The Lemon Fool

Hornblower wrote:

Mike4 wrote:

BungeeJumper wrote:I don't suppose anybody really knows, because this is uncharted territory. But if it's true that it currently costs $35,000 to mine a bitcoin, then the logical thing for a miner to do at $18,000 is to stop mining, no? What happens after that?

BJ

Hornblower wrote:That depends on the miners conviction about the future value of bitcoin. They may choose to continue mining even at a loss.

Why would they do that? I don't understand. Why would anyone continue mining them at a cost of $35k when they can buy them already mined for $18k?

They observably DO keep mining though. Perhaps it's the sunk costs + a conviction that the price will bounce? In prolonged downturns, you'll see total hash rate start declining as miners with higher power prices switch off.

H

I wasn't arguing that they don't, I was trying to understand why they DO.

There must be some really solid reason to, otherwise they wouldn't. But what is it?

Could it be that buying bitcoins still makes no sense because those who are continuing to mine are actually not shelling out $35k on each?

Perhaps they are getting their power at low or zero marginal cost from solar (or stealing it)? That would make more sense.

We argue that investors don't have a rational reason to buy bitcoin, so why expect the miners to be different? Consider farmers. They will sell milk below the cost of production, but above the retail cost, because their fixed costs are hard, cows need to be milked or slaughtered, and when slaughtered it takes time to rebuild a herd, and because its *just what a dairy farmer does*.
Bitcoin miners have similar issues, except wholesale and retail cost is much closer, but I suspect they are similarly irrational about turning the servers off.

Mike4 wrote:

Hornblower wrote:

Mike4 wrote:

BungeeJumper wrote:I don't suppose anybody really knows, because this is uncharted territory. But if it's true that it currently costs $35,000 to mine a bitcoin, then the logical thing for a miner to do at $18,000 is to stop mining, no? What happens after that?

BJ

Hornblower wrote:That depends on the miners conviction about the future value of bitcoin. They may choose to continue mining even at a loss.

Why would they do that? I don't understand. Why would anyone continue mining them at a cost of $35k when they can buy them already mined for $18k?

They observably DO keep mining though. Perhaps it's the sunk costs + a conviction that the price will bounce? In prolonged downturns, you'll see total hash rate start declining as miners with higher power prices switch off.

H

I wasn't arguing that they don't, I was trying to understand why they DO.

There must be some really solid reason to, otherwise they wouldn't. But what is it?

Could it be that buying bitcoins still makes no sense because those who are continuing to mine are actually not shelling out $35k on each?

Perhaps they are getting their power at low or zero marginal cost from solar (or stealing it)? That would make more sense.

Some are getting power at really low rates in ex-soviet countries, others are using things like the methane flare-gas from US oil-fields. Previously this was stranded energy and simply vented to the atmosphere, now they put miners on site & utilise the energy, this will be waaaay below market rates.

+ I suppose they have already invested in the equipment, so there's a lot of sunk costs.


H

Why does H remind me so much of JimSusan? I expect when Crypto is gone he will be too, just like JimSusan.


When the entire world revolves around your own clever little plan...



GS

GoSeigen wrote:Why does H remind me so much of JimSusan? I expect when Crypto is gone he will be too, just like JimSusan.

Ah, but dear old JimSusan had the knack of tempering his Lloyds fixation by telling us all those extended stories about life, human relationships and philosophy. All permeated with a humility that's fairly rare these days.

There isn't quite so much much room for those qualities when your preferred asset exists solely in cyberspace, doesn't have any fundamental value at all, and where you don't know who's producing it (or where), or who's regulating it, or who's playing games with the market, and why. And where your best response to a call for clarity is to say "cry harder".

But the last panicky five days have been instructive. For some reason, I'm reminded of Buffett's old line about how when the tide goes out, you find out who's been swimming naked.

BJ

bungeejumper wrote:

GoSeigen wrote:Why does H remind me so much of JimSusan? I expect when Crypto is gone he will be too, just like JimSusan.

Ah, but dear old JimSusan had the knack of tempering his Lloyds fixation by telling us all those extended stories about life, human relationships and philosophy. All permeated with a humility that's fairly rare these days.

Aye, that's true, the Ercol armchairs I believe he was a Yorkshireman...

GS

I caught part of a documentary on Aljazeera News Channel. There's a bitcoin mining company in Pennsylvania that uses coal to generate electricity. The coal they use is low grade waste scooped up from abandoned mines. The waste is more polluting to burn than regular coal, but they have managed to get a subsidy from the state because they have argued successfully that they are involved in environmental clean-up of the old mine works.

The whole thing seemed Faustian (bad alchemy for the industrial age) and I don't think I would be sorry to see this entire bitcoin crypto enterprise go to hell.

bruncher wrote:I caught part of a documentary on Aljazeera News Channel. There's a bitcoin mining company in Pennsylvania that uses coal to generate electricity. The coal they use is low grade waste scooped up from abandoned mines. The waste is more polluting to burn than regular coal, but they have managed to get a subsidy from the state because they have argued successfully that they are involved in environmental clean-up of the old mine works.

The whole thing seemed Faustian (bad alchemy for the industrial age) and I don't think I would be sorry to see this entire bitcoin crypto enterprise go to hell.

You mean that the coal waste should be allowed to spontaneously combust without any treatment of the combustion products or that any toxins in it be washed into the ground water? The waste of generations past doesn't just vanish.

