No ROI on future Mining, its a FACT!

[tibdraw]

or I am missing a very crucial point somewhere.

Basically, I was thinking of investing in 2T miners from various suppliers.

Lets take the most optimistic example, solar panels, electricity is free, all items gets shipped in time, lets say in March 2014 and also take the predicted end of Feb 2014 difficulty level of 5.4 mill as a base for March 2014

(http://www.vnbitcoin.org/bitcoincharts.php)

it means I can mine 0.18 coins a day till about 10 days, when the difficulty jumps to 7.1mill what makes 0.14 coins a day for 10 days:

0.18 BTC 10 days = 1,8 BTC - diff 5.4mill - 1 March 2014
0.14 BTC 10 days = 1.4 BTC - diff 7.1mill - 11 March 2014
0.11 BTC 10 days = 1.1 BTC - diff 9.1mill - 21 March 2014
0.08 BTC 10 days = 0.8 BTC - diff 11.1mill - 1 April 2014
0.06 BTC 10 days = 0.6 BTC - diff 15.1mill - 11 April 2014

Total 5.7BTC mined in a bit over a month in a very very optimistic scenario, now the cheapest 2Th is from black arrow for over $5k, what is over 7+BTC.

If I do the very same calculations with a 60Gh BFL mining rig, I get exactly the very same poor result.

It is just make no sense to buy any mining rig, rather than to buy the BTC instead, not mention lot less stressful and simple solution with better ROI.

Can someone pls enlighten me what I am missing from the calculations? how come that these rigs are sold? (neptunes for example?) and the BFLs are still selling way over priced on ebay?

Thanks much
Regards
Pete

[1715687385]

1715687385

[1715687385]

1715687385

[1715687385]

1715687385

[-ck]

It's been this way since shortly after ASICs became available, but doesn't change people buying hardware in case... (In case of what? You decide). Most ASIC purchasing miners use a cognitive bias known as "post purchase rationalization" (google/wiki it) to somehow justify that it was worth it and profitable through some argument regarding change of value in BTC, even though exchanging money into BTC is profitable whereas buying mining equipment is the most expensive way to turn fiat dollars into BTC.

Nothing to see here, move along.

[jamesc760]

your diff factor is WAY too LOW. It should be in the BILLIONS, not millions.

[Grix]

Well for one you assume a lot about the future difficulty. Just because the difficulty is doubling every month now doesn't mean it will continue to do so. I personally don't believe we'll see 10 billion until at least june-july, and start plateauing after that.

[tibdraw]

your diff factor is WAY too LOW. It should be in the BILLIONS, not millions.

yep, sorry, you are right there

[tibdraw]

Well for one you assume a lot about the future difficulty. Just because the difficulty is doubling every month now doesn't mean it will continue to do so. I personally don't believe we'll see 10 billion until at least june-july, and start plateauing after that.

I was just following the prediction from the linked website (in the first post)
so far they were spot on, although I was only following it in the last 6 months or so.

to be honest, I was quite gutted by the result of my calculations, I had funds available to buy a few 2THs miners from various suppliers, but it just made no sense, main reason opening this thread was to see if I made a mistake and there is still some way to mine profitably.

at the end I bought BTC for the funds and made 15+% on it already.

[Grix]

at the end I bought BTC for the funds and made 15+% on it already.

Probably a smart move

[smithytzu]

Well for one you assume a lot about the future difficulty. Just because the difficulty is doubling every month now doesn't mean it will continue to do so. I personally don't believe we'll see 10 billion until at least june-july, and start plateauing after that.

I was just following the prediction from the linked website (in the first post)
so far they were spot on, although I was only following it in the last 6 months or so.

to be honest, I was quite gutted by the result of my calculations, I had funds available to buy a few 2THs miners from various suppliers, but it just made no sense, main reason opening this thread was to see if I made a mistake and there is still some way to mine profitably.

at the end I bought BTC for the funds and made 15+% on it already.

The biggest risk factor for me with my calculations is the likely/unlikeliness of the black arrow/hashfast etcs delivering on time.

I just don't see, maybe apart from kncs Neptune, any of them delivering on time.

In the end, nobody knows what will happen, the only thing you can say for certain is buying btc has a lot less variables involved than buying mining equipment.

[WilcoLaad]

Don't mine. Basic economics.

Do you think ASIC manufacturers are at all interested in whether you turn a profit? They're selling shovels to gold diggers, but can also dig themselves.

The price you see is the minimum of what ASIC manufacturers are willing to sell their equipment at (i.e. the maximum amount of money they can make on the equipment if they didn't sell it and just mined themselves). Anything less and they'll keep the equipment and mine themselves (many probably are doing this right now). Don't think that any ASIC manufacturer has your welfare in mind - they are just looking out for themselves.

Best bet is to manufacture your own ASIC. Otherwise don't mine. Buy BTC if you're bullish.

[superresistant]

Some buy it for fun.

[PolkRB]

If you buy 2TH/s for $5k today, and BTC price will be $10,000 in a year.... just a thought...

[BunworthBanshee]

If you buy 2TH/s for $5k today, and BTC price will be $10,000 in a year.... just a thought...

but if you buy 6.23btc today and worth $62300 in a year!!! just a better thought.....

[WilcoLaad]

Yes exactly. It is always better to just buy the BTC directly unless you can make your own ASIC miners.

[Kenshin]

Everyone should stop mining. And buy bitcoins instead. 

[cp1]

ASIC companies would be stupid to sell their machines for less than they can make.  Otherwise they'd just mine with them.

[BunworthBanshee]

I think every miner, that bought an asic, would of made more by buying btc instead. if there is anybody, that has more btc from mining I would be very surprised.

[traiz]

I think every miner, that bought an asic, would of made more by buying btc instead. if there is anybody, that has more btc from mining I would be very surprised.

I brought a knc jupiter when btc was close to $1000USD.
So it would have gotten me 5, maybe 6 BTC.
So far, my jupiter hashed close to 7 BTC.

[Anddos]

Asics are about to make them selfs extinct,you have been warned

[cdog]

https://bitcointalk.org/index.php?topic=398290.0

[heisenbit]

Some people cannot buy high amounts of BTC given local goverment regulations, such as myself. I would gladly buy 5kUSD worth of BTC today, but it's just a no-go given lack of payment methods. Given this, buying a 2THS mining contract due to start in March seems the easiest way to get a hold of some BTCs...

