Opinions on my mining plan?

[betajuice]

I just would like honest and straightforward opinions.

I can get ~ 0.06 $/kWh electricity, in a climate which gets quite hot in the summer.

I can manage to put down $180k in equipment.

I am looking to find a warehouse located in the USA.

Consider that warehouse property lease terms are in the 2 - 4 year range,

I'm considering starting this as a registered business and beginning in the next 2 - 6 months.

Assuming I am fully committed, do you think this will be a profitable endeavour?

My personal calculations say yes, and I have mined before just on a much smaller scale,
I ask for opinions because many of you might have more experience with mining at this scale.

Thanks.

[Steamtyme]

I think your biggest problems will be finding a secure facility that is set up for what you need. (Ventilation and electrical load.

If you can find something to lease that checks those 2 boxes you're still in an okay situation. Unfortunately you are only going to get 75% of the gear you would have 2 months ago, thanks to the tariffs.

On the upside there is a lot of efficient gear that has launched or is launching soon. Most of this is reasonably priced right now, that will change as soon as there is a spike in price.

Apart from that if you can find a way to offer hosting services, it would help cover your operating costs.


While I am a fan of mining, I have to ask are you thinking of doing this based on the price going up? Or for the profit you can make by selling coins as they come in?

[BitMaxz]

Nowadays, ASIC mining still profitable these days but it depends which miner you are planning to invest, just make sure that you buy a new generation of ASIC miner because it is profitable compared to old ASICminers.

Have you tried to use a calculator? There are some tools that you can use online to calculate your profitability by daily or weekly including the amount you spend or hardware cost.

Take a look at this tool http://www.mycryptobuddy.com/BitcoinMiningCalculator

For example:

You bought s9 for $200 and the hashrate of this miner gives you 13.5TH/s and the power is 1300W and then use the 0.06$/kWh rate.
Now, input this on BitcoinMiningCalculator posted above, as you can see from the MiningCalculator the s9 miner will "never" be profitable based on the calculator result, but it gives you around $39 monthly earnings.

Note: This is not accurate result it only gives you an estimation based on the recent difficulty, electricity rate, and the hardware cost it might change in the future because the difficulty is changing from time to time.

If you are looking for the list of ASIC miners that includes profitability you can check this site https://www.asicminervalue.com

Other mining calculators you may use:

- whattomine.com
- coincalculators.io

[betajuice]

While I am a fan of mining, I have to ask are you thinking of doing this based on the price going up? Or for the profit you can make by selling coins as they come in?

Firstly any coins not sold to grow the farm would be kept, not sold for USD. I'm interested in doing this pretty much because I like mining and would like to grow a mining business.

[Steamtyme]

Sounds reasonable. I would definitely look into trying to offer some form of hosting service then. This would be the next logical step in growing said business.

By the way where are you looking in the US?  I recall some people offering up facility leases in the marketplace, no idea if they were legit or not but may be worth checking out.

There are always people looking and there will be more as their gear slowly edges out of profitability. The bonus is you can either take payment in coins, or USD to pay the Bills.  

To get an idea of the current hardware market. You can check this topic out.

https://bitcointalk.org/index.php?topic=5045732.0

Good luck with the venture.

[betajuice]

Sounds reasonable. I would definitely look into trying to offer some form of hosting service then. This would be the next logical step in growing said business.

Why? I'm not super interested in being responsible for other people's equipment, and how much would I benefit anyway? By keeping a small percent of their miners' output?

By the way where are you looking in the US?  I recall some people offering up facility leases in the marketplace, no idea if they were legit or not but may be worth checking out.

Texas

[Steamtyme]

Why? I'm not super interested in being responsible for other people's equipment, and how much would I benefit anyway? By keeping a small percent of their miners' output?

I took your answers as wanting to grow a business. I tend to think of businesses having several avenues to generate revenue.

By hosting you can charge people a monthly rate based on the gear they host, you don't have to set it at a percentage of the coins they earn.

Considering your large investment I would assume you would take the precautions to remove most of the risk involved, mostly theft.

You did ask for opinions and that is what I would be considering as an option. I would also try to secure a better rate of electricity for an industrial facility. edit: Doesn't seem like an option

[betajuice]

I took your answers as wanting to grow a business. I tend to think of businesses having several avenues to generate revenue.

By hosting you can charge people a monthly rate based on the gear they host, you don't have to set it at a percentage of the coins they earn.

Considering your large investment I would assume you would take the precautions to remove most of the risk involved, mostly theft.

You did ask for opinions and that is what I would be considering as an option. I would also try to secure a better rate of electricity for an industrial facility. edit: Doesn't seem like an option

Yeah, thanks for your feedback, hosting is not something I've looked into much, so I'll think about it.

Why did you edit out looking for a better electricity rate?

[Steamtyme]

I was doing a bit of quick searches and it did look like your .06 rate is pretty good for Texas. I looked after posting.

I didn't look too deep but it usually doesn't hurt to ask, in trying to get a better price. The bonus is your the kind of customer those companies like, a good steady load.

[minefarmbuy]

Sounds like a good good plan. Get your licencing and business plan together and negotiate. $0.06 for power is good but don't forget about fees and taxes. I have "$0.06" at home but with fees/taxes it's more like $0.11.

