Has Bitcoin mining ever been so unprofitable?

[Sr.Urbanist]

I've been mining for a little over a year with my first S9 arriving in Jan 2017.

During this past year, no matter the price, it never dipped below an equivalent of $15 per machine per day.  The last two months, however, the difficulty nearly doubled and daily profits have dipped down to around $8-9. 

I'm considering expanding into a warehouse, as I live in an area with relatively cheap electricity available in the countryside and can maybe get ahead of the game ... but is it worth it?  BITMAIN and others have very large facilities of 300,000+ S9s;  I called the electric company and BITMAIN is paying around 4.3c kW/h.  The public electric company has a moratorium on any new mining farms and are, likely, going to increase the upfront costs.  I was pointed to this document from WA: http://www.chelanpud.org/docs/default-source/default-document-library/bitcoin_information_final.pdf

I know there are some people who were around in 2014 when the new miners weren't being delivered and price was so low people were turning off their miners.  Can anybody tell me what that was like? Has the profit ever been this low?  I'd appreciate any insights.

Best.



 

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[philipma1957]

You are clueless


Shock value answer. Above.


Mining is not that bad at all

If your s9 makes money and you paid 1300 for it in nov you are doing fine.

And. Yes mining at a loss was something we used to do.

[Sandal_Hat]

You are clueless


Shock value answer. Above.


Mining is not that bad at all

If your s9 makes money and you paid 1300 for it in nov you are doing fine.

And. Yes mining at a loss was something we used to do.

No offense phillip but not all of is have a solar array for power like u do. Mining was easily more than 2 times more profitable a few months back. The numbers are bad now and this is without taking into account future upcoming difficulty increaaes. There will be those who never break even. Mining at loss is no fun. Bitcoin holders have made alot more than miners in the last year.

[Bucc5207]

I've been mining for a little over a year with my first S9 arriving in Jan 2017.

During this past year, no matter the price, it never dipped below an equivalent of $15 per machine per day.  The last two months, however, the difficulty nearly doubled and daily profits have dipped down to around $8-9.  
[Chop]
Has the profit ever been this low?  I'd appreciate any insights.

I think you are confusing revenue with profit, but here is historical revenue data.  I downloaded from blockchain.info two files:  Miners Revenue (total value of coinbase block rewards and transaction fees paid to miners) and Hash Rate (estimated number of tera hashes per second).  I divided the first by the second to get revenue per TH/s, et voila ---

https://i.imgur.com/mjIgED9.jpg

Their 'hash rate' is an estimate based on block solution times.  I also downloaded price and difficulty data and calculated expected revenue using the usual math.  That gave a very similar result, but it was a lot more work.  

I hope this provides some insight.


(Moderator's note: This post was edited by frodocooper to remove inline image tags.)

[sidehack]

Alright, now factor into that the average cost of 1TH. Four years ago 1TH cost a couple thousand bucks, now it's about $100. I bet the graph gets a lot flatter if you normalize against that.

[Bucc5207]

Alright, now factor into that the average cost of 1TH. Four years ago 1TH cost a couple thousand bucks, now it's about $100. I bet the graph gets a lot flatter if you normalize against that.

Absolutely!  Hardware has also gotten more energy efficient.  The graph makes no allowance for any kind of expense, but neither did the OP's question (if I read it correctly).  I just tried to answer the question in the same terms it was asked.

[rifleman74]

You are clueless


Shock value answer. Above.


Mining is not that bad at all

If your s9 makes money and you paid 1300 for it in nov you are doing fine.

And. Yes mining at a loss was something we used to do.

No offense phillip but not all of is have a solar array for power like u do. Mining was easily more than 2 times more profitable a few months back. The numbers are bad now and this is without taking into account future upcoming difficulty increaaes. There will be those who never break even. Mining at loss is no fun. Bitcoin holders have made alot more than miners in the last year.

Turn your miners off and sell for residual value.   Can't lose that way.

[fanatic26]

Why are there so many stupid posts like this on this forum?

Ignorant people that jumped into this during the most inflated profitability cycle the industry has ever seen are now crying and whining that they arent overnight millionaires....

I was mining when bitcoin dropped from $1100 down to $180s....and you guys whine about single machines only making a few HUNDRED dollars a month....

The definition of unprofitable is "not yielding a financial gain"  yet an s9 or an L3 is still making $200 a month PROFIT after paying for power....

