Has mining (vs. simply buying) ever been profitable?

[Lorenzo]

It's interesting to look back at older posts in the forum such as those from 2011 or 2012 where newbies ask about mining and even back then, people said that mining was unprofitable and that you'd be better off buying them from Mt. Gox instead:

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...

...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.

after some analysis and some risk models done with help of professionals back in May 2012 I have suggested to some people I've been in touch with regarding potential ASIC mining project to forget about mining and simply buy BTC instead. After that our ASIC project was scrapped. It was back when BTC was valued at 5$.

From a thread on Reddit posted 29 Feb 2012:

...I'm not sure it would be worth it at all to mine coins. You're probably a lot better off just buying them.

From a thread on Reddit posted 22 Sep 2013:

The difficulty keeps skyrocketing faster than equipment can pay for itself. So you're going to lose money investing in mining equipment at this point in time. You'd be better off simply buying bitcoins.

Obviously I'm not talking about cases where Bitcoin mining paid off because of the increase in BTC price. Someone who spends $50 mining $30 worth of BTC which later becomes worth $300 would still have been better off buying the coins instead.

I know the first generation Avalon ASICs were extremely profitable and would reach ROI in just 9 days. Has there been any other examples of periods where Bitcoin mining would have been more profitable than simply buying and holding?

[1715160162]

1715160162

[1715160162]

1715160162

[1715160162]

1715160162

[1715160162]

1715160162

[JaredStein]

It's interesting to look back at older posts in the forum such as those from 2011 or 2012 where newbies ask about mining and even back then, people said that mining was unprofitable and that you'd be better off buying them from Mt. Gox instead:

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...

...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.

after some analysis and some risk models done with help of professionals back in May 2012 I have suggested to some people I've been in touch with regarding potential ASIC mining project to forget about mining and simply buy BTC instead. After that our ASIC project was scrapped. It was back when BTC was valued at 5$.

From a thread on Reddit posted 29 Feb 2012:

...I'm not sure it would be worth it at all to mine coins. You're probably a lot better off just buying them.

From a thread on Reddit posted 22 Sep 2013:

The difficulty keeps skyrocketing faster than equipment can pay for itself. So you're going to lose money investing in mining equipment at this point in time. You'd be better off simply buying bitcoins.

Obviously I'm not talking about cases where Bitcoin mining paid off because of the increase in BTC price. Someone who spends $50 mining $30 worth of BTC which later becomes worth $300 would still have been better off buying the coins instead.

I know the first generation Avalon ASICs were extremely profitable and would reach ROI in just 9 days. Has there been any other examples of periods where Bitcoin mining would have been more profitable than simply buying and holding?

Like you said I think it was probably profitable when the price was around $50-$100. After that I do not think so xD

[Lorenzo]

Like you said I think it was probably profitable when the price was around $50-$100. After that I do not think so xD

So mining was really only profitable in early 2013?

It looks like the first batch of Avalons were an anomaly. Back then, there were only really three companies rushing to produce ASICs - Avalon, ASICMiner, and Butterfly Labs. Since BFL kept delaying their customers' orders, the only real competition Avalon had was ASICMiner. Because Avalon was able to release their product first, their customers were able to reach ROI in just 9 days which is pretty insane:

Garzik will be able to earn an average of about $240 per day. Avalon’s remaining customers will also be able to enjoy highly lucrative rewards, although not quite as extreme; once all of Avalon’s 20 TH/s are added into the picture, each individual ASIC will earn about $120 per day (paying for itself in slightly under two weeks), although revenues will decrease further when Butterfly Labs’ customers get their hands on their own ASICs – an event which, given Butterfly Labs’ current shipping projections is likely to occur around the beginning of March.

Source: http://bitcoinmagazine.com/3231/working-avalon-asic-confirmed/

I'm curious to know if this was just an isolated case or if there were other similar examples. Did ASICMiner customers also make similar profits during this time?

[adaseb]

I know if you have either a ASIC miner and/or GPU mining when entering 2014, you would of been filthy filthy filthy flthy RICH!


Don't know about 2011-2013 however.

[Lorenzo]

I know if you have either a ASIC miner and/or GPU mining when entering 2014, you would of been filthy filthy filthy flthy RICH!


Don't know about 2011-2013 however.

Is this sarcasm? LOL.

But just in case you are serious, 2014 was probably the worst time to make profits - either through mining or buying them from an exchange. Even if you didn't have all your coins stored on Mt. Gox when it collapsed, the BTC price dropped from $900 in January to $300 by December so any coins held during that time would have lost 66% of their value. GPU mining wasn't profitable any time in 2014. Most (if not all) ASICs probably weren't either.

