Is bitcoin really worth mining? CoinTerra and Cex.io Analyized

[turbobitcoin]

Overall, if I am correct. CoinTerra's upcoming new technology and Cex.io cloud hashing is not worth it. Simply put, you won't break even.
Currently bitcoin has gotten alot of attention, there are even companies paying for large amounts of Hashing Power creating a demand for Mining Contracts. The issue now is will there be profitability.

First and foremost, the backbone of computers are one's and zero's this means at any given time if a hacker arises with the skill to hack bitcoin, then it is possible at any time the market for bitcoin may crash. In other words, at anytime, bitcoin currency could significantly it's value.

Second, the difficulty is changing by about "last change in % + 5%" to equal the next difficulty that changes about every 10 days or so. This is all according to http://bitcoinwisdom.com/bitcoin/difficulty. The change is due to the change in the total amount of miners in the pool and the amount of hashing power one brings. That is not the only issue with the change in difficulty, but the fact that new technology with faster hashing power at a better watt usage and cheaper price her GH/s. This will allow each miner to have more shares in bitcoins, but at the same time increase the difficulty.

The real question now is, "Will there actually be any profit in mining bitcoins?"
Holding onto history were the difficulty is "changing by about 'last change in % + 5%' to equal the next difficulty that changes about every 10 days or so.", by the 3rd change of difficulty in February, the difficulty factor will be 564632224929.
For demonstration purposes, I will pretend I pre-ordered the found here: http://cointerra.com/product/terraminer-iv-2ths-networked-miner-january-batch and it arrives by the end of February.
I will assume watt usage is 1200. As stated it should be around .6W/GH/s. (https://bitcointalk.org/index.php?topic=287049.0)
Where I live electricity is about .3510 kWh
Since 1 change is about 5% additional from last change in %, I will assume there is a 15% change, BUT the change in difficulty will be significantly be much great. The loss of money will be greater than my calculations without any doubt. Again, due to the calculators limit in functions, this number is much  much lower than actual loss.

In summary: If you earn 25.00 BTC per block found with a value of $212.51 per BTC, mining with a difficulty of 564632224929.1992 at 2000000 Mh/s, power costing $0.3510 per kilowatt hour @ 1200 watts for the next 90 days, spending $5999 in startup costs:
I entered that data into: https://bitclockers.com/calc
The results were shocking.
I would be losing about $9.73 per day.

What is more tragic is the story of Cex.io
Got a email:
"The fee will be implemented in 1 week, which makes it November 8th 2013.

The maintenance fee is estimated as $0.30 / kW*hour:
$0.17/kW electricity cost + $0.09 data centre upkeep + $0.04 hardware repair/maintenance.

(The power consumption of 1 GHS is 1.5W per hour)"
Including:
- hashrate of 2,000 GH/s
- for watts it will be 3000. As stated 1.5W per 1 GH/s
- fee of 0.30 kWh per GH/s
- about $21.89/GH/s . Last time I checked 1 GH/s was 0.107797 BTC on Cex.io. And on preev.com, 0.107797 BTC = $21.89
Therefore:
If you earn 25.00 BTC per block found with a value of $212.51 per BTC, mining with a difficulty of 564632224929.1992 at 2000000 Mh/s, power costing $0.3 per kilowatt hour @ 3000 watts for the next 90 days, spending $43780 in startup costs:
By the end of February you would lose $636.64 per month, if you bought 2,000 GH/s from Cex.io at the above prices today and did not sell any back.

Of course this is just my theory based on trends. There is a high chance that my theory is a correct, because it is based on trends I gathered from various sources on the interwebs. I am not responsible for any gains or losses due to the theory.

Overall, if I am correct. CoinTerra's upcoming new technology and Cex.io cloud hashing is not worth it. Simply put, you won't break even.

[balanghai]

Didn't you find the exact figure in the FAQ that the fee is $0.001 Per GHs. Notice it's in dollars not BTC.