[Raymond_B]

Is your $0.06 price per kw/h including your delivery fee? You need to look at your *total* cost. Secondly prepare for Texas heat to throw that 1300w estimate out the window. My S9s vary from 1400(right now at 64 deg F in the room)-1500+W(100 deg room temps) each according to my PDU. On top of that you have to pay electricity for exhaust fans, supporting gear (computers, switches, routers, lights, etc). Throw AC on top of that and you're not going to make money.

I am in the DFW area and cool my miners with ambient air, meaning your draw outside air in and then adequately exhaust it out. Search the forum and sub forums. You'll find plenty of info.

[betajuice]

Is your $0.06 price per kw/h including your delivery fee? You need to look at your *total* cost. Secondly prepare for Texas heat to throw that 1300w estimate out the window. My S9s vary from 1400(right now at 64 deg F in the room)-1500+W(100 deg room temps) each according to my PDU. On top of that you have to pay electricity for exhaust fans, supporting gear (computers, switches, routers, lights, etc). Throw AC on top of that and you're not going to make money.

I am in the DFW area and cool my miners with ambient air, meaning your draw outside air in and then adequately exhaust it out. Search the forum and sub forums. You'll find plenty of info.

I do believe the price included deliver but perhaps not taxes.

Ambient air seems fine now but does that work in the 90+ months?

[Raymond_B]

I’ve run my miners in 104 deg F Room Temp no problem. The chips temps were high, but did not shut down.

[minefarmbuy]

Can use sun shade on intake side to help some if your "box" farming. Otherwise as long as the exhaust is removed well and away from the miners you should be fine.

Ive had intake up to 40C and miners were fine. Just could max out you psu's as they'll draw more power.

[ccgllc]

Remember that your going to have to sell a fair amount of your BTC to cover your electric bill every month.

The real killers are the unknowns:  

1)  How fast will difficulty go up?  Compounding is a real nightmare.  At one point I figured difficulty had gone up about 7X in 1 year.
2)  What will happen to the price of BTC?  If it goes up in parallel to difficulty, life is wonderful.  If not, eventually you will go out of business.

Lets take an example:

Say you put up a system today that burned $15,000 worth of electricity a month and earned $20,000 in BTC month 1.
Month 2 comes along and BTC has had (2) 4% increases in difficulty, just call it 8% for the month.  
That means your earning 8% LESS month 2 than you did month 1, so you $1600 less in BTC.
Month 1 netted you $20,000 earned - $15,000 in power = $5000 profit
Month 2 netted you $18,400 earned - $15,000 in power = $3400 profit, a decrease of 32%.... unless BTC prices also go up.

Basically, your electricity (and rent, taxes, building insurance, etc.) remain fixed, but your income is always going down.

In order to stay stable, with a non-increasing BTC value, you would have to grow your farm by the difficulty increase every TWO weeks.  Looking at that math:

Assume you invested $150K in miners (the rest for the building, wiring, etc.), and lets use that 8%/month number from above.  Means you would need to invest an additional $12,000 month 1, and more than that ever month thereafter.  But you only have month 1 profit of $5000, so you are dependent on two things you have no control over (items 1 and 2 above).

Obviously a lot of assumption in those numbers.  The biggest one being that you could make a 33% profit over electric cost month 1...

[minefarmbuy]

If you're mining for hobby just enjoy it. Based on the thread though if you haven't developed a business plan I would continue the research on operations and then develop it 5-10 years out to start.

Expansion can encompass on a few areas but looking at relevance to cc's post; Mining is an arms race of sorts. If you have power that is really cheap you'll be looking at adding hardware mostly, with less focus on efficiencies but adding, as increasing hash is a must to retain projected revenues to most models. There are other models to consider but importantly you don't want to chase diff but pace it at minimum in most operations.

[philipma1957]

Basically it is like boxing you need a left and a right.

Your left is cheap power.
Your right is cheap gear.

That means you might make money.

You need a chin that takes a punch.

The punches you get are endless. Gear breaks. Psu breaks. Diff goes up. Price goes down.

So you need to be able to do rope a dope. Or thread water  sometimes for a year or more.

Waiting for the big punch to make a score.

[minefarmbuy]

I didn't know it was analogy time, but philipma with a tko?

Essentially try and consider every variable imaginable, then brace yourself for everything you missed or overlooked. Project very conservatively and don't over promise. Seems familar.

[DDAsics]

I would consider finding a partner instead, and then going to your local power company and asking for a cheaper rate for offpeak service. You are probably going to need more volume for this however. If you can get your usage high enough, you can get very good deals for offpeak power, which is incidentally also when temperatures are the coolest.

By doing this, you can conceivably get your average power cost down, and then the ROI will be much better. There are stories of people in Texas being able to get free power in many cases during the wee hours of the morning, when the power companies would otherwise have to pay surrounding states to take it off their grid. I know that sounds counter intuitive, but shutting down baseload generators can be very expensive, so power companies are occasionally put in the position of needing to pay in order to keep the grid functioning above minimum.

So my advice would be to think bigger. Raising money is never fun, but it can make the difference between being profitable and just losing money.