Bitcoin Forum

If you've used one of the generic bitcoin profitability calculators, you've probably been surprised by the projected income from Bitcoin mining. The profitability numbers can be shockingly high for just buying a video card, putting it in your PC, and running a program 24/7.

But all of the online calculators I've seen omit the biggest hurdle: Difficulty increases.

The bitcoin network is designed to produce approximately 2016 blocks every two weeks. With high performance hardware becoming cheaper and more widespread and more users jumping on the mining bandwagon, the only way to keep the block production rate constant is to make it harder. Thus, every two weeks the difficulty adjusts to slow down or speed up production to match this 2016 blocks / 2 weeks target rate. This almost always goes up.

In fact, it goes up at an alarming rate. Sipa maintains some excellent charts of the increasing difficulty over time here:
http://bitcoin.sipa.be/
Notice how difficulty is increasing rapidly. (The link is very flaky, so check back often if it doesn't load right away).

If you're going to make any long-term projections about the profitability of mining hardware, you must take periodic difficulty increases into account. Right now, the next difficulty increase is predicted to be about a 15% jump at the next increase. This means a rig that pulls in 29 BTC per week right now (typical for an OCed 5870 running phoenix) will only be making 25.5 BTC per week. Add another 15% difficulty and that drops to 22.2 BTC per week. Six months from now (at 15%) that drops to 6.3 BTC per week.

On the other hand, the exchange rate has been increasing lately. If you believe this will continue, then the numbers above don't look as bleak. However, it also means that you'd be better off purchasing BTC rather than mining hardware. If the exchange rate really does increase, your BTC will increase in value. Meanwhile, your hardware will only depreciate and produce less BTC over time.

There are some other costs and hurdles that miners tend not to consider when calculating profitability:

1. Downtime - This isn't just the 100% downtime when you're rebooting your computer or updating your miner application. Using your desktop will slow the miner down somewhat. Perhaps a lot if you're gaming or watching a video. Even dedicated mining rigs will have to contend with periodic pool outages or network hangups bringing production down from 100%.

2. Frictional mining costs - Unless you're solo mining (in which case you'll be dealing with variance) you're going to give up some small amount to whatever pool you join. Fees, stale shares, etc. Figure 3% or so of your output.

3. Frictional conversion costs - Unless you're going to be buying things strictly in BTC (not likely for a miner) you're going to have to pull the money out into your native currency. Conversion costs on small amounts will be painful. Conversion costs on larger amounts won't be as bad, but you'll still lose at least 1% and probably more.

4. Cooling costs - Summer is fast approaching in the northern hemisphere. Cooling a house or apartment is difficult in many regions, and even more so with computers pumping heat into your room. If your computer consumes 1000W, then it is ultimately dumping 1000W of extra heat into your room. If you don't think this is significant, go run a 1kW hairdryer in a small space for a few minutes and see how much warmer it gets.

5. PSU Inefficiencies - Any power supply won't be 100% efficient. The only semi-accurate way to gauge power consumption is to use a Kill-a-watt or equivalent at the plug and measure the power directly. If your video cards + mobo + CPU draw 1000 watts from your power supply, it's probably drawing 1200 watts from the wall. Your electricity costs are 20% higher than you expected.

Bitcoin mining is a race to the bottom, and if you don't already own a capable computer then you've probably missed the boat. You will always be up against people with lower (or no) electricity costs, and people who are buying hardware cheaper than yours. If you're counting on the increasing exchange rate to buoy your mining rig profitability, then you really should be investing directly in BTC, not buying mining hardware. Increasing exchange rates will only drive more people out of the woodwork who are willing to mine for meager profits. Even worse, there are plenty of people who don't grasp the concept that electricity and heating aren't free, and will mine for negative profits.

So before you drop cash on a new mining rig, think long and hard about whether or not you'll find it useful for anything other than heating your house in the winter.

This is an excellent analysis, and considerations like the ones you raise here have caused me to reconsider expanding my hardware beyond the single 6990 I already own.

And I would like to add:

7. Being on-call. Every time something upsets your mining rig, you have to go fix it because every minute it isn't running, you are losing money.

It was very hot over the weekend. My wife noticed that there was a beeping noise coming from the attic where the mining rigs live. The temperature up there was unbelievable... so I had to spend some time contriving some airflow through the attic.

You put it in the attic?  Be careful you don't start a fire.  I'm serious.  If you're trying to get it out of your house, then you'd probably be better of putting it in your crawl space, if you have one, where you can take advantage of the average ground temperature for your area (probably in the 50s).  An attic in the summer is basically where all the heat from your house is going to end up, plus it's affected more by the temperature outside.  So, in the summer you could easily have ambient temperatures of 45C or more.  Seriously, a mining rig in an attic is a horrible idea.

Yes it soon becomes problematic when 24x7 mining, as our homes suddenly start to feel and sound like data centers, my closet is sounding liking a small replica of a data centre minus the dedicated AC.

I wonder adversely will the difficulty also decrease as the summer temp increases leaving just those of us who will endure to no end to keep mining leaving the casual miners to switch off.

Don't forget that the southern hemisphere is entering winter as the northern hemisphere is entering summer. That could balance things slightly.

I'd actually be more concerned about the kids in their parents' basements, for whom electricity and cooling are 'free'. Same goes for those running mining operations in their offices.

I doubt those kids will be running their rigs for too long once daddy discovers that his electricity bill has increased by ~$100 a month or more.

There are plenty of places in the US where running a machine with a single 5870 at full tilt 24/7 will only cost you $20/month.

Sure.  I had a 5970 or 6990 in mind when I wrote that and I was taking into account the second watt problem that vlad mentioned.

if 5870 costs 20$ than 5970 would cost 60$, but nowhere near 100.

As a college student, I pay no electricity bills living on campus, therefore all of those points are moot. Over the past month I have broken even on my two 5870s, which I can easily sell back on eBay if I need the cash. From here on out running my PC 24/7 is pure profit for me, regardless of if I make 1 BTC per day or 10 BTC per day.

Bitcoin mining should NEVER be seen as a viable source of income, but if you can make it slightly profitable, it might pay for your lunch once a week. That's good enough for me, but people with grand schemes of making tons of money mining have missed the boat completely at this point. Personally I believe the BTC/USD bubble will pop soon as well, as soon as people realize that there aren't that many advantages to using this currency.

Depends on your electricity costs.  At full load a 5970 system will probably end up pulling ~500W from the socket (remember that PSUs are not 100% efficient).  During the summer, and taking into account home AC and the second watt problem, at $0.12/kWh you're looking at $86 a month.

Wrong. 5970 system shows for me ~350W power consumption cause I tried to be the smart half in the relationship between electricity bill-my wallet.

If ~350W is really the full system draw at the socket then at standard US rates you're looking at ~$60/month.

I don't think the post was to completely say its pointless to mine, in fact this is the wrong message to send as the network needs miners to work, just don't run down the shops thinking these cards will get you rich quick or at all but the return on investment will be slow or not at all depending on operational costs. But if you have some mining capable hardware why not mine while its on contributing to the network and getting a little something out of it.  

I think there is a magic formula to calculate price per mhash based on power consumption / initial purchase cost and each person should do so before raiding the electronics store.

imo buying the 5870/5970/6990 and running it even in a college dorm/office leaves you with 2 problems ignoring the cost of electricity

1) heat
2) noise these things can get bloody noisy, and in fact can become an audible pain in the butt. i'm sure my work colleagues would not appreciate a mining rig under my desk running all day.

However for the more extreme of us and where this blurs between passion and hobby, I'm currently looking at mining using oil based cooling solution, however that ain't cheap either in fact to have a real benefit to offset cooling costs you need to have a large number of cards immersed in the same solution, but is supposedly more efficient than air based cooling although to mine through a hot summer you will still need a good radiator/heat exchanger.

The ultimate goal, is low watt, high hash, low noise, low temps, i have yet to see the solution for all these components.

Meh... I don't think it matters.  If we get more miners, great.  If we don't, mining will be profitable and established players will expand their capacity.  Either way, the network is secured.

Also, to people who aren't running your dedicated rigs in a large space with open airflow and/or in a climate controlled space.

You're going to experience instances of hardware failure that are higher than average.

Worst case scenario (in my experience with hardware) the Power Supply gets affected by the heat first and dosen't just die in one fell swoop, but slowly starts to fluctuate voltage outputs high and low where it shouldn't be.

Not only can this be incredibly difficult to diagnose, but it can slowly degrade your video card to the point where even when you pull it out and put it in a new system, it'll still have rendering errors.

If you're going to go (past a certain point), go all out. IMHO

I've been from time to time following the discussions here but never registered on the forum. But after getting more and more irritated by clearly people trying to actively discourage others from mining i couldn't resist and had to register to get this out.

I suspect that JJG and one or two others are just puppets created by Vladimir. If you follow their posts and anything which has to do about starting your own mining operation they'll jump on it and try to push it to the ground. It's possible that JJG and other puppets are all and the same person which might be Vladimir himself. It is an INSULT to the community to keep up this theatre and believe that the community is stupid enough not to see your games. Perhaps business is going bad for Vladimir aka JJG aka .. so they resort to these low tactics and discourage as many people as possible.

But it is disgusting to see always the same puppets jump on threads whenever some one has an initiative to mining or setting up shop. Especially newbies with a few posts showing up with the same tactics and at some point Vladimir popsup to add his two "bits".

Anyway, that's my opinion, and i hope others can see the pieces of the puzzle they're playing and draw their own conclusions.

I very much doubt Vladimir is "that big" or that he can really discourage the majority of new wannabee miners.

I agree, in my opinion he's more hot air than anything close to what he's trying to project to the community. Jus like his random posts of capacity and selling out quickly. If it was that easy
others with the resources would have been flocking here much sooner. But point is, it annoys the hell out of me to see these type of figures polluting the community with disinformation or pulling things out of their context.

Yup. Though I'm meaning something very different to what you mean. Regardless, any chance we could have the "Vladimir is the Wizard of Oz, pulling all the strings" thread in one place (http://bitcointalk.org/index.php?topic=6703.msg97920#msg97920)?

Well, concidering a single bitcoin will be worth thousands, or even hundred of thousands of dollars in the future I think you should buy all the rigs you can find and mine as much as possible.
Best case scenario you'll be rich.
Worst case, you'll be poor, but you'll help the GDP of your current country.  ;D

Hundred thousand dollar per bitcoin?! Dang..I dunno I guess that is possible but I have some doubts it will get that high in my life time..I pray that I am proven wrong.

Even if this was true, you'd still be better off trading your USD for BTC directly rather than investing in mining hardware that will just depreciate on you.

Unless you believe there's a realistic chance that BTC value could significantly drop, and you want something that will retain some value left over if BTC value does significantly drop.

If the goal is to up the GDP, then hardware is the way to go. ;)
And s/he'll still be rich if a coin goes up to a few hundred thousand dollars each, perhaps not as rich as he could be by buying coins instead, but rich none the less.

21 million bitcoins. 7 billion people. We'll all be doing business in pico-bitcoins and one coin will be a fortune. ;)

I think Bitcoin will be more of a niche, like Esperanto. A hundred years ago, many people thought that Esperanto might one day be used by most of the world's people. However, it ended up being of the order of a million fluent speakers.

Suppose there are a million people using Bitcoin. That's an average of 21 coins each. They won't be using Bitcoin for all their purchases. Let's say they turn over 10% of their coins each week, and buy $100 worth of stuff using those 2.1 coins. That values each bitcoin at $47.62.

One thing is for sure though: five years from now, each bitcoin will either be worth much more than now, or will be worth nothing.

Yes mining is not profitable. Please stop using your GPUs to mine for bitcoins. Do not sell your GPUs, play games with them and just buy BTC on the market. Leave the mining to the insane.

1. Where is .be? (Belgium?)
2. What date does 11'10 represent in Belgium? 11th of October or 10th of November?

Nevermind, I figure it's November 2010.

Indeed, the hardware is a nice hedge. Especially if you are a deal seeker like me, and could make profit off reselling the hardware (today at least).

My newest rig cost me 692 USD and is currently mining at 1203 Mhash/sec, and it has a vacant pcie slot ready for another card which the PSU is quite capable of powering. At $.0886 per kWh (going down to $.0849 per kWh June 1st), it's a no-brainer.

But I only do this as a hobby anyway!

Same here. I do it cause I enjoy building systems and maintaining them. If I was a technophobe I'd just be buying BTC. Also for me electricity is fairly cheap ($0.06 CAD). 

