Tom & Dan's Crypto History (Die Shrink Telegrams)

I was wondering (and I'm sure you will go into this) about the profitability of mining from a ROI perspective. I've read many people saying that as a private individual, mining is basically just for shit and giggles and you're lucky if you manage to break even. In fact, if you had invested 10k into basically anything else than a mining rig a couple of years ago it would've been far more profitable, even straight up buying bitcoin would've netted you far more. I even have doubts with regards to the profitability of mining companies. When crypto prices are low they are barely breaking even, so they only make good money when prices are high (like now) but wouldn't they be better off just buying the coins at a low price as well? It comes to mind to sell pickaxes during a goldrush and to sell mining rigs, gpus and power supplies during a crypto boom.

Hugo

I think there are multiple reasons for that. One being that Bitcoin was the first decentralized crypto, it was not pre-mined by scumbags, nobody knows who created it and people love mystique, there is a max of 21 million coins, the design to make mining it more difficult over time etc. All these factors contribute to bitcoin becoming the most notorious. As for the second question, 'better' is too vague of a term to use. If you mean faster then yes, this is something the creator might have overlooked, the network is not fast enough to be used for regular payments. Instead it seems extremely likely that bitcoin will (and already has) become a sort of digital gold. A way to fairly reliably store wealth, no central bank can influence it, after all coins have been mined inflation won't be possible etc. So while more technologically advanced crypto's might become available, that's not what the value of bitcoin is about anymore and I doubt any of them will ever surpass bitcoin in market cap.

Hugo

Hey you two, Tom, you mention mining on your Radeon VII and numerous other cards. Since Bitcoin needs ASICs nowadays, what do you prefer to mine? I know you benefit from the house heating and cheap electricity, so mainly asking out of curiosity. Have a good one!

Authoritarrr

Why would Bitcoin become the one major cryptocurrency, when it is possible to create something better and faster? How do we know which one will be the most popular?

I thought this might be a funny aside for your crypto episode.  First world problems: My water block arrived safely at my house, after traveling from the other side of the planet (Germany), unfortunately, I can't place it on my 1500 dollar graphics card... why?! Because the CVS and HomeDepot by my house are out of distilled water, and I refuse to drive another 5 minutes down the street to Walmart. So for at least another few days I will have to deal with the dust buster that is the stock fan on the 3090 FE as it prints me money while I sleep, when meander into the kids wing of my house to yell at the little bastards. And yes my kids play Minecraft, Roblox and Among Us on full custom liquid cooled rigs with 3090s because yolo?

seawo1ff

True. Just looking for y'all thoughts on all the hype check out the subreddits r/bitcoin for reference. Was trying to prevent a wall of text. But just the view of using a previous mining GPU. Fact most coins don't use gpus. so how many would really hit the market. than most are in counties with low power cost. Or these farms are some time ran by larger corporations or such. Or just what y'all thoughts. Figured it would be a good dove tail question. Like say if some one ask for speculation on how long the boom will last or some thing like that.

Nola Owl

I've heard Tom address that on a few recent podcasts. Essentially, if you have the idle hardware go for it. Don't buy new stuff for mining though...

CarryTrainer.Editor

Prices haven't dropped that much

CarryTrainer.Editor

A couple questions, one more technical and one more tinfoil-y: Do you see Bitcoin as a more sound long-term investment than precious metals like gold and silver in the event of global credit bubbles/hyperinflation/currency crises? Or will the increasing attempt of governments to regulate/tax cryptos hurt them in the long run? When buying bitcoin, one uses a wallet of some kind to get a private/secret key and have the transaction put onto the ledger. But where exactly does the currency go, besides into the accounts of coinbase/binance/other wallets? How are the market caps and prices of various cryptos calculated besides by how much cash exchanges have on hand?

Trogdor

Tom, you've mentioned that mining isn't giving anywhere near the same return as from 2017, but I'm wondering if you're still mining today, and if you would recommend anyone with a single GPU to get started with mining today.

cajuncanuck

One interpretation of the technique of proof of work is that the computational effort to alter a transaction that has been hashed into the blockchain already should be beyond the value that would be gained from altering that transaction. By this interpretation it seems to me that it is in effect a *requirement* for cryptocurrencies to be computationally intensive, and that the more computationally intensive, the more secure the blockchain will be. This leads into one of the growing concerns of laypeople with respect to cryptocurrencies: Namely the power consumption of the current networks. Do you think there is an easy solution to this power problem or do you think it has to be accepted as is? Secondly, the security of the blockchain to some degree is guaranteed by the distributed nature of mining operations, by many individuals mining with say their gaming PC or a small <10 GPU operation to heat their house it is hard for any one individual to overpower the rest of the network and "monopolise" the mining pool, thereby potentially compromising the integrity of the mining operations. Do you think that there is a risk that some company *does* manage to monopolise a mining pool of a coin, and thereby control over the blockchain? To me this seems to put you right back at square 1, where one entity has control over the ledger and any breach of security at that entity risks the integrity of the entire ledger.

qhfreddy

How long will it take for RDNA to catch up to the Radeon VII in compute performance? While the latest RNDA cards are better for gaming, they fall way behind in mining and DaVinci Resolve performance.

