Bitcoin Forum

Hey guys, so first off this is my first post.

I just learned about Bitcoin a week ago. I been watching vids and reading on it day and night since.

I have 100k to invest. I was going to(and still can) buy a piece of property with my friend who has money and is also a contractor and build on it.


However I really am fascinated with bitcoin. Now I have seen tons of YouTube video's online of other bitcoin farm operations and have no clue how much they cost to set up. Basically I have no clue how much damage I can do with 100k. What they fail to also tell is how much they're making..........but I could see a few reasons why they would chose to withhold that information.

So far I have learned that power is the biggest overhead. To counter that I would buy a warehouse in Mexico where power is cheap. I have a friend that lives down there who can buy the land for me(in Mexico, the law is only citizens can purchase land). Now my knowledge in computers is pretty good but I am not an expert so I would not mind forking out 2-5k for a person who has a computer science degree and has a good understanding of bitcoin, and have him sit down with my buddy who is a contractor to draw up a design of build out.


My only question is, how profitable do you guys think a 100k operation would be with cheap power? I am obviously not doing this as a side hobby, but instead looking to make some real money. Now I am not looking to start tomorrow. If anything I would keep researching this subject for another 6 months or so before making any decisions. But as of right now, any help from this community who mines would be greatly appreciated.

The 100k investment would just be equipment. The purchase of warehouse, cost to build, any other non equipment cost is not a part of the 100k.

Can you afford to wait a minimum of 12months to make any profit? That's the question you need to ask.

Yes.
And a 100% return on investment in 1 year is gold
Is there a real possibility it can go there?

How cheap is the electricity at Mexico?
China has the highest population of miners because electricity is about 3cents/kwh.
Anything above 10cents/kwh won't give you profits because you have to factor in the cost of cooling your mining rigs(the heat produced is high).

Most people prefer Antminer S9 rig to the latest R4 series because it's more efficient however, R4 rig produces less noise and heat.
Mining bitcoins as a solo miner is not so profitable anymore because the halving has reduced the reward, but if you are going into it, consider joining a mining pool to increase your chance of making money.

In addition, you should do some research for some SHA 256 altcoins you can mine in addition to bitcoin e.g KOMODO, Peercoin, Crowncoin etc.
Check worldcoinindex.com for live price updates of the altcoins and the exchanges where they are listed so you can observe for yourself how the market fluctuates.
Chose the altcoin you find profitable, join its mining pool and mine in addition to bitcoin so you can manage to break even in 12 months.
Hope this helps a bit ;D

But I have seen farms here in the US that are gigantic. They must be turning a profit, and there's no way they're paying 3cents/kwh.

And I don't understand why mining as a solo miner is not profitable? I keep seeing people say to join pools, from a business standpoint all this tells me is:your operation is too small, build bigger.

1. yes, most of gigantic farms are on 3-5c max. In my opinion, don't try a large farm above 5-6c/kwh.
2. large farm run solo will only increase your income about 1%, but will increase variance of income per day or even month. You can get a long stretch of bad luck and you would not know if it is something with your network setup or being hacked (it did happen to some) or just bad luck.

 "Industrial" rates tend to be cheaper then anything else in the same area.
 There are 2 counties in the US that have RESIDENTIAL rates under 3c/kwh (and a third that has mid-sized commercial and larger rates under 3c/kwh but residential and small commercial a bit over 4).

Just to be clear, given your definition of "100% return on investment", if you stuffed your money in a mattress and it didn't burn up or get stolen, you'd have "100% return on your investment" (i.e. you just broke even).

Anybody with $100K to invest should understand that getting you money back is 0% ROI, the only profit you would have would be the residual value of the miners. If you think they are still valued at 100% of their original cost, THEN you would have 100% ROI.

You need to understand that getting into mining is extremely risky.  You can invest the time and money if the wrong set of circumstances happens, you can lose everything very quickly.  So do not gamble with more than you can afford to lose.

You don't need a computer science degree to run this, just someone who knows how to do it (it isn't that hard), the main concern is finding a place where you can disperse that much heat.  I am not going to run the numbers right now, but you can look into how many S9's can be purchased with 100k, and then look at your heat output and see how much you will have to worry about.  Note that Mexico, while cheap power, will need further cooling costs put into the mine because of the hotter weather.  Something to think about.

