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Author Topic: Not worth mining any longer for anyone not already in. Am I wrong?  (Read 4133 times)
D_Thomas
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July 25, 2013, 09:33:28 PM
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I'm pretty green to Bitcoins and mining but I think we had a window of opportunity that is now closed for mining for profit. Or better said, mining for profit much over the break even cost of the hardware.

For example, I don't believe there will ever be a day you will be able to buy from BFL (or any other vendor) a machine such as the Jalapeno for $249, that will generate $400 in BTC in a month. That's a 61% rate of return on your investment in 1 month! When banks at paying 1% on a CD, that makes zero sense. It would be same as Amazon selling $20 bills for $10 with free shipping. Basic supply and demand principle would kick in and drive up the price of the hardware to the point where you would have to pay an amount that would result in you only being able to make something close to a normal rate of return on your money. You are going to have a shortage, as in more people ordering than the company can ever supply, and a few lucky people reselling the products at a price so high that your rate of return will much lower and closer to what other traditional investments pay.

So none of this is making any sense at all to me. It makes zero sense that someone like BFL would sell any of their products at all. Anyone with capacity to build powerful miners should be mining with them, not selling them. Something fishy is going on.

I basically turned $100 into $3,000 over 10 months mining but it was pure luck. My used GPU that cost $100 mined 8 coins. Ordered a Jalapeno last year that cost me $249. It arrived and I sold it for over $2K. Now I can't find anything in stock that can be purchased that has even a remote chance to pay itself off, much less make a profit. I'd like to mine again but everything I explore seems like a loser to buy now.

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July 25, 2013, 09:56:29 PM
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What are your thoughts on KnC?

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July 26, 2013, 01:47:49 AM
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It makes zero sense that someone like BFL would sell any of their products at all. Anyone with capacity to build powerful miners should be mining with them, not selling them. Something fishy is going on.

If a company made ASIC miners and mined a large number of coins continuously it would devalue Bitcoins and only produce a profit for a short time.

If a company, or 3 companies so far, make ASIC miners and sell them to miners then many individuals, whether truly individual people or groups pooling their investments, then the ASIC makers make money from continual sales, miners make BTC and the eco system continues.

You could have kept your Jalapeno and made more than $2K from it.  So it seems like your complaining about your own bad decision?  Not that you haven't done well with your initial investment.  Now your in a spot where your basically done, unless you want to invest allot more money.

Don't know what to recommend for you?  Maybe buy and sell Bitcoins?

Good Luck,
Sam

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D_Thomas
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July 26, 2013, 04:03:41 AM
 #4

Please elaborate on how selling my Jalapeno was a bad decision and how I could make more than $2K in mining (assuming BTC price remains around $100 / BTC)? I hope I got this right but at the current difficulty and projected difficulty over the next 12 months my 7Gh/s Jalapeno would have mined  approximately 10 BTC. I stopped the calculation as of May 2014 because after that date my Jalapeno would be obsolete using more electricity cost that the value of coins mined.

If my math skills are right, 22 BTC I can buy now with the funds from the sale of my Jalapeno is greater than 10 BTC I could mine over the entire lifespan of the Jalapeno.

Even if I grossly miscalculated the payout and increase in difficulty, and if BFL is really going to be caught up with orders in 90 days, I could order 5 Jalapenos now for $1,000 (with 25% off coupon) and still have over $1K in the bank left over. Then I could go on my merry way mining with 5 Jalapenos 90 days from now. I really think it has to be a pipe dream that I can buy 5 Jalapenos now and 90 days from now be profitably mining with them.

Comments and suggestions welcomed. Like I said, I'm pretty green to all of this so I may have really screwed up the math. But when something sounds too good to be true, it usually is.


................   Jul-13   Augu   Sept   Octo    Nove    Dece   Janu   Febru   March    April    May   
Difficulty    3.12   4.34   6.76   10.37   16.15   24.80   38.62   61.00   90.99   139.68   214.41   
Coins/mo   3.38   2.43   1.56   1.020   0.650   0.430   0.270   0.170   0.120   0.0800   0.0500   

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July 26, 2013, 09:07:36 AM
 #5

No, I think you're entirely right about mining not really being profitable anymore generally, the idea of doing something for money is that you should be able to make a decent living off it or at least earn some extra spending money, in this case because the cost of buying the ASIC's is so high that to me it doesn't seem worth it at all to even bother, not unless you want to donate hashing power to the Bitcoin network without frying your graphics card anyway.

