You Can't Mine Bitcoin Profitably (Prove me wrong!)

[NapHappy]

Excuse my provocative title  

I am finding that except for a narrow range of BTC price rise, it is better to buy BTC than to mine it.

I have been looking at buying Antminer S19j Pro 100 TH (3250W) from compassmining using their hosting ($.0624/kWH) and F2 pool (1.2%)

It costs 8000 (after 3% credit card fee).

Assuming a starting BTC price of $30,000, with starting difficulty at 1.4363, with both increasing at 4.4% per month:

After 3 years:

 - ROI of mining - 181%
 - ROI of purchasing BTC - 351%

Change the BTC price rising to 6.5% per month, which corresponds to BTC doubling every year:

 - ROI of mining - 337%
 - ROI of purchasing BTC - 806%

If BTC rises only 1% per month, then the ROI of each about the same.

 - ROI of mining - 40%
 - ROI of purchasing BTC - 42%

At less than 1% rise per month, mining does better than purchasing.

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining.

Prove me wrong!
 

[NotFuzzyWarm]

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining

Correct - if you are using Compassmining. You should change the title of this thread to reflect that vs sounding like a blanket statement about all BTC mining.
Find a place with cheaper hosting fees and it is a different story. As has been said numerous times in the past, you need to find cheap power (and/or hosting where power is cheap). Only then is there a good chance of profitability.

[ch33ks]

I also take it you are selling the BTC right as you receive it in the mining case? If you can cover your mining costs than you can hodl the BTC you've mined and sell it at strategic points. This is why you see miners accumulating when the price gets too low and when the market is in a blowoff top phase you see miners selling more.

[NapHappy]

I also take it you are selling the BTC right as you receive it in the mining case? If you can cover your mining costs than you can hodl the BTC you've mined and sell it at strategic points. This is why you see miners accumulating when the price gets too low and when the market is in a blowoff top phase you see miners selling more.

Only selling to pay fees each month.

[philipma1957]

Excuse my provocative title 

I am finding that except for a narrow range of BTC price rise, it is better to buy BTC than to mine it.

I have been looking at buying Antminer S19j Pro 100 TH (3250W) from compassmining using their hosting ($.0624/kWH) and F2 pool (1.2%)

It costs 8000 (after 3% credit card fee).

Assuming a starting BTC price of $30,000, with starting difficulty at 1.4363, with both increasing at 4.4% per month:

After 3 years:

 - ROI of mining - 181%
 - ROI of purchasing BTC - 351%

Change the BTC price rising to 6.5% per month, which corresponds to BTC doubling every year:

 - ROI of mining - 337%
 - ROI of purchasing BTC - 806%

If BTC rises only 1% per month, then the ROI of each about the same.

 - ROI of mining - 40%
 - ROI of purchasing BTC - 42%

At less than 1% rise per month, mining does better than purchasing.

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining.

Prove me wrong!
 

Okay your math is good but

I can cherry pick and show opposite numbers  with ease.

here goes

I take cash and buy an s19pro when btc was 10k I am charged .25 btc but I purchased the miner with cash via my bank.

So pretend I purchased the coin and hodl. I now have .25 btc = 7875 usd

or I got the miner On Jan 1 2021 it has mined steady since then or about 195 days.

Now 110th x 195days = 21450th in a day  if you please.




coin price and earning price has been all over the place. Up down left right

but 21450 x 28 cents = 6006 My mining dealing is 1/2 goes to the host or 3003

So I have 3003 in my pocket and a used s19pro which I can sell right here right now for over 5000

So 3003+5000 = 8003  and I put in 2500

if I did coin the coin is 7875

So I am better off with the gear as of today. Never mind my tax breaks  I get for mining over buy and hold the coin.

Of course you can say I could of sold the .25 btc for as high as 16k. yeah the s19pro used was over 14k.

Now if the s19pro breaks on me I am fucked but if btc tanks to 10k I am back to where I was.

So basically as long as your gear does not break and turns daily profits you are not fucked mining.

