Playing the market...

Alright - a quick catch up.

So I started this whole thing by applying for a coinbase account, falling into the ideology, I'll buy some coins mentality.  So this set off the long, slow process of getting a coinbase account.  This has taken so long, that the bubble burst before I could even get started.

Son, I am disappoint.

However, when I started researching mining and landed on the Doge coin as a low difficulty coin that I could realistically mine using my hardware.  Of course from then to now, the difficulty has been mounting at the same time that the mining pools have increased fees, and tightened up their reward schedules.  So day by day I produce less and less.  When I started I was getting about 10000 doge coins a day, that has dropped to about 1000 inside of 2 weeks.  For those who like the math speak, I've lost an order of magnitude of production power in a week.  Ouch.

So one of the things I'm going to do this weekend (and through the holidays) is pick a new coin.  I haven't quite decided what I will try (it will depend on the ability to liquidate) but I need something back in bounds with my hardware.  And while I thought my radeon card was relatively decent, it turns out that its actually pretty weak.  Funny, it pushes 3D games like a bastard maniac but when it comes to hash rates - it ain't all that.

Back to the point - buying bitcoins isn't the only way in.  In mining coins and selling them for bitcoins, I've scraped up enough to start playing the market.  It's a tiny little amount, about $15 dollars worth.  (Funny to consider that the amount I have now WAS worth nearly $40 before the bubble burst).  Here's the kicker - the fall off rate vs. the decline in bitcoin value has lowered my production rate to $1 worth bitcoin per $1 worth electricity.  Funny how that works, huh?  (Understand, I quantify this based on the production of Doge coins...  $1 worth of bitcoins = $1 worth of electricity mining doge coins.  For now, if the trend continues, I'll be losing money on mining inside a week.  The rate was obviously better when I was producing 10000 dpge coins a day and the price of bitcoins was higher.  But for the time being, I'm breaking even on the mining side.

But that is production...  on the trading side I've increased my original amount of bitcoins, 0.00833, up to 0.02339.  And that sounds like little tiny amounts.  But lets sick the math on it...  that's about a 36% growth rate.  So the amount I have in play is growing faster than I'm mining.  That's the right direction!

I know, I know - a measly 36%?  Compare that to you average savings account at 0.21%.  So - suck it.  LOL

Anyway, one of the things working in my favor is that I'm a spreadsheet badass from years at my job.  And I could probably push it harder - but I'm still cautious since I'm just learning the ropes.  But it is nice to be able to calculate my values and targets and graph out my growth rate,   I was aiming for 35%, and the 1% variance comes from continued mining.  Honestly though - to get much past 40% I'd have to have more time to babysit my trades and track charts, and since I'm a working class schmo, that's not realistic.  But the upside is - as the amount I have in play continues to grow - that 35% will become increasingly meaningful.

But since there are no guarantees in the trading game, I'm sure not going all in with my own money.  So that's the reason why I'm mining and flipping.  The only overhead is $1.25 a day in electricity.  (One of the advantages of having a kind of crappy video card...  it doesn't suck a lot of juice.  LOL).  And the metric I'm working in is bitcoins (not dollars) because I have no desire to cash out because that accomplishes 2 things.  1)  It takes me out of the trading game.  And 2) The second your coins turn into cash - you have to mind your taxes.

Anyway, tomorrow I'll be picking my new coin (criteria: relatively new, lower difficulty and a fledgling market) and redirecting my mining effort.  I'm sorry to see the Doge go, but it has been both fun and educational.  Playing with them has taught me to mine, and having coins has allowed me to learn the basics of trading.  And since I can get back to bitcoins and cash out through coinbase.com, I have an exit method.  So all is well, and the game is working.

That's it for now.

PS.  I'd like to welcome my new readers from Switzerland, Poland, Austria, Estonia, Albania, Canada, and the UK.  :)