[uk1]

Didn't you find the exact figure in the FAQ that the fee is $0.001 Per GHs. Notice it's in dollars not BTC.

email:
"The fee will be implemented in 1 week, which makes it November 8th 2013.

The maintenance fee is estimated as $0.30 / kW*hour:
$0.17/kW electricity cost + $0.09 data centre upkeep + $0.04 hardware repair/maintenance.

(The power consumption of 1 GHS is 1.5W per hour)"
Including:
- hashrate of 2,000 GH/s
- for watts it will be 3000. As stated 1.5W per 1 GH/s
- fee of 0.30 kWh per GH/s

[turbobitcoin]

Didn't you find the exact figure in the FAQ that the fee is $0.001 Per GHs. Notice it's in dollars not BTC.

The FAQ is older than the email I got. The email i got was produced about 11 hours ago.
http://i40.tinypic.com/9s7ww9.png
http://i40.tinypic.com/9s7ww9.png

I just want people to know if they are investing into services that mine for you or buy hardware yourself (ex Hardware from Coin Terra), it is more than likely you will not profit.

However, Cex.io will profit. The Company itself.

[imrer]

Isn't it obvious that bitcoin mining isn't worth the investment? Hashrate is growing faster than price so even though now you can make bunch of BTCs, in one month it'll be significantly less coins. I don't believe "mainstream miner" could profit from it. There is huge pressure on improving asics but BTC price isn't growing that fast.

You would be able to profit from it if you had best asic for a while. <- everyone tries to accomplish this, so in my opinion pressure is higher than revenues could be.

Or you can just believe in price increase as majority of miners who are in red figures.

[papaminer]

so what are you trying to say?

you want us to buy your turbobit miner?

[turbobitcoin]

so what are you trying to say?

you want us to buy your turbobit miner?

I'm not saying to buy my bitcoin mining plans. Statistically speaking, many rival companies will have a much higher loss than my plans. My plans will not break even just like other miner plans, if not all other plans.

As I said before, these companies are not transparent on the fact you will not profit. I acknowledge myself you will not profit from my mining plans either.

I just don't want people's lives ruined. I will say I got threatened and harassed by a company who promised to double my money. It's part of learning, but I don't believe everyone should learn the same way.

There is a chance you could profit, but it's like finding your needle in a pile of billions of other identical needles.

Best way I can put this:
If your looking for steady income, do not buy Bitcoin Mining Contracts or BitCoin Hardware.

My advice is get out CEX.io if you are not looking to get some bitcoins, but looking for profit. Sell your GH/s while it's worth something, maybe not your original purchase price, but at least something.
The price of GH/s per Bitcoin will drop, as it logically should due to new technology emerging. Just get out if you can't lose that money. Especially, if  that money was supposed to be a investment for your family, particularly the kids.

[balanghai]

so what are you trying to say?

you want us to buy your turbobit miner?

I'm not saying to buy my bitcoin mining plans. Statistically speaking, many rival companies will have a much higher loss than my plans. My plans will not break even just like other miner plans, if not all other plans.

As I said before, these companies are not transparent on the fact you will not profit. I acknowledge myself you will not profit from my mining plans either.

I just don't want people's lives ruined. I will say I got threatened and harassed by a company who promised to double my money. It's part of learning, but I don't believe everyone should learn the same way.

There is a chance you could profit, but it's like finding your needle in a pile of billions of other identical needles.

Best way I can put this:
If your looking for steady income, do not buy Bitcoin Mining Contracts or BitCoin Hardware.

My advice is get out CEX.io if you are not looking to get some bitcoins, but looking for profit. Sell your GH/s while it's worth something, maybe not your original purchase price, but at least something.
The price of GH/s per Bitcoin will drop, as it logically should due to new technology emerging. Just get out if you can't lose that money. Especially, if  that money was supposed to be a investment for your family, particularly the kids.