[heisenbit]

If you can buy hardware, you can buy BTC.  Just find a trusted escrow like John K. and then find someone to do a direct sale.

Otherwise you are going to end up spending 10k to buy 5k worth of bitcoin.

Not really. At least in my country (Argentina) you are not allowed to make wire transfers in USD unless you are paying for a contractual service or with travel purposes. The only leaphole I found in this USD shutdown is to cloud-mine, and I know for a fact that some other countries have similar situations in regards to foreign currencies.

[heisenbit]

@Entropy-uc  a significant value. Since USD is unavailable, many people turned into BTC to have savings in a currency different than ARS due to the devaluation. To give you an idea, USD has an official government exchange rate, which is 1USD=6.50ARS more or less, and then there is the "real" exchange rate, which is 1USD=10.50ARS
People are selling/buying 1BTC at 12000ARS more or less, which translates to roughly 1100USD at today's exchange rate (1BTC=800USD or so)

If you have Bitcoins, secure some buyers, come to Argentina and then convert your BTC at the "real" value, you'd still profit, all while eating good steaks, wine and women

[af_newbie]

Well for one you assume a lot about the future difficulty. Just because the difficulty is doubling every month now doesn't mean it will continue to do so. I personally don't believe we'll see 10 billion until at least june-july, and start plateauing after that.

So difficulty projections are religion now? Difficulty will be doubling every month until all 98%+ coins are mined.  Why would you think the difficulty increase would slow down?
The hardware will be produced and deployed.  Older hardware will continue to run until mining profit is there.  You honestly believe people will stop buying or manufacturers will stop making the hardware?

I think there will be more irrational actors entering bitcoin (and alt) space.  These folks will not stop buying mining hardware just because you think they should.

[ScaryHash]

It depends on what you mean by ROI, and when you expect ROI.

I'll give you a few facts, from a personal standpoint.

I got into BTC in May, total noob at it. Many people helped me on these nice forums, so I will help you, hopefully.

I decided I would buy a 7950 and a 7850 (this was middle of May, 2013). That was ~$500 bones in graphics cards (not including another computer, but I needed one anyway, so that doesn't count). Those graphics cards started hashing at about 1.6 million difficulty, and mined all summer long, for about 1.5 BTC.

Needless to say, when BTC hit about 700 in october-ish, that BTC was put to very good use.

So, ROI factor was 2x. Those graphics cards are still mining LTC right now, at a pure profit.

I'm not boasting in anyway. In fact, I wish I had gotten into BTC much earlier.

My point is, do not worry about ROI. Learn about BTC, get the miners going, learn to run them, overclock them, build some rigs, have a little fun !!! Fight the current fiat monetary system while at it ! Rejoice in rebellion ! That reminds me, I gotta send CKOlivas a donation finally....be right back.

If you constantly worry about making your money back, you might as well piss away 5k and get a Scottrade account and start gambling in the stock market. But of course, you will be supporting a corrupt and evil economic system, not digital monetary freedom.

[cp1]

I decided I would buy a 7950 and a 7850 (this was middle of May, 2013). That was ~$500 bones in graphics cards (not including another computer, but I needed one anyway, so that doesn't count). Those graphics cards started hashing at about 1.6 million difficulty, and mined all summer long, for about 1.5 BTC.

So you turned 5 BTC into 1.5 BTC?

[ScaryHash]

I decided I would buy a 7950 and a 7850 (this was middle of May, 2013). That was ~$500 bones in graphics cards (not including another computer, but I needed one anyway, so that doesn't count). Those graphics cards started hashing at about 1.6 million difficulty, and mined all summer long, for about 1.5 BTC.

So you turned 5 BTC into 1.5 BTC?

minus electricity and the value of 6 months of his labor.

Even if you just count the electricity cost as lost opportunity to buy bitcoin it's more like 8 BTC for 1.5 BTC.

But the cards could be sold for .2 BTC or so!

I don't look at it that way. The cards were also used for gaming type stuff, and I turned $500 into $1500, using my BTC hobby. Not many hobbies you can do that with.

I would have bought the cards anyway, is my point. LTC and Bitcoin is just a fun hobby, I don't think of it as "OMG, I have to have ROI" or " I cuda, shuda, wuouda bought BTC at $2/btc, and sold it at $1000/BTC".

That's just a way to give yourself headaches.

[cp1]

I don't look at it that way. The cards were also used for gaming type stuff, and I turned $500 into $1500, using my BTC hobby. Not many hobbies you can do that with.

True, if everything is free then you will make a profit.  If you view it as a hobby then you don't need to make a profit.

[N[e]wBie]

buying a miner is probably one of the best ways to launder money in the world

[ssbn506]

buying a miner is probably one of the best ways to launder money in the world

I don't know anything about laundering money but it doesn't seem like a good way to do it. Or at least no better than buying a BTC then selling that BTC to someone ells. You still have to give that stolen money to someone for the hardware then wait 6 months to get sum of it back. I would think their are much better ways.

 

[cp1]

I'm sure it's easier to use a casino to launder money.  Or HSBC if you're a terrorist.

[ssbn506]

buying a miner is probably one of the best ways to launder money in the world

I don't know anything about laundering money but it doesn't seem like a good way to do it. Or at least no better than buying a BTC then selling that BTC to someone ells. You still have to give that stolen money to someone for the hardware then wait 6 months to get sum of it back. I would think their are much better ways.

 

It's a pretty good method if you define laundering money as turning $10 000 in your pocket into $0, with some future hope it might be $4000

I wonder if every 8 days criminals get shot after they find out they overlooked difficulty changes and then learn the best way to launder money is not so good.

[tibdraw]

buying a miner is probably one of the best ways to launder money in the world

I don't know anything about laundering money but it doesn't seem like a good way to do it. Or at least no better than buying a BTC then selling that BTC to someone ells. You still have to give that stolen money to someone for the hardware then wait 6 months to get sum of it back. I would think their are much better ways.

