Advice needed: 80k USD mining adventure

[BattleZeo]

I recommend waiting for s11 to be released from Bitmine. Then there is the opportunity to get a good profit from mining.

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[zeric]

Thank you for all your replies. They are much appreciated!

I live in europe, and GPU prices in my country are still quite high (around 750 usd for a vega 56 or 350 usd for a rx 580 8gb) which is part of the reason why ASICs seems the better choice.

I don't know where you are located but if you have 80k to invest it would be best to buy a small house by adding another small amount of money , in US a good small house cost about 150k depending on the state you are located.

If you are firm on your decision and you want to go with a mining adventure, my advice would be to buy 50% of the money , your favourite miners and the rest of money to buy bitcoin,ethereum,litecoin and zcash, the top 4 major coins and hold.

A house here would be at least 300k usd, with a maximum of 40 amps.. so buying isnt really an option im afraid. At least i have cheap rent

OP, I'll try to be on topic and not direct you to buy coins with the money

The question here, which I hope you already calculated, is have you turned a profit? If you have, that's good, you know what you're doing.  

Since you were saying you have started mining with GPUs at the beginning of the year, you probably know already that ASICs are not like GPUs in the sense that they will probably become obsolete (or how these guys here want to call them: "door stoppers"   ) and you won't be able to use them anymore for mining once the algorithm for your target coins changes.
In some cases, ASIC manufacturers announce their new ASICs when the most profitable coin states that it will change the algorithm to be ASIC resistant (see the Monero & Baikal case study).

If I were you, I would research more in the FPGA market rather than ASICs. FPGAs can be programmed to work even if the algorithm changes but you won't have the same hashing power compared to what the ASICs have.

Hope this helps

I did turn a decent profit. Got on the Raven wave quite early
I do know the problem with asics turning into heavy paper weights after a while. Expensive GPU prices is part of what pushes me towards asics though, see above.

-snip-

But what about this?:

I am almost done setting up the place with airflow, security, network and the works.

What to buy?
I am thinking I will start off with:

2 x Antminer Z9
1 x Innosilicon A9 (would focus more on these if it wasn't for all the bad things i read about Innosilicon)
1 x Pangolin Whatsminer DCR (november is a long time away though)
5 x Whatsminer M 10.

Which is about 25k USD give or take.

If you're going for ASICs, do not buy multiple brands and models, research for the one that has the highest profitability but not the ones that targets any "CPU-mining" & newly developed (including suspicious) algorithms .

The advantages of that are easier maintenance and "more efficient mining" of the coin of your choice.
That way, it will be easier to reach the capital return and even ROI in a shorter period of time, the other way around IMO have more disadvantages.
But if you want to expand and add diversity, your original plan (Add GPU Miners) can still be applied.

Today's a risky season for miners, it's up to you.

Could you elaborate on this? I get the maintenance part, but more efficient mining? how so?


FPGAs... I dont feel comfortable jumping into this. My tech skills are decent but nowhere near what it looks like is needed. Perhaps in time when more algos are opened up.

I'll meet with my investor this weekend and see how he feels about a split scenario.

EDIT to fix quote error.

[revenant2017]

It won't be that profitable in long term if you start mining now. It's already too late and the difficulty continues to rise. I'd say use it to buy some coins and hold it.

[fjzappA]

So many unknowns, so much is un-knowable.
- I was in your exact position earlier this year.  I had rented 1000 Square feet in Texas, and had 100KW of 3-phase power available immediately and plans for more.
- As crypto dropped, I abandoned my plans, started selling my gear (still have a bunch) and shut down the facility. 
- I am converting cash into crypto rather than rent, and mining at home only, using only Z9-mini's.  All GPUs are shut down, and all S9's are shut down.

So what do we know?
- Hash rate of every worthwhile coin is the one thing that is actually mooning.
- Bitmain prices their products for ~1 year ROI, maybe a bit less.  In my experience, Antminer S-series will pay back 1X in a year, and never pay another 1X because of hashrate growth.
- Rising value of Crypto to Fiat, makes all of the above math look better than if it stays flat.
- Of course something new is coming from Bitmain.  S9 series is more than 2 years old.  It's time.

What can we do?
- Assume crypto is going to moon.  Buy Crypto because you can't mine crypto as fast as you can buy crypto.
- Assume crypto will drop.  Sell what you have and be done with it.
- Assume crypto will be flat.  Maybe mine if your costs are low enough, but need to recognize that you're in a declining return over time because of hashrate growth.

