Why do I keep hearing mining is unprofitable?

[RodeoX]

The question is how many of these mining rigs do you own....



We are at a stage that requires an investment to get into mining.  

[Bitships]

The projected difficulty for late February 2014 is somewhere around 3 billion on the low side and something like 5 - 6 billion on the high side. 312 Ghs at that difficulty and the current exchange rate for bitcoins would yield about $425 per week with the yield dropping about 15 - 20 % every 12 days or so. The yield for 6 billion difficulty would be about $200 per week. That weekly yield would give about $20,000 or $10,000 earnings WITHOUT any further increase in difficulty which will never happen.

Morris

What causes the yield to drop about 15-20% each 12 days? The difficulty increase?

Yes it increases as time passes by and more coins are in the market.
Honestly, Bitcoin mining is not profitable anymore. Any coin's mining returns good ROI in its initial stages.

I finally get it

Thanks everyone.

So how do people intend to stay in the game? I mean, what kind of a rig would give enough GH/s/J and not cost too much to eat into the revenues?

Some people are mining other coins like LTC. Sometimes they are more profitable, because you can sell them for Bitcoins and gain more BTC then mining it.

[itayl2]

Honestly, Bitcoin mining is not profitable anymore. Any coin's mining returns good ROI in its initial stages.

Except that it is...

Buy a Cube, run it for 2 months, sell the Cube.  You will end up with more BTC than you started with.  I guarantee it.

Details / Links?

[Damnsammit]

Honestly, Bitcoin mining is not profitable anymore. Any coin's mining returns good ROI in its initial stages.

Except that it is...

Buy a Cube, run it for 2 months, sell the Cube.  You will end up with more BTC than you started with.  I guarantee it.

Details / Links?

https://bitcointalk.org/index.php?topic=349787.60

Buy it for 1BTC, run it for a little bit... you should be able to mine close to 1BTC + electricity costs in 2 months... then anything you can sell it for is profit.

Note:  It does come from a rare ASIC company that actually ships its orders out.

[itayl2]

So there are no other setups that would cost below 15K and would actually ship before March 2014 (and turn a profit)?

What about the Black Arrow Prospero X-3 or the KnC Neptune?

[Damnsammit]

So there are no other setups that would cost below 15K and would actually ship before March 2014 (and turn a profit)?

What about the Black Arrow Prospero X-3 or the KnC Neptune?

March 2014 is so far away... high risk should mean high reward, but history makes us weary of the future...

[willpower101]

OP these are your basic factors ranked in order of how they affect bottom line:

• Initial investment in equipment cost
  Day you can start mining
  DIFFICULTY on that day
  Estimated difficulty increase based on historical data http://mining.thegenesisblock.com/
  Electricity cost (which is negligible in most cases for BTC but absolutely necessary for scrypt)

As the value of BTC goes up the cost of currently available equipment goes up.

In your scenario, you could spend 13k on a 312ghs miner starting TODAY. And make your cost back by the end of January.
Then you could sell your 13k miner for roughly what you have in it (unless btc tanks) and have 24k total profit.

To get the same with investing, you'd have to buy ~13 btc today and hope they double to $2000 USD by the end of Jan.
(This investing in BTC thing was great when you could get 60 for 13k, but it's not as glamorous when you can only get 13btc.

The PROBLEM happens when you spend 13k to get a 312ghs miner in Late January or early Feb.

Starting January, you'd only make half your investment back.
Starting february, you'd only make $3k of your original 13k back!
Of course, once you sell the equipment, you can break even or come out a couple of BTC ahead. But this particular scenario you posit is a bad one.

With an 1800w miner that cost 13k, you'd need to start off mining at 550GHS in January, or 1100ghs in February to even BREAK EVEN in 2014.


One thing to note that's not on this list is the value of the BTC. I like to estimate their increase in my calculations. Other's aboslutely do not do that because it's so speculative. For you I have left that part out.

[willpower101]

So there are no other setups that would cost below 15K and would actually ship before March 2014 (and turn a profit)?

What about the Black Arrow Prospero X-3 or the KnC Neptune?

Neptune is only profitable if it ships in Q1, anyone who gets one in Q2 will be SOL and barely be able to make their investment back. Anyone who starts the Neptune in April will start making negative BTC by the end of July. They will have made $8000 worth of btc minus $13.5k of initial investment, so Negative 5500ish. Once they sell their Equipment, they might be able to come out even or probably a little ahead.

The ONLY offset to this is if the difficulty doesn't grow as fast (unlikely) or the value grows by 50% per month in the next 6 months. (Highly, speculative, insanely actually.)

I don't know about the other two, but the knc neptune is a bust unless it gets here in january or february. If they could say "Guaranteed Q1" I'd be on board.

