Large GPU Mining Operations - Discussion Around Valuation

[dirtydatallc]

I would like to start a discussion around valuing large mining operations. We are currently trying to place a value on our operation, for a potential sale. I think it would be helpful to know if there are ANY buyers of larger farms out there given the depressed state of the market.

We obviously know that your all in price per $/kwh is the most important factor outside of your fixed costs (labor, insurance, rent, etc). For many small time miners, those costs are free. For the larger ones, labor especially, can be quite expensive.

We currently have no real fixed costs other than internet, and rent is included in our $kw/h charge. We pay $0.09/kWh, measured at the server rack. Therefor we DO NOT pay for cooling, lights, etc. All remote hand restarts are free.

We currently have 100 4U Rack Mounted Servers each with 6 RX 580 GPUs mining, mining ETH and a dual core CPU mining VRSC. We run our own custom ubuntu distro so no software fees. We run everything in RAM, so no HDDs to replace. We have 10 racks, and have set our miners to be more reliable than power efficient. We have an uptime of +99%. We average 27 MHS per card. Each miner runs 800-900 Watts, measured at the wall. Each rack has a metered and switched raritan PDU. There is also one PXE boot server that serves the OS to the miners, and a complete Unifi network.

So the question is, today, given the information presented, how much do you think this operation is worth. Right now I am having a tough time valuing it (and I am an investment banker). I see a couple of scenarios, salvage value only, a discounted cash flow NPV model (but what discount rate do things like this transact at IDK), or what I think is probably the right answer, a market comp model of ZERO. Obviously, we wouldnt sell it for zero (so the valuation isnt zero) and are happy to keep mining.

If you have a large mining operation and have had internal conversations around value, please contribute.

Thanks everyone,

Colin

[jmigdlc99]

If i was going to be a potential buyer of your mining operation i'd first ask how much do you earn?
Given u say you have 100 racks x 6 rx 580s each at $0.09 electricity then i'd say your daily revenue is around $41 per day based on whattomine stats as of writing. That translates to $1230 per month.

Now, assuming you bought all your GPUs at brand new prices of lets say $250 each, then the total cost of your GPUs alone would be $150,000. Of course you'd have to factor in depreciation costs and all that, lets say your investment is now worth half, at $75,000.

So given the above, i'd have to wait around 60 months (75000/1230) just to get ROI on your mining operations. Thats 5 years before i turn any profit and a lot does happen in crypto with a span of 5 years. Therefore, i'd really need to get a better deal in order to consider buying your mining operation, so sadly, i would low ball it further and would probably (would still be not sure about going through with it), offer maybe $25,000.

[k9750]

in term of electricity consumption
i would go with Nvidia mining cards
P106 - 22mh on ETH @ 80w cost ~$100
P104 - 35mh on ETH @ 100w cost ~$200

but consider the resale value of this cards will be lower than normal cards
beside that , Nvidia support more algo's
that's my opinion from mining perspective

thanks and regards

[Lunga Chung]

25k$ would be my offer also only for miners. If you trow in PDUs and racks might go a little higher, what brand of rx580 are they 8gb or 4gb?

[MarkAz]

We just finished liquidating one of our mines a few months ago, so things probably haven't changed that much.  Our mine was considerably larger than yours (about 4 or 5x), and was exclusively Nvidia GPU's - but a mix from 1060's to 1080TI's... We sold to one buyer, primarily because we didn't want to go through all the pain and suffering of selling the individual parts - and he bought everything; cards, cases, PDU's, cables, you name it.  For the cards, what he was paying was basically about 30% off of what eBay sells for - so just a quick check looks like RX580's go for around ~$120 range, so if you have the boxes for the cards, figure probably ~$50k, if you don't have the boxes, then maybe closer to $40k (he knocked off about $10 for no box, but the bulk of ours had boxes).  He also paid more or less for different manufacturers, as some have far better warranties than other.  The cables and everything else are really worth very little - we bought most of our PDU's and cables surplus, so we already were getting the $500 Dell PDU for $50, he basically paid us about half of that, so $25 each.  Really the bulk of your values is going to be in cards, so my guess would be closer to $50k for everything you've got - really I'd be surprised if a miner would buy it, you're really talking about a liquidator, so I don't think you'll find you have any 'in place' value (especially as others pointed out in terms of ROI).  We also ran our systems very similar to yours, custom Ubuntu although we had local SSD's on each machine (as they were cheap as hell) - but he didn't really care one way or the other about that, just interested in hardware.  And keep in mind this was for Nvidia GPU's, so I have no idea if the market is stronger or weaker for ATI... 

[deadsix]

Valuation logic's pretty much consistent across the answers already given. You can expect between 25k-35k at best since the markets been flooded with cheap GPU's and those form the bulk of your value.

[Ursul0]

a bit confused here.
He says "100 4U Rack Mounted Servers each with 6 RX 580 GPUs mining" which means as far as I understand 100*6=600 GPUs

Also I'd say that there is one point that is not mentioned, but can be relevant for the future prospects of mining: what is the amount of ram on those 580?

And a bit offtopic but why on earth you are getting only 27MH? (relatively easy you can increase by 20+%)

EDIT: also if anyone is interested this is a setup that I have: https://bitcointalk.org/index.php?topic=5124398.msg50305599#msg50305599
Things have changed a bit, now there's another partner and we are expanding, but I'm still a majority holder and options can be discussed if intersted.

[swogerino]

Valuation logic's pretty much consistent across the answers already given. You can expect between 25k-35k at best since the markets been flooded with cheap GPU's and those form the bulk of your value.

I think that a potential buyer right now would decide otherwise,the market is full of cheap Gpu-s now and the Rx 580 in local markets you can find each at less than 100 dollars and would probably try to buy as cheap as he can.

I think that if I were the buyer the maximum I would offer for a Rx card right now is 65 dollars for each about 35.000 dollars in total.

[dirtydatallc]

I appreciate the responses. I agree the valuation is low, and thus not even worth the time to sell. We have 600 gpus (8gb).

Ursul0 - I appreciate your point about the 27MHs. A couple of issues, we ran ETHOS for a while, then switched to ubuntu. All the cards have a custom rom installed, that was probably put in early 2018? I havent touched the BIOSess since. We currently have been using ubuntu and claymore 15. If you can point me anywhere that has a direct guide to applicable drivers, bios, and miner that can push it up to 30+ it would be appreciated. For what I understand +rxboost only works on Windows.