I bid to disagree. You sound absolute when you said "you will not profit".

In some areas yes but NOT all. You can gain profit by trading and not just mining it. We all know that mining is a bit complex at this rate. But if you know how to trade, just with the commodity and same applies with some alt exchange, you can profit.

[turbobitcoin]

so what are you trying to say?

you want us to buy your turbobit miner?

I'm not saying to buy my bitcoin mining plans. Statistically speaking, many rival companies will have a much higher loss than my plans. My plans will not break even just like other miner plans, if not all other plans.

As I said before, these companies are not transparent on the fact you will not profit. I acknowledge myself you will not profit from my mining plans either.

I just don't want people's lives ruined. I will say I got threatened and harassed by a company who promised to double my money. It's part of learning, but I don't believe everyone should learn the same way.

There is a chance you could profit, but it's like finding your needle in a pile of billions of other identical needles.

Best way I can put this:
If your looking for steady income, do not buy Bitcoin Mining Contracts or BitCoin Hardware.

My advice is get out CEX.io if you are not looking to get some bitcoins, but looking for profit. Sell your GH/s while it's worth something, maybe not your original purchase price, but at least something.
The price of GH/s per Bitcoin will drop, as it logically should due to new technology emerging. Just get out if you can't lose that money. Especially, if  that money was supposed to be a investment for your family, particularly the kids.

I bid to disagree. You sound absolute when you said "you will not profit".

In some areas yes but NOT all. You can gain profit by trading and not just mining it. We all know that mining is a bit complex at this rate. But if you know how to trade, just with the commodity and same applies with some alt exchange, you can profit.

You could profit. "There is a chance you could profit". When I say "you will not profit", it is my opinion. I nowhere intended it as fact, but rather "more than likely". In all honesty, I never meant to say a straight flat out no, but the data I looked over, clearly shows mining contracts will not purely give you profit. Nor, would buying the newest,fastest, and cheapest mining hardware soon to be available, as for my example, the new coin terra machines. Yes, you could trade...... but because of the cost of mining, it would take a huge amount of time before you profit from a "mining contract or buying the hardware to mine yourself", assuming nothing bad happens to the market.

Trading is risky and there are some companies who scam. In some cases some companies pretend to look good at first in order to attract a crowd, after then run and don't pay out. This is where I got sucker punched myself when trading currencies (not Bitcoin). I requested a payout, the company refused, I posted a review and was threatened/harassed. They told me they would sue me for Public Relations being tainted and other law cost. Guess what? I had to spend extra money to hire a lawyer just to confirm that they would not be able to sue me.  It was probably my fault, as that company was not regulated. Not only did I lose my initial investment, but I had to spend more cash to solve a problem that came about, because I was trading with a unregulated company. The same problem could arise here as no one here is regulated to exchange currency

The problem with treating it as a currency lies with how much is the bitcoin actually worth and who determines it. As we know machines in farming tend to break the same times of the year around when it's cold and has to work harder. Therefore, this issue will have a effect on the worth of currency. At this time, it would be hard to pinpoint when to trade with bitcoin having huge fluxes. In theory it should keep increasing its value as more miners come into play, but then again a crash can happen at any time. Just like profit is a possibility, even though unlikely, Bitcoin could become worth $0.00. It may not happen in a day, but it is possible, maybe due to strict regulations by countries, bitcoin being hacked, or whatever other possible reason. When Dwolla claimed they were dropping virtual currencies due to uncertainty in the area, that was probably a lie. As there are rumors that they were ordered to by the government. This was regulation, and this does affect Bitcoin.

[Vorksholk]

Overall, if I am correct. CoinTerra's upcoming new technology and Cex.io cloud hashing is not worth it. Simply put, you won't break even.