So, is there any benefit to setting up your own system compared to putting a mining client on something like AWS or Google's App Engine and letting them do the "hard" work? Presuming it wasn't mining that caused the EC2 problem last week of course  ;D

On the one hand, buying a mining rig means you can keep using it as long as you like and only pay electricity. (And, well, upgrades if you try to keep up with difficulty.)

On the other, the nice thing about buying compute time with some else is that uptime is their problem. I learned that one this week -- got a nice little rig from bitcoinrigs, works like a charm -- but for its net connection I installed a little $10 USB WiFi adapter. Guess which $10 component of the rig failed? Good guess. If I expect the rig to run 24/7/365.25, I can't balance its success on a component that just wasn't made to perform like a real commercial piece of equipment. A learning lesson.

I'd love to see the specs on what you are using for this.  If you can buy a rig for that cheap that is that powerful, mining is more profitable than buying by quite a bit.  I may have to rethink my mining position.  If you can spend $X and get .667X Mhash/s, you should come out ahead of buying in a year unless there is huge growth in BTC (BTC over $400 in 1 year).  Even then, you end up with $150,000 profit instead of $181,000 profit.

It's not realistic. It took a couple days finding all the parts on ebay, newegg, and various computer forums. And it was also a lot of luck. And used 5870s for $165 shipped no longer seem to exist (and they were the key, the rest is just random junk).

I think Bitcoin will be more of a niche, like Esperanto. A hundred years ago, many people thought that Esperanto might one day be used by most of the world's people. However, it ended up being of the order of a million fluent speakers.[/quote] Hi, I´m new here. IMHO the difference between Esperanto and Bitcoins is the usefulness. You can´t buy stuff anonymously by Esperanto, or hide money, or speculate, etc. Bitcoins are usefull to some people, while Esperanto is pure idealism.

Hi, I´m new here. IMHO the difference between Esperanto and Bitcoins is the usefulness. You can´t buy stuff anonymously by Esperanto, or hide money, or speculate, etc. Bitcoins are usefull to some people, while Esperanto is pure idealism.
[/quote]
They have a lot in common.

Esperanto would be super useful if everyone spoke it.  Bitcoin would be super useful if everyone spoke it.  But you are right that Bitcoin would still be useful for niche applications where Esperanto isn't.

Concerns noted. Beginning hunt for additional mining hardware.

I wonder why JJG cares so much about others money. I've seen over 15 posts by JJG saying that mining will be not profitable. Of course in a long term there will be only miners who have electricity for free. But for now, difficulty adjusts to current price so mining is almost always profitable.

I had a friend when I was younger who's father demanded he pay him $1 for every night he forgot to turn off the computer.

You're missing the point.

I'm not talking about mining, I'm talking about running out to buy dedicated mining hardware with the belief that it will just pay for itself in a few months and then continue generating income for the owner indefinitely.

My registration and posts were prompted by some posts on this forum and a few others. In one example, someone spent $3000 on a dedicated mining rig and expected to pay $151/month in electricity, but hadn't bothered to take difficulty increases into account. By the time he received his hardware arrive, difficulty was up 19%. In ~9 more days, it jumps 30% (if not more). That means only a week or so after he started, his profits were already only 2/3 of what he predicted he'd make. If another 30% difficulty increase happens after the next one, his profits will be 1/2 of what he predicted.

A lot of the miners who come to this forum are starry-eyed with profits they roughly calculated, and eager to buy all the mining hardware they can. After all, it's free money, right? Well, realize that it's a race to the bottom and you're up against a rapidly increasing difficulty value that is explicitly designed to keep you from making easy money indefinitely. That's the system, and that's how it works.

Meanwhile, the influx of miners generally aren't intent on actually using bitcoin, they just want to do some mining and then immediately cash out to pay off their hardware. When scores of miners are desperately trying to sell their BTC to pay off their hardware investments, the value of BTC is going to fluctuate wildy, and the general direction won't be up.

Plenty of people have run the numbers. Curve fitting the rising difficulty is a trivial task, more advanced models don't tell better stories either. But none of this stops the "I want to believe" crowd who thinks that they're going to turn 6990s into indefinite cash streams.

There's nothing about the price of BTC in the last few weeks that suggests that a little downward pressure on the price wouldn't be a good thing. In the real world there are options markets and short sales to counterbalance rises in price; here in Bitcoin land those mechanisms don't exist on any real scale. Mining for sale will push back against the speculation in Bitcoin price, up until the lower price makes mining unprofitable.

It's not terribly complex logic. If he talks, say, 10 GHash off the network with his logic, difficulty would drop proportionately (albeit slightly). If, however, by his argument he prevents many people who are considering making a mining hardware investment (such as myself) from making said investment and instead using that money to buy Bitcoins, this is a win-win for him if he is mining. He increases scarcity and offsets potential network difficulty increases. It's not completely altruistic, ya know? ;)

For the record, I plan on adding about a Ghash to the network myself over the next month or so. And yes, I realize this is a race to the bottom. So is the rat race that is fiat capitalism. I'll opt for this any day of the week...at least on here I'm not deluding myself.

Paying anonymously and transfer money arround the world anonymously is not a niche, also hiding money in a small datastore and having several backups. It´s only the exchanges which have to work better, and there must be more shops. I´m optimistic about that.

You must realize the total network computing capacity is over 1000 Ghash/s right now. 10GHash/sec is less than the day-to-day variations in computing capacity.

There's a strong trend in this thread. People either:

• Look at the charts, run their own calculations/models, and determine that buying mining rigs is a very poor decision
• Ignore the math, charts, and rising difficulty, and instead rely on conspiracy theories to brush my arguments aside

Even the guy who said the trick was to buy cheap hardware admitted that it's no longer straightforward to buy hardware cheap enough to make it work.

Whatever you think my motives are (I assure you I am not trying to manipulate the market with a forum post  ::) ) you can't argue with the math. So far no one has provided any sort of projections or calculations that show I'm wrong. Conspiracy theories don't count.

And nobody can, because the profitability of mining depends most largely on the exchange rate going up at a certain rate, but that's the bit of the equation about which nobody can make reliable predictions.  At this point I continue to mine because I believe this is a worthwhile project to spend some of my electricity (and ultimately money) on.

And we've been over that flawed argument already, too.

tomcollins was kind enough to share his projections of mining profitability with exchange rate increases/decreases taken into account.

If you're betting on the exchange rate going up, then buying bitcoins will net you a profit without buying rapidly depreciating hardware and paying for expensive electricity.

Just to be clear, I'm not advancing any of the arguments that mining is the most profitable investment, a more profitable investment than directly buying bitcoins, or that mining is a better investment because mining assets offset the risk of potential bitcoin failure.  You said that "no one has provided any sort of projections or calculations that show I'm wrong", and in my response I was essentially agreeing with you and explaining that the calculations needed to show you're wrong depend on something nobody can reliably calculate (i.e. future exchange rates).  In other words, given what we can know, you're right.  Also, I was saying that at this point, having realized that mining is not the best bet in terms of profitability, I mine because I think mining is worthwhile for reasons other than merely generating bitcoins (e.g. network security, and all that).  Even in the case that there's no chance of me generating a profit, I will still mine to some extent because I think it advances a worthwhile project -- a decentralized currency.

Sorry if I appeared a bit abrasive. You're definitely on the right track with your efforts and your mentality.

You might be want read over tomcollins' projections, though. He ran several different scenarios depending on the exchange rate going up or down and at different rates. In other words, the exchange rate doesn't matter as much as you might think.

Guh. It doesn't matter if you're right. Of course you're right...some basic math would prove that. It matters if people agree with your point of view. It also matters as to what I want to spend my hashes on. :) I happen to really enjoy mining as a hobby, and even if Bitcoin went belly-up tomorrow, I would point my mining hardware at SETI@Home or something like that...so it wouldn't be a complete waste. Plus, retired Bitcoin miners can play ANY GAME THEY WANT. :P

Let's also consider it a good thing to have more people mining, if only because it protects us that much more from a >50% attack. There's a botnet out there, ya know? And maybe he hasn't seen your thread... (of course, it wouldn't matter if he did, since he's not paying for things like power and mining hardware, for starters)

Regardless of your motives (which are unclear at best), I think that hardcore mining (the kind I am NOT doing...yet) attracts a certain kind of person with a passion for this sort of work. You'd be hard-pressed to show that person any convincing math to make them stop...and the world needs more people like that.

There is a definite place for math and numbers and a place for people do just do whatever the hell it is they want to do. I believe that this is a case of the latter...PROVIDED they have understood the former.

That's why there's were two differing points in my OP. :)

Say...are YOU mining? Have you purchased any hardware specifically to mine with?

Welcome.

Bitcoin and Esperanto both get their usefulness from the fact that other people use them. The reason I think Bitcoin will take off and Esperanto didn't is that you can get into Bitcoin for a little bit of money and maybe waiting a few days at worst. Learning a language takes a lot more effort and the vast majority can't be bothered. So it doesn't get critical mass and is just for idealists. Bitcoin started with idealists for sure, but it's so easy for others to give it a shot. And they can do it to whatever degree they want and still get some value. Learning 1% of Esperanto doesn't do much for you, but a tiny amount of Bitcoins is great.

Full disclosure: I am mining with a 5870 that I already owned. The financial models and projections I base my claims on sprang from my analysis of whether or not I should add another card to my machine for mining. It doesn't take much math to realize that by the time the card showed up, the mining boat would have sailed. I would have broken even after several months, but the profits weren't nearly the rosy predictions many forum members here have.

Then, I came across threads here where people were spending thousands of dollars to build mining rigs and expecting to make their money back right away, with no apparent understanding of the huge difficulty increases coming down the pipe. I started this thread to balance the gold-rush sentiment out and make people think a little bit harder before plowing their money into mining rigs.

And the noble, passionate miner you speak of is probably not as common as you might think. Just take a look at the Overclock.net bitcoin thread where people were desperately searching for Radeons so they could make bank without any work.

It's a hobby. And a money hole. And in the unlikely event that each Bitcoin is worth as much as a share of Berkshire Hathaway in 15 years, it's as you say...it's still cheaper to buy them. Take that $700 a year ago and buy a whole PILE of bitcoins...but don't buy hardware solely to mine with.

Now, if you'll excuse me, I found a good deal on some 5870's that I'm not letting go to someone else. :P

Full Disclosure: I purchased a 5830 3 weeks ago with the primary intent of mining with it. It was $109, and it could already pay for itself almost twice now if it wanted to at current market rates. Fortunately for me, I was also replacing an nVidia 9300GS, so it wasn't like I was actually buying some frivolous thing. The rig I'm looking at building, though, is probably very frivolous.

JJG appears to be purposely discouraging people imo.

Think of it this way, 1 year of bitcoin mining on 2k to 3k USD in hardware (almost anywhere in America, power-wise) is better than letting 10k USD sit in your average savings account accumulating interest.

And 2k-3k buying Bitcoins on the exchange is likely to do even better, except in rare scenarios.  I'm going to laugh my ass off when people who bought high end video cards get passed up by the next big innovation, much like anyone who was CPU mining a few months ago.

But if you have a machine sitting idle and just need to pop in a video card and it's not terribly expensive and you might use it anyway, go for it!   You can likely pay for the card, and if not, it's still useful to you.  Or you could resell it.  But it's a terrible business model (unless you get other people to pay for your rigs through investing).  Renting a mining rig was an absolute terrible investment in my calculations based on the market rates.  But an absolute goldmine for those who could find the bigger suckers.

This. Honestly, this is what worries me. ASIC mining? GPU mining could become an outmoded thing of the past...and then what. Get 60-70% of your hardware investment back maybe.

Maybe one should save one's money until this new technology is readily available, and then pounce on it as soon as it is.

What's ASCII mining? Sorry, maybe a noob question . . . .

Not ASCII. ASIC. Application-specific integrated circuits. Basically, chips specifically designed to push more mhash on the lowest wattage.

I don't know, I believe mining will remain profitable for a while longer. If difficulty increases too much, it means several miners will no longer find it profitable and will leave, even if just temporally, thus decreasing difficulty until a balance point is reached. Not to mention that BTC can increase its value, too. I don't really know what to say about ASIC miners, though. :(

Though, I'm not a big miner. In fact, I just mine with a crappy 9600 GT when I'm not using my computer a lot, and while I pay peanuts for power, I don't think I'd buy a dedicated mining rig.

