Bitcoin Forum

When it comes to Bitcoin mining, ROI ( Return On Investment ) is an unobtainable myth. Please note, That when i refer to ROI I'm referring to any amount over and above your initial investment. The simple truth is that if the mining hardware was cheaper so as to appear to give a reasonable ROI, the demand for the hardware would be so high that if fulfilled it would push the Dificulty up so fast that the anticipated ROI would just disappear.

As has been said many times, the manufacturers can see a return on their investment. People who get the fastest new hardware first might see some return provided that the supply of that equipment is quite limited. Even then it won't take long for their lead to disolve.

This is all because there is a concerted effort to control the number of bitcoins made at any given time. If your new equipment is fast enough, it can work outside those rules for a time until the difficulty compensates. We are all fighting to get our own share of a finite number of bitcoins and the only way to increase our share is to decrease everyone elses. Of course, they then try and increase their share with new equipment to our detriment. Eventually, the amount of resources that any given miner can throw at this will become depleted and their share of the pie will shrink and they will have to accept it.

From watching the estimated hardware incoming by the different manufacturers, it looks like 16 petahashes are incoming by March 2014.  Except, two things I see wrong are:

No company had released according to schedule (to my knowledge)

And people are already saying "mining is dead, don't buy hardware."  Do you really think people are going to keep buying ehen the difficulty is 4 or 5 times higher? I dont see it getting 16x higher, unless some new, unannounced awesome miners appear before then.

Anyways, with that knowledge I played with some difficulty counters, and changed values until the difficulty growth matched the estimated March difficulty (1.8 billion). Once i was there, I lowered the difficulty jumps to 5-10% (just like it was when graphics cards were stable) and ran it till next sept.  I tried this at 100% difficulty by march, 75% and 50%, and got between 75-90% ROI on my block eruptor farm.  But again, I see that as a worst case scenario, I don't believe the difficulty will get that high.

So, I believe in ROI.

Yes they will. Because you ask the wrong question. The correct question is: how much will a terrahash still cost once difficulty is 4 or 5x higher? Answer: ~4-5x lower than today.

Your next question should be: how low can the cost per GH go? Answer:
https://bitcointalk.org/index.php?topic=295270.0

That all depends.

If you're talking about BtcIn -> BtcOut, you might have a hard time. The numbers for mining the same amount of BTC that you used to purchase a piece of hardware are looking more and more bleak unless you're looking at hardware that can do hundreds if not thousands of GH/s, with good power efficiency, at a cheap price, and can be delivered quickly. The best solution here is to look at the long-term plan (which I've always said any serious miner should be doing), and see what method gets you the most amount of BTC in the future. Buying BTC isn't a viable option, IMO, because the amount of BTC you hold is constant. Mining may net you the most profit right now, but if you run a BitFury miner until it no longer covers it's own electricity costs, how many BTC will you have mined? I'd be willing to be it's more than if you had bought BTC and held.

If you're talking about UsdIn -> UsdOut, that's a whole other ball game. The increase in price has more than compensated many Avalon or BFL pre-orders. I know I've already reached ROI for my early orders and then some, and I expect to do so with any future orders (including the late BFL order that was shipped yesterday). In fact, the USD numbers have lead to my BTC mining being quite profitable. And I'm not done yet, so we'll see how many BTC I can squeeze of of them over the next 4-5 years.

IMO, the key to either is power efficiency. That's why KNC or BitFury miners are so desired, and why ASICMiner and Avalon based miners are almost considered ancient at this point - they have about 6 months of life left in them (tops) before they're no longer worth the electricity it takes to run them.

Just my drunken 0.02BTC.

┌∩┐(-_-)┌∩┐

that logic has been debunked so often...  Send me 1 BTC and in a year I will send you 0.9 BTC back. If BTC price doubles you will make a killer profit.. Thats essentially what a miner does, only my deal is better and you dont even have to wait a year, I will send you your "profit" immediately !

And if you want to buy with fiat , Im willing to accept fiat  and send you 0.9 * exchange rate in BTC. No need to wait 6-12 months.

if you expect BTC to rise, buy btc.

 And also if you believe btc price will go lower , send me as many btc as you want and I will give you the dollar wise version of it in a year, that way if bitcoin lowers , you will still have the same amount of dollars as you had with nothing lost during bitcoin price drop :D

In my mind, there is only two ways to get into mining with (kinda) profit.

1: Be first in line for a next generation asic preorder (like Avalon Batch1 was)

2: Mine scrypt with GPU`s with the intention of heating your house.

Of course they will because they will wheel out the broken mantra that they are buying with fiat and making coin and you do not know the future value of the coin so you cannot tell them that they are wasting money.

Then once they have received their miners they will mine with them. Eventually they will see that the monthly power cost is double the mining income but they will do that drowning-man-and-straw thing with the new mantra that they are paying the power bill in fiat and mining coin etc etc. Eventually when even that mantra is worn out, they will start to mine solo and tell you that it is like playing the lottery and that one day they will actually find a block and then all will be well.

If these guys were not buying ASICs they would be falling for the "Nigerian Princes" who had been left $30M in a Yemen bank account and just need an honest person that they can trust to help them get the money. At least the ASIC makers are not bankrolling terrorist groups like Boko Haram.

Just don't mine for profit, mine to protect the network. Problem solved.

If there were huge profits in mining, hardware companies would just mine themselves.