Pretty soon I think the other miners are going to wake up and look at the mathematics and realise if they try and take it seriously they're still only barely going to break even.
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July 26, 2013, 10:22:19 AM
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Please elaborate on how selling my Jalapeno was a bad decision and how I could make more than $2K in mining (assuming BTC price remains around $100 / BTC)? I hope I got this right but at the current difficulty and projected difficulty over the next 12 months my 7Gh/s Jalapeno would have mined  approximately 10 BTC. I stopped the calculation as of May 2014 because after that date my Jalapeno would be obsolete using more electricity cost that the value of coins mined.

I'm not saying selling your machine was a bad idea.  And obviously you've done well investment wise.

And your math may very well be correct.  I'm just saying that the math isn't the whole story about bitcoin and mining.  There are people involved so there are always variables that can't be foreseen.

When the ASIC race started the high point in BTC price had been 32 USD then it had dropped to 5 and then back up to the 15 range.  Then when ASIC's started showing up the price jumped up to what, 260 USD or so?

So the math is very fluid and will be until the ASIC vendors achieve some stability in their production rates.  Once that stability is achieved I believe the price increase at a somewhat linear rate.  But heck who knows?

Sorry for my rambling, but there allot of unknowns out there.
Later,
Sam

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D_Thomas
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July 26, 2013, 02:42:51 PM
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From an economic perspective, even if we achieve stability in the type and capacity of the mining hardware coming online, we still would not be able to see any profits significantly greater than other investment vehicles. With the increased media exposure, and more availability of hardware, the hardware will be priced to a level that one can only make a "reasonable" rate of return for the risk involved. That is more where I am coming from. The easier it is for people to buy hardware and mine BTC the closer the rate of return will be to other means of making money which means it will be low.

I don't think the jump to $260 per BTC had much to do with ASIC. At that time the Cyprus banking crisis (aka government confiscation of people's money from their bank accounts) lead to a panic and distrust of government controlled currencies. There was a corresponding increase interest and demand for BTC and thus the price of BTC went up. When that panic subsided the demand for BTC went back down to more "normal" levels so the price fell.

I have done some "day trading" in BTC as your prior post recommended. I may do more now that my mining play money fund is larger. I ordered one of those UBS miners for $100 just so I can still be in the game. But it will mine peanuts and I calculated I'll only recover $50 over a 1 year period. The $50 I am giving away is the cost for me to stay in the game and have something to keep me motivated to stay up to date with mining.

What I find it very odd how people are spending about twice what they can recover with the  hardware they are buying. I did it consciously knowing when I ordered the little USB miner for the fun of it. That was a small amount for entertainment and educational purposes. But I see people spending thousands of dollars on hardware on eBay and such where they will only recover 50-75% of their investment. Perhaps people are only looking at the current payout and not factoring in the exponential growth in difficulty when they bid up the price of hardware.

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July 26, 2013, 02:52:16 PM
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Only a sucker would buy an ASIC in today's market.

You're expected to pay an exorbitant price either based on suspect calculations of estimated RoI or demand from people who don't know better bidding it up.
All in spite of bearing the whole risk of being scammed or subject to incessant delays that kill your return.
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July 26, 2013, 03:33:52 PM
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D_Thomas Are you Greek?

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July 26, 2013, 09:38:25 PM
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I've researched until my eyes bled.

And, knowing the probability of breaking even At Best, have chosen to buy shares in a Jupiter that should deliver October/November.

Breaking even in a hobby/ Cause I Believe In is a great prospect. The off chance of profitability just sweetens the deal.

BTCitcointalk 1%ers manipulate the currency and deceive its user community.
D_Thomas
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July 27, 2013, 12:40:09 AM
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D_Thomas Are you Greek?


No, USA.


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July 27, 2013, 03:47:17 AM
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Think I jump in on this thread ... I am not looking to jump in to the hardware for mining.  I have been looking for a thread on the forum that discusses the ins and outs of perpetual/indefinite contracts.  I may have jumped a little to soon, but signed up for a 5GH/s contract for $500.  I figure this is play money and will see what happens.  The most I could lose is the 500 bucks, but who knows the company already has 4000GH/s mining hardware up and running.  Any help on finding an appropriate thread will be much appreciated.

Thanks Much,  Smiley
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July 27, 2013, 04:10:15 PM
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I think the OP is probably correct, but there are still a lot of people who want to get into mining. Maybe they are right...