I wouldn't worry about asics they are highly specialised and difficult to build without resources and money, besides it would end up being pretty big piece of equipment compared to your PC box as an asic might be good on power effeciency you will most likely need more of them to equal your gpus.

For miners to start leaving the pool, miners will have to reach the point where electricity costs outweigh the value of bitcoin mining. If it comes to this and you just recently bought hardware, you're screwed because you'll not only be paying electricity, but paying off the hardware as well. And difficulty probably won't go down in this case, but the growth will slow.

If you're falling back on the 'bitcoins may be worth more' bit then like I've said before, a better bet would be to buy bitcoins.

Good call on not buying a dedicated mining rig.

very interesting that JJG is so concerned about other people buying mining rigs ...

Not buying a mining rig is a smart economic choice. It just isn't profitable at current prices, though if you think that prices will rise, then by all means go for it.

well according to my calculations, I would actually have made more money investing in btc rather than mining hardware I have now back when btc was at .7 or so. And I have to admit it's getting hotter each day and I don't think I want to be running my second machine much longer and thinking about just putting the money and buying and forgetting.

With things that still need to develop like stronger exchange system and others, it would make sense to a lot of people from outside not having to mess with hardware monitoring and getting similar/better returns than mining without headaches. Especially for people who are considering just investing in btc on the side and are not so well versed in computer hardware.

Difficulty is also rising like crazy nowadays after the overclock.net fiasco. Graphs showing network str increasing at almost 4%+ a day. My projection shows it being higher than 150000+ by next change easily

Personally as a miner who already invested in hardware, I know that the mining days are limited and it won't last much longer here. If diff keeps rising at this type of rate, it really won't last more than a few month at best unless the btc prices rise to that lvl. Currently, I personally think the btc is already way overpriced as people are trying to put money in a narrow exchange system inflating the price. This bubble will also burst one day weather people would like it to or not. Realistic price I think would be more in line of $5 or so at the end of the year, but who knows. If dust settles to $5 or so like my conservative guess, recovering cost will be even harder or not possible.

I think the other side of the fence of not mining is getting greener each day and IS a valid option for new people. Or I should say mining is not the ONLY option to invest in btc and make money. Infact mining may be one of the harder and riskier ways of the many available. If I had the money to put in btc I rather do that than deal with everything that comes with mining today with the risk as is. It's not set it and forget it like one may think running miners and keeping it up. We certainly should not discourage people from mining or otherwise, but mining isn't the only option or the best currently if you asked me.

Unless the value of Bitcoins rises quite a bit, buying a dedicated mining rig is probably not going to be profitable at this time, but buying a GPU for an existing machine could be.

A 5870 to drop into an existing machine will probably show a small profit in a month or two, particularly as the price of 5870s has dropped a bit over the last few months and they also seem to have some resale value on eBay.

At current difficulty, a 5870 will mine a little more than 3 Bitcoins per day. The next difficulty rise, probably about 40% will be in under a week, then a 5870 will be mining a little more than 2 Bitcoins per day. Power costs money and 5870s use quite a bit.

So why do I mention all this? I happen to have a machine with a spare PCIe/16 slot and I can't decide whether to order a 5870 to go in it. The 'what-if' spreadsheet suggests that there might be some profit there, but the amount of profit is very sensitive to the rate of rise of difficulty, and this is very hard to predict.

I should have bought the extra 5870 back in January when I bought 7 of them! Those 5870s have paid for themselves and made a moderate profit.

You're a few pages too late for the conspiracy theory talk. Come back when you have some math or logic to debate with.

your calculations were made after the markets moved.
unless someone could tell the future, mining rigs are the safer option rather than trading.
bitcoins arent moved by a small article on the NYTIMES like stocks are, they are completely random.
if some guy says bitcoins are going to fall before 2012, you think the bitcoin market would be affected?
if donald trump tells you citibank is sucking at the moment, the stocks would drop considerably.
there is no bitcoin guru to tell people how to trade, and most of the traders could be adolescents for all you know.
unlike stocks where you need to be atleast 16 to open an account.

mining is safe for now since it is still relativly early. you can make calculations after the market moves cus it just happened, no one predicted the bitcoins would have hit $4.

I didn't mention anything about trading. All I said was instead of investing in mining hardware, I could have bought the btc for the same dollar invested and today I would have ended up with a bigger profit with investing. This is all I said. I also said that mining isn't the only way to make profit and the days of making profit may be more limited than getting involved by investing. My calculation involved buying and forgetting since it was at .7 when I got involved. Has nothing to do with guru and genies or w/e you believe in.

Don't forget that those same moves in the value of bitcoin will also swing the present value of your mining rig.

Buying a mining rig is not, necessarily, less risky. Hardware depreciation and electricity costs are very real.

Maybe that's his objective reality. Then it's not conspiracy at all...it's fact. Of course, that's only if you ask him...

I have taken the advice in this thread to heart. It has not, however, dissuaded me from buying hardware...especially after a visit to CL last night, where I saw that I can get most of the pieces I need (sans video cards and power supplies) for half the price I was thinking of. If anything, I would take the message in this thread as "Watch your ass when buying hardware that you can't turn over when you're done with it."

Also, defending against the >50% attack would be the most altruistic reason I can think of for running a farm. That's not the only reason I want to help, but it is definitely a consideration.

Again, I seriously do not know why you would spend this much effort on this particular topic.

Electricity keeps coming up again and again, so let's talk electricity for a minute.

I'm looking at a 700W, dual 5870 rig here right now on a Kill-A-Watt, and it's drawing ~700 Wh a day.

Yes, a *day*. No, I'm not dropping a zero. The power supply may be capable of drawing 700W, and maybe it does on startup with all those fans winding up, but sitting here happily mining all day at ~680 kH/s, it's spending a total of... less than 1 kWh. I can run this thing for a *year* and pay $35 (at $.14/kWh, which is an overestimate of my yearly electricity cost).

Now, sure, you could overclock this thing and draw more power. And there's certainly a conversation to be had about hardware cost. But the electricity cost does not seem like a dealbreaker by at least a factor of ten.

I suspect that you're not measuring something quite right.  ~700 Wh a day is about 30 Watts.  That's about what a laptop draws.  I have a hard time believing that you're really drawing only 30 Watts with a dual-GPU rig.

I think he did. :(

Ah, uh, oops. No, math was right, but data was bad (wrong device plugged into Kill-a-Watt). Updated data soon.

OK, would you believe 11 kWh a day? :)

And just so you can check my math: it's drawing ~480 watts. So, about 70% of the power supply's rating. At $.14/kWh, that's $45 a month. If I can't get 15 BTC in a month, time to shut it down.

Just my own story. I bought my first bitcoin mining rig and got it mining on April 1st. 2x5970's, system cost me $1500. In April it made just under 500 bitcoins for me. I sold them when bitcoins hit $3.80 shortly before coinpal went down. I made enough money in one month to pay for the machine and the electricity it used. So yes, building a mining rig right now is still very profitable.

shhhhhhh ... JJG won't like hearing that

Glad you can have correct elec rates, but the real question wasn't really a discussion of "is mining more profitable than electricity cost?" but more "is mining the most profitable?"

I think we can all assess that mining is profitable at least for the time being if you had elementary math skills. The real question is, would you look back and wish you had spent the money buying btc instead of mining hardware because it would have yielded you more profit. In my case I would have been better off today just buying outright looking both at profit and time spent.

If network grows as fast as it is today which is about 4% a day, the decision to buy hardware instead of btc outright is looking worse. I already rolled my dice and now I'm just looking for the right moment to sell my equipment. I already see some people listing ads and I worry that I will be selling my hardware with a huge competition if I hold out too long also. I won't be surprised if the difficulty starts going up by 30%+ as it seems it's picked up some steam after people jizzing forum guides all over the net. I would not be surprised things like a press release jump difficulties by chunks this year also. I hear there is a Forbes article and a Time magazine something coming up.. I never thought when I bought my hardware that the difficulty would rise this much this fast and I suspect it's only gonna pick up steam even faster now.

If I had to do it over again, I think I would have gone with just buying route. You might agree or disagree, but it would have saved me a lot of time and hassle. And yes I'm a bit bitter that I have all this hardware that I might have to try to unload because the difficulty is so high now, but it is what it is.  :-\

The difficulty is limited by the price because most people will only mine when it is profitable.  A large amount of hashing power was added to the network after the rise in price by people who turned there miners back on because it was profitable to mine again. (sorry that's a bit of a run on)  I'm rather surprised someone else didn't mention this when discussing the problem with the rising difficulty.  I agree that to many people are using bitcoin as a get rich quick scam (who really knows what other people are thinking) but I know many people are mining because they really believe in bitcoins.

mtGox price on Apr 1- $.70
$1500/ .70 = 2142.86BTC

mtGox price now - $3.205

2142.86 * 3.205 = $6867

Total Profit: $5367.86

vs. Total Profit of $0 (your numbers).  Fantastic decision!

Electricity costs are such a minor part of the equation, though.  The price needs to get super low or the difficulty super high for the best rigs to be unprofitable just looking at electricity.  The cost is the rig itself, which is difficult to recoup the investment from (it takes a while to generate enough coins to make back that investment).  In the mean time, you could have bought Bitcoins up front, and had them all go up, rather than fight to get them against increasing difficulty.

But if you already have most of the hardware and it's sitting idle, buying a few cards can be a good idea.  It's a lot easier to recoup a $300 graphics card than a $3000 rig.

Well done.  :)

Not to mention, I didn't start this thread telling people to not buy rigs to start mining on April 1st. I started this thread to tell people not to buy rigs now that difficulty has gone up and is rapidly increasing.

I'm not sure how you went from "I built a rig 5 weeks ago when the difficulty was much lower and broke even by cashing out at the peak of the market" to "building a mining rig right now is still very profitable".

^^

I'm mining because I believe in Bitcoins. :) Also, because I hate the US Dollar and how we've all been robbed.


Or if you can get the hardware for dirt cheap (like the deal I just found...2 boxes, no hard drives, 1 missing PSU, both boards with a PCI-e x16 slot, processors, heat sinks, giant fans abound for $125), then there's no offset. Or very little. Hell, when I'm done, I can always get some monitors and have a LAN Party. :P That's the thing about mining hardware...you don't HAVE to use it just to mine with. Lots of other uses for it.

Brutal, guys. :P

Edit: My story...purchased 5830 for $109 for 4/12 mining start. Made 55 BTC so far.
My way: 55BTC x $3.235 = $177.93 - $109 (card) - $12 (estimated power cost at 4.8 cent/kW) = $56.93 profit
Your way: $109/$0.77 (MtGox price on 4/12) = 141.56 BTC x $3.235 = $456.95 - $109 = $347.95 profit

Touche, I guess. Mining for profit = not as efficient as playing the market.

Good thing I'm not mining for profit. ;)

Earlier in this thread you justified going to a lot of effort and spending a lot of money to mine at a loss out of nothing more than passion. Now you're questioning why I'm spending a few minutes per day posting in a forum?

Honestly, I'm stunned at the amount of misinformation that floats around these forums, and I cringe every time I see someone rushing out to pour money into dedicated mining rigs without understanding what rising difficulty means to their profits.

Read through the profitability posts here. The majority of them go something like this:

1) Look up video card hash rates on the wiki
2) Look up hardware costs on Newegg
3) Put projected hash rate numbers into generic income calculator with current difficulty and exchange rates
4) Multiply current projected income by 3 months, subtract upfront hardware costs
5) Become convinced that buying a mining rig is the best decision they can make

Of course, by the time the hardware shows up difficulty is up by 30% and quickly rising. These people aren't going to come anywhere near their projected profits. Meanwhile, it's stunning how hard people try to convince themselves and each other that they made the right decision.

It's like politics. If you can mathematically or logically prove that someone is wrong, chances are good that s/he will actually become more convinced of their correctness. Happens all the time, and it's happening here now. No amount of math or models or facts seems to convince people otherwise.

What's that they say? Hindsight is always 20/20? :P

vladimir, I think you missed the point of the post.

tomcollins was showing that if he had bought BTC on the exact day he starting his mining rig, then sold the same BTC on the same day he cashed out his mining BTC, he would have made much more profit. tomcollins didn't pick those dates, mjsbuddha did.

Why? I guess that's the question I've been asking.

Why not? If you saw someone about to make a bad investment with bad information, wouldn't you say something? I'm not just going to sit here and watch the carnage.

I suppose I would.

