pocket_zeros:

By loss I mean that the capital that they spent on their equipment, setup, maintenance & running costs was/is MORE than the income they got from mining BTC & ethereum (AND liquidation of equipment). I am 99% sure that they sold the crypto reasonably quickly after it was mined. That is, I think they were operating pretty much strictly as miners, and didn't hold their mined crypto to speculate on future price movements.

The ethereum miner may have been sub-scale? He was mining off of high end graphics cards. His total capital invested was only about $30K. The bitcoin guys had antminers from China/Taiwan? They had low 6 figures invested in their miners & equipment. They were more sophisticated buyers & operators, but they couldn't make a go of it. They were probably as sophisticated as one would get without having access to outside capital OR being a big corporation? One of the group of bitcoin guys mentioned electricity & setup & repairs cost them much more than they initially thought/planned. They also had some equipment that took more time/work to get going than they initially planned/budgeted for (like a couple/few months).

I am reasonably sure the ethereum miner probably paid too much for his equipment? He got in at the beginning of the pandemic I think. While he was not a "noob", he did not have anywhere near the experience or capital as the bitcoin guys. He was just a 1 man operation mining in his garage workshop.

So these two groups are the only people (that I am aware of), that I know by name, who were mining crypto and were willing to tell me something of their experience. Both of these miners were in the USA, so perhaps they had a structural disadvantage with power costs?

I am SURE that there are/were miners that got deals on equipment, got it up & running quickly & smoothly and sold at/near the top. OR perhaps there are miners that get free/cheap power, and got very good deals on their equipment. I just don't know any.

So they didn’t look into how much electricity they would be using before they started? There is a reason geography matters so much in mining, electricity is the largest ongoing expense.

Mining is a competitive business with volatile margins and cash flow. It's normal that inefficient/unprofitable miners will be weeded out, as it should be.

No, they absolutely did look into how much electricity cost...BUT they miscalculated. The cost of cooling was more than what they thought. Ancillary expenses with electricity were more than anticipated. For example, if they thought electricity was $10/hour during operations, it actually wound up being $12/hour, all in. They had more cooling expenses, lighting, network, network admin, etc. than anticipated.

The numbers put out on the actual miners is usually JUST for the mining machine. Hard to know the ultimate & exact cost until you've done it.

Of course, most locations in the USA are at a disadvantage when it comes to power. The bitcoin guys were in TX, and the ethereum was in MI.

Going back to your original point from bringing up these failed mining projects:

The amount of people setting up mining operations is minimal. It's also a very different operation from just purchasing the thing which they are mining.

It's possible these people still hold coins, or will in the future, even if they give up mining completely. Would it make sense if someone told you, "I tried to mine gold but the operarion was way more expensive than I anticipated, therefore gold is going to lose a ton of value soon."

The swings have always been huge, people still join.

99% of people who thought they could mine bitcoin or ethereum profitably and lost money are ****ing morons. It's a pretty simple thing to calculate. They clearly suck at calculating.

The people that are going to hurt from these guys leaving are the miner producers. All the money these idiots invested went to the miner producers not to bitcoin hodlers.

I agree on higher interest rates being negative for crypto. However, what happens when after the merge you can earn 5% yield in ETH? Would that make more sense then earning 5% in your currency that is getting inflated?

Not that you can't see that someone started pumping highs into Bitcoin in 2020, resulting in a significant increase in value. As far as I'm concerned, it was classic dumping, where the entities responsible for inflating the bubble simply raked in the highs and went to pump it somewhere else.

Did someone pump and dump stocks too? They went up and down at the exact same time.

You seem convinced crypto is no different than equities simply because crypto's price movements have mirrored the market. The only thing crypto has in common with stocks is alpha, which recently has been a function of real and projected money supply. Take speculation away from both and one will still have value while the other won't.

The combination of money printing, grift, govt assistance, hype, and outright lies makes it a scam.

That's stocks. BTC might still be loosely correlated with the swings but is decoupled from the massive type of rigging that goes into today's corporations and markets.

It's very different. But the point I'm making is that price went up and price went down due to monetary policy. When every other asset class(except gold) has done the same, cherry picking crypto specifically and calling it a pump and dump is laughable. It's as laughable as the enthusiasts at the top saying crypto was revolutionizing the world and it wasn't due to easy monetary policy and money printing. Crypto has acted like a high beta stock and every move has been due to fed policy.

Completely agree.

Hey all:

Crypto's price might NOT have gone up as much as people think from loose monetary policy.

There was quite an extensive article with many researchers who say that Bitcoins trading is totally "fugazi", with the majority of trades being wash trades, related party trading, and other "pumping up" moves. The title of the article is "More than half of all Bitcoin trades are fake".

If interested, point your interweb browser to the following URL:

http://www.forbes.com/sites/javierpa...ades-are-fake/

If the research & suppositions in this article are true....then bitcoin and most other cryptos are still VERY richly valued and priced.

Oh so you're saying if I tried selling my bitcoin at 60k and eth at 4.5k last year I couldn't have because there'd be no buyer on the other side?

Tesla already tested liquidity.

Not sure if you are referencing my prior posting.

If you are, the article only concluded that about 50% (possibly a bit more?) of bitcoin trading were wash trades & other "funny" trades. If you were fortunate to have some bitcoin to sell around $60k per coin, CONGRATULATIONS!

The article only says that somewhat HALF of the trading is not legit. Thus, maybe 40% to 45% or so is legit? So yeah, you, or other people could have certainly sold bitcoin at prices much higher than today's prices.

Whether you were able to make a transaction is not the point of the article and my posting.

The point is that if bitcoin (or any other market or security) has 50%+ "funny" trades for any extended period of time....the quoted price of that thing is almost certainly not good/valid.

IF that article is correct, or even close to being correct, at some point, the wash trades are going to slow and or stop. When that happens, the price of bitcoin is going to go down. It might even go down rather substantially.

Wash trading doesn’t conclude that it forces price upward, just that some of the volume may not be legitimate.

The problem is that if you enter at least the onion networks (TOR). It's almost all transactions are done through cryptocurrencies and especially Bitcoins. I must admit that I have been tempted more than once to invest in cryptocurrencies. However, honestly, I don't fully understand until now the entrenchment of the value of cryptocurrencies. I prefer to invest in more traditional and tangible elements of the market, maybe it's just superstitious traditionalism.

Gold once goes up and once goes down, in my opinion, at most currently it can be shorted.

On the other hand, it is interesting that U.S. debt securities have been going up quite a bit for some time.

So if 50% of all trades are fake wash trades which I think the number is actually higher, go ahead and cancel those out, what's the price?

Hard to say since price/volume/demand/supply is all interrelated. Everyone with a "real" trade paid/received what they wanted so looking at each transaction individually no one was screwed. But in the larger market the "fake" trades could have driven the price one way or the other.

Most of the wash trading happens on third tier exchanges where the volume isn't counted anyway. I think it was more of a thing years ago.

Crypto not a scam, but twitter is getting unusable

There's no way to establish whether or not the wash trades materially affected prices. But there is a way to establish the illegitimacy of a market and its prices if half of the purported trades are fake.

Crypto wash trading is not illegal so how does the existence of it establish the illegitimacy of the market?

Haha. Wash trading is illegal because it's market manipulation but because crypto isn't regulated yet that means it's not market manipulation?