Vorsprung durch Technik
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July 28, 2013, 02:11:44 PM
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OP is right. I am a prime example. I got into mining in May'13, having missed the big bubble up but got caught in the big blow down and the current stagnation. Spent $500 in GPU's and have made about 1 BTC thus far. Every 10 days or so, when the difficulty jumps, my mining "profit" takes a dump.

If I had just bought bitcoins with the $500, I'd have 3-4 BTC at least.

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July 29, 2013, 03:44:58 PM
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OP is right. I am a prime example. I got into mining in May'13, having missed the big bubble up but got caught in the big blow down and the current stagnation. Spent $500 in GPU's and have made about 1 BTC thus far. Every 10 days or so, when the difficulty jumps, my mining "profit" takes a dump.

If I had just bought bitcoins with the $500, I'd have 3-4 BTC at least.



But your GPU is still worth about 3 BTC.
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July 29, 2013, 08:32:44 PM
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I'm still pretty new, but also pretty sure at this point GPUs are way more profitable mining scrypt like LTC and then converting it to BTC.

BTCitcointalk 1%ers manipulate the currency and deceive its user community.
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July 29, 2013, 10:22:38 PM
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I'm pretty green to Bitcoins and mining but I think we had a window of opportunity that is now closed for mining for profit. Or better said, mining for profit much over the break even cost of the hardware.

For example, I don't believe there will ever be a day you will be able to buy from BFL (or any other vendor) a machine such as the Jalapeno for $249, that will generate $400 in BTC in a month. That's a 61% rate of return on your investment in 1 month! When banks at paying 1% on a CD, that makes zero sense. It would be same as Amazon selling $20 bills for $10 with free shipping. Basic supply and demand principle would kick in and drive up the price of the hardware to the point where you would have to pay an amount that would result in you only being able to make something close to a normal rate of return on your money. You are going to have a shortage, as in more people ordering than the company can ever supply, and a few lucky people reselling the products at a price so high that your rate of return will much lower and closer to what other traditional investments pay.

So none of this is making any sense at all to me. It makes zero sense that someone like BFL would sell any of their products at all. Anyone with capacity to build powerful miners should be mining with them, not selling them. Something fishy is going on.

I basically turned $100 into $3,000 over 10 months mining but it was pure luck. My used GPU that cost $100 mined 8 coins. Ordered a Jalapeno last year that cost me $249. It arrived and I sold it for over $2K. Now I can't find anything in stock that can be purchased that has even a remote chance to pay itself off, much less make a profit. I'd like to mine again but everything I explore seems like a loser to buy now.

No, mining will never be guaranteed money anymore. Too many people are in the game now.

People still buy from BFL because it's a gold rush. They think if they can get in now they can still make money. It's far too late. BFL sells instead of mines because they can make far more money selling hardware to miners than they can actually mining. If BFL actually suddenly shipped all 60,000+ pre-orders tomorrow the difficulty would skyrocket so high than none of those machines would ever make thier cost.

I hate to say this but you didn't make as much as you thought you did (if any at all) from your Jalapeno.
I bought 2 Jalapenos at $150 last October. At the time, BTC was worth $10. That means those Jalapense cost me 15 BTC each. I don't expect those Jalapenos will ever mine 15 BTC in their lives. I would have been far better off just buying BTC with my $300. I would have 30 BTC now worth about $3k.

You were smart to sell your Jalapenos for 20+ BTC. You would never have mined that much. But you still might have been better off buying BTC instead of a Jalapeno (depends on what the exchange rate was at the time).

I always look at mining costs in terms of BTC, because spending dollars on a miner is an opportunity cost of me not spending that money on buying BTC directly. You need to use the exchange rate at the time you pay for the miner and then think purely in BTC from then on.

If you look at it that way, pretty much every customer of BFL is LOSING money. 
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July 30, 2013, 12:13:02 AM
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Mining is going pro, and anyone wanting to get into it needs to understand that.

This is a marginal business, and if you want to actually make a profit doing it you have to treat it like a real business and not as a get-rich-quick gold rush. That was over the second the first Avalons came online, and those folks who owned them are the only ones who really struck gold. Those that followed will be mightily disappointed. 