I guess it's a touchy point for me. I haven't made the investment in hardware yet. I bought a video card (which I needed desperately...no one wants to see a 2.9 WEI score for Graphics) and I got a pretty good deal on it to boot, so I don't feel like I've "invested" in hardware yet. Even the tinkering I plan on doing (which, I'll admit, would be just that) probably won't set me back an awful lot.

I wouldn't want to discourage anyone from mining...but I would want them to know that they are not poised to be filthy rich from doing so...and it may even cost them in the long run.

He said it took him 1 month to pay off his mining rig. If that 600% rise in BTC didn't occur, then it would have taken him 6 months just to break even on his mining rig. Actually more with rising difficulty and an additional 6+ months of electricity costs. Either way he was betting on BTC value going up, so your suggestion that it's unfair to factor that rise into this argument is baseless.

And like I said earlier, he made his decision over a month ago, which was an entirely different and much more forgiving mining environment. And he still would have been better off buying BTC directly. Now it's much harder to make mining profits if you're buying expensive computer parts.

Here's my position: Don't invest anything you're not 100% comfortable throwing away into the bitcoin ecosystem. I don't think anyone will argue with that. My secondary advice is to invest intelligently if you're going to do so, and take the rapidly rising difficulty into account.

Go back and read my original post. It includes a list of many of the small overheads, risks, and fees that prospective miners might not take into account. It also details why rising difficulty could easily make your mining rig worthless in short order. It's all valid, logical, factual information. It was meant to inform. But for some reason that doesn't stop everyone from thinking I'm here with nothing but evil intentions.

I'm not one for speculation. Give me a long term income any day.

Hey, I may have plugged the wrong device into the Kill-A-Watt, but I stand by my math. :)

At the end of the day, I guess I have to admit to doing this for fun. Because you're right, the gutsy move is to invest in the currency directly. But that would keep me up at night, whereas seeing bitcoins spontaneously form is like enjoying a really slow variation of roulette.

I've run this with projections including flat price, small growth, huge growth, drop in prices, complete collapse, etc...

You may come out ahead if the price of Bitcoins drops or stays even by mining rather than buying and holding.  That was about it, and it wasn't by a significant margins.

The mining guy cherry picked it to say he was right.  Sorry he was wrong.  And yes, the faster the price goes up, the worse the decision to mine is.

Nothing to do with rear view mirror.  My projections are going forward.  My guess is very very very few miners who are putting $2k+ into rigs even bother to try that, let alone are capable of it.

Give me $10,000.  I'll give you $1 a day.  Long term income FTW!

Really? 3.65% interest for life? That's not bad these days. :)

Why is spending money on hardware not keeping you up at night?  Because you physically have something?  If what you mine is worthless, you are screwed too, but you do have some hardware you can sell for something I suppose.  So just compare the residual value of the hardware (what you would pay for it if you had to resell it or just what you would use it for), and compare that difference.

The attitude seems to be more of "I want a new computer, and hopefully it pays for itself" more than slow roulette.

Normally when you get 3.65% interest, you get your original money back.  You don't actually get the money for 28 years.  Then you start making the interest.  I think I can grow $10,000 pretty high in 28 years, even paying $365 a year out of it.  By year 28, I'll have $16,818.  Not too shabby.  I have an interest only loan on $10,000.

But that's the miner logic.  Keep being a sucker at math.

It's true. I see the math challenges people trying to convince themselves over and over again that their decision to mine was the best decision here on this forum. In fact I'm so tired of this misinformation that I've been trying to tell my own story in hope to sway this more in the middle. '

People need to know that bunch of insecure teens trying to convince their hardware investment was worth it to each other is not a sound investment advice. Not saying my advice is better in anyway, but my own situation does tell a different story to theirs that shows another side of the issue. Others who are trying to do the same are only getting cornered by them saying that we have our own interest. While the interest may overlap unintentionally, the fact remains true and numbers don't lie. 

And it's not that mining is a terrible idea or anything.  But it is not something to take lightly and not an instant gold mine.  It depends on a lot of factors, many of which are very difficult to predict.  It's just if you are going to dump a ton of money into something for profit, you probably should at least make an effort to see if it's your best approach.  But if you enjoy mining and consider it entertaining, then maybe that is enough to make up for the suboptimal approach.

I don't think we have 28 more years of the US Dollar, TBH...

I'm a professional miner since the beginning if 2011.
Monthly ROI ranged from 8% to 35% in all that given period.

In the future ?
As all risk investment, nobody knows that answer.

I think I'm going to go ahead and bow out of this conversation. I guess I'm just one of those rare people that doesn't like to argue on the internet.

You all go on and have fun with your investing. I'll be screwing with my video card.

Seems like an even better deal for me.

I'll also make the same arrangement with Bitcoins.  If anyone wants to give me 10,000 bitcoins now, I'll be happy to give them 1 BTC every day for the rest of their lives.

[quote author=tomcollins
Seems like an even better deal for me.
I'll also make the same arrangement with Bitcoins.  If anyone wants to give me 10,000 bitcoins now, I'll be happy to give them 1 BTC every day for the rest of their lives.
[/quote]

Are you feeling generous today ?  ::)

Either that, or he knows a hit man who accepts Bitcoins. :)

Na, I just understand math.

well the fact of the matter is your bitcoin profits are directly dependent of miners making bitcoins for you to buy in the first place. as more miners join the network it becomes harder for each miner to get bitcoins and the price goes up. everybody is winning here. money all around.

the difference is, if bitcoins went to 50 cents tomorrow, people that recently bought bitcoins would lose a lot of money but my machines would still be making me profit.

How would your machines be making a profit?  Are you neglecting the initial cost of them?  If rigs were free or extremely low cost, then yes, you would since electricity costs alone would need a huge difficulty.

If miners actually closed down shop when prices dropped, difficulty would decrease.  But the economics of the situation does not dictate this.  Miners that already purchased rigs should only shut down if the electricity costs plus any damage to their hardware from use exceeds the value they mine.

This is again the same example, give me $10,000, I'll give you $1 a day, and I guess you are profitable since you are always making $1.

But I'd rather invest my $10,000 in a stock or mutual fund or bond, which is risky, but at least not a retarded investment in most reasonable situations.

Yes but please don't compare investing in bitcoins to investing in bonds, stocks, mutual funds, etc. Buying bitcoins purely for investment purposes is akin to making a bet on the foreign exchange market - ie buying Brazilian Real or Turkish Liras because you think they will appreciate in value relative to your native currency or relative to every other currency.

As I said before, mu machine paid for itself in the first month. anything after now is just profit

Good job. Congrats.

However, like we've said before. That was then and this is now.

The problem is that those new to bitcoin mining are seeing these claims and assuming it will be just as easy and profitable now that difficulty is going through the roof. It's not.

I agree with you JJG. I don't think it would be a smart idea to invest large sums of $ into mining hardware now. If one can find a super cheap deal on a good mining video card then maybe, but otherwise I can't justify buying something like a new 6990 JUST to mine..or more.

If you find an investing deal that gives you more than 5% to 30% monthly, then it's not a smart idea.   ;D

From what I've seen on the forums, the 5850 is a pretty solid card. Not terribly power-hungry and ~320 MHash/sec or so. Still very cheap, too...can probably get one for $120-$130, or cheaper used. I'm also very happy with my 5830, but it's not as efficient. I couldn't justify spending $700 on a GPU like a 5970 or a 6990...especially considering the risk. Assembling this pile of parts, throwing Ubuntu on it and snagging a cheap 58XX? Perfectly reasonable.

I guess I want to thank JJG after all. For being a killjoy. :P And for convincing me to do a little bit better modeling on my projections.

Having said that, I still want to grow a little bit of a mining farm. But I'll be reasonable about it. ;)

I know I said I was going to stay out of this. :P

Difficulty is rising, but BTC price is rising even faster.  For some rough estimates, difficulty was between 75,000 and 100,000 when BTC was between $0.75 and $1.00.  Now BTC is over $3.00, (projected) difficulty spiked and crossed 150,000 but has leveled off a bit over the past 48 hours.  It will probably spike again after new miners' equipment deliveries arrive.  If BTC stays over $3.00, difficulty will still has to go over 300,000 before it is back on track with the previous ratio (it may happen in a month or two).

Furthermore, difficulty growth has been declining over the long term (http://bitcoin.sipa.be/growth.png).  This could be signifying the end of already bought video cards coming online.  So new investments in mining are less and less competing with hardcore gamers who already have the equipment to start mining.  In that case, new investments in mining will be more profitable than before.

But let's examine the possible risks that they'll be less profitable.

Previously, small investments in mining probably have been less profitable than small buys.  The main reason for this is the competition with hardcore gamers.  But as this demographic is exhausted, a new one could fill the gap.

The new demographic is Big Players (tens of thousands $$ and over).  Some will choose not to buy much because it would push up the price (even in dark pools).  Instead, they will invest in mining capacity.  We would see signs of this happening if we see the difficulty factor outpacing the price (the opposite of what has been happening recently).

Evaluating the equipment options available to potential big players, they don't seem likely to be able to squeeze out the small miners in the short term.  The estimate of the FPGA performance thread shows that although FPGAs blow away commodity AMDs on a hash per watt basis by at least some 5x-10x, they are probably more expensive by at least 3x.  If the cost of electricity on a monthly basis for an AMD is some 5-10% of the cost of the card C, then over a number of months T, the total cost would be [C + (0.1C)T].  If the cost of the FPGA is 3C is then the FPGA beats the AMD after 20-40 months.

ArtForz has come out publicly as one such player.  He claims in the IRC logs to have invested some $65k in 100 structured ASICs (not named as such explicitly, but "like FPGAs without the FP").  So this is a longer term bet that they will outperform commodity AMDs over the next 2-3 years.  After that, an evaluation will have to be done again between next-gen structured ASICs or FPGAs, and next-gen AMDs.

The point is that signs of any such large investments (FPGA/structured ASIC as well as commodity AMD farms) by bigger players versus direct investments buying coin will be reflected in the difficulty factor outpacing the price of BTC.  Right now, the signs are the opposite (BTC price outpacing the difficulty factor).

I'm a trader, not a miner, but even so my opinion is that a play in mining (big and small alike) is even smarter today, than a play in trading.  The longer the play the more competitive they are.  The trick to profiting in either is the same: selling high.

lol...no that's not what I meant...that is clearly a smart investment IF it is stable and you can rest reasonably assured that you will get that return for the time span that it takes to get your principal back (in this case the amount of $ you invested in the hardware). If the BTC/USD exchange rate reasonably outpaces the rise in difficulty then some hard core miners can justify new builds. You just better pray that new demand comes in and always drives up the exchange rate, otherwise if it stabilizes and yet difficulty rises due to a slew of new miners hoping to strike it bitcoin rich then it will take that much longer for you to recover your initial hardware investment.

I agree. The 5850 is indeed a good mining card from a cost for performance basis. Then again so is the 5870 which is my current favorite. Why my favorite? Well mainly because I can't seem to find cheap 5970s. I can pickup some 5870s for $150-180 (CAD) so for me that's worth while. Also should the unthinkable happen and bitcoin goes flop I still have a reasonably well performing card that I can sell for a fairly good price. The key here is to buy your hardware used and well well below the market price - hard to do I know, but it's the ideal method. 

On the flip side I guess it's also less risky if you have a newer card like the 6990 because you cam more readily re-sell that one but once again that card costs MUCH more than a 5870 or 5850 so it will take you longer to pay it off and in that time you are far more exposed to market risk (of bitcoin itself, difficulty rise, etc).

I was on CL and found just piles of guts...more than I would need to get started building a number of decent rigs. Boards with 1 and 2 PCI-e 16 slots, all kinds of fans...hell, one was a lot of 8 towers for $60 with pretty much everything I needed for 3 solid rigs, minus decent power supplies and cards.

I bought none of it...but the prospect is there. Spending $200-$300 to get a rig operational isn't exactly a lucrative prospect, but it's feasible.

One of the best kept secrets is where the hell you guys are getting 5870's for prices like that. :P

And like I've said many times on this forum...if Bitcoin suddenly disappeared, I have plenty of uses for a bunch of computer hardware. To be honest, I'd probably go back to SETI@Home. How's that for altruism? :P

Edit: Instead of mining rigs, I bought one of these (http://www.everymac.com/systems/apple/ibook/stats/ibook.html) for the missus...and another one shortly to follow for me. I bet I could get 20kHash/sec out of this...

