Bitmain Antminer S7 cost about $533 each
You need power supply units (PSU) for the miners.
A Bitmain APW3-12-1600-B2 PSU cost about $140 each.
So, if you need 16 Bitmain Antminer S7, it will cost you about $10768
You'll probably need to pay for some sort of rack or shelving unit to store all of these, as well as come cables to connect it all. By the time you are all done paying for all the necessary equipment, tax, and shipping, you'll probably have spent about $12000
Then you need to plug them in and pay for the electricity. Each Bitmain Antminer S7 will draw about 1400 watts. If you run them 24 hours a day that works out to 34.135 kWh of electricity per unit per day. If you are running 16 of them, that's 546.16 kWh per day.
If you pay $0.10 per kWh for your electricity, then it will cost you $54.62 per day to run the equipment. So, your gross daily revenue will be $100, but your daily costs will be $54.62. This means that after paying for the electricity, your net income will only be $45.38.
Of course, 16 units will generate quite a bit of heat. If you don't want to destroy the equipment from overheating, you'll probably need to pay for some sort of cooling as well. Lets assume that you can get the cooling equipment for free and that the electricity to run the cooling equipment will add an additional 10% to your electricity costs. 10% of 54.62 = $5.46
So, your daily electricity costs are now just about $60, and you are generating $100 worth of bitcoin per day. That's a $40 profit per day. At this rate, how long will it take for you to pay off the $12,000 that you spent to purchase all the equipment? Assuming that you don't need to take out a loan with interest for the $12000, it will take at least 12000/40 = 300 days of uninterrupted running of the equipment 24 hours per day. If you have any equipment failures, power outages, or other interruptions, then it will take even longer.
So, at first glance, it seems like after a year of running the equipment (costing a total of $34000), you might finally actually have about $2600 in profit. Unfortunately, you won't even come out this far ahead. The problem is that the mining difficulty adjusts approximately every 14 days. If we average all the adjustments so far this year (there have been 9 of them up until now), we find that the difficulty increases by about 6.4% each adjustment.
This means that if you could start mining 0.2174 BTC (about $100 worth) today, then you'd only get about 0.2034 BTC two weeks from now, then 0.1905 BTC two weeks later, then 0.1783 BTC for two weeks, then 0.1669 BTC, then 0.1562 BTC, then 0.1462 BTC, then 0.1368 BTC, and after 16 weeks you'd only be generating about 0.1281 BTC. If the exchange rate doesn't change at all between now and then, your electricity would now cost more than the amount of revenue you would get from mining. Every day that you keep the equipment running beyond this will lose you more money.
If the exchange rate hasn't changed much in the next 16 weeks, you'll have been able to pay for your electricity and also earned back about $4000 of the $12000 that you spent to buy the equipment. You'll still be out $8000 and won't have any bitcoin (since you had to trade it all in to pay your costs).
On the other hand, you could take that same $8000 and just buy bitcoin directly with it today. That would get you 17.3913 BTC.
So, your choice is:
- Put a lot of time, effort, and money into mining, and 16 weeks from now discover that you have no bitcoin and you've lost $8000
- Or, buy bitcoin today for $8000, and discover that you immediately have 17.3913 bitcoin (and still have 17.3913 BTC 16 weeks from now)
Even if the exchange rate goes up (so you can afford to keep your equipment running a bit longer, and can pay off more of your initial equipment costs), you'll find that the total profit you'd get from just purchasing the bitcoin directly today (and selling them later at the higher exchange rate) will probably still be higher than the profit (if any) that you'd get from running the mining equipment the whole time.
All of this math was done assuming that you'd pay about $0.10 per kWh for your electricity. If your costs are higher than that, you'd have to stop mining sooner and would make even less (or lose even more) money. If your electricity costs are significantly lower than that, then there might be a chance to make a better profit from mining than you would from just purchasing the bitcoins directly.
