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UPDATE: 4th April, check out the latest blog for up to date info
I talked recently about how you can mine scrypt/scrypt-jane altcoins and exchange them for bitcoins, something that’s far more profitable and effective than mining bitcoins (or litecoins) directly. However, this is becoming increasingly difficult to do. One obvious reason for this is that too many people know about it, thus more people are selling while buyers remain fairly constant. This drops the price of altcoins, which leads people to try different coins, and the process continues.
Eventually lots of profitable altcoins soon become worthless and not worth mining at all. This is a trend that seems unlikely to stop anytime soon. People who aren’t familiar with mining try to make some money by buying low and selling high on cryptocurrency exchanges, but their money can only go so far. New miners and new altcoins are appearing almost daily, yet buyers are not. That’s why almost every altcoin is decreasing in value (even litecoin), and it’s unfortunate for miners who have worked hard to build a rig and are now trying to recoup their investment.
Mining as a hobby isn’t dead, but it seems as though mining as a source of income is
Unless new buyers appear soon, the value of scrypt altcoins will struggle to go up again. Of course, as bitcoin becomes more accepted in society (Virwox remains the easiest way for newcomers to acquire bitcoins since they accept credit cards and PayPal) people are more likely to invest in altcoins too, though it’s hard to speculate as to if and when that will happen. Many are choosing to hold their bitcoins, and even litecoins, but it seems unwise to hold anything other than those two. Some people do hold other altcoins, but it’s hard to envisage any of them lasting if even litecoin is struggling.
Altcoin mining is still profitable, but for how long
Cryptocurrencies are still fairly new, especially scrypt based coins, so it’s impossible to make exact predictions. However, the market has shown a consistent and steady decrease in altcoin values, in almost every single coin out there. Even newer scrypt-jane based coins start off well (for a week or two) then their value plummets. But at least scrypt-jane coins are based on a new algorithm, something most altcoins don’t bother to do. They offer nothing new to the market, other than a different name.
The reason people keep making new altcoins is simple – GREED
The developers of all these new coins stand to make a fortune, mainly because they premine each time. Often they mine 1% before releasing a new coin, which might not sound like a lot but if you consider the fact that this 1% could be sold for 50-100 bitcoins, it’s easy to see why they do it. They pretend to “support” the coin and promise to maintain and manage it – but it’s rarely true. They work with it for a couple of weeks until they’ve sold their premine and make about $50,000 each time, not a bad ROI eh?
Miners try to stay on top of these new altcoins and get in early so they too can make some profit, but it won’t be anything close to what the devs make. Then there’s the risk of downloading a virus or spyware with these new wallets/mining programs. Quite easy to include a virus because many of these tools are already flagged by anti-virus software, meaning people disregard any warnings automatically. Of course, word quickly spreads if a program does have a virus but by then it could be too late.
The point of this blog is just a reminder to anyone considering mining as an investment
If you’re going to mine as a hobby or just for fun then it’s still a worthy endeavour, and it sure as hell beats buying bitcoins considering the moronic banking systems and their archaic “safety measures”. You will make a profit in the sense that your electricity costs will be covered, but don’t get into mining as a business or for profit anymore because it will likely lead to disappointment. Of course, the value of altcoins could increase eventually, but I highly doubt it.