EDIT: Or perhaps you meant 2013?

[adaseb]

I know if you have either a ASIC miner and/or GPU mining when entering 2014, you would of been filthy filthy filthy flthy RICH!


Don't know about 2011-2013 however.

Is this sarcasm? LOL.

But just in case you are serious, 2014 was probably the worst time to make profits - either through mining or buying them from an exchange. Even if you didn't have all your coins stored on Mt. Gox when it collapsed, the BTC price dropped from $900 in January to $300 by December so any coins held during that time would have lost 66% of their value. GPU mining wasn't profitable any time in 2014. Most (if not all) ASICs probably weren't either.

EDIT: Or perhaps you meant 2013?

No I said entering 2014 because around Nov 2013-Jan 2014 were the most profits in those months

[Lorenzo]

I know if you have either a ASIC miner and/or GPU mining when entering 2014, you would of been filthy filthy filthy flthy RICH!


Don't know about 2011-2013 however.

Is this sarcasm? LOL.

But just in case you are serious, 2014 was probably the worst time to make profits - either through mining or buying them from an exchange. Even if you didn't have all your coins stored on Mt. Gox when it collapsed, the BTC price dropped from $900 in January to $300 by December so any coins held during that time would have lost 66% of their value. GPU mining wasn't profitable any time in 2014. Most (if not all) ASICs probably weren't either.

EDIT: Or perhaps you meant 2013?

No I said entering 2014 because around Nov 2013-Jan 2014 were the most profits in those months

But I was around during that time and GPU mining was already obsolete by then. You could have mined Dogecoin with GPUs and made a handsome profit but Bitcoin was already dominated by ASICs. Pretty much all of the increase in BTC price happened before December 1, 2013. After December 1, 2013, the price of BTC began a long decline which was only once temporarily reversed in mid-2014 when it shot back up to $600 but the price has been falling consistently ever since.

[Amph]

if mining is profitable, it's always better to mine than investing in bitcoin directly, because you will end up with more btc at the end, simply buying can increase your capital(if bitcoin rise), but do not increase your bitcoin amount(unless you are a good trader too), were with mining you increase both

[bgibso01]

if mining is profitable, it's always better to mine than investing in bitcoin directly, because you will end up with more btc at the end, simply buying can increase your capital(if bitcoin rise), but do not increase your bitcoin amount(unless you are a good trader too), were with mining you increase both

Only if costs of production are less than amount of coin mined.

I see so many posts about free electricity, etc.  Mining uses electricity.  Even if YOU don't directly pay for it, somebody does.  But the simple fact is some folks are/were able to mine with equipment that produced more coins over their life time than they cost (less resale value).  In 2013, almost all of my mining was profitable because the miners held their value while I was churning them.  2014 was just minimally profitable for me.  Here my electricity costs are $.0751/kwh.

[notlist3d]

Yes it has.  During GPU day's was the best in my opinion.  But ROI still can be made on asics with low electricity costs.

[bronan]

There is absolute no free energy, that some let other pay for them does not mean its free.
I know alot of students who rented a room which inlcuded energy prices, some of these now have to pay for energy because a previous renter took advantage over the back of others.
A person who i know which leases appartements changed all his contracts for the rentals because some where mining massively in these appartments.
One person even fled from the country because he has a outstanding debt he probably never can pay, because this owner won in court (mining is not considered as normal usage of energy in a rented house).
You can/could only make a fair profit ( so above ROI ) if you have/had a large amount of miners and have cutting edge machines and very low power prices.
If you have time to trade and buy coins you probably can make a bit more profit, unless bitcoin jumps again at a extreme high value.
But i do not expect that to happen anytime soon, it might happen in a few years or not at all.
There is a bubble going on in the stock markets its probably even making it harder for bitcoin to gain some serious value.
Its visible in the Gold market as well, stocks go up precious metals goes down.

[notlist3d]

There is absolute no free energy, that some let other pay for them does not mean its free.
I know alot of students who rented a room which inlcuded energy prices, some of these now have to pay for energy because a previous renter took advantage over the back of others.
A person who i know which leases appartements changed all his contracts for the rentals because some where mining massively in these appartments.
One person even fled from the country because he has a outstanding debt he probably never can pay, because this owner won in court (mining is not considered as normal usage of energy in a rented house).
You can/could only make a fair profit ( so above ROI ) if you have/had a large amount of miners and have cutting edge machines and very low power prices.
If you have time to trade and buy coins you probably can make a bit more profit, unless bitcoin jumps again at a extreme high value.
But i do not expect that to happen anytime soon, it might happen in a few years or not at all.
There is a bubble going on in the stock markets its probably even making it harder for bitcoin to gain some serious value.
Its visible in the Gold market as well, stocks go up precious metals goes down.