[galbros]

Mining is just speculating on bitcoin in a different way.  Right now you will at best break even mining, so by mining you are essentially saying that you think the price of BTC will rise.  That is the same thing as simply taking the same amount of money and buying some BTC.  However, with mining there is less of a trail to you of how you got your BTC versus an exchange.

If you look back on this forum this has almost always been the case.  Mining wasn't profitable at BTC prices of those times either, but it damn sure was in hindsight.  Hence my point that mining is speculating just in a different way.

So I would say if you want to learn more about bitcoin by all means mine away!  But don't expect to make money unless BTC continues its rise in price.

Good Luck!

[cttrade23]

I keep reading that mining the other coins is more profitable at the moment due to the massive resources already mining bitcoin. I would like to mine the others but am wondering whether the same equipment is as efficient at mining the other coins. I know Litecoin uses a different algorithm. Does anyone here know if the ASIC miners soon available will mine Litecoin and other SCRYPT coins efficiently?

[zeraTunerse]

Does anyone here know if the ASIC miners soon available will mine Litecoin and other SCRYPT coins efficiently?

I have no info about ASIC miners soon available for SCRYPT coins. It might not happen in next year at all, it would require a lot of investment (or preorder model)

[Damnsammit]

Does anyone here know if the ASIC miners soon available will mine Litecoin and other SCRYPT coins efficiently?

No.

There was a failed Scrypt FPGA, and the ASIC development seems a bit far out there.

But, yes, if you are mining Bitcoin with a GPU, then you are wrong for it... plain and simple. 

[willpower101]

Mining is just speculating on bitcoin in a different way.  Right now you will at best break even mining, so by mining you are essentially saying that you think the price of BTC will rise.  That is the same thing as simply taking the same amount of money and buying some BTC.  However, with mining there is less of a trail to you of how you got your BTC versus an exchange.

I think it's more about the tangible assets that you can liquidate if the price falls.

If you buy a 12k miner today and the price falls by half tomorrow, you can sill sell that 12k miner for almost as much as you paid for it as long as you are reasonably quick about it before the machine values start to fall too. (Their value lags behind btc by 4-8 weeks)

If you buy 12k worth of btc and it falls to half tomorrow then you just lost 6k flat out.

I'm currently looking at scrypt mining ltc and converting to btc. Buying preconfigured miners isn't all that profitable, but if you configure one yourself then the barrier to entry is slightly higher and the cost slightly lower. It works out to be a small profit.

Honestly, Bitcoin mining is not profitable anymore. Any coin's mining returns good ROI in its initial stages.

Except that it is...

Buy a Cube, run it for 2 months, sell the Cube.  You will end up with more BTC than you started with.  I guarantee it.

That is IF you can get a cube right this second.

How long before those cubes ship?

[CrypticWritings]

13,500 USD are round-about 11.7 Bitcoins (today). With 312 GH/s you will never reach 11.7 Bitcoins, not even in two years.

That's speculation, that's not set in stone in any way

[thebitcoinme]

Unprofitable, in my view, is due to a few reasons:

1) some people purchased the physical mining machines back at the beginning of the year when the cost was really expensive and the machines never got delivered to them until later on in the year when the cost of the machines decreased since the amount that can be mined decreased. This means: purchased at a higher rate, but now mining at a lower rate = unprofitable.

2) electricity bills; you have to constantly have your machines on.

3) limited mining capacity of the physical machines; each machine can only produce up to a certain amount of bitcoins, which means, unless the value of bitcoins increase, you may only be breaking even.

A SOLUTION:

Sign up for cloud mining, which doesn't have all these issues.

[CEG5952]

difficulty is rising too fast based on the length of time between order and commencement of mining

if you think bitcoin is going to 6 or 7 figures, it will surely be profitable to mine now..... long as you're not selling now

[Damnsammit]

Honestly, Bitcoin mining is not profitable anymore. Any coin's mining returns good ROI in its initial stages.

Except that it is...

Buy a Cube, run it for 2 months, sell the Cube.  You will end up with more BTC than you started with.  I guarantee it.

That is IF you can get a cube right this second.

How long before those cubes ship?

Knowing CanaryInTheMine, I'll probably have it in hand in the next 7-10 days.

It should break even in about 45-60 days after I receive it... lead time was already taken into account.

[dzarmush]

Once they sell their Equipment, they might be able to come out even or probably a little ahead.

This is one more thing I don't get. I also read about it in group buys. They say: "when our group miners are no longer profitable we sell them and share the money". But who is going to buy non-profitable miners?

[Damnsammit]

This is one more thing I don't get. I also read about it in group buys. They say: "when our group miners are no longer profitable we sell them and share the money". But who is going to buy non-profitable miners?

Here ya go.  People are always buying non-profitable miners... I have no idea why.

https://bitcointalk.org/index.php?board=75.0

and

www.ebay.com

[CEG5952]

people are enamored with the idea of mining bitcoin. like they think it is creating money out of thin air. they will keep buying no matter how bad the margins.

not me....