Another thing to think about would be that you don't really sound like you are ready to go at this point, so it is very hard to plan.  It is nearly impossible to predict difficulty at the end of the month, much less 4 to 6 months out by the time you will actually probably be ready to buy equipment.  It doesn't sound like you have a place yet, so you still need to figure that out, make sure power is adequate, cooling and racking in place, and internet connection set up, among other things.  So yes, you are probably at least that far out.

If this is something you are seriously considering you need to start figuring out some of these things so you can get a better idea of what your situation is like before looking into equipment.

I'm usually against piling on the anti-mining FUD, but if your going to be waiting 6 months or more to even start at this point its too late. If you had everything up tomorrow I'd probably say go for it but even then you'd have to find someone to sell you $80,000 in miners at a good price which is impossible right now (the other $20,000 will go to PSUs/PDUs/Networking/Ventilation/Rent/Ect).

You can ROI in about a year with cheap power and some good luck but as people have pointed out, your only getting your money back plus the miners you now own. In the case of the S7 it was $1,500 new about a year ago and sells for $300-$400 tops right now.

If the difficulty goes up too quick then ROI will be impossible which has happened in many 6-9 month periods over the last few years. I think we are poised for another difficulty boom that will leave current miners unprofitable soon.

A lot can go wrong in a year that will cost you unforeseen amounts of money but let me just say that unit failure on S9 miners alone will loose you another 10% right off the bat. Power outages or internet failures will ruin you as well.

Just plug your numbers into a mining calculator. You'll see that mining - even if you don't have extremely cheap power - is very profitable, especially now. Last I checked a month ago mining was still profitable enough to invest.

http://www.coinwarz.com/calculators/bitcoin-mining-calculator

Calculators are pretty accurate, but always remember that difficulty does not rise linearly and there are often large spikes in hashrate and difficulty due to new miners being released, etc. I recently bought a few Antminer S7s with the price spike as I have 6 cent electricity and I make my money back in a little over a year- nice time to buy if you have cheap electricity like me.

There's a lot of great comments here, many related to normal investment planning and consideration that you need to figure out first. If this is news to you the simple answer is you are likely not competent enough to risk the money, better putting it in a safer investment portfolio.

I think the decision to mine (for profit, not as a hobby) should be solely based on your OPERATING cost. This assumes that bitcoin itself will continue to be used in the future and doesn't experience some catastrophic demise, but that is a risk every miner is taking...

Your operating cost will mostly be your power cost and it is crucial that it is competitive with industrial miners (which I doubt it is). Maintenance costs will also likely be higher than the industrial guys in China, as they are closer to the manufacturers for servicing and warranty issues (us North Americans have to pay significant shipping costs). If your electricity costs are significantly higher than rates that the industrial guys are paying you will be pushed out, regardless of where price or difficulty goes. You will be at a higher risk than everyone else who is mining at a lower power cost, and your equipment will have a shorter useful life. This doesn't mean you can't turn a profit, just your risk of doing so is relatively much greater.

If I had 100k to invest, I would be looking at purchasing equipment and finding a suitable industrial miner to host for me, as I do not have cheap enough power costs. GreatNorthData and some others in North America would be a good place to start. I would have trouble trusting my high value equipment to someone to host overseas, where corruption is more widespread.

Cheers :)

If the difficulty rises more than 7% a year, you will not make ROI on the bitcoin. It is better to buy and hold bitcoin.

That is correct but an increase in difficulty level also corresponds to an increase ( pump) in bitcoin prices so you might be mining less bitcoins but at a good fiat value.

 Bitcoin difficulty does NOT drive Bitcoin price at all.
 There is a long-term mild correlation of price driving difficulty, but NO correlation the other way around.

 The REAL correlation long-term is "profitability limits difficulty rise".

Well, before two days ago, mining could have been super profitable for anyone. When the prices hit $1,100 a bitcoin that would totally be a profitable price to cash out any bitcoins you would be mining. But going back to $800, maybe you should think twice before you do. Maybe trading is quite better to invest in. Just buy bitcoins itself, at its prices right now, it's a steal.

keep in mind ,since u have a good size farm, when ur done with the gear, u could and are prob going to sell ur gear to someone with lower eletro rates than u. that will boost profits just a bit, u can use that to upgrade  and rinse and repeat. thats how the game is played now, hand me down gear.

