For Individuals looking to get into the Mining Game in 2014, please read this!

[cdog]

PUBLIC SERVICE ANNOUNCEMENT FOR THOSE NEW TO BITCOIN OR BITCOIN MINING

Bitcoin is going to blow up in 2014, we all know that. So what better way to get involved than start mining it! Right?

Wrong, dead-on-arrival, dead as a doornail, reaper with scythe cackling over your rotting corpse wrong. If you intent to profit, that is.

If you are OK to mine at a loss, because you enjoy the technology, or because you want to do your part to secure the network, good for you.

Every single day I see a new thread, "I have XYZ amount of BTC/USD and I want to get into mining!" The unsurprising part of this is that these posts are almost always from new BitcoinTalk members who have little to no technical understanding of mining, no experience mining, no understanding of how to properly calculate the profitability of mining hardware, but plenty of enthusiasm and money for what they perceive as a cash grab or get rich quick scheme. The surprising part of this is that many of these people are actually intelligent, well educated individuals. However, the desire to earn a quick and easy buck has a blinding effect on them; their most powerful tool - the logical part of their brain - stops functioning because another, reptillian part of their brain is screaming "MONEY. LOTS AND LOTS OF MONEY."

The press certainly does their part to propagate this - every day there is a new story about people making tons of money from mining, or some new manufacturer or new hardware which is certain to bring untold riches to those who purchase it.

Stories like this:

http://dealbook.nytimes.com/2013/12/23/morning-agenda-the-bitcoin-mines-of-iceland/?_r=0
http://www.forbes.com/sites/kashmirhill/2014/01/03/the-craziest-bitcoin-business-making-money-minting-machines/
http://www.wired.com/wiredenterprise/2013/05/butterfly_live/

My opinion, which is informed by a fair bit of research, is that for-profit-mining for the hobbyist, enthusiast, or semi-pro is effectively over as of 2014. There is still profit to be had in the mining game, but its going to go mostly to large professional mining conglomerates, pool operators, and hardware manufacturers. This is not news per se or anything like a revelation, and its no secret among people who have been around here for a while. And although there are other threads out there which warn new users about getting into the game, apparently they arent being read and in my opinion having one more cant hurt - all Im trying to do is save people money and heartache. My comments also apply to alt-coin mining, although there is a bit of life left to be squeezed out there, the writing is on the wall with people moving 100mh/s+ rigs into datacenters. Economies of scale, tiny margins, etc. Big money is now deeply into mining, it wont ever go away, and you wont be able to compete with it, unless you also go fulltime pro and invest a very large amount of capital.

But there is another, more important point I want to make, and thats why I created this thread rather than bump an existing one.

There is HUGE profit to be made in the Bitcoin space. There is an entirely new digital economy full of goods and services that is being created as we speak, and if you were to secure just a microscopic fraction of a percentage of that revenue, you would realize your financial dream. Furthermore, you as an intelligent, well educated person with a solid work ethic are uniquely positioned to capitalize on this new space. All of your expertise and experience in whatever field it is that you specialize in is highly valuable, and if you apply this to the Bitcoin space, you have an opportunity of a lifetime to get in on the ground floor of a revolution. Yes, starting a new business or expanding an existing one into the Bitcoin space is difficult and there is risk involved of course. But just recognize that the upside of a successful business in the Bitcoin space is potentially much, much higher than that of a traditional one.






FULL DISCLOSURE: I have been into Bitcoin mining for almost 1 year and have sometimes made a profit - in the past. I have a pre-order for an ASIC due to ship this year, but I wont be surprised at all if I dont turn a profit on it. Furthermore, the money I spent on a preorder was profits from previous ventures, not fresh capital. Also, had I invested 100% of my investment money into buying Bitcoin from Day1 and never got into mining at all, I would have more total Bitcoins than I currently do. Furthermore, the money I spent on a 2014 preorder is fairly trivial to me and losing 100% of the investment would not shock me or put me in a bad financial situation. Finally, Im one of those people who is OK with mining-at-a-loss, because Im interested in the technology and helping to do my part to secure the network so that less overall hashpower is concentrated in the hands of a few companies and pools.