[philipma1957]

No offense phillip but not all of is have a solar array for power like u do. Mining was easily more than 2 times more profitable a few months back. The numbers are bad now and this is without taking into account future upcoming difficulty increaaes. There will be those who never break even. Mining at loss is no fun. Bitcoin holders have made alot more than miners in the last year.

it has gone up and down every year since 2012 when I started.

if you look at last years price of coin for march 12 2017   it was  1050  todays price is 9168   so

9168/1050 =  8.73 to 1


if you look at diff  for march 17 2017  475,705,205,061
if you look at diff for march 5 2018     3,290,605,988,754

so 3,290,605,988,754/475,705,205,061= 6.92 to 1


so  lets see price goes up  8.73 to 1 and diff goes up 6.92 to 1   this means you are doing great.

that is why the op is clueless.  he dates back to jan 2017  I just dated back to march 2017

and you can check every number  from jan 2017 to march 2017  and the op is far better off  today then he was during the jan 2017 to march 2017 time frame.

when I make a shock statement I am very careful to be able to back it up.

and anyone that thinks  that today march 13 2018 is worse then it was a year ago as the op said is clueless.


Now it goes without saying mining is not as good as dec 2017   but the op did the jan 2017-march 2017 time frame as his start point.

If he did nov 2017 or dec 2017  as his start point I would have agreed or not posted.


(Moderator's note: This post was edited by frodocooper to remove a nested quote.)

[philipma1957]

I think you are confusing revenue with profit, but here is historical revenue data.  I downloaded from blockchain.info two files:  Miners Revenue (total value of coinbase block rewards and transaction fees paid to miners) and Hash Rate (estimated number of tera hashes per second).  I divided the first by the second to get revenue per TH/s, et voila...

your chart is a joke


another shock value statement to get attention.

I started in July 2012  the network was  14 th
which was mostly gpus  2-3 per gh

or say 2500 per th so 2500 hd7970's were worth about 300 each = 750,000 usd a th for summer of 2012

 and power used was close to 500,000 watts for that 1 th so what if it earned 10,000  a th per day


(Moderator's note: This post was edited by frodocooper to remove a nested quote and to trim the quote from Bucc5207.)

[Sr.Urbanist]

Miners Revenue (total value of coinbase block rewards and transaction fees paid to miners) and Hash Rate (estimated number of tera hashes per second).  I divided the first by the second to get revenue per TH/s, et voila...

Woah!  

I guess it's a case for greater energy efficiency with things like mineral oil.

You are clueless


Shock value answer. Above.


Mining is not that bad at all

If your s9 makes money and you paid 1300 for it in nov you are doing fine.

And. Yes mining at a loss was something we used to do.

How long did that last?  Mining at a loss?  

I just turned off one of my stupid D3s.


(Moderator's note: This post was edited by frodocooper to trim the quote from Bucc5207.)

[Sr.Urbanist]

your chart is a joke

It looks like it has a static price value for BTC, but that skews it because the electric bill is due monthly

[Bucc5207]

your chart is a joke

The joke is your inability to interpret a technical chart.  The 'per TH/s' is just a scaling factor.  If it makes you happier, lop three zeroes off the y-axis labels and read it as 'per GH/s.'  If you understand what you're looking at, it says the same thing you ranted at Sandal_Hat about.

Do the mods actually buy your 'just for shock value' nonsense?

[Bucc5207]

It looks like it has a static price value for BTC, but that skews it because the electric bill is due monthly

No, it's gross mining revenue in USD.  Basically (block reward)x(market price)/difficulty at a constant hashrate, using published historical data.  Electric bill is not in it.  Did your OP involve utility or other costs at all?  It looked to me like you were simply lamenting low gross revenue.  Please clarify if I misread it.

[Sr.Urbanist]

...  lop three zeroes off the y-axis labels and read it as 'per GH/s.'

That makes it easier.

If you took the block rewards off blockchain.info, then it would include the value at time of production.  

 
Thanks for mining the data  

[Sr.Urbanist]

Electric bill is not in it.  Did your OP involve utility or other costs at all? 

It did not include input costs, though that's the only place where one is able to get a competitive edge.

[Bucc5207]

It did not include input costs, though that's the only place where one is able to get a competitive edge.

Thanks for confirming that.  So there you go.  The 'joke' chart answers your question, since it gives the full history of 'profitability' (as used in the OP).  It has been somewhat worse in the past.  I think it will get still worse in the future. 

[Sandal_Hat]

it has gone up and down every year since 2012 when I started...

Good point on the March comparisons but it has gotten worse than before by quite alot though. Electricity cost isnt a big factor with these kinda difficulty increases.

I calculated 4 months breakeven for antminers around middle last year. It is at least 10+ months now and this is without difficulty increases. And there is major asic overcapacity going forward, thus, bitcoin mining will never have good profitability like before. Hmmm the biggest winners are still bitcoin holders though. From 1050 to 9168, it made 9x the money just from holding. Miners didnt make that much at all.