Were these apartment complex's or something rented from individuals?

I could be out of it but the big apartments I went to pretty much could have cared less on electricity.  I didn't mine as my roommates would have had to pay a "peek" fee of 25 dollars per month.   But I never once heard of the big apartment complex's being mad over electricity, normally they had bigger things to worry about.

[adaseb]

Most apartment have limited number of outlets one can use. Unless its a large 3-4 bedroom apartment which is rare to find. Some 1 bedroom apartment only have 2 breakers.

[notlist3d]

Most apartment have limited number of outlets one can use. Unless its a large 3-4 bedroom apartment which is rare to find. Some 1 bedroom apartment only have 2 breakers.

Apartments normally are not the best for mining.  With owning your house you can modify it to exhust without making landlord mad.

Also as a house I have 2 electrical lines coming into my house. Allows for much more power.

[novak@gekkoscience]

I'm going to make the argument that yes, in fact, it is more profitable to mine.  Now before you do your maths, hear me out:  Anyone mining is adding to the bitcoin economy.  If you're mining, you're processing transactions, helping bitcoin grow.  If you're a home miner (or fairly small) then you're helping decentralize it.  Simply buying and holding bitcoin really doesn't do a thing for anyone.  Buying and spending could help- but most simply buy and hold, and spend dollars/euros/whatever on their purchases, because that's what vendors accept.

So I'm going to say yes, it is worth it to mine because you need to get bitcoin a foothold if it is going to become really profitable ever for anyone.  Buying and holding sounds like a good way to make bitcoin wither away.  Mining strengthens and decentralizes bitcoin.

If it really comes to it I could also try to win this argument anyways because my power is pretty cheap.  I haven't mined a lot but I have always made positive ROI.

--
novak

[notlist3d]

I'm going to make the argument that yes, in fact, it is more profitable to mine.  Now before you do your maths, hear me out:  Anyone mining is adding to the bitcoin economy.  If you're mining, you're processing transactions, helping bitcoin grow.  If you're a home miner (or fairly small) then you're helping decentralize it.  Simply buying and holding bitcoin really doesn't do a thing for anyone.  Buying and spending could help- but most simply buy and hold, and spend dollars/euros/whatever on their purchases, because that's what vendors accept.

So I'm going to say yes, it is worth it to mine because you need to get bitcoin a foothold if it is going to become really profitable ever for anyone.  Buying and holding sounds like a good way to make bitcoin wither away.  Mining strengthens and decentralizes bitcoin.

If it really comes to it I could also try to win this argument anyways because my power is pretty cheap.  I haven't mined a lot but I have always made positive ROI.

--
novak

I think more make ROI then they think.  The safest bet is BTC mining.  It just has a lot less unknown.  A miner with decent priced electricity can run a miner, once almost not making profit sell the miner.  Between those two hopefully they make a profit.

One thing I think a lot look at is Scrypt it had a hard crash on mining gear.  A lot did not make their money back.   I don't see this happening again on miners but I cannot predict future.

[Snipe85]

Mining is a different investment than buying, because you are betting on a different outcome. Think about it, if you calculate ROI, you count it for the current price, which means if the price stays the same you will still profit. At the same time if you buy Bitcoins you are aiming for the price increase, so if it stays the same you won't profit. It's really as simple as that, so we could say mining should be more profitable.
The downside is that when you have coins you can sell and invest somewhere else. When you mine you are in for the long run.

[Minerjoe]

For ordinary people, mining s become more of a hobby. Profit s really hard to get.

[hedgy73]

Mining hasn't been profitable in the UK for a long time even with the latest efficient hardware. I've been running my miners at a loss until recently simply because I like supporting the network and its an interesting hobby. It was also creating some heat during the winter months to offset the loss a little.

Now its spring and its warmed up I cant justify the expense any more so have just sold them and doubt very much whether it'll be worth mining again.

Very sad times indeed .

[crazyivan]

Mining hasn't been profitable in the UK for a long time even with the latest efficient hardware. I've been running my miners at a loss until recently simply because I like supporting the network and its an interesting hobby. It was also creating some heat during the winter months to offset the loss a little.

Now its spring and its warmed up I cant justify the expense any more so have just sold them and doubt very much whether it'll be worth mining again.

Very sad times indeed .

Well, yes. The era of small house miners, especially rigs, has come to an end. There are some cloud mining options which can still be profitable with constant reinvesting. But 2009-2012 level of mining s over.