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Author Topic: Buying mining hardware will never pay off now.  (Read 4176 times)
Hook^
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June 18, 2011, 08:28:53 PM
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I have run some Excel spreadsheet simulations on ROI and want to warn people that buying hardware just to mine BitCoins won't pay off.

I just bought a dual 6970 system, but I bought it before I did the simulations.  I based my purchase on one of the bitcoin calculators.  The problem is that the network is growing at 4% per day in computing horsepower.  That means that your return is losing 4% per day because you essentialy have to compete with everyone else for a fixed rate of bitcoin production per day.  It isn't exactly like that on a day-to-day basis, because the difficulty doesn't adjust continuously.  But the difficulty function adjusts often enough to almost exactly approximate you having to compete directly against everyone else.

When you take the 4% growth into consideration, your break-even goes from 2 months to never.  In my case, I spent $1,000 to produce about 700 MH/S.  Everything else remaining the same, my total cumulative bitcoin production will amount to around $200 before it reaches the cost of electricity in about 60 days.  At that point I will just have to shut it off and sell the parts to my gamer friends for half off.

The only way mining makes sense is if you already have a gaming system and mine in your off times.  But you better do it while it is still worth more than the electricity.  As I said before, that breakeven point will be reached in about 64 days from now.

Some people might say that the exchange rate of bitcoins may go up to compensate.  That may or may not be true.  But if it is, it would make more economic sense to buy bitcoins now and take the gain, rather than buying hardware to generate them. 

I wish that you could paste images directly into the messages, because I have a chart that shows the return falling off a cliff right after purchasing your equipment.

Anyway, I want to warn people not to make the same mistake I made.  The only way to beat the system now is to come out with a custom ASIC for cheap enough per chip that you could dominate the entire network and grow your hardware fast enough to knock out any competitor before they could produce their own ASIC and make a profit.

The frustrating thing about this is that I first read about BitCoin around April of last year (tax season) when I was researching anonymous banking.  I was going to invest $1,000 just as a pure speculation.  I never got around to it though.  If I had followed through, I would have around $7 million now.
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EpiClock
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June 18, 2011, 08:48:16 PM
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Indeed. I'm extremely skeptical of dedicated mining hardware being profitable unless the price of Bitcoins starts trending up again in a major way.
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June 18, 2011, 09:06:05 PM
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I'm a total n00b on this but eh, is doing this purely for a profit not simply moving the issues with money from a real place to a virtual place?
If I would build a new pc right now, I would actually use it because it's a pc too, not purely to mine Bitcoins.

Or am I missing something here?
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June 18, 2011, 09:14:13 PM
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Indeed. I'm extremely skeptical of dedicated mining hardware being profitable unless the price of Bitcoins starts trending up again in a major way.
Even if bitcoins trend up.  It still makes more sense to invest in buying bitcoins themselves instead of hardware.  It wouldn't be the case if the network wasn't growing so fast.  But it is growing much faster than a rational market would support.

I assume this is mostly because the bitcoin calculators out there are so deceptive in the returns they promise.  Also, people may be joining that just have a game machine anyway, so what the hell?

Hook^
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June 18, 2011, 09:15:32 PM
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I'm a total n00b on this but eh, is doing this purely for a profit not simply moving the issues with money from a real place to a virtual place?
If I would build a new pc right now, I would actually use it because it's a pc too, not purely to mine Bitcoins.

Or am I missing something here?
If you are building the PC because you were going to use it for gaming anyway, then it isn't a loss. Buying a PC only for mining is a complete loss.
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June 18, 2011, 09:41:51 PM
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The problem however seems to be that an optimized mining machine isn't much good for anything else.

Any changes increase both cost and energy use, so it's a catch 22 situation.
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June 18, 2011, 09:45:37 PM
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I have run some Excel spreadsheet simulations on ROI and want to warn people that buying hardware just to mine BitCoins won't pay off.

I just bought a dual 6970 system, but I bought it before I did the simulations.  I based my purchase on one of the bitcoin calculators.  The problem is that the network is growing at 4% per day in computing horsepower.  That means that your return is losing 4% per day because you essentialy have to compete with everyone else for a fixed rate of bitcoin production per day.  It isn't exactly like that on a day-to-day basis, because the difficulty doesn't adjust continuously.  But the difficulty function adjusts often enough to almost exactly approximate you having to compete directly against everyone else.

When you take the 4% growth into consideration, your break-even goes from 2 months to never.  In my case, I spent $1,000 to produce about 700 MH/S.  Everything else remaining the same, my total cumulative bitcoin production will amount to around $200 before it reaches the cost of electricity in about 60 days.  At that point I will just have to shut it off and sell the parts to my gamer friends for half off.