Actually mining is a completely different animal than buy and hodl.

[mindrust]

You should only mine BTC if you already have the equipment and have free or near free electricity and if there is nothing else to do with that electricity.

Buying usually a better idea.

In the end you want to make money. Why get in the trouble with mining? Dealing with all that hardware, wiring them, repairing and doing their maintenance.. these are all headaches.

[NapHappy]

Excuse my provocative title 

I am finding that except for a narrow range of BTC price rise, it is better to buy BTC than to mine it.

I have been looking at buying Antminer S19j Pro 100 TH (3250W) from compassmining using their hosting ($.0624/kWH) and F2 pool (1.2%)

It costs 8000 (after 3% credit card fee).

Assuming a starting BTC price of $30,000, with starting difficulty at 1.4363, with both increasing at 4.4% per month:

After 3 years:

 - ROI of mining - 181%
 - ROI of purchasing BTC - 351%

Change the BTC price rising to 6.5% per month, which corresponds to BTC doubling every year:

 - ROI of mining - 337%
 - ROI of purchasing BTC - 806%

If BTC rises only 1% per month, then the ROI of each about the same.

 - ROI of mining - 40%
 - ROI of purchasing BTC - 42%

At less than 1% rise per month, mining does better than purchasing.

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining.

Prove me wrong!
 

Okay your math is good but

I can cherry pick and show opposite numbers  with ease.

here goes

I take cash and buy an s19pro when btc was 10k I am charged .25 btc but I purchased the miner with cash via my bank.

So pretend I purchased the coin and hodl. I now have .25 btc = 7875 usd

or I got the miner On Jan 1 2021 it has mined steady since then or about 195 days.

Now 110th x 195days = 21450th in a day  if you please.




coin price and earning price has been all over the place. Up down left right

but 21450 x 28 cents = 6006 My mining dealing is 1/2 goes to the host or 3003

So I have 3003 in my pocket and a used s19pro which I can sell right here right now for over 5000

So 3003+5000 = 8003  and I put in 2500

if I did coin the coin is 7875

So I am better off with the gear as of today. Never mind my tax breaks  I get for mining over buy and hold the coin.

Of course you can say I could of sold the .25 btc for as high as 16k. yeah the s19pro used was over 14k.

Now if the s19pro breaks on me I am fucked but if btc tanks to 10k I am back to where I was.

So basically as long as your gear does not break and turns daily profits you are not fucked mining.

Actually mining is a completely different animal than buy and hodl.

I'd like to run your numbers through my spreadsheet.

What is the 28 cents?

Your mining pool takes 50%??

What is your electricity rate?

[NapHappy]

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining

Correct - if you are using Compassmining. You should change the title of this thread to reflect that vs sounding like a blanket statement about all BTC mining.
Find a place with cheaper hosting fees and it is a different story. As has been said numerous times in the past, you need to find cheap power (and/or hosting where power is cheap). Only then is there a good chance of profitability.

It seems that 2/3 of the cost (CapEx+OpEx) is the miner itself, so even if you find cheaper electricity than 6.24cents the ROI would still be abysmal compared to buy & hold.

The price of the miners is what is killing the deal, and compassmining's miners seem to be priced in line with other places. They do have a deal for a set of 12 miners @ $4500 each, but on average they don't start hashing for 10 months!

[kano]

Recent calc I did ...
https://bitcointalk.org/index.php?topic=5336244.msg57322479#msg57322479

[NotATether]

Mining is really good for offsetting losses from bitcoin price corrections/dumps since difficulty readjustment will cause it to mine more BTC, so when the price goes down and then up later you actually have more BTC than when you started versus if you just hodled BTC.

It's also good as a tax loophole, as long as countries don't start periodically taxing hardware miners. So in those cases you are actually losing BTC when you are hodling vs. mining with a decent electricity rate. As long as you didn't spend a ridiculous amount on miners i.e. don't go out and spend $200k on a bunch of S19 Pro because price corrections will put you at ten-thousands of $$$ net loss, compared to just a single S19 Pro and then losses fluctuating in the thousands-range. Not to mention the higher chance of buying spare parts when you have more miners (priced in hundreds * dozens of miners = suddenly you're looking at thousands of dollars in these expenses), which further pushes up the initial investment amount.

