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Author Topic: DO NOT BUY GPUs to mine! You will not get your money back!  (Read 20722 times)
FloridaBear
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May 13, 2013, 09:05:00 PM
 #1

Here are my assumptions to arrive at this conclusion:

  • Alt coins are basically "dead," or at best, give a quick bonus for mining early, then quickly go down to 100% or less of BTC.
  • Difficulty will continue to increase by at least 10% every two weeks for at least 7 months. We've been averaging 17% every two weeks, and we have not even seen the biggest ASIC surges yet.
  • Bitcoin price may rise, but it may not. Assuming a miner cashes BTC immediately, later rises in BTC mean very little additional income. If you expect BTC to rise much later, just buy BTC now.
  • Assume 2.5 "real-world" MH/J efficiency--that is about the best I've seen.
  • Assume a base of $116/BTC
  • Assume $0.11/KWh.

If these assumptions are correct (and I think they're essentially best-case), you can expect to make 3.4 BTC per GH of hashing power over the economic life of the card (which is about 237 days at the moment). To my knowledge, this means that there are ZERO economic GPUs out there right now.

Let's take a 7970 at 200 watts and 650 MH/s (which is a generous 3+ MH/J):
Total BTC earned after electricity: 2.53 ($293.77)
Time to 0 BTC/day: 280 days

In short, DO NOT buy a card just to mine.

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May 13, 2013, 09:10:20 PM
 #2

You are not doing it right if you aren't making good on your investment with mining.

In my experience if you pay attention and assess which is the most profitable coin to be mining on a daily or weekly basis you will adapt to the shifts in popularity and keep yourself in the green. If you need any tips, feel free to PM me with your issues.

My 2 cents,

Steelburn@Coincepts
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May 13, 2013, 09:14:11 PM
 #3

This is probably true at the same time, people without electricity costs it's still somewhat worth while even if you can resell the card or you genuinely want a new card, depends if you buy first hand kit for a GPU mining rig then your not to smart as second hand gives you a lot better chances.

ASIC is going to be weird as sure they're the next step but once they become obsolete it's going to be pretty useless, at least graphics and FPGA had some use afterwards and therefore resell value.
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May 13, 2013, 09:21:59 PM
 #4

Wait. I'm confused. You are saying you will earn $293 on the card but you won't get your money back? When you are done with the GPU resell it. I imagine in a year 7950s will fetch $150 so your $275 investment returned $443 when shutting down the operation.

Unlike ASICs, there is an aftermarket for GPUs.
FloridaBear
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May 13, 2013, 09:25:22 PM
 #5

You are not doing it right if you aren't making good on your investment with mining.

In my experience if you pay attention and assess which is the most profitable coin to be mining on a daily or weekly basis you will adapt to the shifts in popularity and keep yourself in the green. If you need any tips, feel free to PM me with your issues.

My 2 cents,

Steelburn@Coincepts

You're basically arguing with my first assumption. While I agree that alt coins can be profitable early on (and I have made some quick bucks on FTC and CNC), I believe this to be a fad, with less interest in each new alt coin. Also, as more and more miners get clued in on this strategy, the difficulty rises so quickly that alt coins quickly decrease to 100% of BTC profitability. As I said, there are quick bursts of profit to be made with new alt coins, but things quickly revert to the mean. Even LTC has effectively been less profitable than BTC for awhile now, given additional power consumption and NMC bonus.

Currently, there is no alt coin consistently more profitable than BTC.
ewitte
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May 13, 2013, 09:25:43 PM
 #6

I'm still able to pay for 2x cards a month but 6 of 8 of the cards will be off free electricity.  Then when the cards are no use most likely still worth 60% of the cost on ebay.  I don't see the issue.  If your plan selling the cards back at the end your going to make the $$ faster.  Also usually the price of BTC goes up with difficulty. 

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FloridaBear
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May 13, 2013, 09:35:43 PM
 #7

Wait. I'm confused. You are saying you will earn $293 on the card but you won't get your money back? When you are done with the GPU resell it. I imagine in a year 7950s will fetch $150 so your $275 investment returned $443 when shutting down the operation.

Unlike ASICs, there is an aftermarket for GPUs.

Just don't tell the buyer you mined with it for a year ;-)

Also, as every GPU out there will be uneconomical in a year, there will be a glut of used cards, and I think $150 is optimistic, given 8xxx cards coming out, etc. Also, my example was for a 7970, not 7950, which is a bit less powerful (e.g 500 MH @ 200 W).