What should you do?  Be careful.  Even at 5.5 cents/kWh, be aware you're competing with people in China and other parts of the world who are paying much less or even not paying for their power. 

[stomachgrowls]

Yea, you should invest all your money on mining equipment because it's very profitable now and the difficulty is very low , it's a good time to jump in , i just gave you what you want to hear , go a head do what you want to do don't ask here because ppl here will say the truth not the lies you would like to hear.
I see ppl like you losing money everyday because they just want to do what they want to do without listening even if they pretend they are listening
Good luck

On most cases this would really be the insight of OP itself which he do really expect to have positive feedback on what hes trying to invest on here. Capital? It is indeed enough to start your own mining rig but profitability wise? Then most of us do have knowledge will have the same opinion and feedbacks which is "Non-profitable" nowadays and basing on the rent plus its current electricity cost then he would able to find out that hes totally wasting up his own time.

[grinbuck]

Yea, you should invest all your money on mining equipment because it's very profitable now and the difficulty is very low , it's a good time to jump in , i just gave you what you want to hear , go a head do what you want to do don't ask here because ppl here will say the truth not the lies you would like to hear.
I see ppl like you losing money everyday because they just want to do what they want to do without listening even if they pretend they are listening
Good luck

On most cases this would really be the insight of OP itself which he do really expect to have positive feedback on what hes trying to invest on here. Capital? It is indeed enough to start your own mining rig but profitability wise? Then most of us do have knowledge will have the same opinion and feedbacks which is "Non-profitable" nowadays and basing on the rent plus its current electricity cost then he would able to find out that hes totally wasting up his own time.

Without going into any altercations or arguments, I'd like to respectfully understand more about why everyone here is against mining.

1) Profitability is down right now yes... but as long as you have a little less than $0.10/KWh electricity rate, as of now it's profitable to mine - even if only by a small margin. (Z9 and their variants are an exception). If you're operating as a business, you'd likely be eligible for various deductions that improve your bottom line. This is the current scenario.
2) Difficulty increases for everyone. Constantly. That's a fact. No arguments here. Over time the number of coins you mine will reduce.
3) I'm bullish on crypto.
4) I can afford to hold the coins I mine. i.e. I can pay for the power I use for the foreseeable future (1 year) without selling any of my holding.
5) If the crypto market collapses, I shut down my business. Declare bankruptcy. That's not a scenario I'm willing to entertain. Every business has risks. I'm in this because I expect the market to rise.
6) If the market rises, despite the lower number of coins mined, I will probably still be profitable. Plus the coins I've mined earlier and held on to at a lower difficulty will add to my bottomline.
7) If I have an intelligent split (50-50 in my case) between mining and buying coins - I'm at a win-win given the above information - the market recovers and I make a win on my investment. Mining profitability resumes and I make a win on the coins mined WITH future income intact because no matter how little I mine, mining can only survive so long as there is some monetary benefit to mining. Therefore total hashrate will reduce when losses increase significantly (kind of what's happening with litecoin now). I also have a cushion since a lot of places in the world have a much higher electricity rate than me.
I have the equipment to sell - wont get too much for asics, more for gpu's. But point is that as long as I can keep reinvesting profits and upgrading constantly, a point will come when I'll be able to pay for equipment with previously earned profit. So mining as a business, given some common sense should pay off in the long run.

Sorry for the numbered list. Just jotted them down as they struck me.

Constructive feedback anyone?

[fjzappA]

Constructive feedback anyone?

Good list, even if it is numbered.

The only thing I would add is to do the math on mining.  Straight up power cost vs. coins produced, independent of capital invested.  If you can buy coins cheaper with electricity, then mine.  If you cannot, then invest in coins.  If you're mining for short term profit, then you're in a different game than me.

I've mined off and on since 2013.  Never sold a coin.  Converted to other coins, or traded coins for miners, but money goes in and never comes out.  Coins for miners is probably one of the worst investments I ever made.  If I had bought coins with fiat and used that for miners, then it would have been a better deal. 

Hindsight is a fun game.  Especially in this market.

[Metroid]

So many unknowns, so much is un-knowable.
- I was in your exact position earlier this year.  I had rented 1000 Square feet in Texas, and had 100KW of 3-phase power available immediately and plans for more.
- As crypto dropped, I abandoned my plans, started selling my gear (still have a bunch) and shut down the facility.  
- I am converting cash into crypto rather than rent, and mining at home only, using only Z9-mini's.  All GPUs are shut down, and all S9's are shut down.

