Thinking of large sum of money into mining. Need opinions

[ryder004]

Hey guys, so first off this is my first post.

I just learned about Bitcoin a week ago. I been watching vids and reading on it day and night since.

I have 100k to invest. I was going to(and still can) buy a piece of property with my friend who has money and is also a contractor and build on it.


However I really am fascinated with bitcoin. Now I have seen tons of YouTube video's online of other bitcoin farm operations and have no clue how much they cost to set up. Basically I have no clue how much damage I can do with 100k. What they fail to also tell is how much they're making..........but I could see a few reasons why they would chose to withhold that information.

So far I have learned that power is the biggest overhead. To counter that I would buy a warehouse in Mexico where power is cheap. I have a friend that lives down there who can buy the land for me(in Mexico, the law is only citizens can purchase land). Now my knowledge in computers is pretty good but I am not an expert so I would not mind forking out 2-5k for a person who has a computer science degree and has a good understanding of bitcoin, and have him sit down with my buddy who is a contractor to draw up a design of build out.


My only question is, how profitable do you guys think a 100k operation would be with cheap power? I am obviously not doing this as a side hobby, but instead looking to make some real money. Now I am not looking to start tomorrow. If anything I would keep researching this subject for another 6 months or so before making any decisions. But as of right now, any help from this community who mines would be greatly appreciated.

The 100k investment would just be equipment. The purchase of warehouse, cost to build, any other non equipment cost is not a part of the 100k.

[Biffa]

Can you afford to wait a minimum of 12months to make any profit? That's the question you need to ask.

[ryder004]

Can you afford to wait a minimum of 12months to make any profit? That's the question you need to ask.

Yes.
And a 100% return on investment in 1 year is gold
Is there a real possibility it can go there?

[Dahhi]

How cheap is the electricity at Mexico?
China has the highest population of miners because electricity is about 3cents/kwh.
Anything above 10cents/kwh won't give you profits because you have to factor in the cost of cooling your mining rigs(the heat produced is high).

Most people prefer Antminer S9 rig to the latest R4 series because it's more efficient however, R4 rig produces less noise and heat.
Mining bitcoins as a solo miner is not so profitable anymore because the halving has reduced the reward, but if you are going into it, consider joining a mining pool to increase your chance of making money.

In addition, you should do some research for some SHA 256 altcoins you can mine in addition to bitcoin e.g KOMODO, Peercoin, Crowncoin etc.
Check worldcoinindex.com for live price updates of the altcoins and the exchanges where they are listed so you can observe for yourself how the market fluctuates.
Chose the altcoin you find profitable, join its mining pool and mine in addition to bitcoin so you can manage to break even in 12 months.
Hope this helps a bit

[ryder004]

How cheap is the electricity at Mexico?
China has the highest population of miners because electricity is about 3cents/kwh.
Anything above 10cents/kwh won't give you profits because you have to factor in the cost of cooling your mining rigs(the heat produced is high).

Most people prefer Antminer S9 rig to the latest R4 series because it's more efficient however, R4 rig produces less noise and heat.
Mining bitcoins as a solo miner is not so profitable anymore because the halving has reduced the reward, but if you are going into it, consider joining a mining pool to increase your chance of making money.

In addition, you should do some research for some SHA 256 altcoins you can mine in addition to bitcoin e.g KOMODO, Peercoin, Crowncoin etc.
Check worldcoinindex.com for live price updates of the altcoins and the exchanges where they are listed so you can observe for yourself how the market fluctuates.
Chose the altcoin you find profitable, join its mining pool and mine in addition to bitcoin so you can manage to break even in 12 months.
Hope this helps a bit

But I have seen farms here in the US that are gigantic. They must be turning a profit, and there's no way they're paying 3cents/kwh.

And I don't understand why mining as a solo miner is not profitable? I keep seeing people say to join pools, from a business standpoint all this tells me is:your operation is too small, build bigger.