 

It's a pretty good method if you define laundering money as turning $10 000 in your pocket into $0, with some future hope it might be $4000

I wonder if every 8 days criminals get shot after they find out they overlooked difficulty changes and then learn the best way to launder money is not so good.

hahah, if there was a "like" button on posts I would press now

[crocko]

buying a miner is probably one of the best ways to launder money in the world

You are sooo out of topic !

And FYI, mining / trading BTC and other crypto-currencies are not related to the criminal activities !

[superfastkyle]

-People will stop buying asic for any price soon. It probably won't be until after 1st gen devices can't pay for their own electric costs. Then people will stop and realize what they did. Buying gpu's for mining had little risk, which in fact ended up being practically no risk. People haven't realized that asic is not the same. Even the gpu's I bought at the peak in cost ($500 for a 5970 in late 2012 for example), I have had an opportunity to resell at almost the same cost at least once.

[rext]

once people stop investing in asics because of the electrical costs, the difficulty charts will start ranging if not it will go down just a little bit. For those with free electricity, business as usual.

[PolkRB]

Bitcoin will revolutionize not only money/markets etc, but many other aspects of our life. It will bring free abundant energy possibilities soon enough.

[e521]

Bitcoin will revolutionize not only money/markets etc, but many other aspects of our life. It will bring free abundant energy possibilities soon enough.

Bitcoin is based on PoW, how can you say that?

[krampus]

Bitcoin will revolutionize not only money/markets etc, but many other aspects of our life. It will bring free abundant energy possibilities soon enough.

Bitcoin is based on PoW, how can you say that?

Because unicorns, of course.

[PolkRB]

Bitcoin will revolutionize not only money/markets etc, but many other aspects of our life. It will bring free abundant energy possibilities soon enough.

Bitcoin is based on PoW, how can you say that?

What's PoW?

[krampus]

What's PoW?

Proof of Witchcraft, which is very well known for its energy efficiency.

[PolkRB]

What's PoW?

Proof of Witchcraft, which is very well known for its energy efficiency.

Got ya! thanks!

[Mr.V]

It would be funny if companies started working on building machines that could harvest huge amounts of free energy instead of developing machines that could produce more hashing power. All because of Bitcoin baha

[CoinDaddy]

Obviously for it to make any sense to mine, which must continue in order for there to be new coins, the price of bitcoin must rise.

I don't think the price is overinflated at all, and I think miners that have been in this game since day 1, that have a good portion of the coins should hold out for an even higher price to sell at. Sellers can pretty much determine the value just by holding at that value.

Hobby miners only have a coin here and there to sell, so are pretty ineffectual at affecting the market.  That leaves miners and speculators who both want to see higher prices, to watch their fortunes rise.  Although I guess traders do love those crazy huge dips and swings.

It would be a good idea to start a bitcoin marketing group, where we could do things like democratically vote to sell at certain prices, to allow all involved to recoup mining costs and make a little profit.  I think this would go far towards furthering the stability/legitimacy of bitcoin and the careers of miners.

[chesthing]

I decided I would buy a 7950 and a 7850 (this was middle of May, 2013). That was ~$500 bones in graphics cards (not including another computer, but I needed one anyway, so that doesn't count). Those graphics cards started hashing at about 1.6 million difficulty, and mined all summer long, for about 1.5 BTC.

So you turned 5 BTC into 1.5 BTC?

What is it with people that think mining and speculating is an either/or proposition? He probably didn't want to risk buying btc at the time and wouldn't have bought them anyway. It makes perfect sense to me to mine and buy/sell. Mining pays off at any level above the cost of electricity, buying only pays off if the price rises. Also, if it all goes to hell you at least have some cards to sell. It's so easy to see black and white but investing in crypto just isn't that simple.

[Zeal0t]

I like mining for its fun factor, and to me there is nothing wrong with having a hobby that fails to pay the bills.

[ScaryHash]

 
Why can't you understand that taking 5 BTC, or funds equal to it, and turning it into a machine that will only mine 2 BTC before the cost of operating it exceeds the revenue from mining is a bad plan?

Mining hardware is an option on future coins.  If you can buy equivalent coins now cheaper than the mining hardware it's a bad investment.  It might ALSO be a bad investment to buy coins but that is an independent decision.  The first question is can I acquire more coins in the future buying this gear?  And if so, does the gain in coins at some point in the future justify giving up access to the funds, and the risk of hardware failure, late or non-delivery, and pay for the work of operating the equipment.

So how is that different than buying Catterpillar stock, or IBM stock, or dumping $500/month into your mutual funds for retirement, hoping they will go up and you'll have enough to live on, assuming the government does not devalue the hard earned money you have saved up?

20 years from now, if the printing presses (or digital ones), keep rolling like they are now, you won't be able to buy a burger with $10,000, and your retirement will be worth crap.

I'd rather take my chances with Bitcoin than with the Federal Reserve and crappy government social security promises. Veteran's pensions just got cut, on the whims of Congress. What's to say that won't happen again, and again, and also with Social Security?

[Zeal0t]

20 years from now, if the printing presses (or digital ones), keep rolling like they are now, you won't be able to buy a burger with $10,000, and your retirement will be worth crap.

I'd rather take my chances with Bitcoin than with the Federal Reserve and crappy government social security promises. Veteran's pensions just got cut, on the whims of Congress. What's to say that won't happen again, and again, and also with Social Security?

That sounds terrible...

[edgar]

20 years from now, if the printing presses (or digital ones), keep rolling like they are now, you won't be able to buy a burger with $10,000, and your retirement will be worth crap.

I'd rather take my chances with Bitcoin than with the Federal Reserve and crappy government social security promises. Veteran's pensions just got cut, on the whims of Congress. What's to say that won't happen again, and again, and also with Social Security?

That sounds terrible...

thats about the state of things right now, and it isnt getting any better!!

just for the sake of it i'll share a small story with you...

when Zetacoin was released, i put all my feeble mining power on it and mined a few million coins in a matter of weeks

worthless at the time. today theyre worth about 300 BTC... (i actually sold 2 million a month or so ago and put some of those coins down onto neptune pre-orders)

who can tell me that was a bad move??

no-one!

i did the same with Asiccoin & a few others which im waiting on gaining value eventually.