But point taken re: resale value. However, if we even see 15% hash rate growth vs. 10% in my example, that 500/200 card returns a mere $137 over its life, barely over 1 BTC. With resale of $150, you're basically at break-even. You have to be pretty certain that hash rate growth stays under 15% at this point.

My point is that it's a very bad time to be thinking about a GPU farm, and even small underestimations in hash rate increases result in disastrous ROI.
FloridaBear
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May 13, 2013, 09:42:33 PM
 #8

I'm still able to pay for 2x cards a month but 6 of 8 of the cards will be off free electricity.  Then when the cards are no use most likely still worth 60% of the cost on ebay.  I don't see the issue.  If your plan selling the cards back at the end your going to make the $$ faster. 

Obviously free electricity changes the economics entirely, and is:

1. in violation of my assumptions (let's try to stay within them or argue that they are unrealistic)
2. extremely unusual--most of us pay for electricity.

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Also usually the price of BTC goes up with difficulty. 

I totally disagree with this. Difficulty (up until now) has changed as a result of price changes. Miners respond to incentive.

I say "up until now" because ASIC miners are basically profitable at any price, and so there will be very little relation between price and difficulty for some time. Price will fluctuate, difficulty will rise.
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May 13, 2013, 10:10:20 PM
 #9

Wait. I'm confused. You are saying you will earn $293 on the card but you won't get your money back? When you are done with the GPU resell it. I imagine in a year 7950s will fetch $150 so your $275 investment returned $443 when shutting down the operation.

Unlike ASICs, there is an aftermarket for GPUs.

I am not 100% convinced there won't be a market for ASICs after the difficulty makes mining BTC unprofitable.  I saw a guy on reddit that said he is going to try and use the Erupter USBs to develop an ASIC for Litecoin.  If it can be done on the USB version, I am sure someone will do so for the larger ASICs as well.  Alt coins are a big question mark, but if there is still interest down the line, there will be a resale potential in that market.  Litecoins were supposed to be GPU-proof.  They weren't.  So they are most certainly not ASIC-proof either.
FloridaBear
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May 13, 2013, 10:14:18 PM
 #10

Wait. I'm confused. You are saying you will earn $293 on the card but you won't get your money back? When you are done with the GPU resell it. I imagine in a year 7950s will fetch $150 so your $275 investment returned $443 when shutting down the operation.

Unlike ASICs, there is an aftermarket for GPUs.

I am not 100% convinced there won't be a market for ASICs after the difficulty makes mining BTC unprofitable.  I saw a guy on reddit that said he is going to try and use the Erupter USBs to develop an ASIC for Litecoin.  If it can be done on the USB version, I am sure someone will do so for the larger ASICs as well.  Alt coins are a big question mark, but if there is still interest down the line, there will be a resale potential in that market.  Litecoins were supposed to be GPU-proof.  They weren't.  So they are most certainly not ASIC-proof either.

I am not sure what the ASIC market would be--current ASICs are SHA-256 and are good for absolutely nothing else other than SHA-256 mining. It's in the hardware.

There is nothing preventing scrypt ASICs of course, except the large initial investment, but again, they would be useless for anything other than scrypt mining.
Gomeler
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May 13, 2013, 10:31:32 PM
 #11

Wait. I'm confused. You are saying you will earn $293 on the card but you won't get your money back? When you are done with the GPU resell it. I imagine in a year 7950s will fetch $150 so your $275 investment returned $443 when shutting down the operation.

Unlike ASICs, there is an aftermarket for GPUs.

I am not 100% convinced there won't be a market for ASICs after the difficulty makes mining BTC unprofitable.  I saw a guy on reddit that said he is going to try and use the Erupter USBs to develop an ASIC for Litecoin.  If it can be done on the USB version, I am sure someone will do so for the larger ASICs as well.  Alt coins are a big question mark, but if there is still interest down the line, there will be a resale potential in that market.  Litecoins were supposed to be GPU-proof.  They weren't.  So they are most certainly not ASIC-proof either.

I have not read much about Scrypt but my understanding is that the algorithm used is so memory intensive that there may not be the performance gain that we saw going from GPU/FPGA to ASIC with BTC. It sounds like you'd basically be building a compute core with access to massive amounts of bandwidth, also known as a GPGPU.
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May 13, 2013, 10:51:30 PM
 #12

Wait. I'm confused. You are saying you will earn $293 on the card but you won't get your money back? When you are done with the GPU resell it. I imagine in a year 7950s will fetch $150 so your $275 investment returned $443 when shutting down the operation.

Unlike ASICs, there is an aftermarket for GPUs.