[Biodom]

1. yes, most of gigantic farms are on 3-5c max. In my opinion, don't try a large farm above 5-6c/kwh.
2. large farm run solo will only increase your income about 1%, but will increase variance of income per day or even month. You can get a long stretch of bad luck and you would not know if it is something with your network setup or being hacked (it did happen to some) or just bad luck.

[QuintLeo]

But I have seen farms here in the US that are gigantic. They must be turning a profit, and there's no way they're paying 3cents/kwh.

 "Industrial" rates tend to be cheaper then anything else in the same area.
 There are 2 counties in the US that have RESIDENTIAL rates under 3c/kwh (and a third that has mid-sized commercial and larger rates under 3c/kwh but residential and small commercial a bit over 4).

[alh]

Can you afford to wait a minimum of 12months to make any profit? That's the question you need to ask.

Yes.
And a 100% return on investment in 1 year is gold
Is there a real possibility it can go there?

Just to be clear, given your definition of "100% return on investment", if you stuffed your money in a mattress and it didn't burn up or get stolen, you'd have "100% return on your investment" (i.e. you just broke even).

Anybody with $100K to invest should understand that getting you money back is 0% ROI, the only profit you would have would be the residual value of the miners. If you think they are still valued at 100% of their original cost, THEN you would have 100% ROI.

[DebitMe]

You need to understand that getting into mining is extremely risky.  You can invest the time and money if the wrong set of circumstances happens, you can lose everything very quickly.  So do not gamble with more than you can afford to lose.

You don't need a computer science degree to run this, just someone who knows how to do it (it isn't that hard), the main concern is finding a place where you can disperse that much heat.  I am not going to run the numbers right now, but you can look into how many S9's can be purchased with 100k, and then look at your heat output and see how much you will have to worry about.  Note that Mexico, while cheap power, will need further cooling costs put into the mine because of the hotter weather.  Something to think about.

Another thing to think about would be that you don't really sound like you are ready to go at this point, so it is very hard to plan.  It is nearly impossible to predict difficulty at the end of the month, much less 4 to 6 months out by the time you will actually probably be ready to buy equipment.  It doesn't sound like you have a place yet, so you still need to figure that out, make sure power is adequate, cooling and racking in place, and internet connection set up, among other things.  So yes, you are probably at least that far out.

If this is something you are seriously considering you need to start figuring out some of these things so you can get a better idea of what your situation is like before looking into equipment.

[Exoskeleton]

I'm usually against piling on the anti-mining FUD, but if your going to be waiting 6 months or more to even start at this point its too late. If you had everything up tomorrow I'd probably say go for it but even then you'd have to find someone to sell you $80,000 in miners at a good price which is impossible right now (the other $20,000 will go to PSUs/PDUs/Networking/Ventilation/Rent/Ect).

You can ROI in about a year with cheap power and some good luck but as people have pointed out, your only getting your money back plus the miners you now own. In the case of the S7 it was $1,500 new about a year ago and sells for $300-$400 tops right now.

If the difficulty goes up too quick then ROI will be impossible which has happened in many 6-9 month periods over the last few years. I think we are poised for another difficulty boom that will leave current miners unprofitable soon.

A lot can go wrong in a year that will cost you unforeseen amounts of money but let me just say that unit failure on S9 miners alone will loose you another 10% right off the bat. Power outages or internet failures will ruin you as well.

[GMPoison]

Just plug your numbers into a mining calculator. You'll see that mining - even if you don't have extremely cheap power - is very profitable, especially now. Last I checked a month ago mining was still profitable enough to invest.

http://www.coinwarz.com/calculators/bitcoin-mining-calculator

[leowonderful]

Just plug your numbers into a mining calculator. You'll see that mining - even if you don't have extremely cheap power - is very profitable, especially now. Last I checked a month ago mining was still profitable enough to invest.

http://www.coinwarz.com/calculators/bitcoin-mining-calculator

Calculators are pretty accurate, but always remember that difficulty does not rise linearly and there are often large spikes in hashrate and difficulty due to new miners being released, etc. I recently bought a few Antminer S7s with the price spike as I have 6 cent electricity and I make my money back in a little over a year- nice time to buy if you have cheap electricity like me.

