No mining hardware is worth buying

[stripykitteh]

It's not like that at all. Consider that, for instance, production price of gold is around 15% of it's current market value. Is buying/selling gold "buying an overpriced asset and finding a bagholder" like you described it? I'm just saying that nothing can fix the price of the asset except the market/exchange. Everything else is false economy and bad speculations.

Your comparison with gold is false.

Gold doesn't produce an income stream; a mining asset does. Unlike gold, if I buy a miner I know its value is falling to zero in the near future. It's just a question of what income it will produce before it does.

So gold doesn't have an income stream, cex.io has, and that's bad for cex.io? What gives you the idea that cex.io GHs value is falling to zero in the near future? It's nonsense, Bitfury is energy efficient chip and their mining farm is at the place with extremely cheap electricity, so GHs you bought on the exchange may very easily still mine while most other current miners shut down.

I see that you don't like them for some reason, but please try to think over before you post such things, you are giving people biased financial advices.

I think overpaying for any asset is stupid, whether it's gold or bitfury miners. I have nothing against bitfury's products, I think he is a talented ASIC designer. If you sell me bitfury miners *today* at 0.05BTC/ghash, I'll take all I can get.

*ANY* mining asset's value is tending to zero rapidly. All that matters is what revenue it produces before that happens. We are at the beginning of the 28nm era. 30%+ difficulty increases are going to be the norm for the next few months, as KnC, HashFast, Cointerra and other players come to market. We are at 189 million difficulty right now. While we've been having this little tête-à-tête, the network has been hashing 10 blocks an hour. The next difficulty increase is going to be huge, 40%, maybe higher. The ones in the coming weeks are going to be around 30% or more.

If the upcoming difficulty increases were around 20%, you could argue that paying 0.18BTC/ghash is fair value. But at upcoming 30% increases, it's stupidly overpriced.

Let me turn the question back at you - what price per ghash do you think is fair value right now, and why? Why should investors put their bitcoins into this investment?

[Bicknellski]

I've done some math and research into all ASIC producers and this is the conclusion I've come up with. I truly think only those Chinese guys next to the foundries, who are the first to get their hands on the new technology, can really make money. All those who buy mining hardware even from companies like KNCminer end up losing more than they've invested.

Just enter the values here http://www.coinish.com/calc/# in Expert mode and you'll see what I'm talking about.

It's way more profitable to just buy BTC than mine it.

I'd like to hear the counter-arguments on this topic.

How about your follow through and simply put up the chips price / hash rate and delivery data and put it on a table for us all to see... that be a great way to show people. No need to discuss the merits of different systems just the chips themselves. Some won't even ROI as bare chips... but is that going to stop people from buying the latest miners?

[darkmule]

My example isn't wrong, I'm not talking about buying BTC and selling it, I'm disagreeing with the statement that you don't earn a profit if the price of BTC goes up. You can't earn a profit in BTC if the price goes up IF you paid for your miner in BTC, but if you payed cash for you miner and you sold your BTC at a price that earned you more than you spent on the miner then you are quids in.

However, you'd have made more of a profit simply by purchasing BTC.  So given a choice between purchasing BTC which will appreciate in value, or purchasing the future potential of fewer BTC by mining for the same amount of fiat currency, choosing mining is obviously the inferior choice.

[itod]

It's not like that at all. Consider that, for instance, production price of gold is around 15% of it's current market value. Is buying/selling gold "buying an overpriced asset and finding a bagholder" like you described it? I'm just saying that nothing can fix the price of the asset except the market/exchange. Everything else is false economy and bad speculations.

Your comparison with gold is false.

Gold doesn't produce an income stream; a mining asset does. Unlike gold, if I buy a miner I know its value is falling to zero in the near future. It's just a question of what income it will produce before it does.

So gold doesn't have an income stream, cex.io has, and that's bad for cex.io? What gives you the idea that cex.io GHs value is falling to zero in the near future? It's nonsense, Bitfury is energy efficient chip and their mining farm is at the place with extremely cheap electricity, so GHs you bought on the exchange may very easily still mine while most other current miners shut down.