Just don't tell the buyer you mined with it for a year ;-)

Also, as every GPU out there will be uneconomical in a year, there will be a glut of used cards, and I think $150 is optimistic, given 8xxx cards coming out, etc. Also, my example was for a 7970, not 7950, which is a bit less powerful (e.g 500 MH @ 200 W).

But point taken re: resale value. However, if we even see 15% hash rate growth vs. 10% in my example, that 500/200 card returns a mere $137 over its life, barely over 1 BTC. With resale of $150, you're basically at break-even. You have to be pretty certain that hash rate growth stays under 15% at this point.

My point is that it's a very bad time to be thinking about a GPU farm, and even small underestimations in hash rate increases result in disastrous ROI.

I do agree that for BTC mining that now is not the time to buy a GPU. Because there are more efficient means to mining BTC, I think we'll see the difficulty increase but the price won't fluctuate much due to miner pressure. Or rather, I suppose I should say that more hashing capacity will come online as the price stays stable.

However, I do believe there is room for more than one crypto-currency and I believe LTC has sufficient presence to survive and thrive. I do think though that LTC is undervalued slightly right now and we'll see LTC profitability compared to BTC at 'equal'(1000:1 hash ratio) hash rates increase slightly.
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May 13, 2013, 11:09:34 PM
 #13

If I had a dollar for every time I have been told this same thing...

My USB Erupter GROUP BUY https://bitcointalk.org/index.php?topic=252180.0

Hungary (south) based trader - accepting/sending bank transfers, also willing to meet in person
mgio
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May 13, 2013, 11:25:54 PM
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I 100% agree with the original poster.

But people seem to want to buy GPUs anyways, so good luck.


I think there is kind of a gold rush mentality presently.

Like the people who are spending $30k+ on pre-order Avalon ASICs. Or block eruptor USBs.

They will never make their money back. Yet they still buy.
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May 13, 2013, 11:28:30 PM
 #15

I 100% agree with the original poster.

But people seem to want to buy GPUs anyways, so good luck.


I think there is kind of a gold rush mentality presently.

Like the people who are spending $30k+ on pre-order Avalon ASICs. Or block eruptor USBs.

They will never make their money back. Yet they still buy.

Heard it all b4.... lol

OBJECT NOT FOUND
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May 13, 2013, 11:49:15 PM
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I 100% agree with the original poster.

But people seem to want to buy GPUs anyways, so good luck.


I think there is kind of a gold rush mentality presently.

Like the people who are spending $30k+ on pre-order Avalon ASICs. Or block eruptor USBs.

They will never make their money back. Yet they still buy.

Heard it all b4.... lol

Hey, it's your money. We'll see in a month or so who is right. Just don't say we didn't warn you.
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May 14, 2013, 12:16:41 AM
 #17

Arguing that GPU mining is dead is also arguing that scrypt mining is dead since GPUs are the best available option for mining scrypt coins, and I happen to disagree with that sentiment. LTC happens to be doing very well at the moment and is valued at over $3 per coin, so we'll see who's right if and when LTC hits Mt Gox...

Various folks have been making similar statements about GPU mining going all the way back to 2011, and while they may eventually be correct if you wait long enough, timing is everything and everyone up until this point has had the timing wrong. I believe the first few months of 2013 were some of the most profitable ever for GPU miners, and my electricity costs are pretty low (~$0.065/KWh).

ATI will also release their 8000 series of video cards later this year which should be more powerful and use less power, which will change the GPU mining equation yet again.

ASIC supply is currently very limited, and they are going for exorbitant prices (~5BTC per GHs). I refuse to pay that price and will happily stick to GPU mining until the price of ASICs comes down to a reasonable level.

If the price of LTC and/or BTC goes up, I may even purchase more GPUs if the ROI looks reasonable at that time. Right now, the ROI for GPUs honestly isn't that much worse than the estimated ROI of an ASIC device selling that ~5BTC per GHs if one has low electricity costs! I can build a 2.5 GHs GPU mining rig for ~$1600, and if BTC or LTC is worth zero tomorrow because of a cryptocoin hack, I can always sell the GPUs on Ebay.

I believe some miners purposely give out bad advice on forums like this one to discourage new folks from mining because it will chip away at their own personal profits. How many GPUs do you own, FloridaBear?  Wink
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May 14, 2013, 01:03:17 AM
 #18

I 100% agree with the original poster.

But people seem to want to buy GPUs anyways, so good luck.


I think there is kind of a gold rush mentality presently.

Like the people who are spending $30k+ on pre-order Avalon ASICs. Or block eruptor USBs.

They will never make their money back. Yet they still buy.

Even if you add 400TH/s to the network right now and keep the price like right now, these people WILL make their money back. Unless you decide to enter a huge number of 500GH/s miners, they will.