(Moderator's note: This post was edited by frodocooper to trim the quote from philipma1957.)

[Sandal_Hat]

Well, my thoughts. The problem is OVERCAPACITY of mining equipment.


From mid Nov to mid Feb, the difficulty went from 1.4T to 2.8T. Price didnt double from Nov to Feb.

-Price of btc rose 10x from a year ago and mining difficulty increased to keep up. BTC price isnt going to increase 10x this year, so, there is EXCESS mining equipment for sale.
-ASICS production capacity has increased greatly and this is without new manufacturers like Dragonmint miners coming in later.
-This thing has 6 months warranty, so, there will be miners that dont break even, regardless of electricity input cost.
-GPUs make more than asics now and it used to be GPUs make half of wat ASICS make. This is because GPU has a shortage now, but ASICS have excess capacity.  
-Current btc mkt cap is 155 billion, a 10x rise makes it 1.55 trillion and a further 10x rise means 15.5 trillion. That isnt possible as gold price is only 7.8 trillion. Max btc mkt cap is around 7.8 trillion and that make take years to reach if it does occur.
-People are used to btc already. It isnt hyped up in news like last year. So, price increases are slower assuming they continue.


That being said, any bitcoin price increase will be accompanied by alot of new miners coming in and thus, bitcoin mining will never be as profitable as before. There is too much stock of mining equipment. The biggest issue is if new stronger miners come in to make old ones obsolete.

This reminds me of the baltic dry index and bulk carriers

http://static3.uk.businessinsider.com/image/54cb8c4edd0895065b8b45b7-1099-514/baltic%202.png

The baltic dry index (BDI) is around 1200 now. It was above 10k at one point. Huge losses for shipowners.

http://www.bbc.com/news/business-38653546

"The attitude in the industry was when you were not making profits the best thing to do was to cut costs, and the best way to cut costs is to increase scale, buying bigger and more fuel-efficient ships," explains Rahul Kapoor, director at shipping consultancy Drewry Financial Research Services.

Miners will be taking this attitude more going forward lol. And there will be few or no winners. In shipping case, shipowners spent more money on more fuel efficient vessels when they were available, thinking they got an edge. The competitors did the same. Many shipowners went bankrupt though some survive but with losses or tiny profits. It is gonna be the same here if new more efficient miners come out quickly.

Many shipowners and shipyards have gone bankrupt, similar to how some miners and asic manufacturers have gone bankrupt. Shipowners had alot more overcapacity than miners I believe. And unfortunately, mining will now enter the same overcapacity issue stage. Low electricity cost is an edge but not a huge edge when the difference is like 5cents per kwh for big miners over home miners. Overcapacity just means intense competition and far less winners.


In my opinion, there is even less reason to be optimistic if u consider that LTC/BTC is going to halve in 2019/2020 and it halves further 4 years later. ETH risks going to POS in the future and stop mining. To me, this looks like the last leg of the race. Companies like bitmain are already going for AI as well.

Anyways, to each his own. If u are optimistic still, good for u. I dont see it. I have never seen anything good come out of overcapacity in any market.

Just my 2 cents.


(Moderator's note: This post was edited by frodocooper to remove inline image tags.)

[Sr.Urbanist]

I calculated 4 months breakeven for antminers around middle last year. It is at least 10+ months now and this is without difficulty increases. And there is major asic overcapacity going forward, thus, bitcoin mining will never have good profitability like before ...

Indeed.  I've been looking at mineral oil, but it has a lot of up front expenses. If done right, and at scale, it could provide an edge by consuming about half the electricity.  Though I see the next big area of profit being a big jump in hashpower.  If somebody would make a 50 TH/s miner, that'd surely be profitable for a while.  However, I'm not sure I see that playing out due to high up front costs.

Well, my thoughts. The problem is OVERCAPACITY of mining equipment.

But only other people's gear ... at least that's how I feel. 

From mid Nov to mid Feb, the difficulty went from 1.4T to 2.8T. Price didnt double from Nov to Feb.

Insane, but true. 

People are used to btc already. It isnt hyped up in news like last year. So, price increases are slower assuming they continue.

We have entered a new era. There were a lot of early promises over the past couple years, from banking the unbanked to overturning the entire power structure.  It's going to take a time and nobody knows how it will develop.  All we know is that before government decree for money, it was commodities like stones, shells, metals.

I, also, know that I've used crypto for many payments and the highest points of friction have been exchange between USD. 

... bitcoin mining will never be as profitable as before.

Do you know anybody with experience running a BTM business?  I'm exploring starting one in El Salvador.