BTC is not the be all & end all of mining with ASICs.

dont forget there are those among us that dont want you to mine, successfully or at all.

do what you think is right, and take the rough with the smooth, its not ALL unicorns!

AGAIN - dont believe the mouthiest critics, they may well have vested interests.

one of them 'kindly' (and rudely) offered me 2.5btc for a rig i paid 78btc for and was (and still am) unhappy with...

tbh, it seems the biggest critics and the biggest fanboys are not to be trusted at all!!

i am neither.

EDIT2ADD - dont trust me either, i might be making it all up!!

[ScaryHash]

That's an awesome story Edgar.

I do have to pay more attention to the other namecoins.

Thank you.

[Nemo1024]

Some buy it for fun.

Exactly. Or to do a small altruistic contribution towards support of the network, fully aware that it will not give a positive ROI.

Everyone should stop mining. And buy bitcoins instead. 

In theory that would mean that the network will collapse, but it won't. See below.

Asics are about to make them selfs extinct,you have been warned

No, it's a self balancing system. Give it time to balance on the edge of profitability.

In conclusion if you plan to buy a miner for any other reason, than revenue, then go ahead with complete disregard to profitability calculators as they are not relevant with your altruistic goal in mind; otherwise, just buy BTC.

[ScaryHash]

Since you have no interest in a discussion based in reality, go do whatever you want.

Hand waving about dollar depreciation is meaningless when inflation is 4% a year and your are comparing to mining difficulty which inflates 30% every 2 weeks.

You may want to check your statistics.

Inflation is running at WAY more than 4% a year (the data below is for the US), and lots of other places, like Zimbabwe, Venezuela, and just about everywhere else in the world.

Seehttp://www.shadowstats.com/alternate_data/inflation-charts

As for the reality of rising mining difficulty, it makes BTC harder to get.

This means increasing difficulty runs opposite that of inflation, thus the rising difficulty level is a measure of deflation.

Increasing difficulty is a good thing, it makes BTC more scarce, and leads to a balance between inflation (the increasing number of BTC), and deflation (rise in difficulty, making new BTC harder to get). You can't print BTC, unlike every other fiat currency out there.

[glendall]

Been saying this for awhile. Bitcoin is so popular now that we are on a big race to the bottom.

What's the bottom? Well someone always is willing to do something for less, globally.  Like I charge 10$ to jump around my house, someone, somewhere will offer to it for 5$, Then some other dude will offer to do for only a dollar ! Then and so and so, until:

For Bitcoin you are going to need next to free power, and a large amount of money to get into, and for those people, they'll be making just pennies profit a day. That's where we are going. That's just globalization.

Bitcoin wasn't as popular before so it wasn't the case, but now that it is much more widely known, we are racing to the bottom. It doesn't matter the industry that much, its the same in most fields.

I definitely don't think we are there yet. But I do think the good days of mining are over , and that is where we are headed.

[pjviitas]

or I am missing a very crucial point somewhere.

Basically, I was thinking of investing in 2T miners from various suppliers.

Lets take the most optimistic example, solar panels, electricity is free, all items gets shipped in time, lets say in March 2014 and also take the predicted end of Feb 2014 difficulty level of 5.4 mill as a base for March 2014

(http://www.vnbitcoin.org/bitcoincharts.php)

it means I can mine 0.18 coins a day till about 10 days, when the difficulty jumps to 7.1mill what makes 0.14 coins a day for 10 days:

0.18 BTC 10 days = 1,8 BTC - diff 5.4mill - 1 March 2014
0.14 BTC 10 days = 1.4 BTC - diff 7.1mill - 11 March 2014
0.11 BTC 10 days = 1.1 BTC - diff 9.1mill - 21 March 2014
0.08 BTC 10 days = 0.8 BTC - diff 11.1mill - 1 April 2014
0.06 BTC 10 days = 0.6 BTC - diff 15.1mill - 11 April 2014

Total 5.7BTC mined in a bit over a month in a very very optimistic scenario, now the cheapest 2Th is from black arrow for over $5k, what is over 7+BTC.

If I do the very same calculations with a 60Gh BFL mining rig, I get exactly the very same poor result.

It is just make no sense to buy any mining rig, rather than to buy the BTC instead, not mention lot less stressful and simple solution with better ROI.

Can someone pls enlighten me what I am missing from the calculations? how come that these rigs are sold? (neptunes for example?) and the BFLs are still selling way over priced on ebay?

Thanks much
Regards
Pete

Regardless of whether mining is profitable or not is irrelevant...without it there would be no Bitcoin.

[pjviitas]

Regardless of whether mining is profitable or not is irrelevant...without it there would be no Bitcoin.

There is a world of difference between operating existing gear, and buying new hardware.

For the existing gear, your capital is already spent.  All you need to do is cover power, network and labor.  Any earnings above this level recover some portion of the capital you investing into the hardware, so you run it until your power costs exceed income.  Even if all you manage is to reduce the amount of your initial investment that is lost, a rational actor runs the gear.

For a rational person to buy new equipment there needs to be an expectation that all of the required funds will be recovered, and a profit commensurate with the risk will be earned.

With the current difficulty growth rate, and hardware costs, rational people are standing back.

Well I guess its the end of Bitcoin then

[SomeoneInNeed]

I agree that an ROI on the mining rigs is possible with the current difficulty.
What I see with the future is, big "mining corporations" coming up, which will mine most of the coins.
We need an improvement in the protocol if we want to prevent this from happening.

[Sonny]

Regardless of whether mining is profitable or not is irrelevant...without it there would be no Bitcoin.

There is a world of difference between operating existing gear, and buying new hardware.

For the existing gear, your capital is already spent.  All you need to do is cover power, network and labor.  Any earnings above this level recover some portion of the capital you investing into the hardware, so you run it until your power costs exceed income.  Even if all you manage is to reduce the amount of your initial investment that is lost, a rational actor runs the gear.

For a rational person to buy new equipment there needs to be an expectation that all of the required funds will be recovered, and a profit commensurate with the risk will be earned.

With the current difficulty growth rate, and hardware costs, rational people are standing back.

Well I guess its the end of Bitcoin then

Are you unable to read?