[VentMine]

There's a lot of great comments here, many related to normal investment planning and consideration that you need to figure out first. If this is news to you the simple answer is you are likely not competent enough to risk the money, better putting it in a safer investment portfolio.

I think the decision to mine (for profit, not as a hobby) should be solely based on your OPERATING cost. This assumes that bitcoin itself will continue to be used in the future and doesn't experience some catastrophic demise, but that is a risk every miner is taking...

Your operating cost will mostly be your power cost and it is crucial that it is competitive with industrial miners (which I doubt it is). Maintenance costs will also likely be higher than the industrial guys in China, as they are closer to the manufacturers for servicing and warranty issues (us North Americans have to pay significant shipping costs). If your electricity costs are significantly higher than rates that the industrial guys are paying you will be pushed out, regardless of where price or difficulty goes. You will be at a higher risk than everyone else who is mining at a lower power cost, and your equipment will have a shorter useful life. This doesn't mean you can't turn a profit, just your risk of doing so is relatively much greater.

If I had 100k to invest, I would be looking at purchasing equipment and finding a suitable industrial miner to host for me, as I do not have cheap enough power costs. GreatNorthData and some others in North America would be a good place to start. I would have trouble trusting my high value equipment to someone to host overseas, where corruption is more widespread.

Cheers

[Westand]

Can you afford to wait a minimum of 12months to make any profit? That's the question you need to ask.

Yes.
And a 100% return on investment in 1 year is gold
Is there a real possibility it can go there?

If the difficulty rises more than 7% a year, you will not make ROI on the bitcoin. It is better to buy and hold bitcoin.

[Pettuh4]

Can you afford to wait a minimum of 12months to make any profit? That's the question you need to ask.

Yes.
And a 100% return on investment in 1 year is gold
Is there a real possibility it can go there?

If the difficulty rises more than 7% a year, you will not make ROI on the bitcoin. It is better to buy and hold bitcoin.

That is correct but an increase in difficulty level also corresponds to an increase ( pump) in bitcoin prices so you might be mining less bitcoins but at a good fiat value.

[QuintLeo]

If the difficulty rises more than 7% a year, you will not make ROI on the bitcoin. It is better to buy and hold bitcoin.

That is correct but an increase in difficulty level also corresponds to an increase ( pump) in bitcoin prices

 Bitcoin difficulty does NOT drive Bitcoin price at all.
 There is a long-term mild correlation of price driving difficulty, but NO correlation the other way around.

 The REAL correlation long-term is "profitability limits difficulty rise".

[Gotottack]

Well, before two days ago, mining could have been super profitable for anyone. When the prices hit $1,100 a bitcoin that would totally be a profitable price to cash out any bitcoins you would be mining. But going back to $800, maybe you should think twice before you do. Maybe trading is quite better to invest in. Just buy bitcoins itself, at its prices right now, it's a steal.

[pumawolf]

keep in mind ,since u have a good size farm, when ur done with the gear, u could and are prob going to sell ur gear to someone with lower eletro rates than u. that will boost profits just a bit, u can use that to upgrade  and rinse and repeat. thats how the game is played now, hand me down gear.

[Exoskeleton]

Well, before two days ago, mining could have been super profitable for anyone. When the prices hit $1,100 a bitcoin that would totally be a profitable price to cash out any bitcoins you would be mining. But going back to $800, maybe you should think twice before you do. Maybe trading is quite better to invest in. Just buy bitcoins itself, at its prices right now, it's a steal.

When prices were over $1,100 the math said yes. Now that prices are at $900 you would think its no. But I'd say that in the future it will be worth it. It always been an ebb and flow based on supply and demand.

[Morbid]

imho its easier to just get btc & get return immediately as its an uptrend now. mining is only profitable to those that stand close to manufacturers of asics, plus have cheap labour & cheap elecy. basically being in the western hemisphere you can barely compete. so not worth it.. stay out of alts until you are fully aware what is their purpose in crypto world. good luck friend.