The only way mining makes sense is if you already have a gaming system and mine in your off times.  But you better do it while it is still worth more than the electricity.  As I said before, that breakeven point will be reached in about 64 days from now.

Some people might say that the exchange rate of bitcoins may go up to compensate.  That may or may not be true.  But if it is, it would make more economic sense to buy bitcoins now and take the gain, rather than buying hardware to generate them. 

I wish that you could paste images directly into the messages, because I have a chart that shows the return falling off a cliff right after purchasing your equipment.

Anyway, I want to warn people not to make the same mistake I made.  The only way to beat the system now is to come out with a custom ASIC for cheap enough per chip that you could dominate the entire network and grow your hardware fast enough to knock out any competitor before they could produce their own ASIC and make a profit.

The frustrating thing about this is that I first read about BitCoin around April of last year (tax season) when I was researching anonymous banking.  I was going to invest $1,000 just as a pure speculation.  I never got around to it though.  If I had followed through, I would have around $7 million now.


Those are some low MH/s numbers...I spent $850 to get ~1200Mh/s. 
freeman725
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June 18, 2011, 10:03:33 PM
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Yeah I get ~450 Mh/s with 2 6850's.
indio007
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June 18, 2011, 10:05:36 PM
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Lifetime return on investment is very lucrative. I can't believe people are whining about a 5000% ROI year over year.
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June 18, 2011, 10:10:13 PM
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The frustrating thing about this is that I first read about BitCoin around April of last year (tax season) when I was researching anonymous banking.  I was going to invest $1,000 just as a pure speculation.  I never got around to it though.  If I had followed through, I would have around $7 million now.

Let me tell you about all the stocks I SHOULD have bought/sold, but didn't  Cry

Just got word that a US$100K investment in Natural Gas wells is a total loss - sigh.  Cry  Cry

If guns magically made you safe then US cities would be the safest in the world!

A firearm is NOT a "magic talisman" it is a TOOL just like a hammer!
Hook^
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June 18, 2011, 10:35:08 PM
 #11

I have run some Excel spreadsheet simulations on ROI and want to warn people that buying hardware just to mine BitCoins won't pay off.

I just bought a dual 6970 system, but I bought it before I did the simulations.  I based my purchase on one of the bitcoin calculators.  The problem is that the network is growing at 4% per day in computing horsepower.  That means that your return is losing 4% per day because you essentialy have to compete with everyone else for a fixed rate of bitcoin production per day.  It isn't exactly like that on a day-to-day basis, because the difficulty doesn't adjust continuously.  But the difficulty function adjusts often enough to almost exactly approximate you having to compete directly against everyone else.

When you take the 4% growth into consideration, your break-even goes from 2 months to never.  In my case, I spent $1,000 to produce about 700 MH/S.  Everything else remaining the same, my total cumulative bitcoin production will amount to around $200 before it reaches the cost of electricity in about 60 days.  At that point I will just have to shut it off and sell the parts to my gamer friends for half off.

The only way mining makes sense is if you already have a gaming system and mine in your off times.  But you better do it while it is still worth more than the electricity.  As I said before, that breakeven point will be reached in about 64 days from now.

Some people might say that the exchange rate of bitcoins may go up to compensate.  That may or may not be true.  But if it is, it would make more economic sense to buy bitcoins now and take the gain, rather than buying hardware to generate them. 

I wish that you could paste images directly into the messages, because I have a chart that shows the return falling off a cliff right after purchasing your equipment.

Anyway, I want to warn people not to make the same mistake I made.  The only way to beat the system now is to come out with a custom ASIC for cheap enough per chip that you could dominate the entire network and grow your hardware fast enough to knock out any competitor before they could produce their own ASIC and make a profit.

The frustrating thing about this is that I first read about BitCoin around April of last year (tax season) when I was researching anonymous banking.  I was going to invest $1,000 just as a pure speculation.  I never got around to it though.  If I had followed through, I would have around $7 million now.


Those are some low MH/s numbers...I spent $850 to get ~1200Mh/s. 
You probably got some older 5xxx series cards put in used PCs.  Mine was new equipment ($330 each for the cards, plus $300 for the cpu, memory, mobo, case, ps).
Swishercutter
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June 18, 2011, 10:38:38 PM
 #12

I have run some Excel spreadsheet simulations on ROI and want to warn people that buying hardware just to mine BitCoins won't pay off.

I just bought a dual 6970 system, but I bought it before I did the simulations.  I based my purchase on one of the bitcoin calculators.  The problem is that the network is growing at 4% per day in computing horsepower.  That means that your return is losing 4% per day because you essentialy have to compete with everyone else for a fixed rate of bitcoin production per day.  It isn't exactly like that on a day-to-day basis, because the difficulty doesn't adjust continuously.  But the difficulty function adjusts often enough to almost exactly approximate you having to compete directly against everyone else.