Existing miners will continue to operate their hardware and verify transactions regardless of difficulty.  There is no 'end of bitcoin'.  Just an end of the gold rush.  

Some are mining for profit.
Some are mining for fun.
Some are mining to support bitcoin solely. (core dev? someone enthusiastic in bitcoin? big whales?)

[mwizard]

Its interesting that in January the initial thread author expected that by now (March) the difficulty would be approaching 9 billion.  It seems the author used more than 30% as the ongoing difficulty increase.   No wonder he saw no ROI.

In fact just 10 weeks later difficulty has only risen about half what the author expected with a current difficulty about 4.5 billion rather than 9 billion.

Difficulty increases between 10-15% seem much more realistic in the current environment when calculating ROI.   

[zerk89]

Its interesting that in January the initial thread author expected that by now (March) the difficulty would be approaching 9 billion.  It seems the author used more than 30% as the ongoing difficulty increase.   No wonder he saw no ROI.

In fact just 10 weeks later difficulty has only risen about half what the author expected with a current difficulty about 4.5 billion rather than 9 billion.

Difficulty increases between 10-15% seem much more realistic in the current environment when calculating ROI.   

No substantial miners have come online yet, wait for the peroid of April-July, you will eat a shoe.

[mechew]

Isn't the real problem here the fact that these are prices and difficulty as of today and these miners won't arrive for an unquestionable amount of MONTHS?

[klondike_bar]

I bought new equipment last week because i know it will be profitable. I expect to see a 20% gain over electricity costs by the end of the year

[KensingtonLabs]

We are really curious about this too....what would the optimum price per GH/s be for a used mining rig these days? $10 a GH/s seems to be the the lowest I've seen for some of the higher capacity rigs.....would that really turn any kind of substantial profit or would it be completely obsolete after 2-3 months?

[klondike_bar]

We are really curious about this too....what would the optimum price per GH/s be for a used mining rig these days? $10 a GH/s seems to be the the lowest I've seen for some of the higher capacity rigs.....would that really turn any kind of substantial profit or would it be completely obsolete after 2-3 months?

thats terrible. You should be able to find an antminer used OR new for about $4-6/GH  ($700-1200)

[povlhp]

Lots of existing hardware using more than 2W/GHS will start to get unprofitable soo, and some of it wil be turned off, or resold to poor souls who plugs in in, realises it is bad, and tries to shift it on. The 2W/GHS will be profitable a little longer.

We have the 1W/GHS units coming up (Antminer S2, KnC and others). They will be profitable longer. But I see most of the units running today being turned off within the next year. If many gets out from the mining business, maybe we will have a difficulty decrease ? Or a slow increase in difficulty.

Profitability in mining lies with the success of getting peple to not buy more equipment, and turn their old stuff off. Difficulty increase needs to slow down. Lst one was 12% instead of the 20% before that. High difficulty increase can only be caused by new hardware. And since there is so much hardware out there, I don't see it increasign that much any more. I see it slowing down.

[zetaray]

Mining will yield profits if mining gears are priced lower. There will always be a second hand market for asics. They will be hinged to profits.

[SomeoneInNeed]

There is ROI, you just need to invest big.

[TheDragonSlayer]

There is ROI, you just need to invest big.

It doesn't matter if you invest big or small, as long as you cannot ROI on $/GHs its the same.

[DrG]

There is ROI, you just need to invest big.

Sure we lose on each item we sell, but we make it up in volume 

Fastest way to the bottom of a pit.

[pjviitas]

There is ROI, you just need to invest big.

Sure we lose on each item we sell, but we make it up in volume 

Fastest way to the bottom of a pit.

Its not even about ROI anymore...its about running out of spare breakers in your house.

[ShakyhandsBTCer]

There is ROI, you just need to invest big.

Sure we lose on each item we sell, but we make it up in volume 

Fastest way to the bottom of a pit.

Its not even about ROI anymore...its about running out of spare breakers in your house.

If you can have your machines hosted at a location that has cheap electricity then this is not an issue.

Most miners are being sold at prices that are above which would ever cause the machines to get ROI.

[zimmah]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

This is the cycle of mining

1) Mining is profitable
2) people buy new miners
3) difficulty increases
4) mining becomes unprofitable
5) people stop being miners (or at a reduced rate)
6) mining becomes profitable again
7) repeat from step 1

also note that being profitable or not depends on how much electricity your miner uses (J/GH) and how much you pay for electricity. Europeans sadly pay the highest price for electricity (up to $0.40 per kWh, while americans, russians and canadians pay much less, about $0.10 per kWh)

[brian_23452]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

You're wrong.  This is the cycle of mining:

1.  Asic company develops new miner.
2.  Asic company mines with new miner.
3.  Having used up the best part of it's profitability, Asic company sells miner to end user for more BTC than it will ever generate.
4.  End user mines with it indefinitely because the cost they payed is a sunk cost so why not.

So you see, it is very possible following this model for mining to never be profitable for "ordinary" people, while at the same time new asics continue to come out and drive up the difficulty.  Since really, only steps 1 and 2 are needed for difficulty to go up.  This is how it works now.

[ShakyhandsBTCer]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

You're wrong.  This is the cycle of mining:

1.  Asic company develops new miner.
2.  Asic company mines with new miner.
3.  Having used up the best part of it's profitability, Asic company sells miner to end user for more BTC than it will ever generate.
4.  End user mines with it indefinitely because the cost they payed is a sunk cost so why not.

So you see, it is very possible following this model for mining to never be profitable for "ordinary" people, while at the same time new asics continue to come out and drive up the difficulty.  Since really, only steps 1 and 2 are needed for difficulty to go up.  This is how it works now.

ASIC companies are testing the ethical limits by mining with the preorder miners. The preorder funds should be used for product development only, once the products are developed and determined to work per their standards the machines should ship.

[brian_23452]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

You're wrong.  This is the cycle of mining:

1.  Asic company develops new miner.
2.  Asic company mines with new miner.
3.  Having used up the best part of it's profitability, Asic company sells miner to end user for more BTC than it will ever generate.
4.  End user mines with it indefinitely because the cost they payed is a sunk cost so why not.

