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Author Topic: 4 x HD5970 What is the cheapest/best motherboard?  (Read 11486 times)
ttul
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March 22, 2011, 09:43:53 AM
 #21

We already passed the point where buying hardware was profittable.

I did the computation for myself. Adding a new video card (only the card), a good bitcoin generation/dollar one, will not pay for itself. I didn't count the electricity.

How are you calculating profitability? I came up with the following naive analysis - can you guys poke holes in it and tell me how this isn't profitable?

 - Each server has 2x XFX Radeon 5970 boards @ $900 each (approx)
 - The rest of the server costs $1000
 - Total server cost is $3000
 - At the current difficulty level, each server will crank out 50BTC approximately every 1.66 days (4 x 5970 GPUs)
 - 50BTC is worth 0.83 x 50BTC = about $40 USD
  + Implies daily revenue of approximately $40 / 1.66 = $24/day
 - Power consumption per server is 1.5kW
 - Power cost is therefore 1.5 x $0.10 x 24 = $3.60/day
 - Net after power is about $20/day per server
 - Days to recover hardware investment: $3000 / $20 = 150 days
 - Depreciation rate of hardware: 45%/year -> implies $1350/year loss in value
 - Net profit per year including hardware depreciation is $20 x 365 - $1350 = $5950

How is this not incredibly profitable? I must be missing something.

Thanks!
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marcus_of_augustus
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March 22, 2011, 10:02:32 AM
 #22


Yep, you are missing something.
2 5970's (4 GPU) maxes out at around 1.2 GHash/sec
http://www.alloscomp.com/bitcoin/calculator.php
That's 50 BTC every 3.125 days roughly ... assuming 100% uptime.

So you can roughly half everything you wrote after this point.

ttul
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March 22, 2011, 10:21:30 AM
 #23

We already passed the point where buying hardware was profittable.

I did the computation for myself. Adding a new video card (only the card), a good bitcoin generation/dollar one, will not pay for itself. I didn't count the electricity.

How are you calculating profitability? I came up with the following naive analysis - can you guys poke holes in it and tell me how this isn't profitable?

 - Each server has 2x XFX Radeon 5970 boards @ $900 each (approx)
 - The rest of the server costs $1000
 - Total server cost is $3000
 - At the current difficulty level, each server will crank out 50BTC approximately every 1.66 days (4 x 5970 GPUs)


Okay, this is where I went wrong. The days to generate 50BTC on average is double this. I was assuming that the CPUs were doubly as powerful as they really are. If you cut in half the revenue run-rate, then mining is a lot less profitable than I modeled above. But still, my model shows an annual return on capital after financing, power, depreciation and conversion costs of close to 60%. Very few businesses do that well.
eMansipater
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March 22, 2011, 11:06:13 AM
 #24

Your other potential issue is in assuming the difficulty rate will be constant for a whole year--in fact, as long as mining at any scale remains profitable, it is likely to increase continually.

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
Visit the BitCoin Q&A Site to ask questions or share knowledge.
0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
ttul
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March 22, 2011, 12:05:21 PM
 #25

Your other potential issue is in assuming the difficulty rate will be constant for a whole year--in fact, as long as mining at any scale remains profitable, it is likely to increase continually.

Got it - however, as I understand it, as the difficulty increases and profitability decreases, fewer people will find mining worthwhile, eventually leading to a reduction in difficulty if the number of blocks being solved drops below the required rate to keep the market going. There must be some steady state and I wonder how close we are to it. I have heard others argue that it's unlikely we'll see the same pace of difficulty growth in the near future as has been the case for the past several months.
wahbasah
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March 22, 2011, 01:16:34 PM
 #26

for daisy chain two power supplies in your computer

http://www.kustompcs.co.uk/acatalog/info_1919.html
eMansipater
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March 22, 2011, 08:56:06 PM
 #27

Your other potential issue is in assuming the difficulty rate will be constant for a whole year--in fact, as long as mining at any scale remains profitable, it is likely to increase continually.

Got it - however, as I understand it, as the difficulty increases and profitability decreases, fewer people will find mining worthwhile, eventually leading to a reduction in difficulty if the number of blocks being solved drops below the required rate to keep the market going. There must be some steady state and I wonder how close we are to it. I have heard others argue that it's unlikely we'll see the same pace of difficulty growth in the near future as has been the case for the past several months.
I'm not sure the ultimate equilibrium will be profitable, because there are always people who are not paying for their electricity and/or hardware--these people will mine no matter what the price/difficulty.

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
Visit the BitCoin Q&A Site to ask questions or share knowledge.
0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
Jered Kenna (TradeHill)
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March 23, 2011, 12:05:15 AM
 #28

Your other potential issue is in assuming the difficulty rate will be constant for a whole year--in fact, as long as mining at any scale remains profitable, it is likely to increase continually.

Got it - however, as I understand it, as the difficulty increases and profitability decreases, fewer people will find mining worthwhile, eventually leading to a reduction in difficulty if the number of blocks being solved drops below the required rate to keep the market going. There must be some steady state and I wonder how close we are to it. I have heard others argue that it's unlikely we'll see the same pace of difficulty growth in the near future as has been the case for the past several months.
I'm not sure the ultimate equilibrium will be profitable, because there are always people who are not paying for their electricity and/or hardware--these people will mine no matter what the price/difficulty.

Also figure in the people that don't care or don't realize they're losing a little and a few other cases.

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