Makes perfect sense, thanks for explaining

Why is the pool not mining FTC rather than LTC? Dustcoin says FTC is currently at 187% of LTC profitability, is that due to an error in their calculation?

The mining of coins is really completely irrelevant to their use as a currency. Best to vote 1024, get the coins produced as quickly as possible, and move on to using it as a currency which is the real point of it.

The Sustain phase will self regulate by the number of miners falling to a level that makes it generate a small profit for them. This would be no problem for the coin's primary function of being used as a currency, except for that fact that the resulting low network hashrate could make the coin vulnerable to a 51% attack.

The price will only go up if there is demand to buy it. If you look at DOGE, for example, the return has halved twice, on 14th Feb and 17th March. If an increase in the cost of mining automatically resulted in a price increase, the price of DOGE would have increased after these two dates, but in fact it has been going steadily downwards since mid Feb:
https://www.cryptocoincharts.info/v2/pair/doge/btc/coinedup/3-months
http://en.wikipedia.org/wiki/Dogecoin#Block_schedule
I'd say it's by no means certain that a flood of GPU miners onto HVC will increase the price.

Okay, so it costs you $510 to mine 1 BTC. Why is the alternative to only invest $10 in buying BTC? The alternative is to invest $510 in buying BTC, as that is what you have saved if you turn your equipment off.

Mining scenario - invest $510 to receive 1 BTC, value increases to $650, $140 profit
Invest via exchange scenario - invest $510 to receive 1.02 BTC, value increases to $663, $153 profit

When you mine you are converting fiat into coins via the cost of electricity, it never makes sense to pay more in electricity than you could get the same coins for from an exchange.

You're not making any sense, we were talking about mining at a loss, i.e. where the cost of electricity is higher than the value of the coins you are mining. If you can mine 1 BTC for $10 of electricity, you're not mining at a loss!

I assumed what you meant was that you mined 1 BTC at a net cost of $10, i.e. that you paid $510 in electricity to receive 1 BTC of value $500, which is what mining at a loss is.

No, you came out $10 down as you could have just bought the BTC instead and been $150 up instead of only $140 up.

It never makes sense to mine at a loss, you'll get more coins for the same money by switching your equipment off and buying the coins on an exchange instead.

That's the nature of virtual coin mining, it will always attract miners until the profit is pushed down to a "barely worth it" level.

It is a bit of a catch 22. You need 5 posts, but all the threads you want to post on aren't in the newbie section. Feels a bit silly to have to keep starting a new thread just to link to the thread you want to comment on and post your comment. And hardly anyone will read your thread in the newbie section, so it doesn't result in any productive discussion. So basically I've spent nearly 2 months on here getting to 5 posts, but here I am finally, post number 5.

I'm starting to think most people won't need to even declare it under self assessment. This year's self assessment asks two questions:
- Did you dispose of chargeable assets worth more than £42,400?
- Are your taxable gains more than £10,600?

If we assume mined coins that are sold for £ represent a capital gain of the entire value, there is therefore no need to declare them unless the total received in a year is over £10,600. At current market rates, you'd need to be mining around 0.37 BTC per day to hit that limit. Even if you exceed that limit, provided you only sell £10,600 of them per year, you still wouldn't need to provide details of any of it on your self assessment, because you'd answer 'no' to the above two questions.

Right, I understand that, but I see mining as like the artist creating the work in the first place, rather than a collector buying and later selling a work of art.

So lets suppose I create a work of art:

I consume some resources while making it, e.g. electricity to heat and light my studio etc = £1k value (analogous to electricity used when mining)
I use various tools to make the work of art that cost me £2k, but they are not consumed by the work and can be reused for subsequent works I create (analogous to BTC mining hardware)
Suppose that when I create it, the work of art could be sold for £10k (analogous to BTC market rate at the time of mining)
But then I decide I would rather keep it for a year, and when I sell it a year later, it is worth £20k (analogous to BTC market rate increasing between mining and selling)

I would guess that any artist doing all of the above would do it as a properly set up business with accounts. Costs would come out of the company accounts and tools would be depreciated according to accounting rules. Income tax would be paid on income drawn down. It seems like overkill if anyone mining a few coins on their home PC has to create a business to handle all the accounting.

So the question is, if you did all the above without having it all within business accounts, is there any simplified way to handle it all? Or do we all need to start depreciating our assets properly etc? Of course, if we all registered as businesses, we could reclaim the VAT on hardware purchases 

I was reading this thread:
https://bitcointalk.org/index.php?topic=143425.0
but it only really considers buying BTC with fiat currency and later selling to make a profit.

It has struck me that we all need to keep records of our activities in case HMRC start wanting to look in more detail at BTC related activities, so I wondered how people are accounting for the following:

- equipment purchases
- power consumption
- mined coins

If you mine coins,  then later sell them for fiat currency, is income tax payable? Are they considered to have been acquired at zero cost, so you pay income tax on the whole amount? Or at the market rate at the time of mining? The latter would be an accounting nightmare as you would need to record the market price every single time a pool adds any quantity of coin to your balance.

It seems rather unfair if we had to pay income tax on the whole amount without being able to subtract all the costs. But equipment purchases and power consumption are potentially hard to nail down, as equipment may not be used exclusively for bitcoin mining.

What records are people keeping to support any possible investigation by HMRC?

I'd post on this other thread to ask this, but can't as I'm limited to the newbie section:
https://bitcointalk.org/index.php?topic=186539.0

I had mined with that pool when mining FTC was worthwhile, and had 11 FTC "stuck" in there, as the pool only pays out above 20. So I set about mining again just to get up to 20. The pool found two blocks in fairly rapid succession, which would have taken me up to 31 FTC but both are now showing as invalid:
http://fc.ltcoin.net/blocks.php

Is there any way to see if this is real info, i.e. did the pool really find those blocks and they became invalid in some way, or is it just a scam to keep people mining for free in the hope of reaching 20 FTC to be able to cash out? If it's definitely a scam and I'm never going to get the FTC I have in there, obviously I'm better off doing something else with my GPU time and electricity.