[1714790370]

1714790370

[1714790370]

1714790370

[1714790370]

1714790370

[Sitarow]

PUBLIC SERVICE ANNOUNCEMENT FOR THOSE NEW TO BITCOIN OR BITCOIN MINING

Bitcoin is going to blow up in 2014, we all know that. So what better way to get involved than start mining it! Right?

Wrong, dead-on-arrival, dead as a doornail, reaper with scythe cackling over your rotting corpse wrong. If you intent to profit, that is.

How does bitcoin adoption by service retailers fit into that perspective?

"Social gaming giant Zynga has announced that it will be accepting bitcoin for in-app payments in selected games, as a “test” with payment processor BitPay. The move opens up $200m per quarter in potential markets for the digital currency.

The Zynga team account posted the following on reddit:

“The Bitcoin test is only available to Zynga.com players playing FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille. The games can be accessed at http://zynga.com.

Zynga is always working to improve our customer experience by incorporating player feedback into our games. We look forward to hearing from our players about the Bitcoin test so we can continue in our efforts to provide the best possible gaming experience.”

Sources connected to BitPay and Zynga users quickly confirmed the announcement as true."

[lordcameltoe]

What about GPU mining other alt coins then trading for BTC?

The entry barrier for mining bitcoin is pretty high now, but Alt coins is still pretty low.

[timk225]

I've been saying for months now that a person would have to be a fool and / or have no financial sense at all to spend one penny buying BTC mining gear.  The few big money players have pushed the difficulty so high that it simply is not profitable anymore for small time players.  And don't forget the ASIC manufacturers who are mining with their own machines for months before they fill your pre-sold orders.  Don't deny it, it happens, they'd be idiots not to do it!

I agree with what was said about reptilian brains taking over, it was people with their reptilian brains that got me a $7200 net profit for my 205 LiteCoins I sold off in the first week of December.  I had mined the LTC in aug, sept, and oct, and held it while the price stayed at $2.

Now I mine Litecoin / Feathercoin / Dogecoin, and I am using the highs and lows of the BTC / LTC / FTC / DOGE markets on cryptsy to manipulate my coins into more coins.  It's the least expense and probably the best profit opportunity for me.

And me making money is all that matters!  

[MrPalmer]

Interesting thread.  I've been looking at a lot of the past & present Group Buys.  How do those factor into your analysis?  Total loss?

Personally, I see Group Buys as much less risk, and hassle, for what could be a decent profit.  No need to be greedy, IMO.  I'll buy a few shares in legit GB's, and roll the dice that way.  No one really know what these new batches of machines are going to do, when they'll arrive, etc.. we're all predicting. 

[black_swan]

First of all, if you are mining for 1 year and you didn't make a huge profit then you shouldn't give any advice.
Second, if price speculation is taking into consideration, mining can still be very profitable.

[MrPalmer]

Second, if price speculation is taking into consideration, mining can still be very profitable.

This is my thinking also.  If you get in fast enough, with enough hash, you can certainly make a lot of money before the difficulty gets too inflated.  I don't think we've hit the ceiling yet, but do appreciate the perspective of those that do. 

[e521]

Second, if price speculation is taking into consideration, mining can still be very profitable.

This is my thinking also.  If you get in fast enough, with enough hash, you can certainly make a lot of money before the difficulty gets too inflated.  I don't think we've hit the ceiling yet, but do appreciate the perspective of those that do. 

The OP's point is that mining is "dead" because it it cheaper to buy bitcoins directly than it is to mine them. Price has nothing to do with that. Even if you think that a bitcoin will be worth a $1 billion in a year, it would still be a mistake to buy mining equipment. You will get a better return by buying the bitcoins instead.

This has always been the case since GPU mining. What changed?
But I agree with you, buying bitcoins is better than ASICs

[cdog]

Second, if price speculation is taking into consideration, mining can still be very profitable.