It's difficult to read your final statement any other way. After all, were it economic to use that waste for other purposes, it would already have happened.
It might have been good of you to provide some links to what is happening, but I suppose you can leave that to Bitcoiners, who know about both coal, oil and waste gas being treated and used to mine bitcoin to use google for you.
Here is a Reuters article about Stronghold mining.

https://www.reuters.com/business/enviro ... 022-03-21/

Oh and here is what brucher apparently is in favor of. I'm sure his post must mean other than it read.

https://en.wikipedia.org/wiki/Coal_refuse

Lest we think that this is just a US issue can I mention such places as the Wigan alps and Aberfan. To save people the effort of following links or using a search engine, the first is a set of huge coal waste heaps and the second the site where a Junior school and its human contents were destroyed by one.

It should be possible to argue that I am misinformed, and that the bitcoin miners are doing useful things environmentally. without suggesting that I want children to die in avalanches of slag heaps.

This is errr...suboptimal, coming from Core Scientific (CORZ on Nasdaq) the biggest listed Bitcoin miner, currently $1.01 down 91% yoy but still $360m market cap :
https://www.sec.gov/Archives/edgar/data ... 956d8k.htm

As previously disclosed, the Company’s operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate and the litigation with Celsius Networks LLC and its affiliates... the Board has decided that the Company will not make payments coming due in late October and early November 2022 with respect to several of its equipment and other financings, including its two bridge promissory notes. As a result, the creditors under these debt facilities may exercise remedies following any applicable grace periods, including electing to accelerate the principal amount of such debt, suing the Company for nonpayment or taking action with respect to collateral, where applicable. Any such creditor actions may result in events of default under the Company’s other indebtedness agreements, including its two series of convertible notes due 2025, and the potential exercise of remedies by creditors under such agreements....In light of the foregoing, the Company is in the process of exploring a number of potential strategic alternatives with respect to the Company’s capital structure...
As of October 26, 2022, the Company held 24 bitcoins and approximately $26.6 million in cash as compared to 1,051 bitcoins and approximately $29.5 million in cash as of September 30, 2022...
It is very difficult to estimate our future liquidity requirements. The Company anticipates that existing cash resources will be depleted by the end of 2022 or sooner.

Stats on the place of the listed miners in the Bitcoin world :

Hallucigenia wrote:This is errr...suboptimal, coming from Core Scientific (CORZ on Nasdaq) the biggest listed Bitcoin miner, currently $1.01 down 91% yoy but still $360m market cap

Now worth less than $80m after today, but that still feels toppy?
[no position, just grimly fascinated]

And another one - London-listed Argo Blockchain down 45% as a refinancing fails :

https://www.marketwatch.com/story/argo- ... 1667206390

https://www.investegate.co.uk/argo-bloc ... 00075760E/
As previously disclosed, the Company signed a non-binding LOI with a strategic investor to raise approximately £24 million ($27 million) via a subscription for ordinary shares. The Company no longer believes that this subscription will be consummated under the previously announced terms. Argo is continuing to explore other financing opportunities.

The Company has also taken steps to further maximize liquidity and preserve cash. The Company sold 3,843 new-in-box Bitmain S19J Pro machines, representing ~384 PH/s of total hashrate capacity, for cash proceeds of ~£4.8 million ($5.6 million). These machines are the last batch of the original Bitmain order scheduled for installation in October 2022. As a result, the Company's total hashrate capacity remains at 2.5 EH/s.

[no position]

"Top 10 Public Miners by Share of Bitcoin's hashrate"

Number seven: "Hut 8"

I liked that!

So Bitcoin down 22% this week - currently US$14,579 - as it looks like one of the biggest exchanges FTX is in a death spiral after Binance walked away from a rescue deal.

Bitcoin is still worth $280bn....

[no position]

Hallucigenia wrote:

Hallucigenia wrote:This is errr...suboptimal, coming from Core Scientific (CORZ on Nasdaq) the biggest listed Bitcoin miner, currently $1.01 down 91% yoy but still $360m market cap

Now worth less than $80m after today, but that still feels toppy?

CORZ continue to Runaway (sorry), down another 10% today to $45m.

[still no position, just as fascinated]

Hallucigenia wrote:So Bitcoin down 22% this week - currently US$14,579 - as it looks like one of the biggest exchanges FTX is in a death spiral after Binance walked away from a rescue deal.

Bitcoin is still worth $280bn....

[no position]

I bought £200 of bitcoin a week ago.... on FTX.
Unfortunately, I was somewhat slow withdrawing it.

Looks like I've been "Goxed".

Not to sure of your price, though. My tracker Widget is showing a low for the week of USD $15,555.

I now need to sort out another exchange (or more than one) to deal with.

I have a small bitcoin position.

Urbandreamer wrote:Not to sure of your price, though. My tracker Widget is showing a low for the week of USD $15,555.

I was just going off Yahoo, who reckon it dipped below $14k at 11pm last night, so it could be a question of exchange opening hours? But I wouldn't rely on Yahoo for anything important,they're just convenient for rough and ready stuff.

Snorvey wrote:I have a small bitcoin position.

Everybody has a small Bitcoin position these days.

I know that it was gaining in popularity!

Urbandreamer wrote:

Snorvey wrote:I have a small bitcoin position.

Everybody has a small Bitcoin position these days.

I know that it was gaining in popularity!

Old joke updated slightly

How do you make a small fortune ? Start with a large fortune and invest it in crypto.

ursaminortaur wrote:Old joke updated slightly

How do you make a small fortune ? Start with a large fortune and invest it in crypto.

I should get into the habit of using "Smilies". I got the joke and was making one of my own about the way that it was phrased.