So you see, it is very possible following this model for mining to never be profitable for "ordinary" people, while at the same time new asics continue to come out and drive up the difficulty.  Since really, only steps 1 and 2 are needed for difficulty to go up.  This is how it works now.

ASIC companies are testing the ethical limits by mining with the preorder miners. The preorder funds should be used for product development only, once the products are developed and determined to work per their standards the machines should ship.

What do you expect?  When you preorder from one of these companies they typically make it very clear in their terms (the contract) that there is no guaranteed delivery date, and no penalty to be paid if they fail to deliver by a certain date.  Why anyone would agree to such terms is beyond me but people do, and then act surprised when the companies honor the contracts as it is written as opposed to what they feel should be "ethical", whatever that means in this context. 

[-ck]

Here's the warning I wrote in November 2012. Pertinent then, still relevant today.

What I really worry about, is that new hardware will continue to come out frequently enough that people end up on a cycle of investing in hardware that basically never pays itself off as slightly newer hardware and higher diffs keep coming out. Sure at some stage the limits of technology will be reached, but given the best tech at the moment is going to be 65nm ASICs when CPUs are 28nm devices, I can see the cycle going on for some time, and then even if btc mining ASICs end up in line with CPU manufacturers, they still continue to evolve over time. Dramatic profits from ASICs will likely only last a couple of weeks at most for a lucky few. The rest of you who paid for devices that don't even exist yet will not be making any magical profit no matter how big the hashrate appears. Your proportion of the total bitcoin hashrate will remain pitiful.

Sigh...

The period of the "couple of weeks for a lucky few" has long since passed.

[DrG]

Here's the warning I wrote in November 2012. Pertinent then, still relevant today.

What I really worry about, is that new hardware will continue to come out frequently enough that people end up on a cycle of investing in hardware that basically never pays itself off as slightly newer hardware and higher diffs keep coming out. Sure at some stage the limits of technology will be reached, but given the best tech at the moment is going to be 65nm ASICs when CPUs are 28nm devices, I can see the cycle going on for some time, and then even if btc mining ASICs end up in line with CPU manufacturers, they still continue to evolve over time. Dramatic profits from ASICs will likely only last a couple of weeks at most for a lucky few. The rest of you who paid for devices that don't even exist yet will not be making any magical profit no matter how big the hashrate appears. Your proportion of the total bitcoin hashrate will remain pitiful.

Sigh...

The period of the "couple of weeks for a lucky few" has long since passed.

Oh it's still there, but the few have names now: BFL, Avalon, Hashfast, etc etc....

I'm still shocked people were able to +ROI in BTC with S1s.

[zimmah]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

You're wrong.  This is the cycle of mining:

1.  Asic company develops new miner.
2.  Asic company mines with new miner.
3.  Having used up the best part of it's profitability, Asic company sells miner to end user for more BTC than it will ever generate.
4.  End user mines with it indefinitely because the cost they payed is a sunk cost so why not.

So you see, it is very possible following this model for mining to never be profitable for "ordinary" people, while at the same time new asics continue to come out and drive up the difficulty.  Since really, only steps 1 and 2 are needed for difficulty to go up.  This is how it works now.

ASIC companies are testing the ethical limits by mining with the preorder miners. The preorder funds should be used for product development only, once the products are developed and determined to work per their standards the machines should ship.

What do you expect?  When you preorder from one of these companies they typically make it very clear in their terms (the contract) that there is no guaranteed delivery date, and no penalty to be paid if they fail to deliver by a certain date.  Why anyone would agree to such terms is beyond me but people do, and then act surprised when the companies honor the contracts as it is written as opposed to what they feel should be "ethical", whatever that means in this context. 

It's probably because there is no other option, all miners are either obsolete or preorders. It impossable to buy profitable miners directly. Especially if you live in Europe where electricity prices are astronomical compared to the restof the world. (About 4 times more than in Canada and the USA)

[brian_23452]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

You're wrong.  This is the cycle of mining:

1.  Asic company develops new miner.
2.  Asic company mines with new miner.
3.  Having used up the best part of it's profitability, Asic company sells miner to end user for more BTC than it will ever generate.
4.  End user mines with it indefinitely because the cost they payed is a sunk cost so why not.

So you see, it is very possible following this model for mining to never be profitable for "ordinary" people, while at the same time new asics continue to come out and drive up the difficulty.  Since really, only steps 1 and 2 are needed for difficulty to go up.  This is how it works now.

ASIC companies are testing the ethical limits by mining with the preorder miners. The preorder funds should be used for product development only, once the products are developed and determined to work per their standards the machines should ship.

What do you expect?  When you preorder from one of these companies they typically make it very clear in their terms (the contract) that there is no guaranteed delivery date, and no penalty to be paid if they fail to deliver by a certain date.  Why anyone would agree to such terms is beyond me but people do, and then act surprised when the companies honor the contracts as it is written as opposed to what they feel should be "ethical", whatever that means in this context. 

It's probably because there is no other option, all miners are either obsolete or preorders. It impossable to buy profitable miners directly. Especially if you live in Europe where electricity prices are astronomical compared to the restof the world. (About 4 times more than in Canada and the USA)

Some people would say that not buying it at all would be another option.

[xstr8guy]

there is no such thing as no ROI in mining, some people will make ROI or else no one will buy a miner.

If no one buys a new miner for long enough, difficulty will not increase (because only old miners are mining), while the technology improves to create more efficient miners. This will lead to mining being profitable again. Than people will again buy miners, until it becomes (close to) improbable again.

You're wrong.  This is the cycle of mining:

1.  Asic company develops new miner.
2.  Asic company mines with new miner.
3.  Having used up the best part of it's profitability, Asic company sells miner to end user for more BTC than it will ever generate.
4.  End user mines with it indefinitely because the cost they payed is a sunk cost so why not.

So you see, it is very possible following this model for mining to never be profitable for "ordinary" people, while at the same time new asics continue to come out and drive up the difficulty.  Since really, only steps 1 and 2 are needed for difficulty to go up.  This is how it works now.

Don't forget the "X Factor"... the infamous "preorder". People invest in miners that won't be delivered for many months. The investment looks great on paper. That is until the miners are many months late and when they are finally delivered, profitability has gone POOF!

