Got in too deep too late!

[daniel_berwick]

Hi everyone,

I'm new so restricted to this forum for now. I'm Dan, how are you all doing?

Here's my experience of the past couple of weeks, and would hope it serves to give advice or attract advice from others?

I'm from the UK and from what I hear our electricity prices are through the roof. My main PC is running some GTX 580s, a lovely set of cards that has serviced lots of high powered gaming joy but was at the top end of my years PC budget. I learned about Bitcoin and was very interested in checking it out, watched the market and did a lot of calculations on what I could earn if I tried it out.
I tried it with my 580GTXs but as the complex shaders of the nVidia cards are wasted with the basic integer math of Bitcoin hashes I decided to get a second rig to set running out of the way in my attic space.

I calculated rig cost and electricity cost, how much I would make at market Bitcoin values and it was about 50/50 cost of electricity/£900 rig spread over a year. I wouldn't make any money but I would break even and have a decent set of graphics cards at the end of it. It seemed like fun.

Around 2 weeks ago I bought the £900 rig which included 2 OC 6970s (around 380MH/s each) and a relatively expensive 4 way crossfire board so I could add 2 more 6970s if I made enough. This 4 way board would have worked out cheaper than buying all the components for a second 2 way crossfire machine in the future so I thought it was a worthy investment although it adds a little more financial risk overall.

Now I start running, everything's lovely. My electricity was almost £0.12p for KWh. Move forward to today and my electricity has gone up to 15p per KWh and my hash rate is now only 0.38 per day on Deepbit and the price is crashing through the floor.
I have lost quite a bit of money now as the value of hashing now only returns about 40% of my electricity making a minute by minute loss without taking into account the lost hardware value of reselling the rig.

It was always a risk, and I knew that from the start, but I didn't expect everything an attack from all sides (25% Rise in the cost of electricity, seeming large reduction of Bitscoins per share from Deepbit and the currently epic drop in Bitcoin value on the open market) that would turn this into such a loss maker.

I suppose I could look at it in the sense that I have just accidentally purchased a set of way overpriced PC components, but my bank account's not happy.

Maybe it's best to keep hold of those Bitcoins for now, although if everyone does that it will stagnate the market further leading to a complete collapse or 'stalemate'. There maybe factors in waiting though that I'm not aware of that may kick start the market again, but I'm not aware of what those factors may be.

Sorry to go on, just thought I'd share my tale if anyone finds it interesting or informative.

[The_Duke]

Good post, thanks for sharing.

Take comfort in the fact that you are not alone. At least you bought some hardware that you can still sell. There's also people who bought bitcoins when they costed $30, thinking they could only go UP UP UP.

[Gabi]

Stay calm! As price are dropping now, they can still rise in the future, no need to panic too soon

[The_Duke]

Stay calm! As price are dropping now, they can still rise in the future, no need to panic too soon

Yeah, or drop even further.

[daniel_berwick]

No panic in me, I was just dissapointed by the market move so soon after my investment. Stock market rates, and in a similar way, Bitcoin rates are always emotionally driven and mathmatically uncertain.

My post was supposed to be a factual tale of my experiance, it's all true but in the long term it's not life changing losses and it could be profitable in the end. I hope it is, the Bitcoin concept is potentially world changing!

[bilbob]

It's a similar story with me. I bought my rig in July (one 6950 and one 5870) and it cost me around 650 Euros or around $900 and electricity per kwh is around 0.25€ or $0.35 or £0.21. Since I don't have to pay for the electricity I am better off but really hope it will go up to around 15 so I can at least break even at the end of year. I estimated my 680 MHashes will have made me around 40 BTC till christmas time.

so the lesson is: stay calm, maybe shut off you rig if you have to pay the electricity bill and just relax.

[ovidiusoft]

In the end, it will be your decision based on the trust in Bitcoin. You can continue to mine at a loss, stop mining but keeping the rig, or just selling the rig. You could also decide that buying Bitcoins for cash is easier/cheaper than mining.

So ask yourself: Do I think Bitcoin will succeed? If no, sell everything, cut your losses. If yes, keep mining if you can afford paying the electricity for a few months. If you can't afford the electricity, stop mining, sell your rig and buy Bitcoins with cash.

You should also consider selling and buying products and services for Bitcoins.

[molecular]

In the end, it will be your decision based on the trust in Bitcoin. You can continue to mine at a loss, stop mining but keeping the rig, or just selling the rig. You could also decide that buying Bitcoins for cash is easier/cheaper than mining.

That's not a decision, it's a calculation.

So ask yourself: Do I think Bitcoin will succeed? If no, sell everything, cut your losses. If yes, keep mining if you can afford paying the electricity for a few months. If you can't afford the electricity, stop mining, sell your rig and buy Bitcoins with cash.