This is my thinking also.  If you get in fast enough, with enough hash, you can certainly make a lot of money before the difficulty gets too inflated.  I don't think we've hit the ceiling yet, but do appreciate the perspective of those that do. 

This has nothing to do with difficulty or BTC price. It has to do with the fact that an single person with a $5000 budget cannot compete with companies that have $500,000-$5,000,000 budgets, which is what we are starting to see in the mining game now. Even with altcoin mining the game is coming to an end, there are huge 100mh/s+ GPU farms out there sitting in climate controlled datacenters with 100% uptime, mining on private pools, and now ASICs are almost here for scrypt also, so GPU mining is coming to a close in 2014. Even alts like Primecoin, which doesnt even use hashcash and is mined "CPU only" are seeing massive farms of cloud hashing on Amazon cloud and DigitalOcean. You're overclocked i7 doesnt mean squat when I have thousands of instances of miners running in a cloud, and Im paying a nice cheap bulk rate for the processing.

Mining has gone pro. The big money is now into crypto, which is what everybody wanted. Crypto cant go bigtime without it. But it means profitable mining, for the everyman, is effectively over unless you want to lower yourself to mining Dogecoins or some other such flavor-of-the-week scam/sham/shit-coin which will be long gone tomorrow and no sane person would touch with a 10ft pole.

But my more important, salient point is that people new to crypto should not be looking at mining period. Nobody who isnt already neck deep into mining and knows the game inside out should be looking at getting into it. Its too late to climb that learning curve. But many of these people have vast expertise in other fields, like IT, network security, 3dprinting, manufacturing, marketing, product development, customer service, consulting, etc etc etc. These fields will see explosive growth in the next 2-5 years as Bitcoin takes off and spawns an entirely new digital economy, and being in on the ground floor of that is still very possible and most certainly will be profitable. So dont look at mining and try to learn a new game you cant possibly win at. Apply what you are already expert in to the Bitcoin space and you may be the next titan of your industry.

[LRCGROUP]

I find this point of view right on point.  Noone is going to get rich throwing money at high end hardware.  In my own opinion everyone who uses BitCoin and believes in the system should at least make a small investment into the infrastructure and become a part of the infrastructure.  Strengthen the system by helping the system.  No matter how small. 

If you have hardware you use on a daily basis, put it to work. 

Even small investments could in the future reap some type of reward. 

Think of the long term.

[vpitcher07]

Not to say OP is wrong, but when I first bought my 2 USB block erupters everyone was preaching the same exact thing. "These will never provide a ROI, don't buy, waste of money, blah blah blah". I bought anyway not really caring if I got a ROI. Turns out I have more than doubled my original investment (at today's price). My point is, these threads offer a fair warning, but don't take them too seriously. He may be right, he may not be; no one really knows for sure. Remember, do your research!

[brokedummy]

What if I do the calculations by hand? How hard could it be?

[hope4me]

Not to say OP is wrong, but when I first bought my 2 USB block erupters everyone was preaching the same exact thing. "These will never provide a ROI, don't buy, waste of money, blah blah blah". I bought anyway not really caring if I got a ROI. Turns out I have more than doubled my original investment (at today's price). My point is, these threads offer a fair warning, but don't take them too seriously. He may be right, he may not be; no one really knows for sure. Remember, do your research!

You doubled USD value, but if you saved the BTC you would have much more USD value now

[timk225]

You all ought to come over to the LiteCoin forums and read the Mining section, there's a bunch of noobs over there with less than 10 posts talking about how they want to spend thousands of dollars getting started in mining.  LOL.

I made a nice profit of $7200 after PayPal fees by selling off my 205 LTC in the first week of December to a bunch of noobs who were all wallet and no brains.  I'm still mining on a smaller scale, varying between LTC, FTC, and DOGE.  Whichever is the most profitable at the moment on coinwarz.com , and I exchange them into LTC or BTC on cryptsy.

My only regret is that I didn't just buy a couple thousand LiteCoins in mid October, but at the time, it had been at $2 for months, and although I was hoping its price would rise, I had no reason to think it would go up by 20x in 6 weeks from then.