[stompix]

You Can't Mine Bitcoin Profitably (Prove me wrong!)

You're missing one small thing in this, just a tiny word.
If you would have said "You can't start mining" it would have been way better, as that's what your topic is about, just a slight difference but which matters a lot. You took a miner price, a colocation service, and decided is not worth starting, somebody who got their hands on a 100$ S9 or 841 and runs them at near free energy or 0.02/kWh is laughing his ass out on that math. Not!!! that I know anyone around here who would do such  thing 

The other statement as NotFuzzyWarm said, might be indeed true,

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining.

So, should we make this a service area review topic about compassmining? 

[philipma1957]

Excuse my provocative title 

I am finding that except for a narrow range of BTC price rise, it is better to buy BTC than to mine it.

I have been looking at buying Antminer S19j Pro 100 TH (3250W) from compassmining using their hosting ($.0624/kWH) and F2 pool (1.2%)

It costs 8000 (after 3% credit card fee).

Assuming a starting BTC price of $30,000, with starting difficulty at 1.4363, with both increasing at 4.4% per month:

After 3 years:

 - ROI of mining - 181%
 - ROI of purchasing BTC - 351%

Change the BTC price rising to 6.5% per month, which corresponds to BTC doubling every year:

 - ROI of mining - 337%
 - ROI of purchasing BTC - 806%

If BTC rises only 1% per month, then the ROI of each about the same.

 - ROI of mining - 40%
 - ROI of purchasing BTC - 42%

At less than 1% rise per month, mining does better than purchasing.

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining.

Prove me wrong!
 

Okay your math is good but

I can cherry pick and show opposite numbers  with ease.

here goes

I take cash and buy an s19pro when btc was 10k I am charged .25 btc but I purchased the miner with cash via my bank.

So pretend I purchased the coin and hodl. I now have .25 btc = 7875 usd

or I got the miner On Jan 1 2021 it has mined steady since then or about 195 days.

Now 110th x 195days = 21450th in a day  if you please.




coin price and earning price has been all over the place. Up down left right

but 21450 x 28 cents = 6006 My mining dealing is 1/2 goes to the host or 3003

So I have 3003 in my pocket and a used s19pro which I can sell right here right now for over 5000

So 3003+5000 = 8003  and I put in 2500

if I did coin the coin is 7875

So I am better off with the gear as of today. Never mind my tax breaks  I get for mining over buy and hold the coin.

Of course you can say I could of sold the .25 btc for as high as 16k. yeah the s19pro used was over 14k.

Now if the s19pro breaks on me I am fucked but if btc tanks to 10k I am back to where I was.

So basically as long as your gear does not break and turns daily profits you are not fucked mining.

Actually mining is a completely different animal than buy and hodl.

I'd like to run your numbers through my spreadsheet.

What is the 28 cents?

Your mining pool takes 50%??

What is your electricity rate?

my power rate is ½ the coins mined.

28 cents is current viabtc payout for 1 th of hash rate.

so a 110th is really 55th as  i gave ½ the coins.

I know that since i got the machine in jan i have been paid as high 50 cents a th and as low as 17 cents a th.  so

110 x 195 days of mining = 21450 th x 28 cents is 6000 usd worth of coin

divide by 2 you get 3000 usd. why because I pay ½ the coin i mine which is ½ of 6000 or 3000

so i used 2500 bank order  when coins were 10000. i could have 7875 in coin buy and hodl.

or. 3000 from mined coin and a s19pro that i can get 5000 easy peasy thus i have 8000 .

actiualy really more as i could get more like 6000 for the unit which would be 9000

and in coin i would have  7875.

the math is correct as it really happened for me with the one s19pro i own.

but if the gear broke i would be fucked .

Simply put if you cherry pick you can make either   one mining or  buy and hodl.