So what do we know?
- Hash rate of every worthwhile coin is the one thing that is actually mooning.
- Bitmain prices their products for ~1 year ROI, maybe a bit less.  In my experience, Antminer S-series will pay back 1X in a year, and never pay another 1X because of hashrate growth.
- Rising value of Crypto to Fiat, makes all of the above math look better than if it stays flat.
- Of course something new is coming from Bitmain.  S9 series is more than 2 years old.  It's time.

What can we do?
- Assume crypto is going to moon.  Buy Crypto because you can't mine crypto as fast as you can buy crypto.
- Assume crypto will drop.  Sell what you have and be done with it.
- Assume crypto will be flat.  Maybe mine if your costs are low enough, but need to recognize that you're in a declining return over time because of hashrate growth.

What should you do?  Be careful.  Even at 5.5 cents/kWh, be aware you're competing with people in China and other parts of the world who are paying much less or even not paying for their power.  

This is the best advice so far in my opinion, this person knows what is the right thing to do in most cases, merit deserved.

[whitesites]

Build 15 Rigs with 8 x 1080 ti each.
Then go to church and pray that Bitcoin suddenly adopts an Anti-ASIC stance on mining.

[lunobird]

Yea, you should invest all your money on mining equipment because it's very profitable now and the difficulty is very low , it's a good time to jump in , i just gave you what you want to hear , go a head do what you want to do don't ask here because ppl here will say the truth not the lies you would like to hear.
I see ppl like you losing money everyday because they just want to do what they want to do without listening even if they pretend they are listening
Good luck

On most cases this would really be the insight of OP itself which he do really expect to have positive feedback on what hes trying to invest on here. Capital? It is indeed enough to start your own mining rig but profitability wise? Then most of us do have knowledge will have the same opinion and feedbacks which is "Non-profitable" nowadays and basing on the rent plus its current electricity cost then he would able to find out that hes totally wasting up his own time.

Without going into any altercations or arguments, I'd like to respectfully understand more about why everyone here is against mining.

1) Profitability is down right now yes... but as long as you have a little less than $0.10/KWh electricity rate, as of now it's profitable to mine - even if only by a small margin. (Z9 and their variants are an exception). If you're operating as a business, you'd likely be eligible for various deductions that improve your bottom line. This is the current scenario.
2) Difficulty increases for everyone. Constantly. That's a fact. No arguments here. Over time the number of coins you mine will reduce.
3) I'm bullish on crypto.
4) I can afford to hold the coins I mine. i.e. I can pay for the power I use for the foreseeable future (1 year) without selling any of my holding.
5) If the crypto market collapses, I shut down my business. Declare bankruptcy. That's not a scenario I'm willing to entertain. Every business has risks. I'm in this because I expect the market to rise.
6) If the market rises, despite the lower number of coins mined, I will probably still be profitable. Plus the coins I've mined earlier and held on to at a lower difficulty will add to my bottomline.
7) If I have an intelligent split (50-50 in my case) between mining and buying coins - I'm at a win-win given the above information - the market recovers and I make a win on my investment. Mining profitability resumes and I make a win on the coins mined WITH future income intact because no matter how little I mine, mining can only survive so long as there is some monetary benefit to mining. Therefore total hashrate will reduce when losses increase significantly (kind of what's happening with litecoin now). I also have a cushion since a lot of places in the world have a much higher electricity rate than me.
I have the equipment to sell - wont get too much for asics, more for gpu's. But point is that as long as I can keep reinvesting profits and upgrading constantly, a point will come when I'll be able to pay for equipment with previously earned profit. So mining as a business, given some common sense should pay off in the long run.

Sorry for the numbered list. Just jotted them down as they struck me.

Constructive feedback anyone?

This is Ace advice.  Good job

[grinbuck]

If you can buy coins cheaper with electricity, then mine.  If you cannot, then invest in coins.

Agreed 100%. Golden rule. However, currently I'm ignoring this and mining LTC at a ~10% loss because:
a) I have no money to buy coins because life happens AND
b) My electricity supplier put me on pre authorized monthly payments of 'x' no matter what the monthly bill is. The excess or deficit billed annualy will be adjusted in a bulk payment/refund sometime in the middle of next year. Figured a year was enough for crypto to recover and I am kind of getting interest free loan in electricity to "buy"/"mine" crypto.

