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Author Topic: Thinking about borrowing money to buy an ASIC...  (Read 3920 times)
zkay
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March 17, 2013, 12:27:32 AM
 #1

Hello

I am currently considering borrowing $1500 from my father to purchase an Avalon 60 GH/s ASIC mining rig. I am still debating on whether this is a good idea or not. At the current rate, I know the select few ASIC owners and operators are earning upwards of $300/day per 60 gh/s machine at the current prices. I realize that this will greatly decrease as time goes on and more people receive their rigs and the difficulty increases. Despite all this, I wonder if it will be worth it to borrow money to buy an ASIC that I likely won't receive until midsummer or later.

I live in the USA and where I live, I pay 7.5 cents per kilowatt hour. I use my electric sparingly and my wife and I average 450 kWh/month. I own my own home in a rural area of Illinois.

How can I get electricity for this rate? Wind power! I live in what has been called the Saudi Arabia of wind power, along the border with Iowa near the Quad Cities. The project(s) can be viewed here:

http://www.invenergyllc.com/invenergy/ProjectsbyCountry/UnitedStates/BishopHillI.aspx
http://www.invenergyllc.com/invenergy/ProjectsbyCountry/UnitedStates/BishopHillII.aspx

The first stage is completed and is outputting 211.4 mW of power. The second is set to come online soon and will add an additional 80 mW.

Even at $30/day, the initial purchase price will be repaid within 60 days. However, this is making the dangerous assumption that the BTC/USD exchange rate will stay the same or increase.

Pros:
-Potentially make a good amount of money
-Support bitcoin in a tangible way
-Gather more support among people for bitcoin, in this case my immediate family
-Loan is easy(ish) to pay off in the event it doesn't pan out

Cons:
-No one likes to be in debt
-Might need some help actually setting the thing up when I get it
-Wife will probably hate the noise the thing makes
-Idea could fail and I'll have nothing to show for $1500

So, would it be worth it to you?
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Le Happy Merchant
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March 17, 2013, 01:14:50 AM
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You seem to be posting in the wrong subforum.

BTC Books
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March 17, 2013, 01:16:23 AM
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Probably not a good idea.

When would you actually get one?  Q1 2014?  Maybe?

You're better off just buying the BTC with a monthly amount equal to what your loan re-payment would have been - since you already know you can afford that (You wouldn't take out a loan for a performing asset unless you knew you could pay it back even in the event of non-performance, right?)

Dankedan: price seems low, time to sell I think...
Bitobsessed
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March 17, 2013, 01:23:00 AM
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You have to weigh the risk to reward ratio and with Bitcoin it could be enormous.  No matter what your calculations tell you I would easily double your estimate of when you think you will get your return on investment.  If you are getting an ASIC then a lot of other people will too and the difficulty will go up and you will not get nearly the coins you think you will.  Just a tip...
zkay
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March 17, 2013, 01:50:02 AM
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You seem to be posting in the wrong subforum.

I figured this was more a speculative post than anything to do with the actual hardware. If a mod feels otherwise, please move the post.

Quote from:  BTC Books
Probably not a good idea.

When would you actually get one?  Q1 2014?  Maybe?

You're better off just buying the BTC with a monthly amount equal to what your loan re-payment would have been - since you already know you can afford that (You wouldn't take out a loan for a performing asset unless you knew you could pay it back even in the event of non-performance, right?)

Right. I say in the OP that this is a major detraction from going through with the idea. This alone is probably going to kill the idea for me, and the fact that like you say, I likely won't receive anything for quite a long time.

Quote from:  Bitobsessed
You have to weigh the risk to reward ratio and with Bitcoin it could be enormous.  No matter what your calculations tell you I would easily double your estimate of when you think you will get your return on investment.  If you are getting an ASIC then a lot of other people will too and the difficulty will go up and you will not get nearly the coins you think you will.  Just a tip...

Indeed. The fact that I likely won't receive the unit for a while, won't be earning nearly as much per day, and quite possibly won't ever break even at all are all major down points. At the moment I am leaning more towards not doing it.
zkay
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March 17, 2013, 01:55:02 AM
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I figured this was more a speculative post than anything to do with the actual hardware. If a mod feels otherwise, please move the post.

There is a "mining speculation" sub-forum. Wink

By god, you're right! Apologies mod, please move this post. Smiley
zkay
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March 17, 2013, 02:01:03 AM
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I figured this was more a speculative post than anything to do with the actual hardware. If a mod feels otherwise, please move the post.

There is a "mining speculation" sub-forum. Wink

By god, you're right! Apologies mod, please move this post. Smiley

I'm fairly certain you can move your own threads! I could be wrong, I've never done it myself.

Editing the OP, I don't see any option to.
ehoffman
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March 17, 2013, 02:21:55 AM
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Another thing with ASIC, if you buy now, and only receive in a few months, then you probably would be better just to buy Bitcoins in the first place.