My next rig will cost me somewhere between $200 to $300 CAD so it is possible, but you have to find some pretty cheap hardware. Also you sometimes are forced to use somewhat out of date hardware like old Athlon X2 boards/CPUs. For me the only requirement is that it has support for two PCIe slots. The CPU ideally should have as low of a TDP as possible but it's not an absolute must cause I intend to underclock it anyways and besides the CPU will be/should be mostly idle. 

I guess for me bargain hunting is just as fun as putting the system(s) together.

As for finding cheap 5870s, well, what I do is search classified sites. Craigslist is a good place to start.

Hmm, that ibook looks nice but you sure it's worthwhile mining on it if all you can get is roughly 20 KHash/sec? Also do you mean to say 20 MHash?

I was definitely kidding. I'll be lucky if it starts...

Oh I'm sure it will start. There are a few OSX cpu miners around. Don't know how effectively its GPU can be exploited - if at all. If you do manage to get both CPU and gpu mining after a while you'll come back and see the laptop melted in a puddle of plastic and metal parts lool

In the shape of Steve Jobs' face, no less...

I do know that if someone wants to break into the Bitcoin Mining market, they are welcome to have at it with my 256MB nVidia 9300GE. I was getting 1700 kHash off of it on a good day. It's in the closet now. :P

Nvidia cards just plain sux0rz at mining.

To generate a 50 BTC reward with that hash rate it would take 9607 days, 3 hours, 55 minutes...I am soooo there! Ship me the card ASAP I can't wait any longer!

I think the cheapest entry into this fun bitcoin mining arena is probably the Radeon 5770 - sub $100 cards :)

The cheapest entry is using existing cards.

I did the maths, and at current exchange rates even my GTX260 is bringing in (a little bit of) money, when it is used for mining instead of idling in Windows.
90W more compared to idling (at the plug, measured with a wallplug device), 47 MH/s (with fans locked at 35% and 77°C core temp, that's kinda ok and still silent!), 16 €cents per kWh means at current (24h weighted) BTC - EUR exchange rates (1 BTC = 2.7148 EUR):

1.8 Bitcents/hour (or 43 Bitcents/day)
4.9 Eurocents/hour (or 1.17 EUR/day)

after deducting the electricity costs per day/hour my gain is:

1.3 Bitcent/hour (or 30 Bitcents/day)
3.4 Eurocents/hour (or 83 Eurocents/day)
plus 90W of free heating.

However, as soon as you add buying hardware to the equation, you'll have to write that off over some time - and currently the system grows at ~2% EACH DAY! If you factor that in, you get some really crazy numbers!

If you expect for example to pay off a 150USD card that uses 150Watts @ 15 USDcents/kWh, runs 24/7 and difficulty increases linearly at 2%/day in 90 days, it needs to do do ~417.5MHashes/s on the last of these 90 days. After that it is paid off and you only pay for electricity. Also on the first day, you just need ~70.2 MHashes/s to pay electricity + writeoff, so your milage may vary.

This assumes a static USD - BTC price (I took the current 24h weighted one: 3.4252USD per BTC)

Maybe I'll publish these calculations as a webservice too, so you can do them easily as well - the only problem is that I don't factor in transaction fee gain (maybe do an average over the last 100 blocks?). Currently this is negligible though.

Great analysis, Sukrim. Thanks for sharing your numbers with us.

A lot of people aren't taking the 2%/day growth into account. 2% seems to be an optimistically low number lately.

At 2%/day growth, the mining capacity of the network will double in only 35 days, triple in 56, and quadruple in 70.



The next difficulty increase is already projected to be an incredible 37% now!
For prospective miners: Whatever your projected income is right now, multiply that by 0.73 and that's what you'll be making in 4.5 days. If you ordered a card at this very moment, I doubt it will show up before this difficulty increase reduces your profits to less than 3/4 of what you'd make with the same card today.

If you want to do calculations yourself, here are some formulas (Things you need to insert/look up are marked with [these brackets]):

Income per day in your currency (for income in BTC just set the conversion rate to 1 or skip the last bit):
[Bitcoins generated per block] / ( ( [Current difficulty] *2^32) / ( [your hashrate in hashes/s - for MH/s multiply this number by 1000000]*24*60*60 ) )* [conversion rate to your currency --> 1 BTC = this much in your currency]

Income at day X in your currency if the network grows at a steady Y% and your hashrate stays the same:
[Bitcoins generated per block] / ( ( ([Current difficulty] * (1 + [growth percentage]/100)^[number of days in the future] *2^32) / ( [your hashrate in hashes/s - for MH/s multiply this number by 1000000]*24*60*60 ) )* [conversion rate to your currency --> 1 BTC = this much in your currency]

I hope it might be easier now to throw up LibreOffice Calc or Excel and do some calculations yourself with this as a start.

It's amusing to me...in reading this thread, you would think that there is absolutely no use for a high-end graphics card other than Bitcoin mining. This doesn't seem like 100% solid logic.

If you're a gamer looking for a new card, then by all means go for it! Bitcoin mining would effectively be a discount on money you would have spent anyway. No one will argue this.

This thread isn't for these people. This thread is for the non-gamers snatching up GPUs and considering building second computers (motherboard, CPU, RAM, PSU, etc.) for them.

100% logic here.

Well, then how do I tell the forum to stop updating me on it? It's damn depressing. You all sound like my 7th grade science teacher. :P

I'm betting on some reduction in difficulty after the OC.net people get bored. Since a lot of them are gamers, I don't imagine that will take all that long (I saw that thread you mentioned...it was very sad).

I'd love to bet against this if you want.

I'm not a betting individual...I get queasy buying scratch tickets. I sincerely hope you are wrong, though. :( They did not have the same ethos that a lot of the people here do.

It's not exactly hard work to mine, though.  As long as there is free money, someone will be after it.  If selling becomes too much of a pain, they might stop.  Or if the price crashes.

Well, at least while surfing the web or doing some office work you can use nearly any current card to get enough bitcoins to cover your electricity bill for the time you let your computer run (and if you game for a few hours instead of mining, that is covered too, at least at the moment and if you use your computer for something else as well).
You won't get rich probably if you mine (especial with newly bought hardware) - however if you want to get rich, it has been already said that if you believe that prices go up, you're better off buying BTC instead.

Difficulty reduction won't happen any time soon. I think you're overestimating the number of OC.net people who make up the entire network hash rate, and underestimating how desperate some of these guys will be to pay back the hardware they purchased.

OC.net is just one forum and I doubt it's the last one that will have a 'bitcoin revelation'. Expect more jumps in difficulty as more forums catch wind of this.

Again, you are probably right. Still, there were 160 pages of comments in just two days before the mods over there shut it down...seems like a fair amount of interest in a short timeframe.

I've got a hunch that after this next difficulty increase the percentage increase to the difficulty after that won't be quite as big because the big leap coming up in a few days will scare some people off.  But, who knows.

I'm not ascared. I just know that the 2.5-3 BTC I get a day will probably get cut in half or worse in the next six weeks. I can live with that. :-\

Well, if you're looking for a gaming thread, you're on the wrong site.

I think the comparison is false regardless. Currency speculation has as little to do with mining as buying pork bellies on the commodity exchange has to do with farming hogs.

This thread is about if it still pays off to buy a new farm + some land and start to breed pigs, if the food will be 2% more expensive each day. ;)

Depends. If I can either send the pigs to slaughter when I'm done or put tutus on them and make them join the circus...well, you get it.

I'm the sort that would probably keep them all as pets and name them.

Not only that but a LOT of them were woefully misinformed and they did not even show the willingness to educate themselves a bit before they open their mouth. Also many of them exhibited that idiotic "if it's new it must be a scam or something must be wrong.." attitude.

This little piggy went to the market..this other little piggy wasted his time in bars and got wasted all day..and this other little piggy built himself a bunch of rigs and got rich mining bitcoins...:P

JJG, thanks for providing this analysis. Splendid work. I was just wondering today if there was any value in doing any hardware investment given the astronomical hash rate increases. You saved me the effort of running the numbers. Much appreciated.

Also very pleased to see you and tomcollins successfully defend logical reasoning in this thread.  One doesn't see that work out very often on the internet.  ;)

Thanks for the kind words. I'd still suggest you build your own simple models and check my reasoning if you're interested in the economics of it. The numbers are interesting, to say the least. Plus, the more eyes and models we have on a problem the better we can understand it.

On another note, it looks like we're due for a stunning 40% difficulty increase in 2.5 days! If anyone did order hardware for mining, I hope it's not still in transit over the weekend.

I appreciate your work too, JJG -- raising all of the risk factors of mining is very helpful, and every market needs its contrarian :)

To those who think JJG is somehow a "sock puppet" of Vladimir: that makes very little sense. Vladimir is in the business of leasing mining hardware, based on the idea that your opportunity cost might be high so it could be cheaper to outsource.

When mining is unprofitable, his business will be less attractive.

Note that this is not meant to advice for or against mining contracts. If you run the numbers and it turns out that the average difficulty over the next 4 months will be at such a level you'll make more coins, at today's value, than the price, with interest, for 4 months of a contract, you could choose to do that. Especially if it'd be expensive to set up your own shop. Vladimir can reap the benefits of 'mass production' to some extent and if your opportunity cost is high you might actually make more money using contracts during good times than doing it yourself.

My point is merely that you would not see Vladimir arguing against the profitability of mining.

Thanks for the support. This is certainly a nice change from a week ago when I was quite the villain. :)

I still encourage everyone to run their own projections, models, and numbers. Just be realistic about it, and most importantly don't forget to factor in rising difficulty!

Let's just hope the price follows the uptrend with the difficulty.  It has historically up to this point.

That without a doubt is the big hope of all bitcoin miners, but it doesn't necessarily have to be so. My gut feeling is that we will see another rally as soon as the next difficulty rate increase comes around.

Sounds about right to me.  Some hype in the media as well driving some of the market.
If you look at the charts the picture is fairly clear (at least until some outside entity tries to cause problems).
I say KEEP ON MINEN!!

No, generally the difficulty follows the price, which follows the level of publicity Bitcoin gets in the media.

That's perfect!
As long as the price goes up before the difficulty the miners are in the money.

Unfortunately there's no guarantee for that. In February/March the price fell almost 50% from the top while the difficulty tripled. Unless there is a regular flow of publicity in big media outlets the difficulty will rise much more than the price.

The point is that the publicity has to get bigger and bigger to feed the exponential growth that is required to keep the difficulty at bay.

Mining just needs to get more efficient.  You don't need that much more attention.  Some technological breakthrough similar to GPU mining when it came out would destroy the difficulty.  New cards that are more efficient could come out.  There are a lot of things that can make difficulty grow fast.

That would give the opposite effect of what the messages I responded to were predicting. I'm saying that difficulty will increase almost no matter what happens.

An extreme price drop will make difficulty get easier, but besides that, I agree.

This thread should be made a sticky.

Welcome to the club....

I guess that's the last we'll hear from you!!

It appears this thread/discussion ended(5-08) when the value for BTC were around 3-4 USD each, and today's mt-gox listing currently at 16.3.    Interesting to see if the difficulty increase has been proportionate with the BTC value increase to make mining still a worthwhile endeavor.  Still new to the site and working through all the great info here.

Also of course investing is always better IF BTC prices continue to rise, but if you don't want to invest in the coins themselves(for whatever reason) it's pretty irrelevant to the "is mining profitable" discussion even though it took up the majority of this otherwise helpful thread.

I just bought parts for yet another mining rig.  I did this calculation for 1Gh/s at current difficulty and assuming a 100% increase in 20 days :

days  - 0 20 40 60 80 100 120 140 160 180 200 220 240 260

BTC/day - 0 1.77 0.89 0.44 0.22 0.11 0.06 0.03 0.01 0.01 0.00 0.00 0.00 0.00

power $ - 0 91.2 182.4 273.6 364.8 456.0 547.2 638.4 729.6 820.8 912.0 1003.2 1094.4 1185.6

BTC Total - 0.00 35.4 53.1 62.0 66.4 68.6 69.7 70.2 70.5 70.7 70.7 70.8 70.8 70.8

If I am even close to calculating returns, a 1Gh/s rig will only net about 70 BTC ever.  Can someone verify?  Does this mean a 1Gh/s rig must cost under 70BTC right now to be feasible.  Otherwise just buy the BTC.

Difficulty is dynamic. When mining becomes unprofitable for even ASIC farms and botnets, difficulty will go down in a linear curve with thash/s of the network, until optimal amount of blocks are generated.

If difficulty ever starts to go down you should absolutely not buy new mining hardware as the equilibrium will tend towards profitability for those already invested. There will be very little headroom for new investment during the lifetime of the existing mining hardware.