I see that you don't like them for some reason, but please try to think over before you post such things, you are giving people biased financial advices.

I think overpaying for any asset is stupid, whether it's gold or bitfury miners. I have nothing against bitfury's products, I think he is a talented ASIC designer. If you sell me bitfury miners *today* at 0.05BTC/ghash, I'll take all I can get.

*ANY* mining asset's value is tending to zero rapidly. All that matters is what revenue it produces before that happens. We are at the beginning of the 28nm era. 30%+ difficulty increases are going to be the norm for the next few months, as KnC, HashFast, Cointerra and other players come to market. We are at 189 million difficulty right now. While we've been having this little tête-à-tête, the network has been hashing 10 blocks an hour. The next difficulty increase is going to be huge, 40%, maybe higher. The ones in the coming weeks are going to be around 30% or more.

If the upcoming difficulty increases were around 20%, you could argue that paying 0.18BTC/ghash is fair value. But at upcoming 30% increases, it's stupidly overpriced.

Let me turn the question back at you - what price per ghash do you think is fair value right now, and why? Why should investors put their bitcoins into this investment?

It's nice that you want to buy *today* at 0.05BTC/GHs, but nobody wants to sell you at this price. The only raw chips selling today (Bitfury) manufacturer sells for 4X that price, + you have to add the price for the PCB, small parts and assembly to complete the miner. To answer your question about what is the fair price right now: It's the price rational person willing to sell, and rational person willing to buy, agree on. That price can only be determined on the exchange, and if they can't agree on the price you have a spread. Currently that spread almost doesn't exists and trading is very alive, which means there is a fair value most people agree on - just check the exchange. The idea anyone will sell the miner at the price which is sure to give positive ROI is wishful thinking. The times when AsicMiner sells initial shares or Avalon sells batch #1 miner where a Bticoin infancy, they are long gone and will never be repeated. All further purchases of mining assets will be small (if any) reward.

[Leehoya]

Mining never pays off. With the skyrocketing difficulty, its a negative profits.

[stripykitteh]

It's nice that you want to buy *today* at 0.05BTC/GHs, but nobody wants to sell you at this price. The only raw chips selling today (Bitfury) manufacturer sells for 4X that price, + you have to add the price for the PCB, small parts and assembly to complete the miner. To answer your question about what is the fair price right now: It's the price rational person willing to sell, and rational person willing to buy, agree on. That price can only be determined on the exchange, and if they can't agree on the price you have a spread. Currently that spread almost doesn't exists and trading is very alive, which means there is a fair value most people agree on - just check the exchange. The idea anyone will sell the miner at the price which is sure to give positive ROI is wishful thinking. The times when AsicMiner sells initial shares or Avalon sells batch #1 miner where a Bticoin infancy, they are long gone and will never be repeated. All further purchases of mining assets will be small (if any) reward.

So far you just appear to be a shill for cex.io. But I want to give you the chance to prove me wrong. Let's all find out about what you really think.

C'mon, don't be so coy. Forget about the market for a moment. Let's blue sky this.

What would *you*, itod, the real living and breathing human being, who has bills to pay, honestly, pay for a ghash on cex.io right now? If you saw the market price was 0.25BTC/ghash right now would you get your wallet out and start buying? How about 0.15BTC/ghash? Or 0.1BTC/ghash? C'mon, you're not that stupid that you don't know what a ghash is really worth, even approximately.

If you expect others to part with their hard earned BTC, what would get you to part with yours? I've told you my buy price. What's yours?

If you want to give me another of your "whatever the market thinks" answers, OK. There's no point in arguing further with you, Mr. Shill. But to others who have read this far, *caveat emptor*.

