Projected Minimum Cost per BTC over the next year

[samsonn25]

So next September it will be 381 times harder to mine for BTC.   Unless the price rises to $181,000 to make it equal to mining today.  Something has to give.

why it will be harder to mine for BTC? you mean the price will be down and few people mine?

The difficulty level to mine seems to gets harder every 13 days

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[mikerbiker6]

I changed my mind, a growing competition doesn't necessarily force miners to sell their coins higher.
A growing competition will push out less efficient miners, so the miners are left with higher efficiency that can sell their coins even lower.
there is no lower boundry, more and more people will fold so the remaining miners will make more bitcoin and can afford to sell low.(since they made more coins than before).
So a higher difficulty or higher competition will not always lead to a higher BTC value.

[molecular]

I changed my mind, a growing competition doesn't necessarily force miners to sell their coins higher.
A growing competition will push out less efficient miners, so the miners are left with higher efficiency that can sell their coins even lower.
there is no lower boundry, more and more people will fold so the remaining miners will make more bitcoin and can afford to sell low.(since they made more coins than before).
So a higher difficulty or higher competition will not always lead to a higher BTC value.

correct. The hashrate (cost to mine) will adapt to price, not the other way around.

Bitcoin mining is a weird beast.

• With gold mining, if price falls below production cost, inefficient gold mines will close down. Produce supply decreases, which has a positive effect on price.
  
• With bitcoin mining, if price falls below production cost, inefficient bitcoin mines will close down AND the remaining mines will automatically become more efficient. Produced supply remains essentially constant and effective supply brought to the market can even increase (if miners have to sell a higher percentage of production), having potentially negative effect on price.

[mikerbiker6]

well said molecular

[keystroke]

Looks like the current difficult bump a few hours from now is about to be about 15.7%.

Edit: Can we update the table based on this data? It would be cool to have this on a website where the data is brought up to date in live time.
Something like bitcoinclock.com but better.

[Opnsrc]

Love this thread. Going to keep a close eye on it.

[BurtW]

Looks like the current difficult bump a few hours from now is about to be about 15.7%.

Edit: Can we update the table based on this data? It would be cool to have this on a website where the data is brought up to date in live time.
Something like bitcoinclock.com but better.

I will update this again some time in October.  It really does not change that much on a month to month basis since I am looking back one year and forward one year.

A real time version of this, updated after each difficulty adjustment would be totally cool.  Someone could do that.  If anyone wants/needs my Excel spreadsheet as a basis for the web site just give me a PM and I will send it to you.

If this was done on a web site I could stop doing it manually and that would be totally fine with me.

[AnonymousEconomist]

This thread is excellent so far!

It would be great to have more data. Like a chart with the price of bitcoin overlayed on top of price to mine bitcoin, but over the course of the history of bitcoin. If that is possible...?

[mvalley]

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

[AnonymousEconomist]

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

[keystroke]

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

Yes, but I imagine that now home miners are a small percentage of the overall mining market. Does anyone have a guess at how sizable they are now?

[AnonymousEconomist]

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

Yes, but I imagine that now home miners are a small percentage of the overall mining market. Does anyone have a guess at how sizable they are now?

I would guess around 20%.

But that IS just a guess. With no scientific backing whatsoever.

[wilth1]

Does $100,000 USD seem reasonable for manufacturers' 1 PH/s infrastructure costs at present? Any data that indicates how this is declining over time?

[samsonn25]

1000TH for 100k

$100/TH is hard to do

If they can do it then they are making a killing at sales:

KNC Neptune 3 = $2000 TH

Bitmain s4 = $750 TH

[eoakland]

hopefully it becomes very unprofitable--that way the corp farms stop mining the shit out everything

[mmeijeri]

hopefully it become very unprofitable--that way the corp farms stop mining the shit out everything

Industrial mining isn't going to go away, and home mining is likely on its way out, just as happened with CPU mining and GPU mining. Just the free market in action. You can't just make free money forever.

[eoakland]

hopefully it become very unprofitable--that way the corp farms stop mining the shit out everything

Industrial mining isn't going to go away, and home mining is likely on its way out, just as happened with CPU mining and GPU mining. Just the free market in action. You can't just make free money forever.

you never know.  if bitcoin falls enough--it will get to a point where these companies with big farms will have to turn off the power. 

[mmeijeri]

you never know.  if bitcoin falls enough--it will get to a point where these companies with big farms will have to turn off the power. 

Some of their power and the same goes for home miners. If they still have an edge on energy prices I don't see how home miners could hope to regain much "market share". I imagine there are some limited advantages that home miners have such as "free" space to store the mining hardware rather than a data center which costs money to run / rent, but only in small amounts.

[xstr8guy]

Based on the hashrate increase and how consumers are still buying over priced miners, I now think that overall mining will go negative ROI for a while until people realize that they are losing money. Home miners don't think like business miners and may not realize they are losing $ in small bits here and there.

So while the max hashrate/BTC calculations have value, I don't think many individuals will actually shut down if they already have the equipment.

Gonna be a rough ride for a while.

I agree with this. I also believe the typical home miner is more likely to hold onto his/her bitcoin.

But I couldn't imagine the big mining farms selling at a loss. They are at the top of the bitcoin food chain.

Yes, but I imagine that now home miners are a small percentage of the overall mining market. Does anyone have a guess at how sizable they are now?

I would guess around 20%.

But that IS just a guess. With no scientific backing whatsoever.

It should be pretty easy to deduce by looking at Organofcorti's hashrate chart.
http://organofcorti.blogspot.com

You would have to make some assumptions about how much of DiscusFish and GHash.io's hashrate is from their private farms though. And the other public pools would be mostly home miners since every large-scale mining operation should logically be solo mining. There are some pretty big players on some of the public pools though but they aren't in the same league as Bitfury, KNC, Bitmain and other ASIC manufacturers.

So who's good at math?  

[wilth1]

1000TH for 100k

$100/TH is hard to do

If they can do it then they are making a killing at sales:

KNC Neptune 3 = $2000 TH

Bitmain s4 = $750 TH

trying to estimate infrastructure reinvestment cost:

hashrate increase * production cost per PH

You could then deduct any retail sales from this amount relative to the total increase as a percentage.

AM is now selling 1TH/s for as low as about 290 usd.  with retail markup (roughly 100%) removed and all resulting profits considered, $100/TH seems fairly accurate