Jumping in now requires a boatload of capital to build a mining network that is capable of a decent return. You must simply do the math to properly figure your ROI now and into the future as possible projections or face possibly screwing yourself. By my calculations a full Bitfury rack at 400 GH/s is plenty profitable even at a 62% rise in difficulty per month and accounting for a 0% rise in Bitcoin's value, though that means dropping a cool $8000 to get started. Only those brave and bold will be miners going forward as the industry grows up and the buy in cost is substantially more than a cute little BFL Single or ASICMiner USB (winning the award for worst investment ever at 333 Mh/s for around 1.2 BTC as you would need 15 of them to equal a BFL single...though I can't say I dont still want one anyway because the are neat  Cheesy )

So, those hoping that their single 5 Gh/s Jalapeno was going to let them retire young and rich, probably not going to happen because the mining industry is exploding, just accept it. Remember that BFL still sells them because they are selling you the pickaxe. Just a product like any other for cash money. Mining itself is an entirely different ballgame than simply selling something there is a demand for in terms of making a profit. Though I don't doubt for a second they probably are mining with their own gear, or are at least more than happy to "test" them on the live network.

Keep in mind that part of the ROI problem is more that Bitcoin's market value has flattened compared to the network's dramatic rise in power. What really needs to happen is either some tapering of network speed as the ASICs finally reach saturation, Bitcoin rallies upward again like it did in April to offset the difficulty rise, or ideally some of both. I imagine it will be both, but we will need to be patient and see.


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July 30, 2013, 07:04:14 AM
 #19

Mining is going pro, and anyone wanting to get into it needs to understand that.

This is a marginal business, and if you want to actually make a profit doing it you have to treat it like a real business and not as a get-rich-quick gold rush. That was over the second the first Avalons came online, and those folks who owned them are the only ones who really struck gold. Those that followed will be mightily disappointed. 

Jumping in now requires a boatload of capital to build a mining network that is capable of a decent return. You must simply do the math to properly figure your ROI now and into the future as possible projections or face possibly screwing yourself. By my calculations a full Bitfury rack at 400 GH/s is plenty profitable even at a 62% rise in difficulty per month and accounting for a 0% rise in Bitcoin's value, though that means dropping a cool $8000 to get started. Only those brave and bold will be miners going forward as the industry grows up and the buy in cost is substantially more than a cute little BFL Single or ASICMiner USB (winning the award for worst investment ever at 333 Mh/s for around 1.2 BTC as you would need 15 of them to equal a BFL single...though I can't say I dont still want one anyway because the are neat  Cheesy )

So, those hoping that their single 5 Gh/s Jalapeno was going to let them retire young and rich, probably not going to happen because the mining industry is exploding, just accept it. Remember that BFL still sells them because they are selling you the pickaxe. Just a product like any other for cash money. Mining itself is an entirely different ballgame than simply selling something there is a demand for in terms of making a profit. Though I don't doubt for a second they probably are mining with their own gear, or are at least more than happy to "test" them on the live network.

Keep in mind that part of the ROI problem is more that Bitcoin's market value has flattened compared to the network's dramatic rise in power. What really needs to happen is either some tapering of network speed as the ASICs finally reach saturation, Bitcoin rallies upward again like it did in April to offset the difficulty rise, or ideally some of both. I imagine it will be both, but we will need to be patient and see.



That was an awesome post.

And btw - USB erupters have dipped to $70ish on eBay, and will most likely continue to drop as sellers sitting on craptons try to unload them before the price bottoms out.

BTCitcointalk 1%ers manipulate the currency and deceive its user community.
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July 30, 2013, 01:13:50 PM
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Wrong.

Investing in mining is just another form of speculation. Some choose to invest in coins to make their money, others choose to invest in hardware to try and make theirs.

Either way, you're speculating because you're calculating an ROI off a moving target. You could buy mining gear tomorrow with an ROI in 9 months, but the next day the ROI could be 2 years or 2 weeks. You're speculating off price either way when you get into the mining business.

People buying ASIC hardware today (even with negative, or LOONG term ROI) are speculating that the price of Bitcoin will go up and that in turn will net a profit from their investment. Additionally, if a Miner is sitting on the BTC they earned and not selling it as it comes in the door, it only goes to drive home the point that they're just speculating vs. attempting to recover income.

In a healthy Bitcoin ecosystem, the ROI on mining should be very, very low in that mining shouldn't be about printing money to make an easy buck. Difficulty should follow price and demand. We're missing an element right now with demand (as Bitcoin still hasn't a solid foothold in retail) but it's getting there.
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