No one can make a sound investment without a crystal ball. Some have been very lucky with their timing and have been successful. I have been VERY lucky myself. But the forum is filled with sad sacks who have been absolutely raped by ASIC vendors. And I'm not talking about outright scams. I'm talking about (semi) legitimate companies that have had horrendous delays or have been lured by the bitcoin siren to hash with customer machines for months before delivering.

[film2240]

Everyone should stop mining. And buy bitcoins instead. 

I'd really wish people would just stop mining for a while,that way the difficulty will drop significantly,buy BTC and then when the difficulty is much lower,mine again and you profit in both ways,more mined BTC and returns from the BTC you bought as well.

But I'm also sure that until the big mining operations stop (like companies,data centres,large scale mining farms) there's not much point in normal people stopping their mining operations either.

[xstr8guy]

Everyone should stop mining. And buy bitcoins instead.  

I'd really wish people would just stop mining for a while,that way the difficulty will drop significantly,buy BTC and then when the difficulty is much lower,mine again and you profit in both ways,more mined BTC and returns from the BTC you bought as well.

But I'm also sure that until the big mining operations stop (like companies,data centres,large scale mining farms) there's not much point in normal people stopping their mining operations either.

And as soon as people start mining again, the difficulty, at the next adjustment, returns to exactly where it was when they quit. What would be the point? You've just delayed the inevitable.

Be honest now. What you really meant was that you wish everyone would stop mining... except you. 

[Bonio]

Ive been giving this some thought, I said some, not lots

People buying Bitcoin right now want the price to stay low, people mining want (need) the price to rise. As people realise the price isnt rising like they thought it might they will get out of mining. Also when the last block is mined, what then? Transaction costs are going to have to be much bigger with the current turn over of coins. As the big mining farms go bust will those of us with their home miners be able to make money again?

What Im saying is, even if we dont use them now should we hang on to our old miners?

[brian_23452]

Ive been giving this some thought, I said some, not lots

People buying Bitcoin right now want the price to stay low, people mining want (need) the price to rise. As people realise the price isnt rising like they thought it might they will get out of mining. Also when the last block is mined, what then? Transaction costs are going to have to be much bigger with the current turn over of coins. As the big mining farms go bust will those of us with their home miners be able to make money again?

What Im saying is, even if we dont use them now should we hang on to our old miners?

First, the last block will be mined many many years from now, no need to worry about that just yet. 
Second, the price of bitcoin has a lot less to do with it than you would think.  The big mining operations aren't going to just shut down.  The mining rigs are a sunk cost, they won't turn them off just because they are making less money.  Sure they may look to sell some machines, but only people who would buy them would be people who were going to mine with them anyway so that doesn't reduce difficulty.  Besides, bitcoin would have to drop to like, 50 bucks for it to cost more to run the machines then they make and even then they may still mine, hoping for a price increase later.  At most, you would see them cease or reduce development of new machines so the difficulty stays the same, but it wouldn't go down.  In any case though most of their R&D costs are born by "customers" who preorder their miners so that isn't much of an issue. 

There is pretty much no scenario that could happen that would both cause the major companies (the ones driving the difficulty) to want to shut down while at the same time, ordinary people would want to still mine.

[Bonio]

Im not sure I agree with you entirely with regard to companies continuing to mine if the price falls and stays down. There comes a time when a business has to make a decision about losing money. When the cost of gaining a bitcoin far outweighs its value and potentially future value.

For example, I have a 7 gig miner, it makes maybe $0.15 a day, but its costing that in electricity, now I get that for free so its worth running it but if it were costing me say $1 a day in power then I would turn it off.

[brian_23452]

Im not sure I agree with you entirely with regard to companies continuing to mine if the price falls and stays down. There comes a time when a business has to make a decision about losing money. When the cost of gaining a bitcoin far outweighs its value and potentially future value.

For example, I have a 7 gig miner, it makes maybe $0.15 a day, but its costing that in electricity, now I get that for free so its worth running it but if it were costing me say $1 a day in power then I would turn it off.

But you aren't a mining operation.  You are using a very inefficient miner running it out of your house.  A large scale mining operation running equipment that gets 2Gh/s per watt running in Sweden or something where electricity is 5 cents a kilowatt or less is ALWAYS going to beat you in efficiency.  Bitcoin would have to drop to like $50 or so for it to start costing them money.  There is no guarantee they would turn off at that point anyway but let's say for the sake of argument they did.  So what?  You already turned your miner off long before then so what difference does it make?  A.  Bitcoin isn't going to drop and remain at such a low price and B.  If something happened where it did, ordinary miners would feel the pinch long before the datacenters.

[nwfella]

Im not sure I agree with you entirely with regard to companies continuing to mine if the price falls and stays down. There comes a time when a business has to make a decision about losing money. When the cost of gaining a bitcoin far outweighs its value and potentially future value.

For example, I have a 7 gig miner, it makes maybe $0.15 a day, but its costing that in electricity, now I get that for free so its worth running it but if it were costing me say $1 a day in power then I would turn it off.

But you aren't a mining operation.  You are using a very inefficient miner running it out of your house.  A large scale mining operation running equipment that gets 2Gh/s per watt running in Sweden or something where electricity is 5 cents a kilowatt or less is ALWAYS going to beat you in efficiency.  Bitcoin would have to drop to like $50 or so for it to start costing them money.  There is no guarantee they would turn off at that point anyway but let's say for the sake of argument they did.  So what?  You already turned your miner off long before then so what difference does it make?  A.  Bitcoin isn't going to drop and remain at such a low price and B.  If something happened where it did, ordinary miners would feel the pinch long before the datacenters.

Truer words where never typed.  Rubber meets the road here!

[tntdgcr]

I hope that all the people reading believe this. less people taking the precious supply chain we need to buy from

[Bonio]

Im not sure I agree with you entirely with regard to companies continuing to mine if the price falls and stays down. There comes a time when a business has to make a decision about losing money. When the cost of gaining a bitcoin far outweighs its value and potentially future value.

For example, I have a 7 gig miner, it makes maybe $0.15 a day, but its costing that in electricity, now I get that for free so its worth running it but if it were costing me say $1 a day in power then I would turn it off.

