USA's largest mining farm? 1 petahash making 8 million a month (see the vid)

[nuff]

You know, this guys almost certainly has to sell an ever increasing amount of the Bitcoins
he mines each month. He obviously has a huge power bill, and I'll just bet the electric
company wants dollars, NOT Bitcoins. Besides mining fewer Bitcoins each month due to
the increasing difficulty, his mining operation depreciates at a furious rate compared
to almost any other "industrial" operations since his mining hardware becomes less and
less valuable each month. While the scale is impressive, the economics aren't really any
different for him compared to a guys with a single Antminer. He just has more to lose.

Exactly. Unlike traditional business where perhaps scale can offset expenses, there's no such thing in the business of bitcoin mining because it's mathematically bound to be proportionate (the more hashpower you throw at it, the more difficulty increase, negating the extra hashpower after a while). Whether you are mining with 1 S1 or 10000 S1 your ROI rate remains pretty much the same. The only winning strategy for a miner is to be the first one fastest out there, and only for about 10 days. 

[wajiminer]

So why is he not taking profits and consolidating into faster more efficient miners?

I just got into the mining scene. I'm currently pulling in .2 btc/day, and I'm allocating 50% of that to new equipment.  As faster/more efficient equipment comes out, I'm swapping my stuff out at the same time increasing speed.

My garage can currently run 17,600 watts of equipment, and I'm only using 9100 of it.

[cloverme]

After paying operating expenses, I would imagine some of the profits go back into upgrading less efficient equipment to newer equipment. The secret sauce is getting your equipment to profitability as fast as possible. But if your equipment never profits, you have a take a loss at some point. The forums are filled with buyers who purchased pre-order equipment and then when it was delivered (some of it very late) the equipment wasn't as effective at turning a profit quickly.  With difficulty going up and BTC/USD going down, this month could be rough.  The larger the mining operation, the more equipment you need to turn over... IMHO You can't (or dare I say shouldn't) really treat mining equipment as a traditional asset as part of a capital expenditure. Miners are almost like a consumable, it's only good for about 8-9 months after release, then it costs more to power than it likely generates revenue.