The real question now is, "Will there actually be any profit in mining bitcoins?"
Holding onto history were the difficulty is "changing by about 'last change in % + 5%' to equal the next difficulty that changes about every 10 days or so.", by the 3rd change of difficulty in February, the difficulty factor will be 564632224929.
For demonstration purposes, I will pretend I pre-ordered the found here: http://cointerra.com/product/terraminer-iv-2ths-networked-miner-january-batch and it arrives by the end of February.
I will assume watt usage is 1200. As stated it should be around .6W/GH/s. (https://bitcointalk.org/index.php?topic=287049.0)
Where I live electricity is about .3510 kWh
Since 1 change is about 5% additional from last change in %, I will assume there is a 15% change, BUT the change in difficulty will be significantly be much great. The loss of money will be greater than my calculations without any doubt. Again, due to the calculators limit in functions, this number is much  much lower than actual loss.

In summary: If you earn 25.00 BTC per block found with a value of $212.51 per BTC, mining with a difficulty of 564632224929.1992 at 2000000 Mh/s, power costing $0.3510 per kilowatt hour @ 1200 watts for the next 90 days, spending $5999 in startup costs:
I entered that data into: https://bitclockers.com/calc
The results were shocking.
I would be losing about $9.73 per day.

[...]

Overall, if I am correct. CoinTerra's upcoming new technology and Cex.io cloud hashing is not worth it. Simply put, you won't break even.

Interesting numbers. I'd like to point out your difficulty number, though. 564,632,224,929 difficulty. That's 564 BILLION. For reference, the next difficulty retarget is expected to be around 500 MILLION, or < 1/1000th of your estimated difficulty for February. Currently, that 500mil diff will represent, for simplicity, around 4PH of mining power. 4000PH of mining power wouldn't quite make it to your supposed number. 4000PH, 1EH, or 4,000,000TH. At a conservative cost of $1000 per TH (way lower than any ASIC manufacturer is promising, but certainly doable for an ASIC manufacturer to deploy their own systems...) that would mean that, between now and February, people would invest over 4 Billion dollars into mining hardware. As another point of reference, most people around the forums are predicting a difficulty of ~1 to 2 Billion by early/mid January. Not 564 Billion by late Feb.

[huryde]

I disagree, I invested 1.75 BTC and by playing the buy / sell game have increased my total to 2.5 BTC in just over a month in my free time at home after work. Cex.io is the best! At this point I have pulled back out the original 1.75, rode the referral horse and continue to buy / sell with the profits pulling .2 back to my local wallet every weekend. Flame on all ya want, it works for me. So yes, it really works for me.

[Rannasha]

Second, the difficulty is changing by about "last change in % + 5%" to equal the next difficulty that changes about every 10 days or so. This is all according to http://bitcoinwisdom.com/bitcoin/difficulty. The change is due to the change in the total amount of miners in the pool and the amount of hashing power one brings. That is not the only issue with the change in difficulty, but the fact that new technology with faster hashing power at a better watt usage and cheaper price her GH/s. This will allow each miner to have more shares in bitcoins, but at the same time increase the difficulty.

This isn't true at all. First of all, the "last change + 5%" model is completely off, unless you only consider the last 2 difficulty adjustments (and if you're picking your datapoints so arbitrarily, you can make whatever curve you want to fit work). Secondly, the superexponential nature of this progression is completely unsustainable in every way, shape or form. You estimate the difficulty being a factor 1000 higher in february than it is now. That means that on average for the coming 4 months, every day there is 8 times the current amount of hashing power being brought online. So take all the hashing devices currently mining, multiply that by 8. That is how much needs to be installed every day to reach a factor 1000 in difficulty after 4 months.

Finally, as a minor point. You state that the difficulty changes "about every 10 days or so", which is grossly inaccurate. If the difficulty goes up by a factor of 1.3 (so +30%), it means that the previous period lasted for 14 / 1.3 days. In your model, after ~12 difficulty adjustments, each increase will be at least 100%, which means they happen every 7 days and it only speeds up more in your model.