Gamble? Informed risk? Dunno.

On the bright side, a few Z9 mini's are actually offsetting the current loss so the mining operation on the whole is in the green.

[nc50lc]

-snip-

Could you elaborate on this? I get the maintenance part, but more efficient mining? how so?

All I'm saying is, do not diversify your ASIC miners, focus on one algorithm.
That way, you'll get a higher hashrate to get more of that particular coin than buying different ASICs to mine other coins which could lead to loss that will be deducted to the total profit of all of your miners.
You only have to research intensively on the coin/algorithm of your choice.

If you want to diversify your assets, use the profits or part of the remaining funds to buy them (not so different with buying them using the initial funds but you got the hardware for your "investors" to see).

This all because you're already at the halfway or quarter of your plan.
If you can cancel all of it and do the usual buy-n-hodl, that's a good decision too; as I said in the first reply: It's up to you.

[Za1n]

This is not what you want to hear but mining is dead, at least for the short-term (next 12 months or so). Any investment in mining gear right now is going to cause you and your investor to take a one way trip to Rekt City.

The bear market is not done yet. BTC WILL drop under 5k, probably down to under 2K before this is all said and done. Ethereum will hit under $100 before finding stability, and it might even do a quick drop to $50 or so first.

All of these posts of "I am breaking even so will continue to mine and hold" is simply delusional thinking, as once your breakeven point fails, all the mined coins you thought you mined at a profit are actually now underwater as well. You would have been better off waiting awhile and buying coins outright in a few more months at a discount.

I do believe crypto will recover, at least some of the bigger and more promising coins, but many of the alts will also slowly become worthless and disappear completely. Be careful of what coins you buy as next time the "sure thing" feeling will be over as many people have been burned now and will be a lot more hesitant the next time around and not just pour money into all the "me-too" coins.

I would say mid-2019 would be the time to start looking at promising coins again and mining under the radar, keeping it simple at first. I would expect 2020 to be the year crypto is taken seriously again and seeing meteoric rises like we did in 2017, but again not every coin is going to take the rocket-ship to the moon, so you need to really look past the fluff and research what coins you want to get into and have an actual use case.

[jillscarbrough]

Yeah, maybe it's the right time to buy those coins. Unfortunately, the top 4 major coins are often drowning, both have risks.

[Metroid]

Yeah, maybe it's the right time to buy those coins. Unfortunately, the top 4 major coins are often drowning, both have risks.

since 2009, bitcoin never crashed more than 5 times, funny, it's always 5 times from all time high, has bitcoin crashed almost 5 times? yes, so the bottom for me was already hit as far as history goes, so anybody saying to people there is more to crash, those people are bears waiting you to sell your coins to them even lower than what they already sold hehe

You trolls have to be wise for once, if you held your eth coins at peak levels as $1400 and you have not sold, then why would you sell eth right now for 5 times less than that, if you do then this is not your game, yes this will be your end game for good, bears are really deceptive.

[grinbuck]

bears are really deceptive.

Seconded 

[grinbuck]

The bear market is not done yet. BTC WILL drop under 5k, probably down to under 2K before this is all said and done. Ethereum will hit under $100 before finding stability, and it might even do a quick drop to $50 or so first.

Any technical indicator/analysis/reasoning behind that statement?

[Za1n]

The bear market is not done yet. BTC WILL drop under 5k, probably down to under 2K before this is all said and done. Ethereum will hit under $100 before finding stability, and it might even do a quick drop to $50 or so first.

Any technical indicator/analysis/reasoning behind that statement?

I do have my own private long term TA, but in short just look at the long term chart pattern. We are still very much in a bear market and only see low volume anytime we do get a small uptick in price. Still a long ways to go down yet in my opinion and it will take time to fully play out.

The parallels to the 2013/2014 BTC boom and subsequent crash to what is happening now is so close it is almost spooky. The way I figure BTC was trading close to or just under $100 for much of 2011, with a previous ATH of ~$270 set in April of that same year. After the run-up to ~$1,200 we took several months to drop down to a $100 low before bouncing a little and averaging out in the $200 to $300 range for much of 2015, which took about 11 months to find bottom then another 10-11 months to stabilize and begin climbing in earnest.