[Xian01]

What if I do the calculations by hand? How hard could it be?

http://www.reddit.com/r/Bitcoin/comments/1r3wau/mining_bitcoin_by_hand/

I figured I'd calculate how long it would take to mine bitcoin using a pen and paper for fun.
According to some forum posts, it takes 3385 integer operations to calculate one double SHA-256 hash.
These are 32-bit operations, so we'll give a very generous estimate of 10 seconds per operation (we're assuming that you're a numeric genius)
This works out to a rate of .0000295 hashes per second. Not bad, right?

Throwing the current difficulty (609482679.88835) into this[1] calculator gives us an average time of 2,809,786,333,451,380 years to mine one block. Have no fear, this is only 200000 times the age of the universe.

Now, at current rates of 25 BTC/block, and $600/BTC, this gives us an hourly profit of $0.000000000000000609/hr (assuming we're contributing to a pool, since competing with ASIC machines is just unfair), or about 1/300 of a quadrillionth the national (US) average.

What would it cost you to perform this?

One three ounce bottle of Noodler's ink is $12.50, and will write for approximately 33 km. Let's say that you're working in binary, and drawing a 1 and a 0 uses 1cm of ink, and you need to write 2 32 bit numbers per addition operation. That's 2166.4 meters of ink per hash. You can do about 50 operations on each side of a piece of paper. Paper runs for about a cent a page on Amazon, so that's about 34 cents per hash.

At the (approximate) 2,728,647,008,755,700,000 hashes you need to mine one block, adding these two costs together gives you a whopping $3,162,791,285,103,330,000.00 per block, or, if you're keeping track, you earn 0.000000000000474% of the money you spent mining that block (excluding the cost of petayears worth of food and shelter, and assuming the difficulty of mining and the value of bitcoin freezes forver at this moment).
Anyone want to get started with me?

tl;dr - mining by hand is no longer profitable.

[DrG]

I spent a grand on my litecoin gear, maybe more since I buggered up with the tech spec. ITs half a litecoin per day for two R9 290, sooo.....

I need to mine for two months at current difficulty to recover costs and I can play Battlefield 4 for FREEEEEEEEE!

but yeah if I bought in october I could of had 400+ litecoin and made a few k profit - but wheres the fun in that?

Doctor, Doctor, Doctor, Doctor, Doctor....


The fun lies in the fact you can actually play BF4 and not think damn, while I'm not mining I'm losing $0.03.  If you made $26k by buying the coins you probably won't care about missing out on 0.000196 coins lost to BF4 

As somebody who had 50GH/s of GPUs mining BTC offsite and having to drive 3x in one day for downtime - there's a lot to be said for sleeping soundly in your own bed and not restarting a rig.

[_s3v3n_]

Well.... Let miners be miners 

[pjviitas]

PUBLIC SERVICE ANNOUNCEMENT FOR THOSE NEW TO BITCOIN OR BITCOIN MINING

Bitcoin is going to blow up in 2014, we all know that. So what better way to get involved than start mining it! Right?

Wrong, dead-on-arrival, dead as a doornail, reaper with scythe cackling over your rotting corpse wrong. If you intent to profit, that is.

If you are OK to mine at a loss, because you enjoy the technology, or because you want to do your part to secure the network, good for you.

Every single day I see a new thread, "I have XYZ amount of BTC/USD and I want to get into mining!" The unsurprising part of this is that these posts are almost always from new BitcoinTalk members who have little to no technical understanding of mining, no experience mining, no understanding of how to properly calculate the profitability of mining hardware, but plenty of enthusiasm and money for what they perceive as a cash grab or get rich quick scheme. The surprising part of this is that many of these people are actually intelligent, well educated individuals. However, the desire to earn a quick and easy buck has a blinding effect on them; their most powerful tool - the logical part of their brain - stops functioning because another, reptillian part of their brain is screaming "MONEY. LOTS AND LOTS OF MONEY."

The press certainly does their part to propagate this - every day there is a new story about people making tons of money from mining, or some new manufacturer or new hardware which is certain to bring untold riches to those who purchase it.