I agree with the final conclusion that mining is not profitable. But the margin with which this is the case is much smaller than you claim.

[Rannasha]

I disagree, I invested 1.75 BTC and by playing the buy / sell game have increased my total to 2.5 BTC in just over a month in my free time at home after work. Cex.io is the best! At this point I have pulled back out the original 1.75, rode the referral horse and continue to buy / sell with the profits pulling .2 back to my local wallet every weekend. Flame on all ya want, it works for me. So yes, it really works for me.

Because you made money trading, doesn't mean mining is worth the money. You're basically playing a game of hot potato, trying to get rid of the overpriced shares before they tank in price. You've played it well, which is great, but you shouldn't pretend that this strategy is closer to investing than it is to gambling.

[HellDiverUK]

Overall, if I am correct. CoinTerra's upcoming new technology and Cex.io cloud hashing is not worth it. Simply put, you won't break even.

Assuming the price of BTC stays where it is.  Which it won't.  It's at $224 on BTC-E at the moment.  I'm pretty sure a few weeks ago it was down around $110. 

If BTC is $1000 this time next year, mining will still be profitable.

[Rannasha]

Overall, if I am correct. CoinTerra's upcoming new technology and Cex.io cloud hashing is not worth it. Simply put, you won't break even.

Assuming the price of BTC stays where it is.  Which it won't.  It's at $224 on BTC-E at the moment.  I'm pretty sure a few weeks ago it was down around $110. 

If BTC is $1000 this time next year, mining will still be profitable.

You buy cex.io shares for BTC, they pay out in BTC. How exactly the the BTC/USD exchange rate important?

You're repeating the same "but I made a profit in USD" fallacy that has been circling these areas for ages. If I just buy and hold BTC, I also profit in USD if the BTC/USD exchange rate goes up. If I spend $10000 buying BTC and $10000 buying mining stuff, at the end of the road the BTC-purchase will have performed better. And since buying and holding BTC is significantly less effort and risk than buying and operating mining equipment (even through hosted services such as cex.io), there is no reason to pick the inferior investment of mining over the superior investment of buying and holding BTC.

[mvidetto]

I would have to agree that both are terrible investments. However, cointerra is not as bad primarily because if they do ship on time December/early January then it may be worth the price depending on competition.  Unfortunately, I am not completely confident they will ship on time after seeing the problems with hashfast etc.  If they ship 2-4 weeks later than originally promised it is certainly not a good investment imo.

[lordfirefox]

Yeah mining isn't worth it, in fact all miners should just stop mining bitcoins because they'll never make enough to...oh wait we need miners to mine the bitcoins we buy otherwise the supply dries up eventually.

Yeah telling miners to stop mining bitcoin is going to be cutting off your long tail. Brilliant stratagy. Really. 

[Vorksholk]

I'd like to point out that, as ASIC hardware is tied to USD prices, investing in mining hardware right now might see an awesome ROI.

[NorbyTheGeek]

oh wait we need miners to mine the bitcoins we buy otherwise the supply dries up eventually.

It's worse than that.  Without miners, no transactions are confirmed.  Miners make the network work.

I started on cex.io less than 36 hours ago.  Only deposited .25 BTC, which bought me 3 GH at the time.

With some BTC and NMC mining income and some casual trading, I now have 3.5 GH.  More than a block erupter's worth of additional hashing for doing very little.  At the current trading prices, if I cash out right now I'll end up with .30 BTC for a 20% gain in less than 36 hours.

As I understand the maintenance fees, it currently ends up being 2.4% of mining income.  I've seen pools charge more than that.

I'm not paying for electricity.  I'm not waiting for hardware to ship.  I'm not dedicating additional hardware to run mining.

And no, I don't have any referrals.  Nor do I have a referral link in my .sig.

[ScaryHash]

If it's not in your hand, you don't own it, you don't control it, and you will be screwed because you are not there to deal with issues.