When you take the 4% growth into consideration, your break-even goes from 2 months to never.  In my case, I spent $1,000 to produce about 700 MH/S.  Everything else remaining the same, my total cumulative bitcoin production will amount to around $200 before it reaches the cost of electricity in about 60 days.  At that point I will just have to shut it off and sell the parts to my gamer friends for half off.

The only way mining makes sense is if you already have a gaming system and mine in your off times.  But you better do it while it is still worth more than the electricity.  As I said before, that breakeven point will be reached in about 64 days from now.

Some people might say that the exchange rate of bitcoins may go up to compensate.  That may or may not be true.  But if it is, it would make more economic sense to buy bitcoins now and take the gain, rather than buying hardware to generate them. 

I wish that you could paste images directly into the messages, because I have a chart that shows the return falling off a cliff right after purchasing your equipment.

Anyway, I want to warn people not to make the same mistake I made.  The only way to beat the system now is to come out with a custom ASIC for cheap enough per chip that you could dominate the entire network and grow your hardware fast enough to knock out any competitor before they could produce their own ASIC and make a profit.

The frustrating thing about this is that I first read about BitCoin around April of last year (tax season) when I was researching anonymous banking.  I was going to invest $1,000 just as a pure speculation.  I never got around to it though.  If I had followed through, I would have around $7 million now.


Those are some low MH/s numbers...I spent $850 to get ~1200Mh/s. 
You probably got some older 5xxx series cards put in used PCs.  Mine was new equipment ($330 each for the cards, plus $300 for the cpu, memory, mobo, case, ps).


Um...no...new MSI mobos, 955 phenoms, gskill 4gb ram, psu's...no cases...hdd's were the only thing I had...5830's were where I saved the money admittedly.  If you don't think its profitable don't do it...I do not get why people are trying so hard to steer people away...seems like a lot of FUD...same stuff has been going on for months as far as I can tell.

I did all my calculations based on $9/btc and a much higher difficulty...sorry bout your bad luck on pricing.
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June 18, 2011, 10:46:21 PM
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Um...no...new MSI mobos, 955 phenoms, gskill 4gb ram, psu's...no cases...hdd's were the only thing I had...5830's were where I saved the money admittedly.  If you don't think its profitable don't do it...I do not get why people are trying so hard to steer people away...seems like a lot of FUD...same stuff has been going on for months as far as I can tell.

I did all my calculations based on $9/btc and a much higher difficulty...sorry bout your bad luck on pricing.

No FUD, just math.  Did you consider the 4% per day decrease in earnings?  Because that is how fast the network is growing.  You will definately do better than me on ROI, but still won't break even.  To break even, you have to be able to buy horsepower at $0.25/MH/S.  So for your 1.2 GH/S, it would have to cost less than $300.
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June 18, 2011, 10:47:42 PM
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Um...no...new MSI mobos, 955 phenoms, gskill 4gb ram, psu's...no cases...hdd's were the only thing I had...5830's were where I saved the money admittedly.  If you don't think its profitable don't do it...I do not get why people are trying so hard to steer people away...seems like a lot of FUD...same stuff has been going on for months as far as I can tell.

I did all my calculations based on $9/btc and a much higher difficulty...sorry bout your bad luck on pricing.

No FUD, just math.  Did you consider the 4% per day decrease in earnings?  Because that is how fast the network is growing.  You will definately do better than me on ROI, but still won't break even.  To break even, you have to be able to buy horsepower at $0.25/MH/S.  So for your 1.2 GH/S, it would have to cost less than $300.

Just to emphasize, the compounding effect of that 4% per day over a month is ENORMOUS.
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June 18, 2011, 10:53:38 PM
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Um...no...new MSI mobos, 955 phenoms, gskill 4gb ram, psu's...no cases...hdd's were the only thing I had...5830's were where I saved the money admittedly.  If you don't think its profitable don't do it...I do not get why people are trying so hard to steer people away...seems like a lot of FUD...same stuff has been going on for months as far as I can tell.

I did all my calculations based on $9/btc and a much higher difficulty...sorry bout your bad luck on pricing.

No FUD, just math.  Did you consider the 4% per day decrease in earnings?  Because that is how fast the network is growing.  You will definately do better than me on ROI, but still won't break even.  To break even, you have to be able to buy horsepower at $0.25/MH/S.  So for your 1.2 GH/S, it would have to cost less than $300.