+1, that is sane advice.

  EDIT: seeling his rig might also be an option even if he thinks bitcoin will succeed. It might even be the best option to sell the rig for BTC, assumimg bitcoins success.

However you decide, ask yourself the question: How would I feel in a year or two when the decision turns out wrong. E.g: "if I quit now and bitcoin has good success somehow, how would I feel about that?" or the other way around: "If I stay with it and bitcoin continues to slide down into meaninglessness somehow, how would I feel about that?"

For some reason the first case (I quit, bitcoin rockets) triggers much worse feelings for me than the second one (I stay, bitcoin declines), so I'm here to stay, not selling either.

[tablekart]

prize is falling and mining shares on GLBSE rising up, what the h... is this?

[iprivately]

prize is falling and mining shares on GLBSE rising up, what the h... is this?

means there are more people that believe in bitcoin than not. Bitcoin is not going anywhere folks. Now with national media exposure by Krugman, Bitcoin is goin to start gaining speed. Speculators are free to dump their coins for fiat, more for us!

[daniel_berwick]

I'm staying in. May as rell run the course. I won't lose my home because of it, but they'll be a few less trips to the cinema

The possible gains outweigh the risk of an expensive energy bill.

For now though they'll be no cashing out by me. Might put 50% time into mining and 50% would be energy costs into buying. That way I keep some coins and help keep the market running.

[Bitcraft]

Going to be sticking with BTC also, whether I'm mining them or buying them.

[NothinG]

I'm thinking about creating my own coin based off Theoretical value. Currently, what I would value 1 Bitcoin is 10.2075957481.
Instead, it's falling because of what user<>user values Bitcoins.

In order to start my Alt. Coin, I'd have to learn how to; start a new Genesis, setup an exchange (including Dwolla), and setup a pool.
If anyone knows how to do any of the above, I'm sure we can have a successful coin.

I'll never leave Bitcoin, just want to see formula's (math) determining the price instead of the community.
In the end, rich people (or people who got rich) determined the price per Bitcoins.

[worldinacoin]

For me, my electricity is free, it is located at a datacenter, power is already paid for, I am using the excess space of my friend's.  My problem is how to use my old desktop and equip it with GPUs to start a good mining.

[molecular]

For me, my electricity is free, it is located at a datacenter, power is already paid for, I am using the excess space of my friend's.  My problem is how to use my old desktop and equip it with GPUs to start a good mining.

Will people stop bragging about free electricity, please. It makes all emotional. ^^

About your "problem": there's loads of material on the interwebs on how to put a GPU in an older computer or build a pc in general. But actually: when I built my rig, the GPU was about 70% of the price of all components, so why bother with the old stuff. You'll most likely need a new PSU and maybe also motherboard anyway. You can use the case, of course, that's gonna save you 10 bucks or so.

[worldinacoin]

Apologies, not really bragging and thanks for the input.  I managed to see the rig posts in this forum. There are sure tons of choices.

[bitcoinTrader]

I am in too... no point in selling at this point... either you get lots of profits with bitcoin's success or you loose full investment as bitcoin fades away (unlikely).

Most would go with 1st option, rather than bailing out with loss

[P4man]

As bitcoin becomes more popular, mining isnt going to make you any non trivial money. Difficulty is adjusted automatically, so the more people mine, the harder it becomes to make any bitcoins  (and vice versa). Also the more prices of bitcoins drop, the less people will want to mine (and vice versa). What this means, is that it will find an equilibrium where BC mining just barely is or isnt worthwhile, depending ao how competitive your electricity rates are.

The only scenario where you could make real money is when there just arent enough miner rigs to keep up with BC demand growth, like it was earlier this year. Or if you have some competitive edge over the average miner, like by using FPGA's instead of GPUs.

[molecular]

As bitcoin becomes more popular, mining isnt going to make you any non trivial money. Difficulty is adjusted automatically, so the more people mine, the harder it becomes to make any bitcoins  (and vice versa). Also the more prices of bitcoins drop, the less people will want to mine (and vice versa). What this means, is that it will find an equilibrium where BC mining just barely is or isnt worthwhile, depending ao how competitive your electricity rates are.

The only scenario where you could make real money is when there just arent enough miner rigs to keep up with BC demand growth, like it was earlier this year. Or if you have some competitive edge over the average miner, like by using FPGA's instead of GPUs.

Good analysis P4man. Many newbies fail to realize that (and other stuff). Some just thought in may/june, "wow, I can print money with my GPU, letz buy some GPU, it's insanely profitable", waking up to a dropping market and strong difficutly increases later.

It's refreshing to see someone new to bitcoin (I'm assuming you're new to bitcoin because of your post count) not failing to see the mechanics.

[kasus]

I have solution - stolen electricity