I have a question about power consumption of a card I'm planning to upgrade to.Radeon HD 6950.How much would a pc with this setup cost per month to run in US $ then in UK £:
Core i7 920 @2.67ghz stock (3ghz OC'd and 1.53GHZ max power savings mode) CPU
6GB RAM
3 HDDs
Asus P6T SE mobo (chipset also  in max power savings mode with deep voltage drops)
Radeon HD 4670 currently but will be upgraded later on.
620W Enermax Liberty PSU

I want to know (an estimate if possible) of power use in the following scenarios:
1.I Continue with the above setup with no upgrade (as Power is only 145W at the wall)
2.I swap out hte 4670 with 6950 GPU

How much will my power usage rise at load when the gpu is upgraded from the wall?
How much will this cost me in US $ and UK £ if possible.

I have joined a pool now to make things work faster.Pool is Bitcoin.lc.

ny help would b appreciated guys.

At stock clocks, the difference will be around 140w. If unlock the shaders and overclock, probably 200w or more.

If its only for mining, don't overclock your cpu, or replace your I7 with an I3. You can also lower the memory clocks of your video card, it will lower the temps and power consumption a little bit. 250MHz seems the lowest I can set for DDR2 and DDR3 cards without affecting hashing performance, and 300-400 for GDDR5. Lowering mem clock can also help to stabilize your card at higher core clocks.

I need help underclocking my i7 in bios on mobo Asus P6T SE to reduce CPU power use while giving GPU more of the available power needed for mining.Also how to underclock 6GB RAM or wotever it is to reduce power use of these parts to make more power available for GPU mining.

If some1 knows how,then please either put it in this thrad if possible or if not link to it in ur reply.


Thanx n4l3hp 4 the advice on hte GPU power use.

P.S does someone know of a good cost effective SSD at 80GB and 120GB capacities thanx?.It needs to be long lasting,reliable,cost effective,fast and low power consumption.

It's very simple in BIOS but really not necessary. Core i7 downclocks itself when not in usage, and cuts down on power consumption drastically. In fact it will use very little power compared to your GPUs while mining as will the RAM. But basically just go in and reduce the clock speed and try put down the voltage if you want, might save a few watts  :D

For SSD I recommend the Intel 320 series. They have a 5 year warranty now, and boast the best reliability and compatibility. Plus they're really fast.

What I find interesting is that there are so many variables at work here that determine profits (power costs, difficulty, current BitCoin value).  Obviously there must still be some, even after power costs, for those who already have the equipment, or continue buying it cuz they've wanted state-of-the-art equipment on their system since WAY before the BitCoin existed (e.g. gamers).  I happen to be one of those people who wants a great video card in my system so I have a good system, mining BitCoins is just a current, temporary bonus.  But one thing I've noticed: a lot of posts made in May stated how mining was profitable then, but won't be as difficulty increases.  But back then, a BitCoin was only worth 4 and a half bucks!  Obviously the price is volatile, unpredictable, and has some inherent risk, but what investment in life isn't?

People on the internet like to bitch and moan about all kinds of things. I'm sure that back in May life was different and thus required different amounts of bitching than the current state of available things of which to bitch about now. Life's a bitch, just mine coins and enjoy it. If it ends up being profitable, great! If not, you tried.

My word of advice, with my $5K invested in BTC mining, is that there are too many variables to do very accurate projections. You either go for it or don't. BTC is a gamble. It's better than going to a casino though ;)

well.. $4.50 at 200k difficulty (average in may) and $14 at 1.6m difficulty. that's 155% more profitable than it is today (before electricity cost, so effective profit was even higher).

edit:


alright, first of all, you don't use an i7 as a dedicated miner. it's way too expensive. secondly, your post sounds as if your PSU doesn't have enough power to support your graphics cards if the other components use up too much power. that's not the best case here, you don't want to run a PSU at its maximum capacity. lastly a ssd doesn't consume much power, you can go with any type/brand. even a hdd doesn't consume very much when idle.

solution:

get a dedicated rig, low power (+consumption) cpu, a usb stick with linuxcoin, a few cards, and a decently sized PSU (of course you need a board and ram, too. but there's not much you can do about its power consumption).

ps: your nick and your language.. wow

Now here's the million dollar question: Has that change decreased linearly, or exponentially?  No seriously, I'm not trying to be a smart ass, does anyone know?  Who's up for creating some XLS ?

there's a million dollar reward on many many mathematical problems, but i doubt there's one on this one. http://bitcoin.sipa.be/.

obviously it's exponential, but as someone on this forum has said "every exponential is a logistic in disguise" which seems to be pretty true. hasn't been going exponential in the past 2 weeks.

So, a decline in miners/mining hash causes difficulty to increase?

You have to be more specific.

If there is a NET LOSS of mining capacity, then difficulty will go down.

But just because 1,000 5830's are taken offline doesn't mean that 1000 6870's aren't going ONLINE somewhere else.

That's why you have to net it out. The bitcoin network charts show the actual state of the network, based on how many blocks are being found per hour.
The number to look at is "expected difficulty" -- that shows what we're on track to get at the next reset.

A lot of people on this forum are talking about (in the last few days anyway) that it's a bad time to invest in new rigging equipment. Is that something that can be determined by 3 or 4 factors (power = 8 cents per KW hour, 1 BTC = roughly $14US, difficulty = a lot, rig building = $110)? Assuming all the variables stayed the same for the next few months, is it seriously a bad time to buy/add hardware now? I just bought a good video card cuz I wanted to upgrade my video card before I knew what a BitCoin was, but I am a little overzealous upon learning about BitCoin mining (brand new to me, I knew nothing 4 days ago) and can afford to build a decent 3 card system this week.  :-\

If you won't miss the money (i.e., you're spending your "spending money"), then go ahead.

Worst case, you don't make much and you have yourself some computer hardware that plays games well.

I would say, however, that the "get rich quick" phase has unfortunately passed.  You're looking at 70-day payoff periods on cards (110+ days on systems) instead of 9 or 10 day payoff periods like we had in early June.

But the problem is, nobody really knows where Bitcoin is going. It's a gamble. BTC could continue to get cheaper every week, even as difficulty inches up every 1 1/2 weeks. That's what seems to be happening right now, so it's safest to bet on that (a.k.a., "more of the same") -- but that could change if something happened out of left field.

Long story short, Bitcoin is still a gamble. Are you a gambling man? 
But it's not exactly like playing the lottery, because when you lose the lotto you just have a lousy piece of paper. PC hardware is better than that.

Matthew

If you think now is a bad time to invest in mining, it was even worse for the early adopters 1-2 years ago.  At least now you can expect somewhat of a return for your money.  Early adopters were looking at absolutely zero for their investment.

Speaking of mining,I do wonder how many people are now stopping mining (as it's unprofitable for the ones with weak GPUs) and how quickly can difficulty go down as well as up?

This isn't my intention to complain or whine,but I simply wish to understand more about what's making it more difficult for me to get as much money as before aside from the currency losing value for a bit.

I wish the value of BTC rises again soon so I can finally cashout my mined BTC without making a loss.What is the current value of BTC?

it's much faster to decide to start mining than to stop mining. if you want to stop, you have to start counting your losses, you might want to sell your rigs slowly etc. so stopping is a pretty hard decision unless you already amortized your investment. theoretically it's possible for the difficulty to go down as well/fast as it can go up. not very likely, though.

current value is $14 (bitcoinwatch.com). i'm waiting for $20 (which might never happen again) to sell my coins. probably gonna buy a 2nd 6950 then and stop mining.

except now those pennies they were making became thousands of dollars
how terrible for those early adopters

i don't really see the point. investing thousands of $ into mining gear and investing some idle cpu cycles are 2 whole different things. nobody has invested in mining 1-2 years ago. nobody. they have used what was available.

B-b-but early adopters shouldn't have mined Bitcoins to begin with because it was unprofitable!

Never PRESUME, because it makes PRES out of U and ME...


...or something like that

:O i've read the difficulty chart. i thought that's enough to assume nobody invested in mining.

I love how this thread just continues to be negative; ten whole pages of it. It's like you guys think that you can dissuade new miners from getting into the game by saying it's pointless and unprofitable and the sky is falling and we're all going to die if we buy more hardware.

personally I just dropped $5k on hardware in June and have another $1k in cards going live next week. If you understand anything about enterprise capacity planning, TCO-over-time analytics, or the like you can build rather efficient hardware. Then you rack and stack it, cool it, monitor it, and understand your electric usage. This is not rocket science but it's not a child's game either.

But hey, I'm all for keeping the difficulty low :D

I work a desk job. If I bought the best video card that fit in the thing (it's a decent system, I design tools with Autocad Inventor 3D modeling software) then mined all night while I wasn't there, no power costs. THEN, surely it is very profitable... ;D

Except that you'd be stealing the electricity from your employer, not to mention that they would have claim to the bitcoins for providing the system, even if you provided the video card, assuming that your employer / network admin is ok with you making hardware changes.

If none of those things bother you and you're confident of getting away with doing it, then easy profit for you!

Wouldn't it be easier to use batteries designed for solar installations to charge at your employer and use them to power your rigs at night?  Depending on how meaty of an individual you are (or want to become) it may be possible to lug a few thousand kwhr a day out that way -- a 380 amp/hour, 20 hour 6 volt deep cycle battery is only about 110 pounds.

I like it :P Everything about this idea makes me laugh.

This could work!  Rig up some sort of sling for your groin to hold the battery (or batteries) and smuggle them in a pair of hammerpants.  When co-workers ask you why you're walking funny tell them you just got a vasectomy.  If they ask again a month later tell them you had to get a couple more because of how potent you are, and they'll stop asking ever again.

You could expand your operation by siphoning gas from cars in the parking lot and running a generator.

LOL!!!

there is an engine that spins at about 300 rpm. it runs on any fuel, used motor oil, french fry grease and so on. These engines are bulletproof. They use them in india for power, and some have been running for 30+ years. You can get the fuel from restaurants, you can even charge them to take their used oil away...

http://www.youtube.com/watch?feature=player_detailpage&v=GJgg-L95G2M

Hey that's pretty cool.  That guys whole video was interesting.

Thanks.

Yeeaaa... you probably thought about getting some Nvidia Quadro or Tesla, eh?

Over 9000 GHash/s with one of those cards, fine quality - really nice.

Workstation cards like Nvidia Tesla M2090 are horrible for integer calculation like bitcoin mining. They will yield about 200-300 mhash/s but cost $7k to $20k dollars.

They have phenomenal performance for single and double precision floating point operations though (1 Nvidia Tesla M2090 card @ 1300gigaFLOPS equivalent to over 200 radeon 6990's)

In all honesty if ATI/NVIDIA devoted even a minuscule fraction of their R&D twoards developing a bitcoin mining specific product, a Th/s rating of over 9000 is certainly not out of the question.

Oh absolutely.


Absolutely...

If Moore's Law for semiconductors holds true in the future, then 9000mh/s dual GPU cards would become a reality (in theory) in roughly 7 years. Currently the best dual GPU does about 800 mh/s.

A 9 thash/s card will never happen with current silicon based GPUs. When we move onto 3d and carbon based resistors on graphene wafers after the 11nm process in 2015-16, we could see a limitless expansion of GPU computing power.

I haven't seen plans by AMD, but Nvidia is planning their graphene GPU technology 'Echelon' for 2018, the first chips are said to achieve 10 teraFLOPS of computing power, which is 400 times more powerful than a Radeon 6990. They will also use 20 times less energy than todays GPUs

http://www.eetimes.com/electronics-news/4210815/Nvidia-describes-10-teraflops-processor

Satoshi has probably created his difficulty model upon the expectation that processing power will really double in performance every 2 years.

Think 1.6 million difficulty in January 2009, people would simply quit mining because even the most expensive GPUs back then before the 5xxx series was released, cost about $300-$400 and only yield about 100mhash/s.

Doesn't sound so bad now that you can buy two 5830's for about 200 bucks and stretch them to 600mhash/s.

Similarly 160 million difficulty wont sound so bad many years in the future when you can get a fairly cheap GPU doing 10ghash/s,
but sounds like a nightmare to someone who only has access to year 2011 gpus doing a few hundred mhash/s

Just don't fucking do it. Its a waste of your money. I am out $1K bucks. /end thread /pin

http://img856.imageshack.us/img856/1959/thestupiditburns.jpg (http://imageshack.us/photo/my-images/856/thestupiditburns.jpg/)

Who is we? Nothing that NVidia is developing will reach consumers, at least not in the foreseeable future. If they succeed with their design, and that's a big if, it will be from a millions dollar grant by the US Govt, and certainly not developed in any way for mass release. Not to mention that double precision floating point operations are not at all used in hashing, so the power is irrelevant for bitcoin.

