tomorrow gold would probably be worth less than tin. It has a few industrial uses but in general it's too soft and too heavy. Maybe it would be used in place of lead where you need ballast.
 

Stereodude

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#29
How are munitions related to currency? Maybe heavy metals like Au?
Because in a societal collapse or near total currency collapse which seems to be something that many of the Gold and Silver proponents (the ones who have the physical precious metal in their possession or a safe deposit box not in an abstract fund or ETF) think they're going to be all set. While in such a situation over a longer term precious metals could become the defacto currency. In the short term, I think it will be totally worthless. In a true barter system it has no value. Munitions, fuel, food, batteries, etc. do. Of those munitions have the longest shelf life.
 

jtr1962

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#30
In a true barter system it has no value. Munitions, fuel, food, batteries, etc. do. Of those munitions have the longest shelf life.
I agree. Who is going to want gold or silver when they're starving? Add solar panels and wind generators to your list of things which will be valuable if the SHTF.
 

LunarMist

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#31
Because in a societal collapse or near total currency collapse which seems to be something that many of the Gold and Silver proponents (the ones who have the physical precious metal in their possession or a safe deposit box not in an abstract fund or ETF) think they're going to be all set. While in such a situation over a longer term precious metals could become the defacto currency. In the short term, I think it will be totally worthless. In a true barter system it has no value. Munitions, fuel, food, batteries, etc. do. Of those munitions have the longest shelf life.
By stability I meant the typical currency value fluctuations, not Mel Gibson after an alpaca lips.
 

Stereodude

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#32
Add solar panels and wind generators to your list of things which will be valuable if the SHTF.
For your domicile yes. They're a little harder to barter with or use as a pseudo-currency because they're not so portable.

By stability I meant the typical currency value fluctuations, not Mel Gibson after an alpaca lips.


Alpaca-Lips.jpg
 
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#34
Reading this finally was enough to get me to log onto my BTC account and see how things were doing. Much better than I was expecting, time to call the accountant.
 

sechs

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#36
Reading this finally was enough to get me to log onto my BTC account and see how things were doing. Much better than I was expecting, time to call the accountant.
BIP 91 apparently passed the 80% threshold this morning, so BTC is popping.

I also saw that Ethereum is looking to push off the difficulty bomb, which will allow it to be mined with GPUs for at least another year.
 

sechs

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#37
Vice is pretty mainstream, so this could go on for a while....
[video=youtube_share;3YMxGGXme8g]https://youtu.be/3YMxGGXme8g[/video]
 

sechs

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#38
Reading this finally was enough to get me to log onto my BTC account and see how things were doing. Much better than I was expecting, time to call the accountant.
FYI: There's still going to be a hardfork on August 1.

If you're holding your Bitcoin properly, you'll end up with equal amounts of both currencies.
 

sechs

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#40
The new currency (BCC) will initially only be worth a fraction of of Bitcoin (BTC) because it's only being espoused by about 15% of the users. But it could gain traction later.

Same thing happened with Ethereum (ETH) and Ethereum Classic (ETC).
 
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