CarryTrainer.Editor

What are thought s on the following statement: Social media has been buzzing about this dip. The two main topics are: 1. This has never happened before and this is a sign this current boom is over. 2. Mining Gpus are about to flood the market.

Nola Owl

Will we reach a point where the most effective mining products are not AMD/Nvidia graphics cards?

Neverendingdrums

I have two questions: 1) Do you see any use for cryptocurrencies besides mining and speculative investment? In your article you argue the strengths of bitcoin: it's decentralized but well-controlled (excepting the 51% attack) and through its nature encourages cooperation and verification. However, let's be honest: it is atrocious as a common currency (a single transaction takes forever, is expensive, and uses a ton of energy). Other cryptocurrencies fix some of these problems while introducing others. We'll see how proof of stake works out for Ethereum, but the very fact that the algorithm can be changed removes any possible benefit a cryptocurrency has, as you've pointed out. If it _is_ mainly useful for investment, then it's in direct conflict with a decentralized economy, because it's a way to make money off of already having money and therefore increases the economic divide. 2) How do you reconcile the energy waste? Regardless of one's opinion on the usefulness of bitcoin itself, the hash computations do nothing of intrinsic value; they exist literally as busy work that you can easily prove you've done. While clearly the massive mining firms use the vast majority of this energy (and it would be a mistake to blame individuals mining on the side for this), engaging with bitcoin inevitably means engaging with this destructive process.

Mia

Obviously you guys don't want to be liable for giving financial advice, so all my questions are with that grain of salt expected. But, that said: Do you think that BTC will continue its current trend of 4 year boom/bust cycle following each halving? Or do you think that with the grumblings of regulation going on in the US currently it could be genuinely threatened? I feel like if left alone it'd continue its current cycle and be at a couple hundred grand in a few years but if investors get scared of it being shut down I feel like that could really crash it. Do you foresee BTC or any other cryptos actually becoming a crypto *currency*, like, actually being used for selling and buying things regularly? Honestly can't see the point unless you're buying something illegal at the moment, as it's a lot of friction to go back and forth between crypto and fiat. Also, any thoughts on Doge?

Alexander

Hello, Can you take a look at projects like decentralized filestores (IPFS/Filecoin), decentralized exchanges (Uniswap/Sushiswap), decentralized finance (MakerDao etc), digital assets (crypto kitties, decentraland), decentralized browsers (beaker etc), wrapped assets (wrapped bitcoin), legislative progress (avanti bank and WYO state law reforms)? There is a lot more to crypto than trying to be a payment rail (lightning network and more) or a store of value, but I feel like people aren't paying attention to the slowly growing field of dApps with real utility.

Rentaro Matsukata

Hi guys personally for me and my friends we have lost all faith in the dollar and see the fed reserve printing money nonstop with no way of paying it back. The dollar is essentially monopoly money every since we got off the gold standard which is why bitcoin aka digital gold is so popular people just want a real currency backed by something. what are your thoughts?

Mican Andrews

Hi Tom and Dan, love your guys' work. These podcasts are now integral to my day, especially on long and very boring road trips. What I want to know is this: what makes cryptocurrencies profitable, how does it execute on graphics cards, and when do you think the next likely mining "crash" will happen?

P. D.

I recently discovered that my 1080ti that I bought for $350 from EVGA directly in September 2020 is now selling for $500-$600. I also have a 1070ti that I got for $200 which is now selling for $400. Your statement on adored about the gold rush and people selling shovels got me thinking about selling my shovels (GPUs) and if I did how long do you think I would have to wait for stock to reach some sort of normalcy?

Jeremy Lamb

This isn't asking for financial advice but I'm curious to know if you believe crypto can be a real store of value? Specifically as a hedge against the USD in the long term. I'm mining etherium for fun with my two gaming computers and wondering if I should just dump the etherium into bitcoin and just forget about it for a few years.

Jeremy Lamb

Is there any sort of cryptominer out there that can be brought on the go, fit into a backpack and isnt just a laptop? Or is this something that just isnt feasible?

Greentauros

Hello guys, how did you first hear about crypto and what was your immediate reaction towards it?? Also, what’s the thing that you find most interesting about crypto and specifically about Bitcoin? For me, it is the tokenomics that limit BTC max supply and production, added on top of the philosophy of being your own bank.

Luis Correa

How do I know when to sell my Bitcoin and avoid the big dips that end the bull runs? Any telling sign specific to BTC?

Eleriam