The current pattern very much fits this model and I predict the bottom to take a similar amount of time to be found (11-12 months ) or roughly December 2018 to January 2019. If we find the new low somewhere near the previous ATH high ($1,200), much like last time this would put us somewhere in the $1,200 range before rising again to somewhere in the $2k - $3k range to ride out much of the rest of 2019. I fully expect it to take a good 2 years before we start climbing again and looking for a real bull trend.

So even with a generous dose of "it won't be as bad this time around", a low around the $5k mark would "only" represent a optimistic 75% decline versus the more realistic 90% decline like we seen last time which would put us closer to the $2k value. So with either scenario, coin prices are heading lower making today's values look relatively expensive in comparison.

Since the original post was more about mining than trading, I will get back to my main point about how unwise it is right now to invest in mining gear to mine coins that will very soon become much cheaper to buy outright that it is to pay electric, along with hardware depreciation, etc. to mine them at a loss. Too many people think we are close to, or already have, found the bottom and the bulls will return any day, but other than forum posts from people hopeful that this is the case, there is 0 evidence it is about to occur anytime soon.

[Za1n]

Yeah, maybe it's the right time to buy those coins. Unfortunately, the top 4 major coins are often drowning, both have risks.

since 2009, bitcoin never crashed more than 5 times, funny, it's always 5 times from all time high, has bitcoin crashed almost 5 times? yes, so the bottom for me was already hit as far as history goes, so anybody saying to people there is more to crash, those people are bears waiting you to sell your coins to them even lower than what they already sold hehe

You trolls have to be wise for once, if you held your eth coins at peak levels as $1400 and you have not sold, then why would you sell eth right now for 5 times less than that, if you do then this is not your game, yes this will be your end game for good, bears are really deceptive.

Well using Bitstamp pricing, simply because it was also around for the last boom/bust cycle, we had a previous ATH of $1,163 in Nov 2013. This was followed by a low of $152 set in January of 2015, occurring almost 14 months later. This would represent a 7.65 times crash, which a bit more than your 5 times statement. Using this 7.65X crash from the roughly $20,000 BTC high would put us around $2,614, so yeah I would say we have not bottomed yet according to history and still have some ways to go.

Also of note is the 14 months it took to get to the new low back then, so we will need to wait until around January or February to be of a relatively comparable time frame before putting in the new low.

I agree with your assessment that if someone held on to ETH from $1,400 until now it is probably not a good time to sell them unless you desperately need the money, but I don't think bears are clamoring for your coins quite yet. There is still more down to go, maybe not enough to risk putting in a big short portion, but definitely enough room to wait it out before buying in again.

[grinbuck]

I do have my own private long term TA, but in short just look at the long term chart pattern. We are still very much in a bear market and only see low volume anytime we do get a small uptick in price. Still a long ways to go down yet in my opinion and it will take time to fully play out.

The parallels to the 2013/2014 BTC boom and subsequent crash to what is happening now is so close it is almost spooky. The way I figure BTC was trading close to or just under $100 for much of 2011, with a previous ATH of ~$270 set in April of that same year. After the run-up to ~$1,200 we took several months to drop down to a $100 low before bouncing a little and averaging out in the $200 to $300 range for much of 2015, which took about 11 months to find bottom then another 10-11 months to stabilize and begin climbing in earnest.

The current pattern very much fits this model and I predict the bottom to take a similar amount of time to be found (11-12 months ) or roughly December 2018 to January 2019. If we find the new low somewhere near the previous ATH high ($1,200), much like last time this would put us somewhere in the $1,200 range before rising again to somewhere in the $2k - $3k range to ride out much of the rest of 2019. I fully expect it to take a good 2 years before we start climbing again and looking for a real bull trend.

So even with a generous dose of "it won't be as bad this time around", a low around the $5k mark would "only" represent a optimistic 75% decline versus the more realistic 90% decline like we seen last time which would put us closer to the $2k value. So with either scenario, coin prices are heading lower making today's values look relatively expensive in comparison.

Since the original post was more about mining than trading, I will get back to my main point about how unwise it is right now to invest in mining gear to mine coins that will very soon become much cheaper to buy outright that it is to pay electric, along with hardware depreciation, etc. to mine them at a loss. Too many people think we are close to, or already have, found the bottom and the bulls will return any day, but other than forum posts from people hopeful that this is the case, there is 0 evidence it is about to occur anytime soon.

Thanks @Zain. I need to do my own research on this and I'm not sure whether I (want to) agree or not but your post was very informative. I now see how your thought process is ticking. Great information for a guy just starting out and wanting to make some sense of this madness. Appreciate it.