No ROI on future Mining, its a FACT!

[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.