I did pre-order BFL SC, just when Avalon came out.  At the time I paid 65BTC.  Would I have been ordering today, it would have cost me only 30BTC due to the BTC value rise.  That's 35 BTC lost that I could have used to buy twice the number of ASIC.

Also, what do you think will happen in a few months, when 60GH/s will get you only 50$~100$/months.  The company, with their initial investment (to develop ASIC) already paid, will have to sell their board at much lower price.

So I have the impression I would have just been better not ordering the board, and keep my BTC.

Don't think you'll get your investment back with ASIC.  Buy one if you want to stay in the game with mining, but only when the ASIC prices get lower.

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saddambitcoin
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March 17, 2013, 03:54:03 AM
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better off borrowing money from your father to buy bitcoins instead of pre-ordering something that you won't get for months

Bitobsessed
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March 17, 2013, 04:39:22 AM
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Quote from:  Bitobsessed
You have to weigh the risk to reward ratio and with Bitcoin it could be enormous.  No matter what your calculations tell you I would easily double your estimate of when you think you will get your return on investment.  If you are getting an ASIC then a lot of other people will too and the difficulty will go up and you will not get nearly the coins you think you will.  Just a tip...
Quote
Indeed. The fact that I likely won't receive the unit for a while, won't be earning nearly as much per day, and quite possibly won't ever break even at all are all major down points. At the moment I am leaning more towards not doing it.

My suggestion like above, an investment in hardware is a bad idea, but buying BTC outright with the $1500 in my opinion is the best idea if you want to take the risk.
piramida
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March 17, 2013, 08:01:06 AM
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I am personally going to buy several ASICs when I can order them and have them shipped in a week. Not for making any immediate profit obviously - to have it running, securing the network a little and maybe paying back in a year or two.

Borrowing money? When you live on your own house with a wife? Sorry but sounds irresponsible to me, you should spend whatever extra money *you* do earn.

i am satoshi
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March 17, 2013, 10:52:08 PM
 #12

Would you borrow money to play the lottery? Don't do it. If you're borrowing money, at the very most just buy Bitcoin. But even then, I can't recommend it.

more or less retired.
Korbman
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March 18, 2013, 05:32:15 PM
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I am currently considering borrowing $1500 from my father to purchase an Avalon 60 GH/s ASIC mining rig. I am still debating on whether this is a good idea or not. At the current rate, I know the select few ASIC owners and operators are earning upwards of $300/day per 60 gh/s machine at the current prices. I realize that this will greatly decrease as time goes on and more people receive their rigs and the difficulty increases. Despite all this, I wonder if it will be worth it to borrow money to buy an ASIC that I likely won't receive until midsummer or later.

I'm not sure borrowing money for this sort of venture is in your best interest, solely judging by what I've read in the other posts of course (In general, I have no problem with loans for this sort of stuff). As Piramida pointed out..

Borrowing money? When you live on your own house with a wife? Sorry but sounds irresponsible to me, you should spend whatever extra money *you* do earn.

...and he's exactly right. It sounds like you're going out on a limb to purchase the "magic money making machine" with the hopes of creating a sustainable income. Though it's true that mining can produce a livable income, it's usually based on the price a Bitcoin can go for on the open market. For example, would you still be looking to purchase an Avalon if Bitcoins were only worth $1? What about $100? Whatever your answer may be (and I think we know what it is), there are thousands of other people with the same thought process. As a result, it's important to plan out how things are going to go..regardless of whether you start out mining at a difficulty of 30 million or 300 million. BitObsessed said it best with..

You have to weigh the risk to reward ratio and with Bitcoin it could be enormous.  No matter what your calculations tell you I would easily double your estimate of when you think you will get your return on investment.  If you are getting an ASIC then a lot of other people will too and the difficulty will go up and you will not get nearly the coins you think you will.

My advice is similar. Think long and hard about where you think the network is going to go before making your purchase. Will you regret your purchase when you receive your product 3-4 months from now and the difficulty is 10 times the current value? It doesn't matter if you're investing $1500 or $30,000, the advice is the same. Having a "Plan B" will only help you in the long run.

On a side note, what made you consider purchasing from Avalon instead of Butterfly Labs? Just curious..

BBQKorv
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March 18, 2013, 08:34:00 PM
 #14

Only invest the amount of money you can afford right away without creditcards etc, taking a loan to get a 1,5k$ device is not the way to go. Bitcoin seems to have a bright future but there is always the risk of things collapsing due to some reason.

As a sidenote, an employed person should always have atleast 2 months worth of net income on their bank account to safeguard against sudden expences like emergencies. I would recommend to acquire that buffer first, and only after that planning on the future investments when the base of personal economy has first been established. That 2 months safetyfund is only to be touched in an emergency, so saving for the Avalon is necessary after the safetyfund is up.
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March 25, 2013, 06:13:16 PM
 #15

Having funds available for an emergency is prudent to be sure, but don't store the emergency funds in your bank account. Bad things can happen. Please check the headlines in Cyprus or the history books for US bank holidays and S&L collapse.

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