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Author Topic: Bitcoin Mining Profitability Backtester + Predictions  (Read 473 times)
EssentialDataScience
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September 14, 2017, 09:33:52 PM
 #1

Hey guys,

I just added a simple Bitcoin Mining Profitability Backtester to Github: https://github.com/VermeirJellen/Bitcoin_Mining_Backtest_Predictions. Future predictions based on price and hashrate regressions will be added later on.

The bottom two charts of the readme file represent the "immediate selling" scenario versus the "buy and hold your mined coins" scenario (compared to immediately buying the coins at market price without doing any mining). I'm wondering what most people here do? If you hold your mined coins (which I would personally do, because I believe in Bitcoin long term) it takes a very long time -more than a year it seems- to end up with more coins in comparison to buying coins immediately at market price. Hence, it seems to be almost not worth it, given the constant risk of commercial ASIC chip upgrades that make the equipment basically worthless at an unknown point during the time interval.

On the other hand, the "immediate sell" scenario seems a good way to generate fiat cash flow and to hedge against price fluctuations. The initial investment would have been recuperated after 8-10 months or so, but you would have earned way more by just holding your coins, given the price appreciation of BTC. Someone that believes in the long term BTC potential would not want to sell any coins, correct?

Happy to hear your thoughts on this. I'm basically a mining newbie and was considering a move to Iceland (Geothermal / hydro power) to do some altcoin mining on the side while contracting. I already assumed that Bitcoin mining was not very profitable. Still considering though..

I also think the price to hashrate graph is interesting. I checked the data long term and it stays stationary over time in any given "halvening" regime. Hence, It could be optimal to buy coins at market when the price is low while buying more mining equipment when the price is high. I would determine the state of Bitcoin price using simple trend regressions, as I did here: https://github.com/VermeirJellen/Cryptocurrency_Trend_Regression. So, back when the Bitcoin price was 5000$, we were definitely in "buy more equipment"-mode Smiley I should regenerate the graphs to see where we are right now, my guess would be that the price is still overvalued.

Best Regards.
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EssentialDataScience
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September 16, 2017, 03:45:01 PM
 #2

Hi again,

I just updated the project and added future mining profitability simulation functionality. In the added example, future profitability simulations are performed using bitcoin price, total hashrate and total network revenue predictions, as follows:

- Use exponential regression to predict the bitcoin price trend.
- Use exponential regression to predict the total network revenue trend.
- Use loess regression with degree 1 to predict the future hashrate trend.

Illustrations on the landing page illustrate the results quite clearly. I also added some more printouts related to the ROI, profitability etc. Check it out if you're interested: https://github.com/VermeirJellen/Bitcoin_Mining_Backtest_Predictions
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October 30, 2017, 08:03:48 PM
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Brilliant!
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