Bitcoin Forum

Just curious.  So answer the poll already!

INVESTING is the best choice right now. Just buy bitcoins with as much cash as you have !

right now i'm tweaking all my miners - latest miner versions, overclocking, case cooling, etc.  i've boosted my Mh/sec rate almost 20% since the difficulty rise - practically as good as getting a new miner.

so no hardware right now.  we'll see how difficulty goes.

and frankly, given the speed at which things move, i'm going to wait a couple weeks to see what happens on the FPGA front.  my miners have paid for themselves many times over, so i can afford to look at re-investing if the FPGA possibilities are good.

i guess my answer isn't in your poll...

No would be my answer.

No

Yeesh - almost half of all respondents indicated that they will still be adding more hashing power in the coming weeks!  I was hoping for numbers less than that, but now I fully expect difficulty to continue rising as quickly as it has in the last few weeks.

Just bought a few bits but I'm done for now

It's apparent that mining will trend toward small profit. Any undertaking that has massive profit will grow until the profit is reduced (everyone tries to grab that profit). Serious miners should understand this and practice high efficiency.

Lots of people are still buying. We can't buy enough video cards to keep up with demand!

yes, why not ?

Because difficulty going up without BTC price going up will cause the payback to be less then the price of the equipment.  Our next difficulty is on track to be more then a 50% increase again and it is happening sooner then 10 days.  If you repeat that just four more times mining is not very profitable. 

I just got my last 6990 card.  It should make some acceptable money in the next month.   After that profit is unlikely.  I will turn my equipment off a little before it becomes unprofitable due resale value of the equipment. 

Please define what is "profitable". Or what is a good ROI for a business. 20% a year ?  30% ? 60% ?   ;)   

"Because difficulty going up without BTC price going up will cause the payback to be less then the price of the equipment. " I plan to track the rate of difficulty increase vs bitcoin value in the coming months, probably until august before buying anything. There is no guarantee of profit or loss but there should be some trending going on. Hopefully I can use the money to finish my PhD in mathematical finance.

Here's the thing:

Difficulty only needs to make a few more big jumps before your return starts to get awfully close to the cost of mining (equipment depreciation + electricity costs). Eventually, you'll be up against the flat-rate/free electricity crowd.

There will probably be marginal profitability for most for quite some time, but these margins will be thin and fluctuate heavily with the exchange rates.... UNLESS you're convinced that BTC value will just continue to go up.

However, if BTC just keeps going up then mining is not where you should be putting your money. Buying BTC directly will yield much larger profits given the same investment, or alternatively will yield the same profits with less investment.

For the record, I don't believe BTC value will continue to rise as it has. I do believe difficulty will continue increasing until marginal profits are minimal, however.

Before you answer the poll here is something to think about.  I believe these numbers are correct:

If you are interested I got my raw historical data from here http://blockexplorer.com/q/nethash and the estimate next difficulty here: http://bitcoincharts.com/markets/ (at the top of the page - will happen in 789 more blocks as of the time of this post)

This is the way I am trying to answer this question for myself:

Todays network hash rate is estimated at about 3.5 Thashs/s.  So if I build a hot 3.5 Ghashs/s system that would be exacly 0.1% of the network.  Since the entire system produces about $50,000 per day at the current price of $7 per BTC my share should average out to about $50 per day.

Assuming that the average rate of growth in the value of the BTC matches the average rate of growth of the network then I will continue to average about $50 per day until 2013.

$50 per day is about $18,000 per year.  Can I build a 3.5 Ghash/s system for less than $18,000?  Yes.  If the above assumption holds is it worth doing?  Yes.  Will the above growth rate assumption hold.  That is the real question here.

Bitcoin value has remained stagnate for the past 11 days, while difficulty has almost doubled in the same time period.  Wishful thinking doesn't make it happen.

There has to be a reason for a rally - more investors come in looking for bitcoins, so they infuse cash into the market.  There doesn't have to be a reason for difficulty to increase - it just happens, whether there is growth in the value of BTC or not.  The reason for this is because it is still profitable to mine, even with the lower value/generation ratio.  People will continue purchasing mining equipment until the revenue is very close to the expense of electricity.  Prepare to make $2-$3/day with that same 3.5ghps in the not-so-distant future.

Too many assumptions, few facts. If you believe that buying btc directly is the best thing to do, pls sell me at $1.32, which is the actual cost for me to mine each one.   ;D

How about we *don't* turn bitcoin into a ponzi scheme.  Pleeeeeeease?

i just bought Asus EAH5850 (725MHz gpu / 1000MHz mem) clocked to 900/900. without clocking says 260M Hash/sec, but with clocking up to 350M ! :) temp nice at 65°C for 5 days with >95% activity now :)

This happens in every single "should I buy mining hardware" thread:

The question starts as: Is it profitable to buy mining hardware now and pay it off over the next few months?
And the want-to-believe crowd jumps and and says: The hardware I started mining with months ago [i.e. when difficulty was much lower] is still profitable to operate.

These are two entirely different questions.