Not saying that technological progress isn't cool, but let's not conjure up pipe dreams of computing bitcoin to the moon just yet.

When total network was 1GHash/sec a block took 10 minutes, same as now.  The whole point of difficulty is to keep productivity the same.

Were blocks worth more than 50 BTC back then?  I remember reading in that one thread about the guy who bought two pizzas for 10,000 BTC that he was generating "a few thousand" bitcoins per day.

There are about 7200 generated a day.  So if he was 1/3 of the mining he could do 2000 or so.  That is possible. 

The number of coins per block is cut in half every 210,000 blocks.  We are currently around block 136,746 so it will drop to 25 coins per block in about 17 months from now.

I think it is simple ;D to ROUGHLY determine how much Bitcoins you can expect from a new to build mining rig. Make a configuration overview and calculate the expected number of Ghashes you would get by using https://en.bitcoin.it/wiki/Mining_hardware_comparison#20_Popular_Mining_Cards and call this number MYHASHES.

Now go to http://bitcoinwatch.com/ and look at the lower left and read the Network Hashrate Gigahashs/s number, call this TOTALHASHES.
On that same page you also see Blocks last 24h, call this TOTALBLOCKS.

The number of Bitcoins in a block is currently 50, call this BLOCKSIZE. This will drop to 25 in 2013 and halve again every next 4 years.

The average number of Bitcoins you can expect to mine on a day is then:

MYHASHES / (TOTALHASHES + MYHASHES) * TOTALBLOCKS * BLOCKSIZE

Now that you have a ROUGH idea, calculate the hardware cost and estimate the energy (http://www.coolermaster.outervision.com/index.jsp)  you're gonna use to run the rig and to keep it at a reasonable temperature (AC ?). Is the place you want to put the rig capable to supply this amount of energy ?

You can go to https://mtgox.com/trade/history to get an idea of the US$ <-> Bitcoin exchange rate.

After all this, you should have a rough idea of your bright or not future ;-)

Any suggestions and improvements are welcome :-) Don't shoot me right away, this is my first post and I am a miner since a few days *grins* after reading a lot about Bitcoins, mining, etc.

The above formula gives a good value for my own situation.

Oh, and also take into account if you really want all the noise of the high rev fans of the graphics cards.....

This may change things a bit: My father owns the company

Then you're taking money from your father. Also you run into a moral hazard because once the money you are generating from bitcoin is less than the power cost, if you were paying for power, you would simply sell the rig. Here you would continue because even though it nets your family negative.

It's not really clear what card your system could handle. Does it have PCI 16x? How big is the Power Supply? Are there any PCI-E connectors. These things will help you determine if you can mine profitably. Pretty much to get any decent extra money, you would need to drop in a 6990.

I have an idea that I want to pursue, but I have no idea if it will be profitable at all. I really need some opinions on the matter.

Alright, so this summer I'll be heading to my grandma's for the whole summer, where I'll be working making about $15,000 the entire summer. When I go back North for the school year, my mom's a teacher so I'll have free power. I'm looking to invest about $6000 in computer software, and upgrade to the fastest internet speeds at my location ($175/month). So my only cost monthly would be about $70 for the internet bill (my mom would cover the rest). Would this be a good idea, I know profitability is decreasing and difficulty is increasing, but I think I can make this work since I'm paying minimal bills every month.


Here's cliff notes on what I want to do

1) Go to my grandmas this summer, make $15,000

2) Invest $6,000 in mining software and head back North

3) Have however many computers set-up, running 24/7 (Free-power)

4) Paying around $75 /month for internet



Would this be a good idea? Would I be able to create my own pool with just my own computers?

Just work for Grandma, buy coins, hold some and spend some on things you want.  This will likely be the best monetary outcome.

Where do your grandma live? Can I stay there all year and make $60.000? Is she married?

A few questions:

1) What do you mean by "my mom's a teacher so I'll have free power" ? You're not thinking of stealing electricity from any schools, are you? Yes, it is actually stealing, and yes, you can't actually get in trouble for doing it.

2) By "Invest $6,000 in mining software" do you mean hardware? I don't know of any mining software that you have to pay for, but the hardware can be quite expensive. If you're asking about $6000 worth of hardware, that's 4-5 SC Singles, or ~270GH/s worth of BFL hardware. But that's sort of speculation, as who konws what mining will look like 6 months after ASICs hit.

3) "Have however many computers set-up, running 24/7 (Free-power)" Again, similar to point 1 above, these are all your computers, right? Mining on (and consequently degrading their hardware) on someone else's hardware while they pay for the power is stealing.

4) "Paying around $75 /month for internet" One small computer can run all 5 of the BFL equipment I mentioned in point 2, and not require a heavy internet connection. With stratum and varrdiff on a pool such as OzCoin, network and internet requirements really shouldn't be that high. You don't need a $175/month internet bill.

It'll be my money that I've worked for during the summer, and I'll be using the power at our house so I won't be stealing anything. By mining software I meant the software I need to buy in order to start mining. I guess it's to early to start speculating as I can see how much the bitcoin world has changed in the last 6 months. Thanks for the information.

Ah ok. Powering computers at your own personal house is ok. As far as purchasing software goes, you really don't need to. Any mining software you need is already free and open-source, it's the hardware that's expensive.

Okay, how much do you think a set-up that mines BTC in the top 20 percentile would run me?

That's really hard to answer, because I don't know of any place that shows an average user's hashrate. You said you won't be getting the hardware until the end of the summer? I'd say wait until then, and see what your options are. A lot will change between now and then.

Good idea? A good idea is typically defined by the results, which cannot be foreseen ahead of time. As in "is it a good idea to go swimming with leadweights tied around your feet? Not if you drown, but if you become a world champion olympic swimmer because you got so strong at swimming it is.

That not being a terribly helpful answer, I'll say that no one really knows when and where bitcoin investment is good, it's all very volatile, and therefore very risky. For example, many people, last summer invested thousands or tens of thousands of dollars into ASIC pre-orders. for mining. Since then, pretty much every company stalled out on their promises of delivery, and bitcoin more than doubled in value. By next summer, things might shift that radically again.

What I can tell you is that you will almost certainly not be in the top 20th percentile, nor will it really make sense to run your own pool, on a $6000 investment, barring some very large happening between now and then. As said by another poster, much will be different, so just keep checking in to see where things are by then, and make a decision based on the facts at the time.

$146,500

And in 6-12 months time if you we're still mining with the hardware you bought today, you would probably be in the bottom 10%.

Lol nobody is stupid enough to spend $126,000 on a set-up when BTC are so unstable, are you serious? I'm thinking of having 5-10 Computers, because my powers free I won't need to worry about the power bill. Also, does it matter what kind of computer you buy, or does it just matter about the graphics card? Would it be better to buy a Mac, or a PC?

Btw, do you mean like one computer set-up would cost $126,000? Or do you mean the entire set-up (Comps, Power, Hardware, etc.)?

I know of people that have preordered 4 SC MRs from BFL, which would be ~$120,000. So yes, people do have that much money to invest in BTC.

As I said, wait until the summer to decide what hardware you should buy. By the time June or July comes, you will see that mining with a computer (CPU or GPU) will be completely worthless, regardless of free power or what kinds of computer it is.

So you're saying computers will be useless by summer time? Some kind of super computer or mining machine is going to be created that will replace computers? I could see that happening, but as soon as summer time? It would take months and months, if not years to create it. Can Bitcoins be mined with anything that contains GPU or CPU? So say, could you mine with your phone if the right software is created? I'm not sure what you mean when you say something will replace computers.

Thanks for the info  :P

Well for starters, yes almost anything that has a CPU can mine Bitcoins. People have actually compiled CGMiner (https://bitcointalk.org/index.php?topic=28402.0) to run on their android phones, and they have even gotten a few KH/s. Not really worth it, but interesting nonetheless.

When I say that computers will be useless for Bitcoin mining by summer, I mean that several vendors will be shipping ASICs (http://en.wikipedia.org/wiki/Application-specific_integrated_circuit) by then. ASICs designed to mine Bitcoins have actually been in development for quite a while now, and will be the last step in the evolution of mining hardware. It's basically a device that you plug into a computer's USB port, and has a chip inside whose sole function is to mine Bitcoins. It can't do anything else except mine Bitcoins, but it does that one job exceptionally well.

People started mining Bitcoins years ago by using CPUs. Then they figured out how to mine Bitcoins 10x faster by using a video card (GPU). Now, ASICs will be 100x faster than a GPU, or 1000x faster than a CPU.

3 different manufacturers have offered pre-orders for ASIC hardware for Bitcoin mining: Butterfly Labs (http://www.butterflylabs.com/), BTCFPGA (https://www.bitcoinasic.net/), and Avalon (http://www.avalon-asics.com/). Each device has their pros and cons, but they will all be leaps and bounds of any hardware that is out today.

So that's why I said that if you aren't even planning on buying anything until the summer, you should really just wait and see which of those 3 ends up being the best deal for you. Right now, it's a lot of speculation about which is going to be the most profitable, but in 6 months when you decide to order, you will have a lot more information to be able to make an informed decision.

Wow, after read this i wont buy minning hardware.

Not only is he dead serious, you're overlooking the fact that a lot of people are doing literally that. His figure comes from reasonable projections based on averages and such. The fact is the Bitcoin network does pour out 20ish TH/second, and has roughly for months and months and months. This is literally millions of dollars in op costs, and a lot more than that in fixed costs.

To ease the point into a "low information voter" sort of mental context, think of it in terms of television: you buying ten or twenty television sets does not make you "one of the top 20%" people in television. Even if they are all top notch plasma screens or something.

Well for starters, yes almost anything that has a CPU can mine Bitcoins. People have actually compiled CGMiner to run on their android phones, and they have even gotten a few KH/s. Not really worth it, but interesting nonetheless.

When I say that computers will be useless for Bitcoin mining by summer, I mean that several vendors will be shipping ASICs by then. ASICs designed to mine Bitcoins have actually been in development for quite a while now, and will be the last step in the evolution of mining hardware. It's basically a device that you plug into a computer's USB port, and has a chip inside whose sole function is to mine Bitcoins. It can't do anything else except mine Bitcoins, but it does that one job exceptionally well.

People started mining Bitcoins years ago by using CPUs. Then they figured out how to mine Bitcoins 10x faster by using a video card (GPU). Now, ASICs will be 100x faster than a GPU, or 1000x faster than a CPU.

3 different manufacturers have offered pre-orders for ASIC hardware for Bitcoin mining: Butterfly Labs, BTCFPGA, and Avalon. Each device has their pros and cons, but they will all be leaps and bounds of any hardware that is out today.

So that's why I said that if you aren't even planning on buying anything until the summer, you should really just wait and see which of those 3 ends up being the best deal for you. Right now, it's a lot of speculation about which is going to be the most profitable, but in 6 months when you decide to order, you will have a lot more information to be able to make an informed decision.

Not really sure why you decided to quote my previous post in this very same thread, but thanks? Next time try using the quote button, tho.

+100

Conversely, if you are a professional IT / hardware nerd, and you are some sort of freak who really enjoys tinkering for hours with software and hardware to improve performance, then mining is a fantastic hobby.

If the thought of spending hours and hours of constantly tinkering and improving and setting up mining computers does not appeal to you, you'll probably really regret get into this .

7950's turned up yesterday. Took me 60 minutes to pull my PSU out and plug the cards up and replace my fans.

This morning I loaded up guiminer and joined a pool. My client is reporting 1500mhash and Slushpool is telling me I'm doing 1600.

And that is with a -s wait enabled, as I didn't want to leave them running at 100% whilst I was away at work, so they are ticking around 90%.

I don't intend of spending hours and hours tinkering, ever.

Oh and I've made 0.03btc already :)

Very, very, very good point, but not everybody has the same goals/ideals/beliefs, whatever one wishes to call it.

People tend to spend LOTS of time on these hobbies/past-times/activities because they enjoy it. They are here for the buzz.

I tend to spend a crazy number of hours creating game bots and hacks. Not for any financial gain, but just for the buzz of it.