Do the damn calculations, guys.

Put 50 million, which is adding 4 times the whole network strength, put the timeframe in and see what happens.
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May 14, 2013, 01:23:57 AM
 #19

last year, bitcoins were at around $5-$8 most of the summer.  even with current difficulties, the profit margin is higher right now than it was then.  so scrypt does alright, as the bots do their thing.   did litecoin drop in value about 10-15% since last difficulty change a day or so ago?   nobody wants litecoin, except to exchange it for bitcoins or some other currency

anyway, i said buying a GPU farm was dumb in early feb, when those first avalon asics shipped.. i was wrong.   if you bought w/ any clue as to what you were doing, you'll have a very good profit.  esp if you find the right time to sell those 5830's, 5870's, and 5970's that were selling used back then for about 50% of the value they do now

i also said it was foolish to pre-order this BFL crap last year, when bitcoins were at $7 or $8 and that you'd be better off just buying the currency itself (you wouldn't be pre-ordering if you didn't think the price was going up)


Dacentec Dedicated Servers (Lenoir, NC, USA) from $25/mo & Time4VPS Storage VPS' (Vilnius, Lithuania) from €18/qtr & Hetzner's serverbidding, from ~€20/mo -- had bitcoin nodes & p2pool (dacentec, hetzner) for several years on these.  Only two are affiliate links too, kek! -------  Feel free to join my G2A Goldmine Pyramid Scheme Team, or possibly even buy a Steam game from there.  Maybe.
FloridaBear
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May 14, 2013, 02:56:13 AM
 #20

Arguing that GPU mining is dead is also arguing that scrypt mining is dead since GPUs are the best available option for mining scrypt coins, and I happen to disagree with that sentiment. LTC happens to be doing very well at the moment and is valued at over $3 per coin, so we'll see who's right if and when LTC hits Mt Gox...

Yes, but mining LTC vs. mining BTC is currently a wash. There is no advantage to LTC mining. I believe it will stay that way--as soon as LTC becomes attractive, GPUs get moved over from BTC mining, and the advantage disappears. This will happen until ALL GPUs are mining LTC...at which point there may be some time where LTC has an advantage, as the hash rate will likely stop increasing, or greatly slow down. This is months down the road, and does not violate my premise that one should not buy NOW to mine. There are already scrypt FPGA designs in the works which may change this equation (for the worse) at some point as well--it's too soon to tell.

In addition, the LTC/BTC price has been quite stable and I don't see much reason for that to change (however I agree that Gox may give it a short boost).

Quote
Various folks have been making similar statements about GPU mining going all the way back to 2011, and while they may eventually be correct if you wait long enough, timing is everything and everyone up until this point has had the timing wrong. I believe the first few months of 2013 were some of the most profitable ever for GPU miners, and my electricity costs are pretty low (~$0.065/KWh).

All true. However, that doesn't mean I'm not right this time ;-)

Quote
ATI will also release their 8000 series of video cards later this year which should be more powerful and use less power, which will change the GPU mining equation yet again.

Right. But that does not conflict with my premise that one should not buy NOW.

Quote
ASIC supply is currently very limited, and they are going for exorbitant prices (~5BTC per GHs). I refuse to pay that price and will happily stick to GPU mining until the price of ASICs comes down to a reasonable level.

Of course, if you got 'em, smoke 'em...and I agree that ASIC pricing (especially ASICMINER) is exorbitant.

Quote
If the price of LTC and/or BTC goes up, I may even purchase more GPUs if the ROI looks reasonable at that time. Right now, the ROI for GPUs honestly isn't that much worse than the estimated ROI of an ASIC device selling that ~5BTC per GHs if one has low electricity costs! I can build a 2.5 GHs GPU mining rig for ~$1600, and if BTC or LTC is worth zero tomorrow because of a cryptocoin hack, I can always sell the GPUs on Ebay.

I believe some miners purposely give out bad advice on forums like this one to discourage new folks from mining because it will chip away at their own personal profits. How many GPUs do you own, FloridaBear?  Wink

Like a car, GPUs lose value the minute you crack the box open--at this point, breaking even is questionable over any time frame. I'm just trying to sound the alarm that GPU mining is essentially over. I don't believe this is bad advice--after looking at the recent rate of increase of hashrate, I'm being conservative. And a few more GPUs doesn't do much to the network has rate when ASICMINER is measuring its increases in TH and overall network %.

I have exactly one GPU mining (a 7970). I have made back nearly 100% of the cost over the last 6 weeks or so. Going forward, I will only see another 2.5 BTC or so out of it ever.
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