Stories like this:

http://dealbook.nytimes.com/2013/12/23/morning-agenda-the-bitcoin-mines-of-iceland/?_r=0
http://www.forbes.com/sites/kashmirhill/2014/01/03/the-craziest-bitcoin-business-making-money-minting-machines/
http://www.wired.com/wiredenterprise/2013/05/butterfly_live/

My opinion, which is informed by a fair bit of research, is that for-profit-mining for the hobbyist, enthusiast, or semi-pro is effectively over as of 2014. There is still profit to be had in the mining game, but its going to go mostly to large professional mining conglomerates, pool operators, and hardware manufacturers. This is not news per se or anything like a revelation, and its no secret among people who have been around here for a while. And although there are other threads out there which warn new users about getting into the game, apparently they arent being read and in my opinion having one more cant hurt - all Im trying to do is save people money and heartache. My comments also apply to alt-coin mining, although there is a bit of life left to be squeezed out there, the writing is on the wall with people moving 100mh/s+ rigs into datacenters. Economies of scale, tiny margins, etc. Big money is now deeply into mining, it wont ever go away, and you wont be able to compete with it, unless you also go fulltime pro and invest a very large amount of capital.

But there is another, more important point I want to make, and thats why I created this thread rather than bump an existing one.

There is HUGE profit to be made in the Bitcoin space. There is an entirely new digital economy full of goods and services that is being created as we speak, and if you were to secure just a microscopic fraction of a percentage of that revenue, you would realize your financial dream. Furthermore, you as an intelligent, well educated person with a solid work ethic are uniquely positioned to capitalize on this new space. All of your expertise and experience in whatever field it is that you specialize in is highly valuable, and if you apply this to the Bitcoin space, you have an opportunity of a lifetime to get in on the ground floor of a revolution. Yes, starting a new business or expanding an existing one into the Bitcoin space is difficult and there is risk involved of course. But just recognize that the upside of a successful business in the Bitcoin space is potentially much, much higher than that of a traditional one.






FULL DISCLOSURE: I have been into Bitcoin mining for almost 1 year and have sometimes made a profit - in the past. I have a pre-order for an ASIC due to ship this year, but I wont be surprised at all if I dont turn a profit on it. Furthermore, the money I spent on a preorder was profits from previous ventures, not fresh capital. Also, had I invested 100% of my investment money into buying Bitcoin from Day1 and never got into mining at all, I would have more total Bitcoins than I currently do. Furthermore, the money I spent on a 2014 preorder is fairly trivial to me and losing 100% of the investment would not shock me or put me in a bad financial situation. Finally, Im one of those people who is OK with mining-at-a-loss, because Im interested in the technology and helping to do my part to secure the network so that less overall hashpower is concentrated in the hands of a few companies and pools.

You forgot this basic equation:

(Viability of mining) = (Value of bitcoin)/(Network difficulty)

People always seem to forget this.

[DrG]

You forgot this basic equation:

(Viability of mining) = (Value of bitcoin)/(Network difficulty)

People always seem to forget this.

Let me fix that for you:
(Viability of mining) = [(Value of bitcoin)/(Network difficulty)]/(acquisition cost of mining equipment)

Right now all the SHA256 ASIC manufacturers are price gouging (whether they intend to or not).  When it came to GPUs the acquisition cost was more reasonable (except the recent LTC runup).

[outsider]

So is it all a question of not making ROI on the mining equipment?
I am guessing that it's only more profitable to buy the coins (rather then mine them) if the value of the coin goes up.
If the coin value stays constant over the next couple of months (to pay for initial investment in mining equipment), would it not be better to buy mining equipment?

But I guess the point of the OP was that coin (most coins) will increase by large amounts this year, which makes sense that buying the coin itself is a better option.

Though investing is cryptocurrency (mining or buying coins) is still a risk, my thought has always been that by buying mining equipment, I can always sell it the equipment (if it all goes bust). If I buy coins and it all goes south, I've lost everything.