[itod]

It's nice that you want to buy *today* at 0.05BTC/GHs, but nobody wants to sell you at this price. The only raw chips selling today (Bitfury) manufacturer sells for 4X that price, + you have to add the price for the PCB, small parts and assembly to complete the miner. To answer your question about what is the fair price right now: It's the price rational person willing to sell, and rational person willing to buy, agree on. That price can only be determined on the exchange, and if they can't agree on the price you have a spread. Currently that spread almost doesn't exists and trading is very alive, which means there is a fair value most people agree on - just check the exchange. The idea anyone will sell the miner at the price which is sure to give positive ROI is wishful thinking. The times when AsicMiner sells initial shares or Avalon sells batch #1 miner where a Bticoin infancy, they are long gone and will never be repeated. All further purchases of mining assets will be small (if any) reward.

So far you just appear to be a shill for cex.io. But I want to give you the chance to prove me wrong. Let's all find out about what you really think.

C'mon, don't be so coy. Forget about the market for a moment. Let's blue sky this.

What would *you*, itod, the real living and breathing human being, who has bills to pay, honestly, pay for a ghash on cex.io right now? If you saw the market price was 0.25BTC/ghash right now would you get your wallet out and start buying? How about 0.15BTC/ghash? Or 0.1BTC/ghash? C'mon, you're not that stupid that you don't know what a ghash is really worth, even approximately.

If you expect others to part with their hard earned BTC, what would get you to part with yours? I've told you my buy price. What's yours?

If you want to give me another of your "whatever the market thinks" answers, OK. There's no point in arguing further with you, Mr. Shill. But to others who have read this far, *caveat emptor*.

So when you have no arguments you resort to insulting me, calling me a shill? I would not get to that level, it just speaks for you.

To answer your question: I would not buy any GHs on cex.io, since I already have small amount of GHs there, and don't want to invest that way any more. Happens that I just like that we have an exchange for GHs, which is essential for anyone deciding to buy or not some specific miner for immediate delivery. Just look at the price on the exchange (currently BTC0.1838 per GHs) and skip every offer above that.

[stripykitteh]

So when you have no arguments you resort to insulting me, calling me a shill? I would not get to that level, it just speaks for you.

To answer your question: I would not buy any GHs on cex.io, since I already have small amount of GHs there, and don't want to invest that way any more. Happens that I just like that we have an exchange for GHs, which is essential for anyone deciding to buy or not some specific miner for immediate delivery. Just look at the price on the exchange (currently BTC0.1838 per GHs) and skip every offer above that.

So you have no opinion on whether or not it's overpriced. OK. I withdraw the shill accusation.

For everyone who's read this far, my opinion is the prices on cex.io are far too high. Invest at your own peril.

[DyslexicZombei]

I've being following what you are doing and appreciate it, though I'm still not in your Cooperative. If you consider group buying cex.io GHs for your Miners Cooperative, I suggest that you delegate someone who has experience with exchanges to handle this part for you. It's not rocket science, but it ain't exactly easy. You can't just buy GHs and wait for months, you have to be active, if not constantly than daily on the exchange. Would hate to see you organize something in good will and get burned.

Hey itod,

Thanks for saying that! Compliments are always appreciated.

Of course, teaming up with thomas_s has had a synergistic effect where we can focus on what we both do best. Also, there's 5 of us helping to lead and run the co-op now, with software support from two other world class programmers. It helps us to get Group Buys off the ground as we can pre-reserve chunks of shares in miners we're interested in, and then run them at the absolute lowest possible costs with the maximum amount of A/C to improve Overclocking.

Overall, between the 7 of us, we've donated thousands of dollars of pro bono work to help make this democratic at-cost mining experiment appear to work (so far). People have been appreciative to be part of something solid that's a mesh network that works hard to secure at-cost or below-cost deals. Since I co-lead our merry bunch with Thomas, he and I can fill in for one another, when necessary.

==

Thanks for giving me some info on that exchange. It sounds like a bit of work & my free time bandwidth is already pretty saturated, even when taking more of a backseat to co-op GBs since Round 5.

[BtcBling]

Have actually checked Cex.io also. They do have decent gigash/$ prices but you'd still lose. Not as much as pre-ordering some November 500giga ASICs, but you'd still lose nonetheless.

