Mining Profitability

[fryarminer]

I wonder what’s gonna happen regarding mining. It’s just not profitable anymore. My Jalapeño gets me $0.17 (cents) a day. My monster 110GH Avalon I bought in August for $8g is getting me 0.01BTC a day. Butterfly Labs is still going to take another 5 weeks to start shipping the Monarch, and when they do the device will be useless, and even more useless once they have shipped all their orders. 1TH is going to be a joke come the summer.

Something’s gotta change. I’m torn between liquidating my equipment on ebay for the few hundred dollars they are worth, or letting them keep running until the summer and trashing them.

Maybe by July things will be in perspective and if there is mining equipment it will be reasonably priced and competitive.

I was thinking of switching to cloud mining, but that would be the least profitability imaginable.

What are your thoughts on mining these days?

[bjalbert]

sell your equipment and get some of your ROI back. Did you make anything off the avalon?

[Zimbabwecoin]

Mining can be alot of headaches and it is very easy to lose alot of money. But, you can learn alot in doing it. So do it at some level with the knowledge that it might fell like you are bashing your head against the wall.

[fryarminer]

sell your equipment and get some of your ROI back. Did you make anything off the avalon?

I made back ROI and then some, but at this point the question is if it is worth it to keep the machine running!

[stergium]

Mining these days at least for me is more of a hobby. I dont expect earnings.
I use cloud mining on cex and pbmining (referal sig) with few ghashes  . On cex i like it because i had the chance to create a page that automatically trades through the api and was a fun project for me. Pbming , well... i dont expect to get more that i put there (only 5 ghs)  and they  do have a bit shady way of doing bussiness. https://bitcointalk.org/index.php?topic=484355.0.
To make a long story short, cloud mining profitable? probably not.

[DobZombie]

What generally happens when mining becomes unproffitable is the miners themselves refuse to sell bitcoins at a loss.

This drives up the price of bitcoin.

Then more miners come in when profitability increases.

So on and so forth.

There is generally a 3 month delay in the shifting of the bitcoin price,

It happened when the reward halved. It happened when difficulty increased when ASICs arrived on there scene.

Believe me guys, it'll happen again.  SO INVEST ALL YOUR SPARE CASH IN BITCOINS! NOW!! 

[Klestin]

Butterfly Labs is still going to take another 5 weeks to start shipping the Monarch

That's not what they've said. They've said that this issue is causing a 5-week delay. They were not poised to ship anything before this delay, so the ship date isn't in 5 weeks, it's 5 weeks out from where it was before the delay. So, with no more issues and with the rosiest of predictions taken as fact, purchasers should still not expect any shipments before June.  Given their prior history, June would be a miracle.

[fryarminer]

Butterfly Labs is still going to take another 5 weeks to start shipping the Monarch

That's not what they've said. They've said that this issue is causing a 5-week delay. They were not poised to ship anything before this delay, so the ship date isn't in 5 weeks, it's 5 weeks out from where it was before the delay. So, with no more issues and with the rosiest of predictions taken as fact, purchasers should still not expect any shipments before June.  Given their prior history, June would be a miracle.

Wow. I feel for the people who traded their singles preorders for monarch preorders back in September. They're still waiting.

[jmumich]

What generally happens when mining becomes unproffitable is the miners themselves refuse to sell bitcoins at a loss.

This drives up the price of bitcoin.

Then more miners come in when profitability increases.

So on and so forth.

There is generally a 3 month delay in the shifting of the bitcoin price,

It happened when the reward halved. It happened when difficulty increased when ASICs arrived on there scene.

Believe me guys, it'll happen again.  SO INVEST ALL YOUR SPARE CASH IN BITCOINS! NOW!! 

To the extent that difficulty has an impact on price, and that is far from certain, it will become less of a factor as the number of mined coins becomes a smaller percentage of total coins.  Plus, my understanding is that most of those who received the first batches of ASICs last summer/fall easily made a return on their investment.  I don't think there is any good evidence that the price rose in November because miners pulled their supply from the market. 

In fact, I think that the first miners that received ASICs that failed to return on the initial investment (or will almost certainly fail to ROI) received them in the past few months - a period where the price has been generally declining (due to external factors, but that's my point).  There's no reason to think that those miners are holding their supply - maybe some are, but others may be selling, reasoning that getting 70% of their investment back is better than risking getting less back if the price continues to decline.  The cost of the equipment is a sunk cost in any event - a rational miner will decide whether to hold or sell their coins for the same reasons as anyone else.

[cloverme]

Well, it sounds like you reached the point where you need to use mining profits and reinvest back into better mining equipment.  Jalapeño's sold on ebay for $130 this week, an Avalon @ 90 gh/s sold for $600. Consider selling your equipment and buying an antminer, prices are dropping on antminers this week, price per gh/s is below $4. Cloud mining is anywhere between $5-$12 a gh/s depending on the provider. You should plan to swap out/upgrade your mining equipment when it is no longer profitable for you to maintain, you should drop/resell it.

Here are my thoughts on where I think mining is today....

I think once the new 20nm asics reaches the hands of the pro-consumer miners out there, the mining market will level off for awhile before the next advancement in mining technology. Miners will need at least 30-60 days to recoup their investment for the new systems in Q2 this year (if they ship in Q2) and the hardware manufacturers will be thinking up new designs and supporting existing products in Q4 this year.  Just my opinion, but I don't think we'll see another leap past 20nm in ASIC design until Q4 of 2015 at best. I think what we will see is more 20nm packages being put into different form factors and systems.  

So while the hashrate will continue to go up as well as the difficulty, I don't think we will see the same growth pattern that we saw from October 2013 to Feb 2013, maybe 75% of that growth. With the rise of the corporate miners having massive hashing farms, they aren't going to be able to turn over old hardware and upgrade at the same rate as smaller miners with less hardware because it's going to take them longer to pay it off as difficulty rises. Some middle-tier miners are likely going to throw in the towel if they weren't profitable this year, and small hobby miners are probably going to continue to pursue high risk / high return investments into mining equipment.

[hulk]

Sell it is the only thing you can really do..

[TheChosenOne]

What generally happens when mining becomes unproffitable is the miners themselves refuse to sell bitcoins at a loss.

This drives up the price of bitcoin.

Then more miners come in when profitability increases.

So on and so forth.

There is generally a 3 month delay in the shifting of the bitcoin price,

It happened when the reward halved. It happened when difficulty increased when ASICs arrived on there scene.

Believe me guys, it'll happen again.  SO INVEST ALL YOUR SPARE CASH IN BITCOINS! NOW!! 

That's quite interesting. I wonder how far this is true. The total amount of mined bitcoins is very small in comparison with the total amount of bitcoins in circulation. If most people hold bitcoin, then most bitcoins on the market will be from these miners, the greater this effect. If prices go up, people that are willing to sell bitcoins at a slightly higher price come in the market and this 'smoothens' the price.

[Wanesst]

How can I cloud mining and why that would be the least profitability?

[Buziss]

How can I cloud mining and why that would be the least profitability?

"Cloud mining" is simply renting others' equipment to do hashing for you.

Why would someone sell their hashrate, rather than do mining themselves?
Because they can earn more selling the hashrate