But you aren't a mining operation.  You are using a very inefficient miner running it out of your house.  A large scale mining operation running equipment that gets 2Gh/s per watt running in Sweden or something where electricity is 5 cents a kilowatt or less is ALWAYS going to beat you in efficiency.  Bitcoin would have to drop to like $50 or so for it to start costing them money.  There is no guarantee they would turn off at that point anyway but let's say for the sake of argument they did.  So what?  You already turned your miner off long before then so what difference does it make?  A.  Bitcoin isn't going to drop and remain at such a low price and B.  If something happened where it did, ordinary miners would feel the pinch long before the datacenters.

For the record I might not be making a living out of mining, however electricity is free because its surplus in my racks I have a bit more than 7 gig of hashing power and what I have is making me money. I used the 7 gig miner (it was the first one I bought and sits in my office for old times sake) as an example. The point I was making is that even if they do get their mining power for 2 gh/s per watt if they aren't making a profit or there is doubt about how much they will make then it will stop, business is business.

I would like to see the figures for a big mining farm out of interest. Sure they must get discount on the equipment but by how much? By my reckoning 2gh/s that cost only $1 per gh/s (wild guess on my part )  running for a year and using 1 watt at $0.05 would make just under $4 in a year. So maybe $2 profit? But then you have the other costs such as cooling, rent, wages, insurance, accounting fees, tax etc. (prices worked out on current BTC value not $50).

I dont doubt they are making a profit somehow but the margins seem very tight to me.

Im not looking for an argument just a discussion.

[brian_23452]

2Gh/s using one watt generates $16 a year and costs around $0.44 at current rates (which of course are always changing).  You really need to do daily rates to get a more accurate picture, but can't do that with Gh/s because numbers are too low so 2Th/s at 1000 watts is about $44 a day generated, and consuming around $0.75 a day.  The margins are enormous.   Yes there are other costs associated with it as you mentioned but those costs all scale very well.  The fact that many of these data centers aren't put in strategic places should tell you something; the margins are so enormous they didn't even bother cutting costs in some cases.
They don't get a "discount" on the machines.  They are the manufacturers, so they get them literally at cost.  While I don't know for sure I would be very surprised if it is over $200 per Th/s.  But there is no cost associated with the machines themselves anyways, they get them not for free but better then free, they get paid for them.  See the cycle I posted above.  They get the machines at cost, mine with them for a few months, and then sell them at retail\wholesale prices which by their nature is more then cost. 

As I mentioned before, only way you would see these operations cease would be if bitcoin completely tanked for a prolonged period of time, which wouldn't do anyone any good.  Besides, they could always turn the machines back on if profitability turned around.

[Bonio]

Thanks for explaining that to me I never considered the manufacturers mining case

How did you come to the $16 for a year using 2gh/s? I used one of the regular mining calculators, obviously not a very good one!

Cheers

[newguy05]

you guys are all living in fantasy land, unless you can get free electricity there is miner currently on sale that is profitable.

The reality is difficulty increase is not slowing down anytime soon, with hardware getting pumped out nonstop. Next bump is 25%.

[brian_23452]

Thanks for explaining that to me I never considered the manufacturers mining case

How did you come to the $16 for a year using 2gh/s? I used one of the regular mining calculators, obviously not a very good one!

Cheers

You can't really predict that far in advance, that is why I said it makes more sense to calculate it per day, since we know the difficulty for sure right now.  But not one year from now.  But then you end up with really small numbers so I did it per Th/s instead of Gh/s.  Any calculator can accurately tell you what your earnings will be for one day at a time.

[DrG]

Thanks for explaining that to me I never considered the manufacturers mining case

How did you come to the $16 for a year using 2gh/s? I used one of the regular mining calculators, obviously not a very good one!

Cheers

You can't really predict that far in advance, that is why I said it makes more sense to calculate it per day, since we know the difficulty for sure right now.  But not one year from now.  But then you end up with really small numbers so I did it per Th/s instead of Gh/s.  Any calculator can accurately tell you what your earnings will be for one day at a time.

Well even that can be wrong.  Most pools are using PPLNS or similar variant.  If the pool has a bad luck streak for 3-5 days then you can take a big hit.  Only way to guarantee against this is go onto PPS.  This is why PPS still exists even with crazy fees - some miners want assurance of a given payback during a difficulty interval.

[ShakyhandsBTCer]

Thanks for explaining that to me I never considered the manufacturers mining case

How did you come to the $16 for a year using 2gh/s? I used one of the regular mining calculators, obviously not a very good one!

Cheers

You can't really predict that far in advance, that is why I said it makes more sense to calculate it per day, since we know the difficulty for sure right now.  But not one year from now.  But then you end up with really small numbers so I did it per Th/s instead of Gh/s.  Any calculator can accurately tell you what your earnings will be for one day at a time.

Well even that can be wrong.  Most pools are using PPLNS or similar variant.  If the pool has a bad luck streak for 3-5 days then you can take a big hit.  Only way to guarantee against this is go onto PPS.  This is why PPS still exists even with crazy fees - some miners want assurance of a given payback during a difficulty interval.

Over a two week period these calculators are generally roughly accurate as long as the pool is large enough. The pool may have below average luck for a few days, however it could also have above average luck for a similar number of days resulting in the overall luck over the 14 day period to be ~100%

[brian_23452]

Thanks for explaining that to me I never considered the manufacturers mining case

How did you come to the $16 for a year using 2gh/s? I used one of the regular mining calculators, obviously not a very good one!

Cheers

You can't really predict that far in advance, that is why I said it makes more sense to calculate it per day, since we know the difficulty for sure right now.  But not one year from now.  But then you end up with really small numbers so I did it per Th/s instead of Gh/s.  Any calculator can accurately tell you what your earnings will be for one day at a time.

Well even that can be wrong.  Most pools are using PPLNS or similar variant.  If the pool has a bad luck streak for 3-5 days then you can take a big hit.  Only way to guarantee against this is go onto PPS.  This is why PPS still exists even with crazy fees - some miners want assurance of a given payback during a difficulty interval.

That's true of course, but a large mining farm can expect them to be pretty accurate over any reasonable time frame.