Mining vs. buying ETH analysis using Bitinfocharts raw data

[cudapop]

Since this topic has come up again recently I decided to re-extract the raw data available from the Bitinforcharts website for ETH daily mining profitability and ETH daily price and use the data to compare the profit from mining vs. buying the coin directly.

From the Bitinforcharts webpage on "Ethereum Mining Profitability historical chart: Mining Profitability USD/Day for 1 MHash/s" you can use scripts (python, sed, etc.) or even regexp in vi to extract the date and USD-per-MH-per-day data into a csv file.

Similarly from the Bitinforcharts webpage on "Ethereum Price in USD historical chart: Average price, per day, USD" you can also extract the date and USD-price-of-ETH into a csv file.

Then, dividing the data from the first csv file by the data in the second csv file will yield ETH-per-MH-per-day data.

Combined you will get a csv file similar to the following:

https://www.dropbox.com/s/arx2aqw11djk2i0/ethpermh.csv?dl=0

Which gives the Date, USD profitability per MH, USD price per ETH, and ETH per MH for each day.

To use the extracted data, let's say that back in March 1 2019 I bought a GTX 1660 Ti at a price of $280 and used it to mine ETH at 30 MH/s at 70 watts power draw, and accumulated all the ETH mined to sell on Dec 11 2020.

Loading up the csv file into a spreadsheet I can sum up the ETH-per-MH data from March 1 2019 up to Dec 11 2020, I multiply the sum value by 30 MH/s, and I get 1.644650613 ETH mined in total over that time period.

Over that same time period of 652 days the 70 watts power consumption cost me (using $0.10 per KWh):

70 * 24 / 1000 * 652 * 0.10 = 109.536

So in total for an expenditure of $280 for the GPU plus around $109 for electrical costs I mined 1.644650613 ETH, which if I sell on Dec 11 2020 at around $550 per ETH gives me $904.56 gross earnings, less the cost of the GPU and electricity gives me around $515 in profit.

If instead I had used the $280 (GPU) plus $109 (electricity) = $389 to directly buy ETH back in March 1 2019 for around $136 per ETH, I would have had 2.860294118 ETH. If I then sold that on Dec 11 2020 for around $550 per ETH I would have earned $1573.16, less the initial investment of $389 gives me a profit of around $1184, so over double the profit as compared to mining for this specific example.

You can test out buying/mining from various start dates and selling on other dates to see for which cases mining or buying is more profitable.

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Personally I buy and mine with GPUs because, as others have mentioned elsewhere, the GPUs are a hedge in the worst case (eg. ETH price goes to zero, etc.) as they can always be sold to to recoup some of the costs, plus I also use the GPUs for CUDA mining kernel development as a sideline to my regular programmer job.

[adaseb]

I was also wondering this and thanks for doing the grunt work. However can you calculate how much profit mining would of yield if a miner just mined everyday and sold at the market for US dollars. I think the reason why the other topics are getting heated is because there is a big difference between mining and holding and mining and selling.

Obviously it would be a different story if ETH was at $55 now rather than $550. So if ETH went to $55 it would of obviously been more profitable to mine and sell rather than hold which would of resulted in a huge loss.

[cudapop]

... how much profit mining would of yield if a miner just mined everyday and sold at the market for US dollars ...

You mean sell all mined ETH every day right?

In that case it's just the sum of the "USD profitability per MH" column multiplied by the MH/s of the rig. So for the example used of the 30MH/s GPU, that would be around $401 gross for the Mar 1 2019 to Dec 11 2020 period, less the $389 GPU and electrical cost, gives a profit of $12.

As for selling at a lower price than $550, if we consider the end date as Mar 18 2020 (instead of Dec 11) the ETH price that day was around $114. In this case for that period Mar 1 2019 to Mar 18 2020:

Selling only at the end yields a gross of $107.
Selling each day yields a gross of $181.

Both losses, but a larger loss if you sold only at the end.

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The data can also be used to test out various selling methods, eg. accumulating mined ETH until the price drops by 15% and then selling what was accumulated, otherwise if price doesn't drop continue accumulating. Testing these selling methods has to be done via a program/script, in effect having the program simulate the selling method or strategy. For the example case used, if you did the "accumulate and sell on -15% price drops" method you would get a gross of $210. Still a loss, but the smallest loss (so far) among the selling strategies for the Mar 1 2019 to Mar 18 2020 period.

<edit>

To clarify, the "sell on -15% price drops" is not a drop in a single day, rather it is a drop from the most recent high from the last date you sold, ie:

day 1: assume ETH price starts at $100, recent high set to $100, accumulate mined coins
day 2: price drops to $90, recent high still $100, price drop not 15%, continue accumulating
day 3: price drops to $80, price drop now >15% compared to $100 recent high, sell accumulated coins, set new recent high to $80
day 4: price drops to $70, price drop not yet 15% of most recent high at $80, accumulate coins
day 5: price rises to $85, set new recent high to $85, continue accumulating
day 6: ...

