So, just to clarify, I should mention I'm a senior member here. Since I joined in 2017, I've mostly stuck to the basics of asking and answering questions on this mining forum, but honestly, I stopped following mining stuff a while back.
I’ve been browsing different forums, and I keep running into this question: What’s the deal with mining bitcoin if its value is just going up? It’s interesting to see that mining is still alive and kicking, with folks still buying ASICS and GPUs to mine.
I’d really like to hear your thoughts on this based on what you know. If you're gonna just say it's easy to find on Google, I’ll look it up after I get a fresh answer from you guys so I can compare. I know it sounds a bit odd, but just try to understand where I’m coming from. Plus, it’s way cooler to get insights from real-time chats.
The main point of mining BTC is what it has always been: To confirm transactions. Something cannot have (verifiable) value if there is no way for 2 or more parties to confirm the exchange of what they are trading/buying/selling...
It just so happens that because BTC is not a centralized service (or coin) ran by a company that has their own data processing centers like the credit card companies and banks do, all transactions instead run through and are stored on a public blockchain and the equipment used to verify the tx's is owned by miners.
How does one encourage others to spend $$$ to process the data? Pay them rewards for the work done that are worth more (in fiat) than what it costs the miners to purchase and operate their equipment. Things don't get much simpler than that...
I understand your confusion. The internet is filled with garbage when it comes to bitcoin. The kind of articles I'm referring to may already have affected you negatively.
The above answer should be enough if you were wondering what's the point of bitcoin mining. However, I'm going to reply to this specifically:
The miners are rewarded in bitcoins, not in a fiat. For instance, if you successfully solve a block, you will be rewarded with 6.25 BTC regardless of the exchange rate. This means that if the price rises, then the miners' reward will also worth more. Hence, they're even more incentivized to mine. So the main point of mining bitcoin when its market value goes up is that you can have a greater income with the same cost, which means more profit.
The issues are simply one of:
1) I'm desperate, I need cash
bitcoin mining is not the answer
2) I want to mine bitcoins and maybe in the future when they are worth even more, sell some
yep that works
3) I'm a big company, I wanna find a get rich quick system with our money
they wont be posting here on the forum in the first place
Mining is a business, completely different from investing/holding or trading.
Miners pay for hardware, pay for electricity, confirm transactions and get paid for that. Afterwards they can sell or hold, that's a completely different story.
Keep in mind that miners will earn even is Bitcoin price falls. This can make a difference sometimes.
I agree, it's a business. I formed a LLC so that miner hardware, electrical system hardware and electricity are expenses that can be written off against the gain. Otherwise, if/when the IRS should happen to know how many BTC you hold, without a business, you can't balance the capital and operations costs of getting those BTC against their value.