When prices were over $1,100 the math said yes. Now that prices are at $900 you would think its no. But I'd say that in the future it will be worth it. It always been an ebb and flow based on supply and demand.

imho its easier to just get btc & get return immediately as its an uptrend now. mining is only profitable to those that stand close to manufacturers of asics, plus have cheap labour & cheap elecy. basically being in the western hemisphere you can barely compete. so not worth it.. stay out of alts until you are fully aware what is their purpose in crypto world. good luck friend.

This is 100% wrong. You need to seek out some people with actual industrial mining experience if you want answers to these questions. Honestly a 100k build might net you 60 machines with power supplies if you went with new S9/T9s. You can run the entire business by yourself at that point. There is very little maintenance to do with such a small number of machines.

P.S. Someone mentioned R4's. Stay as far away from them as possible. The price per GH is higher than either the S9 or T9 as they are for the ultra foolish home miner that doesnt care about making a profit. Also a quick search of the hardware section will confirm they are extremely unreliable.

 Care to explain the large farms known to exist in the Western Hemisphere that ARE still competing?

 Care to explain how many of us smaller farmers can still compete?

 Your statement is WRONG on far too many levels.

There are a number in the pacific northwest that have been mentioned many times over. Go look at all the places in Chelan County WA alone. Smaller farmers cant really compete, you need to go big to get the good electricity rates. Its been that way for a while but so many people are not willing to accept it on this forum for whatever reason. Before you say I am WRONG please tell me what is so incorrect about my statement and I will gladly explain my position.

 How odd that many of us smaller farmers ARE in fact able to compete successfully - and no, I'm not in Chelan Coubnty though I am in one of the other 2 adjacent "very low cost" counties.

 I've been profitable enough since I went full-time as a cryptocoin miner this past summer (after moving from Iowa) that I am currently looking for a bigger place with more electric available to expand into (I'm currently pretty much electric capasity capped in my current place) - if that's not able to compete with success as a small miner, then you have a VERY odd or a very NARROW definition of "success".

 For you information "residential" and "small business" all-up rates in Chelan or Douglas counties are quite close to the final "all up" cost for industrial-scale users - they ALL come in at under 3c/kwh (Alcoa might have managed to negotiate under 2 for the very large Aluminum smelter complex they used to have in Chelan County, but I'd not BET on that after their up-front costs and usage fees were included There has to be SOME reason they shut that one down in favor of others elsewhere - possibly transportation costs for the ore and resulting products)
 This is not factoring in the "high density surcharge" stuff that Chelan recently implimented that pretty much only affects large Cryptocoin mining farms, though it would appear that existing farms are getting hit with that on a "phase in" basis rather than immediately.

 Grant County isn't quite good for small scale farmers, the residential and small business rate all-up is about half again the all-up rate for larger users - but at 4.5c/kwh or a hair less ALL UP, it's still easily possible for a small miner to make good money.


 I can't seen any possible VALID reason for you to say us small miners can't compete here, given the actual facts of the matter.


 Outside of the 3-county area, you MIGHT have a point about it being hard for small miners in the US to be competative.

 

Alcoa moved most everything they do offshore so they didnt have to deal with EPA regulations and all that other fun environmental protection stuff the civilized countries have implimented.

I think there is confusion between us over the terminology.  I am not sure what you consider a 'smaller miner/farm' as people on this site tend to call their 10-20 unit setups a farm.

In my opinion it is not worth to invest in mining 100k and run a farm. The best choice is to buy Bitcoins for 100k sit and watch how the price is doing. You will get more returns than mining BTC. Just think if something goes wrong you will lose all your investment but having BTC you can just sell off everything and move on. Running a farm is very expansive business. You need invest not only in electricity but also in security. Why you want do this?

 *goes around and counts*


 As of right now, I have 5 ASIC and 15 dedicated GPU rigs of various types mining, and the machine I'm typing this on part-time mining makes 21 total units.