I spend hours every week in the gym and running in the morning, but where one person might exercise to improve themselves physically another may be in it just for the endorphin hit. I'm the latter :) Endorphin junky :)

I thoroughly enjoy studying (currently doing an Open degree with the OU), but have no intent to use my qualifications to improve my job prospects. It's just a great buzz to study :)

Mind you, I do have a serious problem with authority, which no amount of qualifications will ever help, lol.

Now I'm rambling....

Temporary insanity.... priceless ;)

[/quote]

7950's turned up yesterday. Took me 60 minutes to pull my PSU out and plug the cards up and replace my fans.

This morning I loaded up guiminer and joined a pool. My client is reporting 1500mhash and Slushpool is telling me I'm doing 1600.

And that is with a -s wait enabled, as I didn't want to leave them running at 100% whilst I was away at work, so they are ticking around 90%.

I don't intend of spending hours and hours tinkering, ever.

Oh and I've made 0.03btc already :)
[/quote]

Well you either got lucky, or I got unlucky :)  Good on you...

For myself had a heck of a time getting everything going somewhat optimally. About a 30/30/30 split between the hardware, rebuilding some systems out of spare parts, installing new OS's etc, and then after that, figuring out some cgminer problems and power problems (burnt out 2 old psu's in a week!) then had a hell of a time finding a reasonable pool. Wasted tons of potential earnings on pools with 30% stale rates until finally finding a reasonable pool with 4% stale. No joke was 6 or 7 pool I tried.

Anyways did enjoy myself though and did most of this with a beer in hand :)

Every time I consider buying mining hardware I just jump over to http://www.coinish.com/calc/ and enter the numbers, pretty much every time the return on investment is NEVER.

This is one of the few calculators where it takes into account rising difficulty.

Heh

so true

So, I just wanted to say with economies of scale taken into consideration is it even possible to be a profitable beginning bitcoin miner anymore?

It depends on the resources you currently have available to you, the cost you pay for power, and how much you would need to earn to consider yourself profitable.

If you happen to have free power and a gaming PC with a 7970, then just download cgminer and you are good to go.

fair enough, thanks for the insight!

back in cpu/gpu days initial setup and tuning did take time, but once set up, its just blowing the dust off every few months, and updating the miner software.

now with asic, you plug it in, run the miner. blow dust out every few months.

with bfls firmware out now you can go further and tune your sc stuff (I will be doing that) but its optional.

I monitor my rigs with anubis and kanos miner.php  (I use cgminer) via a WAMP server on one of my rigs. just click one link on any of my computers/smartphones/whatever and all the stats for all my gear is there on one page.

there is no more "constant tinkering" unless you want to for the fun of it. electronics is my hobby, so...

Bitcoin ASIC devices are still being developed so there's quite a bit of prices ranging from $26 or so for 333MH/s on Ebay to Cointerra with their 2 TH/s for $14,000.00  so which one should you get?  

WARNING:  if you care to look at how I come to the numbers I have on estimated difficulty and price read on, if not, skip to the... ---


Well if you take a look at the electricity efficiency, the cost of the device per GH, and also considering the times that these devices will arrive to you, it may help you to see the bigger picture.  Which device is likely to be the most profitable after a years time from today?

Estimations are roughly based on the following difficulty estimates (these estimates are based according to devices pre-sales and other factors including TH to Difficulty conversion rates):

https://bitcointalk.org/index.php?topic=283820.0

September Average: 125,000,000
October Average: 700,000,000
November Average: 840,000,000
December Average: 1,260,000,000
January Average: 1,372,000,000

After this I added the last growth between December and January, 112,000,000 per month

January   1,372,000,000
February   1,484,000,000
March   1,596,000,000
April           1,708,000,000
May           1,820,000,000
June           1,932,000,000
July           2,044,000,000
August   2,156,000,000
September   2,268,000,000

While these numbers for difficulty are likely to be fairly accurate, I would give them a +/- 300,000,000 from Oct-March on and +/- 500,000,000 from April - Sept.

Now for Price estimates:

This estimation on bitcoin value is harder to gauge because it's largely based on acceptance/demand.  The more this currency is accepted the more likely the demand will increase.  Also as the difficulty to obtain more bitcoins increases the rate in which the value increases (yes I said increases twice on purpose  :)).

So here's the pricing estimates based on the difficulty estimates and historical behavior to situations.  Difficulty estimates although in the long run will likely increase the value of the bitcoin.

When mining difficulty grows in difficulty at first you may notice a price drop, because many of those who have invested in mining machines want to sell some/all of their bitcoin gains to recoup the costs of the machine they invested in which increases supply (i.e. that is what I believe happened from sept 2 - today sept 10 http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv).

Bitcoin Value estimations:

September   130
October   140
November    150
December   160
January   180
February   220
March   230
April           240
May           240
June           250
July           250
August   250
September   260

Too many factors are included to give an accurate gauge with a reasonable +/-.  But you can decide for yourself how accurate you believe these numbers to be, and add or subtract accordingly.

Keep in mind these are all estimations, and are therefor likely to be 100% inaccurate for exactness in accuracy.

Ok now finally the fun part the results:

Depending on how much you can afford, or want to, will determine which rout you may want to go:

                               Cost        GH Rate      Month available      3 Months Revenue      Revenue in 1 year      ROI (100% = break even)
USB Miner                  $28           .333           Now (Sept)                  $3.86                          $9.23              33%
Mining W/ Hosting       $249           25             December                    $155                        $494                199%
BFL                          $4,680        600            February                     $3,970                    $9,496               203%
KNCMiner                  $4,999        400            November                    $3,888                    $8,856               177%
Cointerra                 $13,999       2,000          December                    $12,400                  $39,570              283%

Also it may be good to note, that if Bitcoins continues to become increasingly valuable, in 2017 I expect a large jump in price as the populace realizes that coins are going to be even more difficult to find as they did in 2013 (but maybe this time with a little less volatility due to past experience in the change).

I personally would recommend cointerra if you can afford it because of the ROI and its energy efficiency.  Otherwise I'd consider looking at the link below for the Mining w/ hosting since you can get basically get the quantity you desire.



Links:
USB Miner (http://www.ebay.com/sch/i.html?_trksid=p2050601.m570.l1313.TR0.TRC0.Xusb+miner&_nkw=usb+miner&_sacat=0&_from=R40) $28
Mining w/ hosting (http://www.ebay.com/itm/181210411210?ssPageName=STRK:MESOX:IT&_trksid=p3984.m1559.l2649) $249
BFL (http://www.butterflylabs.com/monarch/) $4,680
 $4,999
[url=http://cointerra.com/product/terraminer-iv-2ths/]Cointerra (https://www.kncminer.com/?resellerid=249[/url) $13,999

Always bet on GPU first then more specific. Even the specific fails, You still have GPU to do other things.

Good thought from you, you just save my ass.

Thanks

Does everyone agree with Delmonger's assessment of Cointerra's hardware profitability?

Seems very nice if it's attainable.

How much does one of these cost now?

In case you missed it.

I have taken the time to project what the network difficulty will be when these pre-order's are expected to begin shipping.

The difficulty dates selected are from the manufacturer's expected shipping date start. The numbers are based from a low Network Difficulty Increase of 20% every 12 Days.

https://i.imgur.com/INFtCVI.png

And as always here is the link to the updated estimate both 20% and 30% increases.

https://docs.google.com/spreadsheet/ccc?key=0AmeuPljmUNHCdEpqX2RmMDFwemJyLURVUWFtZ3J3aGc&usp=sharing
 

You can follow along here as it is updated every difficulty increase. Plan to see a normal 30% difficulty increase every 10 or so days for the foreseeable future.

https://bitcointalk.org/index.php?topic=273264.msg2929060#msg2929060

Everyone should go back and re-read the OP.  Mentally replace GPU with ASIC in that post... that's the same kind of "the sky is falling" stuff we are seeing now with ASICs.  How'd that GPU mining turn out for those that invested in it back in 2011?

The equation is simple.

If you have fiat capital that you wish to exchange for Bitcoin, then history has shown that you get more Bitcoin buying it at market rate, rather then expected Bitcoin return from mining.

Remember that unlike GPU's the ASIC hardware being sold at premium rates have no other use.

Over what time frame are you referring to, though?  Depending on the time frame, mining can return more than buying... I agree that if you take the entirety of Bitcoin history as a whole, you are correct.  Will that statement hold true in the future?  Who knows...

Coming from you that's hardly impartial now is it?  Also with over 50% of total coins mined under which conditions do you believe mining will return more in the future?

I see a lot of the powerful ASICs that can get you a lot of Bitcoins are all for pre-order right now. Since they won't be available for a few months I'm not very interested in them. A lot of the ASICs available for purchase right now are not very powerful and I'm not sure if they'd be worth the investment. Does anyone know of a seller that is selling ASICs available right now for a great deal?

Once Hashfast hit the network this month,difficulty is going to skyrocket,jupiters are going to look like usb sticks i am afraid,there is 570 devices of the babyjet that are expected to hit the network anytime now,they also have upgrade modules and there is also Hashfast seriea's which i dont know how many they are shipping in batch 1

Has mining BTC lost its profitability due to the high difficulty? Can people even break even with current hardware prices and difficulty level? I mean current hardware as in hardware that you can use today.

The bare minimum investment that has the potential to turn in a big profit so you can grow your mining operation exponentially bigger over time, tops at hundreds of thousands of dollars.

Even if you want to start low, your option is the pricey 10~15k miners, which won't give you enough profit to buy a new beefier miner when yours turns into the red zone of profit/powercost

Some advice..
BFL 300gh card is $1,200
If i order one and mine for lets say 6 months I could get anywhere from 2-X btc..
The ROI is not a problem and im not looking to re sell this card simply a way for myself to get some BTC for the long run without just purchasing 1.2k worth?
I will hold the coins until later with a hope of a spike and if Bitcoin dies out which i don't believe will happen.. Then whatever right?

The only deal I see from BFL close to that is 300GH for $1500, and that is a preorder for 3 or more months from now. This is what their description shows "Pre-Order Terms: This is a pre-order. 28nm ASIC bitcoin mining hardware products are shipped according to placement in the order queue, and delivery may take 3 months or more after order. All sales are final." So since difficulty pretty much doubles by the month, you will want to do your calculations after doubling current difficulty 3 times. If your plan is to mine and wait for the price to go up then it would be worth it as long as the price does go up.

You need to do more reading.  If your computations made sense then everybody would buy the 300GH/s card for free money, then the difficulty would skyrocket and nobody would make money.   And that's exactly what's happened, except not with BFL hardware.  Considering BFL hasn't finished tapeout yet you're looking at a May/June release on those cards.

Of course, DrG is lying as usual.  But don't let his lies dissuade you from believing in idiots like him if you like doing that sort of thing.

(ROFLCopters at BFL not having taped out.  What an idiot.)

I have to pose the question. Is mining profitable enough to even be able to scale up enough in a reasonable manner? I take it we can't expect to double profits at all, but let's say you expanded your ANTMINERS for the next 3 months by one unit starting at one, and then took the profits from those to flip into newer technology that will likely be announced, is there a point where your profits will eventually sustain the business of replacing current hardware and expanding to purchase additional hardware?

From my view with the calculators that do factor in difficulty increase, it doesn't seem very likely. Here I am about to try it anyway though...

Yes, but not until the next generation of miners are deployed and active.  Until then, it's a race to just keep up.  Once the next generation is out there, we are up against a technology wall that will slow down the pace of new hardware being rolled out dramatically, giving the miners and the manufacturers time to breathe a bit.

You're right. His May/June estimate was idiotic. September would have been a lot closer. And what a bargain for existing customers at $1.97/GH. Super ROI there.

Josh, sometimes your arrogance is truly breathtaking.

Wow I didn't see the reply lol.  Yes Josh, I am the idiot.  I am the idiot that fell for your lies and paid 209BTC and believed your company would ship an ASIC in October 2012 that end up being delivered in July 2013 - and died within 1 week of usage and took almost 14 days to RMA.  Yes I am an idiot - only idiots get into medical school and finish medical residency you know - we can't all wear Big Boy Pants.

I love the accusation of lying as usual - I would like one link to where I lied on these forms.  The court documents clearly showed where you lied.

How's that Monarch shipping going? Two weeks you say?

All I can think about is that early miners were pulling in 25+ BTC per week.  If only hindsight was 20/20, that should be the slogan of this message board.

Yes, but you would have either had to guess right AND time it right, or spread your bets around with multiple vendors, maybe none of which would have panned out. Some got lucky but most got screwed.