K, I have no problem with new miners...good luck to you.  I am doing fine thanks for your concern.  I am running on par with what the bitcoin mining calculator says so...whatever.  

Also...are you taking into account increase/decrease in btc value...I don't care really...I will find a way to profit from my computers even if BTC went to $0...haven't tried yet but I bet Adobe CS5 runs great on a 4 gpu rig.  

I will start to worry when ASIC's are the norm.  
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June 18, 2011, 10:53:47 PM
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Ouch,

i just spent about $500 on hardware, even i've "free electricity", it might take a while to breakeven, now on profits, seems like investing directly on buying coins is the way to go

Shame, i was about to spend more and get 1gh/s.
Hook^
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June 18, 2011, 10:57:14 PM
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Um...no...new MSI mobos, 955 phenoms, gskill 4gb ram, psu's...no cases...hdd's were the only thing I had...5830's were where I saved the money admittedly.  If you don't think its profitable don't do it...I do not get why people are trying so hard to steer people away...seems like a lot of FUD...same stuff has been going on for months as far as I can tell.

I did all my calculations based on $9/btc and a much higher difficulty...sorry bout your bad luck on pricing.

No FUD, just math.  Did you consider the 4% per day decrease in earnings?  Because that is how fast the network is growing.  You will definately do better than me on ROI, but still won't break even.  To break even, you have to be able to buy horsepower at $0.25/MH/S.  So for your 1.2 GH/S, it would have to cost less than $300.

K, I have no problem with new miners...good luck to you.  I am doing fine thanks for your concern.  I am running on par with what the bitcoin mining calculator says so...whatever.  

Also...are you taking into account increase/decrease in btc value...I don't care really...I will find a way to profit from my computers even if BTC went to $0...haven't tried yet but I bet Adobe CS5 runs great on a 4 gpu rig.  

I will start to worry when ASIC's are the norm.  
Actually, in that case, it could still be worth it because you have some other purpose besides mining.  I actually stated that in a previous post, that if you have some other use like gaming, it could still be worth it.  So in your case it probably still is.  In mine, I will need to sell my stuff because I'm not a gamer, Adobe user, etc.

ASICs will be coming soon.  There is too much money to be made to not have it happen.
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June 18, 2011, 11:00:10 PM
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Um...no...new MSI mobos, 955 phenoms, gskill 4gb ram, psu's...no cases...hdd's were the only thing I had...5830's were where I saved the money admittedly.  If you don't think its profitable don't do it...I do not get why people are trying so hard to steer people away...seems like a lot of FUD...same stuff has been going on for months as far as I can tell.

I did all my calculations based on $9/btc and a much higher difficulty...sorry bout your bad luck on pricing.

No FUD, just math.  Did you consider the 4% per day decrease in earnings?  Because that is how fast the network is growing.  You will definately do better than me on ROI, but still won't break even.  To break even, you have to be able to buy horsepower at $0.25/MH/S.  So for your 1.2 GH/S, it would have to cost less than $300.

K, I have no problem with new miners...good luck to you.  I am doing fine thanks for your concern.  I am running on par with what the bitcoin mining calculator says so...whatever.  

Also...are you taking into account increase/decrease in btc value...I don't care really...I will find a way to profit from my computers even if BTC went to $0...haven't tried yet but I bet Adobe CS5 runs great on a 4 gpu rig.  

I will start to worry when ASIC's are the norm.  
Actually, in that case, it could still be worth it because you have some other purpose besides mining.  I actually stated that in a previous post, that if you have some other use like gaming, it could still be worth it.  So in your case it probably still is.  In mine, I will need to sell my stuff because I'm not a gamer, Adobe user, etc.

ASICs will be coming soon.  There is too much money to be made to not have it happen.

In my case even selling my CPU's as used gaming rigs I will still turn a profit.  I guarantee I can sell them for more than I paid, even with full disclosure on what they were used for...plus I live in a smaller population area and there is still several craigslist ads trying to buy any and all ATI cards they can get their hands on.
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June 18, 2011, 11:00:58 PM
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Do you not find value in effectively having your own BitCoin exchange in your basement?  You give the power utility bucks, you get out BitCoins.  The account is already set up.  No Big Brother watching your interaction with Mt.Gox. 

Seems like there might be something worthwhile about that.

Hook^
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June 18, 2011, 11:04:01 PM
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Do you not find value in effectively having your own BitCoin exchange in your basement?  You give the power utility bucks, you get out BitCoins.  The account is already set up.  No Big Brother watching your interaction with Mt.Gox. 

Seems like there might be something worthwhile about that.


That is true.  But Mt. Gox accounts can be traded out of quickly if that concerns you.  If you want complete anonynimity, then doing your own mining would be the best.
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