 The BULK of my income comes from the 5 ASIC and 11 of the various GPU rigs - the other GPU rigs are entirely "left-over" parts from my Litecoin GPU mining days or "what I had lying around" and while they're profitable they're not making a lot.

 I would classify this as a "small farm" or "small miner" setup.

 My TOTAL investment is well under $30k - I think it's under $20k a bit but haven't crunched the full numbers for last year yet.

 A fairly large chunk of the "investment" is paid off, it's my more current *higher profitability* gear that I've not had long enough to be completely paid for though.

 I wasn't aware Alcoa moved so much offshore but I don't find the idea shocking.


 I do NOT believe that 100k invested in Bitcoin right now would return more over the next 2 years than getting a serious well thought out small-to-mid-sized mine going with that same money. The BULK of the recent Bitcoin price rise came with the Chinese exchanges were allowed to start accepting payment in Yuan for Bitcoin purchases back around November a year and change ago - which was a ONE time event that more than doubles Bitcoin pricing in a month and has allowed the continued weakness in the Yuan to fund ADDITIONAL Bitcoin price rise since then (excluding the short-term panic drop when the Chinese "Central Bank" (owned by their government) turned around and announced that they decided to "investigate possible market manipulation and other issues" with the major Chinese exchanges).



 If I had 100K to work with (INCLUDING my outlay for the current setup), I'd find a much bigger place with a lot more electric to work with and move a lot more towards doing what I WANT to do, without having to worry about continued growth just to maintain my current income level. Among other things, ALL of the pre-RX AMD stuff (and possibly my pair of RX 470s as well) would shift to hammering out MooWrapper/Dnet blocks (I can almost break even doing that via GridCoin, but can't afford to do so at this time)....

Yea we actually looked into some old alcoa locations due to the fact that they already had so much heavy power ready to go but ended up going another direction.

I tend to look at things from a larger business point of view and I think thats my disconnect with most of the people on this site. Personally I wouldnt consider what you have a farm, thats still something you could run out of your basement. I may be a bit jaded in that respect because I manage thousands of machines daily so my sense of scale in the industry doesnt match up with many other people.

I totally agree a quality mining setup will give you a better return than just sitting on BTC at present. We are at a time where there will not be improved miners coming out for quite a while so anything purchased today will have a longer shelf life than pretty much any miner in the past. 100k will get you a manageable starting point to get into the mining game. As I stated before it is a small enough number of machines that a single person could run the business no problem. Heck if you didnt want to do the monitoring on a place like that yourself I could come out and setup a server to remote into and I could manage/monitor it all for the right price.

i am not sure how much you can get when you decide to mining, you said you have 100k to invest in mining section, then i think you will need high-end hardware to mining because this is the only way to can earn much of bitcoin than other people. but in mining, you need to wait before you can earn much of bitcoin like 3-8 month or maybe less, beside that you should calculate how long you can get ROI.

i think you need to thinking to make investment in other way so you don't have to wait to long to get ROI but its up to you.

The difficulty is rising too fast. It is better to buy the bitcoin directly.

You might be able to make a bit of profits with the price of bitcoin rising with the difficulty, but again it's up to your electrical price. ROI will be a little long but with time the price of BTC will rise and you'll make a profit in the end most of the time.

Holding is nice and can net you nice profits but it's also a little bit risky. Trading can be worthwhile if you're willing to put time into it.

What do you think of Bitfury? Is that not in the west?

Yes, but Bitcoin mining is pretty risky to get into now because:
-You don't know what transaction fees etc. will be in the future so your income will not be consistent.

-In 4 years there will be another 'halving' in which the rewards for mining a block will be cut in half, making it harder to profit.

-You need to consider exactly how resolutions to block size issues are going to affect mining.

Fortunately what will make you profit is holding the Bitcoin you earn, as it is most likely that the price will rise over time.

These points you make are not relevant at all... Transaction fee's have always been uncertain, Halvings have always been known, uncertainty in the political scene have always been an issue.

It always a problem but now it is at make it or kill it levels.
He is right because back in the day it was affecting how much you make, now it is affecting IF you can make any money at all. So, if any of those happens you may never ROI at all. That is why it is more important now than ever.