Is mining still viable with ASIC investment for the next 24 months?

[Reddle]

So I was looking into the current rates of investment return for mining...
With just a GPU based system I can make about .01-.1 Bitcoins a year per high end card (about $1-$20 a year per card) - so not worth it.

With an ASIC - 1-2 bitcoins per year (about $100-$200 a year per device) - so worth it if the devices are less than a bitcoin (ideally less than half) , sort of... You can pay of a moderate investment in 6-9 months.

Conclusion - Unless you invest $5-$10K (thousand) to buy a good amount of ASIC's, you won't be making much money in terms of real world spending (virtual to physical asset accumulation). About 150-200 % return in 24 months. However...the return on investment is deprecating at a pretty alarming rate. So what rate you calculate today needs to be on a direct proportional curve to the uptake in both ASIC capability or community size/capability (which is really difficult to quantify). This has changed a significant amount in the last couple of months. So i think the realistic investment over 24 months (well beyond ASIC warranty) is around 50-80% (depending on your luck ).

That's my quick take on the current mining situation from a purely outside look. I was wondering if people had a more "real world" experience to share?

[odolvlobo]

...
Conclusion - Unless you invest $5-$10K (thousand) to buy a good amount of ASIC's, you won't be making much money in terms of real world spending (virtual to physical asset accumulation). About 150-200 % return in 24 months.
...

It depends what you consider "much money". As with any investment, the more you invest, the more you will earn (or lose).

The biggest impact on profitability is the change in difficulty. It is difficult to predict future difficulty, but I think it is fairly certain that it will be rising rapidly for the foreseeable future. If you assume that it will be rising 20% every difficulty adjustment, then your total mining revenue will be 1.126 BTC for every 1 GH/s, assuming the current difficulty is 31256961, and 99% of that will be earned in the first 6 months.

The formula for computing mining revenue (assuming constant exponential growth and constant block reward) is actually very simple:

Total Revenue = H * 1,000,000,000 * 25 * 600 * 2016 * 65535 / 2⁴⁸ / D / R

where,
H is the hash rate in GH/s
D is the difficulty when mining starts
R is the rate of increase at every difficulty adjustment (e.g. 20% = 0.2)

[Reddle]

@odolvlobo That is exactly what I was looking for!

Still not sure if it is worth it though. I think the best path to bitcoin riches is not being part of the mint (money creation/distribution) but part of the actual economy (sell goods and services).

[Reddle]

WOW - just found the mining dashboard at genesis block.

If bought now and delivered in 7 days a ASICMiner Block Erupter (no matter how many you purchase) will NEVER pay itself off.

[xerno]

WOW - just found the mining dashboard at genesis block.

If bought now and delivered in 7 days a ASICMiner Block Erupter (no matter how many you purchase) will NEVER pay itself off.

Im intresting at buying those, but why wouldnt it pay itself within the first 2 months?

[Altoidnerd]

...
Conclusion - Unless you invest $5-$10K (thousand) to buy a good amount of ASIC's, you won't be making much money in terms of real world spending (virtual to physical asset accumulation). About 150-200 % return in 24 months.
...

It depends what you consider "much money". As with any investment, the more you invest, the more you will earn (or lose).

The biggest impact on profitability is the change in difficulty. It is difficult to predict future difficulty, but I think it is fairly certain that it will be rising rapidly for the foreseeable future. If you assume that it will be rising 20% every difficulty adjustment, then your total mining revenue will be 1.126 BTC for every 1 GH/s, assuming the current difficulty is 31256961, and 99% of that will be earned in the first 6 months.

The formula for computing mining revenue (assuming constant exponential growth and constant block reward) is actually very simple:

Total Revenue = H * 1,000,000,000 * 25 * 600 * 2016 * 65535 / 2⁴⁸ / D / R

where,
H is the hash rate in GH/s
D is the difficulty when mining starts
R is the rate of increase at every difficulty adjustment (e.g. 20% = 0.2)

Do you know the integral expression used to obtain this formula?  One which doesn't require strictly exponential difficulty scaling and leaves R and D as general functions?

[odolvlobo]

Still not sure if it is worth it though. I think the best path to bitcoin riches is not being part of the mint (money creation/distribution) but part of the actual economy (sell goods and services).

I agree. Although there have been plenty of spectacular failures, there are many successes. For example, SatoshiDice sold for $12 million, BTC-TC is worth at least $600,000, MPEx is worth at least $400,000, and MtGox may be worth millions though it remains to be seen if it will end up as a spectacular failure or not.

[odolvlobo]

Total Revenue = H * 1,000,000,000 * 25 * 600 * 2016 * 65535 / 2⁴⁸ / D / R

where,
H is the hash rate in GH/s
D is the difficulty when mining starts
R is the rate of increase at every difficulty adjustment (e.g. 20% = 0.2)

Do you know the integral expression used to obtain this formula?  One which doesn't require strictly exponential difficulty scaling and leaves R and D as general functions?

The revenue is simply the sum of the cumulative payouts for each difficulty period. Assuming constant exponential growth turns it into a power series which has a simple formula. In reality, the formula above is a simplification, because the revenue for each period also depends on the average hashing power for the period (which also affects length of the period and the next difficulty value). I suspect the formula should be "... * R / (1+R)" instead of "... / R"