Just enter all the numbers here http://www.coinish.com/calc/# in expert mode. At 0.1850/gigahash, you'd still make a loss even with zero electricity costs. Price of hashrate is going down so in 12 months time what now costs 0.18xbt might be worthless so resell value is also questionable, though I have to say seems better deal than buying ASICs and have them delivered to your home.

cex.io beats every preorder because you get GHs mining for you *now*, which is the most important thing when you look at constant difficulty increases before you get your preorder delivered. Another thing going in cex.io favor is that you can easily sell GHs and get the most cost of it back, which may not be true for in-hand hardware.

Yeah, was basically saying same thing, however buying bitcoins is much better deal. Not only is it more profitable but you avoid the 3rd party risk of trusting these guys run a legit business or of them just vanishing into thin air. You also have to trust that hash power you buy is actually the real power used in paying those dividends. There's zero auditing and zero accountability, so no one would know if they're really trading unbacked ponzi paper contracts or the real thing.

Given the number of Bitcoin sites going offline just like that, I'd say risk is pretty high.

Great idea, but price / GH/s is absolutely too high.

[darkmule]

[newguy05]

you guys can argue until blue in the face and it wont matter. Bottom line is the current market rate is ~$20 per 1 GH.  Whether that is overpriced or not strictly depends on what the difficulty increase percent will be in the next 3-6 months, if it is going up like it does now then no it is a money loser, but if it starts to top off and flatline in 2 months then you will make a return.

Again noone knows what the difficulty percent increase will be in the future, i count at least 3 major players who havent come online yet but it's still all speculation.   So there is no point keep beating the same deadhorse.

cex.io is an interesting idea by taking the physical labor out and trade the mining GHs, not much different than commodity futures.  However i am not clear exactly what happens in the background, when you buy 1 GH who physically holds this 1 GH of hardware and mines for you?  do i actually own this 1Gh hardware ie can i exercise the contract and take physical delivery of the hardware or is it cash settled or you can never redeem?  how do you know you are actually getting 1GH worth of btc (besides constantly checking the payout and do the math).

[jermwerty]

The only "profitable" ROIs thus far:

Avalon Batch 1
Avalon Batch 2
BFL first day/week orders
Avalon Mini Tradehill auction

All others are negative ROI I think.

Bitfury?

[itod]

The only "profitable" ROIs thus far:

Avalon Batch 1
Avalon Batch 2
BFL first day/week orders
Avalon Mini Tradehill auction

All others are negative ROI I think.

Bitfury?

Bitfury August delivery is definitely positive. AsicMiner IPO was also huge positive ROI.

Avalon Mini Tradehill auction is highly doubtful, I wouldn't bet it will turn out to be positive.

[newguy05]

Bitfury August delivery is definitely positive.

bitfury august was >2x the current price, 400GH at $18k (or was it 19k dont remember exactly), they took delivery at the very end of august.

Not factor in the bitcoin/usd price increase as you never should for roi calculations,  please enlighten on that hardware is "definitely positive"

[frankenmint]

you guys all screwed up...if you are willing to keep sell orders alive (buy in and once your buy order clears immediately place sellorders at a slight gain [still gain from mining earnings while your gigahashes are on sell order]) you basically get mined coins but can either sell at a gain if you play the market correctly or sell it to be at just a slight loss such that you are still in the black on mined shares earnings.  Sure its small, but I did it daily the buy/sell game and ended up gaining  maybe 2-3x what I put in initially which was like a single coin (cashed out around 2.5, I was greedy and didn't get out before the correction which would have put me in at 2.7 BTC for simply putting in and playing on a single bitcoin within a three week period)

[itod]

Bitfury August delivery is definitely positive.

bitfury august was >2x the current price, 400GH at $18k (or was it 19k dont remember exactly), they took delivery at the very end of august.