Difficulty is set to go up by 63%+ at the next jump. Bigger than the last jump, and bigger again than the jump before. Around each jump, the mining optimists come in and declare that difficulty is going to stabilize or even fall soon. And it doesn't.

And SgtSpike: Read my post more carefully. I said I don't believe that the exchange rate will continue to go up. I just pointed out that if you believe mining will be profitable in the long term then you must also believe exchange rates will continue to go up in the long term. If you believe that, then mining isn't your best option.

Higher dificulty = Higher price of bitcoin.

Everything else would be complete madness..

Being myself a professional miner, I read your mining-not-profitable campaign with great interest. With due respect, are you also a miner, and wish to discourage competition ? Competition is good. All your pessimistic predictions proved to be wrong until today. I envision that the bitcoin ecosystem will stabilize on a slightly profitable to very profitable to slightly profitable again cycles.

hopefully... I don't receive donations  :'( .... And mining at 35 Mh/s....  8)

That's quite the fallacy you've embraced.

The price of bitcoin is dependent only on supply and demand. More sellers == lower price. More buyers == higher price.

While I'm not thrilled with your change of the subject without addressing my prior points, I'll play along:

My predictions were not wrong. Go back and re-read my posts where I iterate the same point: If you believe the exchange rate will continue to go up (critical for long-term mining profitability) then you're probably better off purchasing bitcoins directly than investing in mining hardware.

Several members were kind enough to provide mine/buy comparisons for their own situations, and surprised to find that they would have been much better off buying BTC directly. To the tune of 200% or more.


Hardly. If you believe that, then you don't understand my position.

And as much as people would like to relate my small mining activities to this: Don't bother. If you want to debate, argue with math and logic. I was in the right place (had good hardware) and the right time (low difficulty, high exchange rates) so I mined. It was logical.

The total network hashing power is around 3 Thash/sec. If I convince 100 people not to run out and buy $1500 mining machines, it's not going to affect the steep climb of difficulty in any appreciable way, and you can't argue otherwise. I will have, however, saved 100 people from getting caught up in a highly speculative investment trap when everyone else on the forum is gung-ho about buying mining hardware regardless of the math.



Remember, this forum self-selects for miners and those who believe. Those who stop by, run the numbers, determine that buying mining hardware is not a good investment, and leave will not be posting here. Visitors are likely to get a highly skewed view of bitcoin mining. And that drives me nuts.

I missed that.  In that case, I completely agree.  When I first started mining three weeks ago, it was more profitable to mine instead of invest directly in bitcoins, when looking at the longer-term picture and assuming no more huge jumps in BTC price.  This was because of the EXTREMELY low difficulty level compared to the current price.  Now, difficulty is still working on catching up, and it has already caught up to the point of investing being more profitable than mining, except at 0% or negative BTC valuation changes.  It will only take a few more difficulty increases like this upcoming one before investing at 0% valuation change is more profitable than buying mining equipment...

Answer: No

I was fortunate to have a 5870 when I started mining.  I'm also really fortunate that it overclocks very well, currently at 1130/900 putting out 473 Mhash/s.

Anyone buying equipment now is a mug... it looks like this 50%+ increase in difficulty is going to continue. It won't be long at all until it is no longer worth mining. I reckon from 1.5 to 2 months. Probably down to just over $1 per 2 gfx card rig per day, after just 1 month. That's with 1 BTC = $7

After that, the only people left out there mining will be those who do not have to pay for electricity, and the crazy people.

It's not entirely mistaken.  darre should use a one-way equals sign, or an "implies sign".

Higher difficulty =/> higher price   (=/>  is "does not imply")
Higher price => higher difficulty   (=>  is "implies")

If the price goes up, it becomes more profitable to mine, so more people mine and the difficulty rises.  This does not change bitcoin supply because the (appx. constant) quantity of new bitcoins is much smaller than the quantity traded (new btc=7,200/day, traded at MtGox only > 30,000/day).

If the difficulty goes up, mining is less profitable BUT it is still economically rational for a miner who has already bought a rig to continue mining (up to a certain point which depends on each individual's opinion of future BTC value).

But if the difficulty spontaneously goes up, implying that more people are mining, there is still no change in supply.  I'm still trying to understand why more people should spontaneously start mining though.  Perhaps, as word spreads, people see what a fantastic idea or investment bitcoins are, and erroneously conclude that mining is uniquely the best strategy.  However, if that's the case, then there should be other newcomers who erroneously conclude that *buying* is uniquely the best strategy, and so the price should *also* rise.

Hah, so, maybe as difficulty rises, more newcomers will see the folly of mining and tend to favour buying, so the current exponential rise in difficulty should gradually transfer over to an exponential rise in price.

i did not buy my new card for bitcoin only, old card was nvidia 8800gt, almost 3 years old ;)

I mostly agree but there is some linkage in the other direction.  Let's say someone wants to acquire 1 bitcoin for some reason.  If he can mine it for $5, he's less likely to want to buy it for say $7.  If it costs $10 to mine, he's going to be willing to pay $7 or even more.