[Metroid]

Obviously it would be a different story if ETH was at $55 now rather than $550. So if ETH went to $55 it would of obviously been more profitable to mine and sell rather than hold which would of resulted in a huge loss.

It wouldn't, gpu and electricity prices would still be the same, yeah you can buy cheap gpus on ebay but without warranty on bearrun. If both electricity and gpu prices followed the bearrun in the sense of going down drastically then it would be no different than mining on bullrun. Bearrun issue is electricity cost, bullrun issue is gpu price since electricity price remains the same on both bullrun or bearrun.

Anyway you look, the best approach is to buy coins on bearrun or bullrun, my point being, you will have to pay 2 to 3x more the msrp for gpus on bullrun, and if the market crashes, that gpu will lose a lot of value, you see people nowadays paying $1300 for 3080 to earn $2.20 per day, if the bullrun lasts at least 24 months then is worth, but we know it won't.

https://whattomine.com/coins/151-eth-ethash?hr=88.5&p=250.0&fee=2.0&cost=0.1&hcost=1300&commit=Calculate

Whattomine says 600 days to roi, that is almost 2 years mining 24/7, buying eth for $550 now and selling for $1100 is a much better deal than buying 1 x 3080 for $1300, now if you can find a 3080 for msrp $700 then I recommend buying the 3080 and mining cause anyway you look in the end you will win it, going bear or remaining bull.

On bearrun, if you can buy close to the bottom or on bullrun sell close to the top then you are a winner, question is how do you know the bottom or top? people have different theories about the bottom or top. I'm sure this is not the top yet, it will go a long away before the top, reason no significant crash yet, people are not silly like used to be, they know eth has potential to hit 5000 usd next year and btc around 50k, buying eth now and ride the wave can net you 10x, mining will never give that, on the other side, even if eth crashes now, I dont see it going below, 250 ~ 300 usd not now or ever, this is my bet.

Also from what we know $500 eth price could well be the bottom in 2021 ~2022 of a super bullrun to eth $5000 ~ $10.000. So my point is, you will sell now eth $500, then you will see eth going from $500 to 5k ~ 10k then crashing to $500 and then buy it back? see, it makes no sense. I will ride the wave, not sure about you trolls. Well, since btc at $10, i never got it wrong, I hope i will keep getting it right.

Pay attention, bullrun and peak earnings can never be reached with mining, while it reaches the peak, your mining equipment can earn a certain amount and then if the price crashes, that is it, if you buy and sell, you can sell it all at the top and be done with it for the time being, mining is day by day, my point being price climax on bullrun will be for a day at best. I mean if eth hits 10k then will be for a day at best before it crashes, if you hold eth you can get 100% of earnings, with gpus you can earn the price climax during a single day and that is it.

The truth is miners in general are bears, most of them think the price will crash and they have electricity and other bills to pay. Investors don't care about that kind thing, so they hold until they see it reached somewhat their top, reason investors always win and miners always lose, imagine how much money investors made buying coins from miners on bearrun and miners who say they mine and dont sell their eth then how they pay electricity and other bills? if they use money from a different source then why not turn off their gpus and use that money they are paying electricity and other bills to buy coins? see my point, in the end buying coins will always be a better option no matter how you see it.

The only way mining can be a win is if a user buy a single gpu lets say a 3080 msrp price then mine until prices crashes, sell every single payout and in the end that person bought a gpu for himself, not as a business, this is what btc creator envisioned, decentralization based on single entities.

[xxcsu]

There is one very important thing !
You cant buy or sell without miners

[batsonxl]

in crypto investment shouldnt be in 1 direction. lets say you want invest 2000$, 50/50 you should invest example 1000$ for mining gear 1000$ buying coins,
with coins also same as soon as you got them you play with them. when eth goes down you buy, when it goes up you sell by the time 1000$ gets 2000$ just selling and buying

[badbart]

If you are a serious miner you need to learn to hedge your mining income similar to farmers or gold miners.  You could negate most of your income loss caused by falling prices.

[FP91G]

Personally I buy and mine with GPUs because, as others have mentioned elsewhere, the GPUs are a hedge in the worst case (eg. ETH price goes to zero, etc.) as they can always be sold to to recoup some of the costs, plus I also use the GPUs for CUDA mining kernel development as a sideline to my regular programmer job.

Now there are other problems. If you are considering an investment amount of less than 10-20 thousand dollars, then you can mine cryptocurrency in your own house or garage.

If the investment amount is more than $ 100,000, then you will have to rent an apartment, pay for security, alarm and other expenses - this is already a business.

[philipma1957]

Picking a date for your buy in is kind of arbitrary.

Lets pick the date when eth was at 1000 usd.

buy and hodl

buy a 1080ti for 1000 which was possible.

It is obvious that buying is a loser.