Not factor in the bitcoin/usd price increase as you never should for roi calculations,  please enlighten on that hardware is "definitely positive"

Ok, let me try that: I don't have any of this Bitfury full-kit 400GHs units so can't testify first hand (if someone has them please confirm or deny), but let's say they started mining Sept. 1st to be on the safe side, although some did few days earlier. According to reverse mining calculations it already earned close to 80 BTC, maybe few BTC more or less. 400GHs will mine around around 35-40BTC more before network difficulty reduces mining income to satoshies, so it will return around 120 BTC mining in profitable conditions. Bitfury is energy efficient, so it will continue to grind over electricity costs even in double-digit PHs conditions. Don't need to calculate that in fiat, although they were paid in fiat and not in BTC, but it looks to me that whoever invested in that at the beginning of July is looking at his wallet and smiling to the current ASIC buyers.

[GodHatesFigs]

And it would cost a lot less than $18k to buy 120BTC; plus there's no risk/hassle/work involved.

Bitfury August delivery is definitely positive.

bitfury august was >2x the current price, 400GH at $18k (or was it 19k dont remember exactly), they took delivery at the very end of august.

Not factor in the bitcoin/usd price increase as you never should for roi calculations,  please enlighten on that hardware is "definitely positive"

Ok, let me try that: I don't have any of this Bitfury full-kit 400GHs units so can't testify first hand (if someone has them please confirm or deny), but let's say they started mining Sept. 1st to be on the safe side, although some did few days earlier. According to reverse mining calculations it already earned close to 80 BTC, maybe few BTC more or less. 400GHs will mine around around 35-40BTC more before network difficulty reduces mining income to satoshies, so it will return around 120 BTC mining in profitable conditions. Bitfury is energy efficient, so it will continue to grind over electricity costs even in double-digit PHs conditions. Don't need to calculate that in fiat, although they were paid in fiat and not in BTC, but it looks to me that whoever invested in that at the beginning of July is looking at his wallet and smiling to the current ASIC buyers.

[Jutarul]

Bitfury August delivery is definitely positive.

bitfury august was >2x the current price, 400GH at $18k (or was it 19k dont remember exactly), they took delivery at the very end of august.

Not factor in the bitcoin/usd price increase as you never should for roi calculations,  please enlighten on that hardware is "definitely positive"

Ok, let me try that: I don't have any of this Bitfury full-kit 400GHs units so can't testify first hand (if someone has them please confirm or deny), but let's say they started mining Sept. 1st to be on the safe side, although some did few days earlier. According to reverse mining calculations it already earned close to 80 BTC, maybe few BTC more or less. 400GHs will mine around around 35-40BTC more before network difficulty reduces mining income to satoshies, so it will return around 120 BTC mining in profitable conditions. Bitfury is energy efficient, so it will continue to grind over electricity costs even in double-digit PHs conditions. Don't need to calculate that in fiat, although they were paid in fiat and not in BTC, but it looks to me that whoever invested in that at the beginning of July is looking at his wallet and smiling to the current ASIC buyers.

Your estimate is spot on, but your conclusions are a bit off. With 120 BTC income in profitable conditions you're looking at about a 50% ROI overall after about 1 year. One scenario where you can make anything more than that is if the BTC price collapses right NOW to $20, instantly crowding out everyone who is less efficient than you and collapsing the sales market. Then there would be a net wealth transfer from the inefficient miners to the efficient ones, because the inefficient miners are out of the competition and immediately bankrupt.

Of course there are a few other scenarios which make hashpower more valuable than bitcoins, but I don't see them happening within the next 2-3 months, where this would make any impact. Instead, given that the BTC price will not collapse and keep rising sub-exponentially, the hash power will simply inflate away your yield and will cause the remaining 50% to take a lifetime.

There is no incentive to smile at anyone. The only satisfaction which is left is that the miners are the peons who make this industry work and without their sacrifice, bitcoin may not succeed. As such, giving up opportunity gains (loss of potential profit) when mining may be a small price to pay in the grand scheme of things.

[itod]

The only satisfaction which is left is that the miners are the peons who make this industry work and without their sacrifice, bitcoin may not succeed. As such, giving up opportunity gains (loss of potential profit) when mining may be a small price to pay in the grand scheme of things.

That's a comfortable thought, now I feel much better.