+1

I treat it is a hobby, and it's fun to get something back from the hobby.

Another way to think of it is like an annuity that you CONTROL.

Instead of dumping $1000 in the bank, and have them pay me an insulting 0.05% interest rate, and having them use my money to goose up Wall St, I'd rather buy something real that I control, and pay myself some interest money.

Then when I'm done with it, I still have the graphics card/miner and the enjoyment of it. I could put it up on E-bay, keep it, use it, do whatever I want with it. It's under my control, not somebody elses.

ROI is a relative term. Returns are what you make them out to be, not what somebody else tells you they should be.

To each their own whatever.

+1

this is my angle its not just about the ROI , im part of this movement that the whole world is starting to really talk about . i believe the price of bitcoins will rise to a crazy level and i will get my return as i keep mining away generating  bits of a bitcoin.

if America defaults on the 17th watch the price of bit coin go up 1000%

One of the biggest problems is really electricity cost.  Every month that is a constant for most miners, so you can say "I believe and believe and the BTC I get from mining is more special than what I can buy from CoinBase!".  Let's use a generic example not based on any one vendor.

I buy MinerExtremeX and it hashes at 350GH.  This costs me $4000 but my tinkering on GenesisBlock tells me that if it does arrive tomorrow I can make up to (using numbers I see right now, let's say right now you could buy 28BTC with that and sit on it) ~34BTC over its lifetime before it goes under the effeciency line.  Cool, I will hedge my long-term bet.  Now time to move this out over a few months...

Start:

Buyer - 28BTC
Miner - 0 BTC
Vendor - 28BTC (this will never change, just want to point out who is fucked from the get-go in mining these days :D)

Next diff:

Buyer - 28BTC
Miner - 6BTC total, -$200 for power

Next:

Buyer - 28BTC
Miner - 10BTC total, -$400 cumulative for power

...

Buyer - 28BTC
Miner - ~20BTC total, -$1600 cumulative for power

............

So your $4000 mining unit is *actually* costing you somewhere around $5600 to cover the next 8 diff increases, each with exponentially decreased earnings in BTC.  If BTC value goes up, at any time the 'Buyer' can sell.  Otherwise, you're basically fighting to earn as much BTC as you could have purchased but taking 100% of the risk from the moment you send vendor your cash.  

Tl;dr: I agree, ROI is unobtainable and mining is a bloody arms race with no winners EXCEPT THE VENDORS.  I'm glad everyone is so eager to support these vendors, but remember, AvaBitFlyCoin & Co. are sitting on piles of cash long, long before you will ever see any form of return.  And the constant electricity cost is the 'hidden' part of the price when everyone runs calculators but in reality that is a constant you must pay to ensure you can chase the ROI dream on hardware.  If you can't pay elec, your ROI/return dies immediately.  And as others have said, the only true way to make your money back for sure is to mine in that short sweet spot and play hot potato with the hardware so some other sucker can buy the dream off you with zero hopes of a full return.

So:

With 0 cost of electricity.

Is there any machine that I can order now and get positive ROI when I get it and run for it's lifespan?

People will keep on buying mining equipment even if negative roi is more than obvious.
I mean someone will tell them that they are "PROTECTING THE BLOCKCHAIN" and that "Miners are available in MANY colors" and there you have it!

If you buy with USD, there are unknown factors
- machine lifespan
- price of BTC
- difficulty


I believe it might be positive ROI, but optimal is just buy BTC

Sure, If the machine is able to run for a few hundred years or so.

Electricity cost is still negligible today when compared to writing off the (28nm) hardware. One day, electricity will become the sole real limit on network hashrate, but by that time your miner will be earning at most 1% of what it would earn today, and possibly as little as 0.1% if there are many miners with "free" electricity.  That makes break even calculations pretty pointless.

 Yes, huge profits. Exactly what happened.

You forget there were no companies before we funded one or two, then, they made the machines and mined all coins they could before start shipping equipments with impossible ROI.

Zing.

Not that I disagree with the Op but he did not mention the scenario where the price has a steady increase or even new spike which would give people ROI at least in the short term.

Hardware cost is mentioned but not the price of bitcoin.

Bitcoin is still in it's inflationary stage, increase in price is not guarunteed. Bitcoin acts as a commodity, you can't bank on price. a spike would only help if people acted on it but most will miss the peak, expecting it to go higher. Playing the exchange market isn't mining.

or you can buy the equivalent bitcoin now for a lower price. no hardware cost, no need to maintain machines.

Well, when we talk about ROI normally we don't factor in price increase of Bitcoin. If we do, we might as well buy Bitcoin and do nothing.

Yep.  Think of mining as buying BTC and receiving them sometime in the future.  I'll offer anyone the same deal as a miner that won't mine as much BTC as it costs in it's lifetime.  You give me 10BTC (think of this as the cost of your miner) now and in 1 month (or 3 months or 6months, whatever, you choose) I'll give you back 9BTC (the lower BTC return of miner equivalent).  Heck I'll even let you pay me in USD, that way you might ROI on the "investment", right?  Hah.

I've made a similar offer in the past, but sadly no one took me up on it.  ;)

Yeah I suppose you have to put more lipstick on that pig of an investment.  Guess that's why I'm not a sales guy.

Its anybodys guess and there are lots of scenerios and room for speculation. Lets say BTC goes to $1000 or $10000, you may be priced out of the market to buy coins now but that old miner of yours will be churning out valuable cents still.