Miners tend to not hodl coin. we take sure profit and less risk.

buy and hodl can be a killer.

buy a coin at 10k and it shot to 64k you kept hodling and now it is 32k

ugh.

meanwhile i mine prices drop from 64k to 32k but diff dropped from 25 to 14.3

my cash earnings are about 500 a day for the mine. my may earnings last time coins were 64 k were about 500 a day. no loss in cash.

my coin earnings were .0047 a day in may
my coin earnings are about 0.0088 a day in july.

so as a miner i am still in bull mode.

i hodl some of my coins and right now that is bearish.

so i have a built in hedge that a coin buyer. does not have.

[mikeywith]

So, you can't mine BTC profitably at current miner prices and hosting fees at compassmining.

Prove me wrong!
 

Why would anyone attempt to prove you wrong? While the numbers you use can be way too different for others,  the matter of the fact is that in every 10 combinations at least 6 will be a loss, maybe 1 will break even, and probably only 3 will win (assuming the combinations are reasonable and real-world numbers)

Paying $8000 for an S19 is the first mistake, and using over-priced gears for your inputs will easily end up in your favor as far as your theory goes, but that does not mean "You Can't Mine Bitcoin Profitably", and I can easily prove you wrong.

on the 27th of June, I got my hands on 40 S9is with a total cost of $6,000 plus $3400 for shipping from China, that's a total of $9400 or $235 per S9i, I received the gears on the 9th of July and they were up and running on 11th of this month.

The total cost in USD was about $9400 or 0.285 BTC.


The average daily income for these gears has been about $145 / 0.0048BTC a day, I have free power where these gears are hosted, and thus I am almost guaranteed to ROI within 2 months or 3 months in the worst-case scenario, at least for theBTC investment I made.

The key point here is that getting those S9s for that price wasn't something everyone could do (ask most resellers on telegram/Alibaba and you are unlikely to find anything below $200, am also sure other people who have the right contacts got them for less than what I paid for) and the second point is the fact that I have free power, which is also something that most people don't have.

I am nothing but a small fish in a huge ocean, but when you think of mining, you are essentially competing against a dozen folks like me, those who have access to better gear prices and free or very cheap power rates, when you pay $8,000 or even worse $15,000 for an S19, you are asking for troubles and you are more likely to lose money than not.

[OgNasty]

Profit is measured in fiat, not Bitcoin. That’s just the way the world works. For this type of statement to be true you would have to factor in many things over the stated timeframe. What you probably mean to say is that investing in Bitcoin directly is more profitable than mining it. I think that statement becomes less true the more you factor in the variables like reselling hardware and taxes. Those two factors alone have the potential to massively sway any calculation based on circumstances. I would agree however that historically speaking you would have had far less opportunity for mistakes by holding over mining, but unique risks remain with each.

Just as an example to show how ludicrous your statement is… I could fire up a GPU right now and solo mine a BTC block in 5 minutes (unlikely), and buying BTC could never offer such a return. My point being everything balances out in the end one way or another.

[mikeywith]

I think that statement becomes less true the more you factor in the variables like reselling hardware and taxes. Those two factors alone have the potential to massively sway any calculation based on circumstances.

I don't know how taxes exactly work where you live but to me and probably to some others, tax is completely irrelevant in this subject, and as far as reselling hardware, you have too keep in mind that if you sell the gears because they are no longer profitable, then they will be worth close to nothing, the S9s were bought for 5k in 2017 and sold for $80 in 2018, not such a grear resale value if you ask me.

Obivislouly, if you were lucky enough to have bought in the right time, and ended up profiting, you will be able to sell the gears for a much higher price, some of those folks who bought S9 for 80$ sold it later for $500, in other words, if you end up winning, your gears will add to your winnings, if you end up losing, the gears won't cover up much.

My point being everything balances out in the end one way or another.

Maybe if you apply this against infinite time period, but then you can't, because you can't run a mining gear for infinity, the gear will die within a few months/years or will consume more energy than profit and will have to be shut down, and thus in the real world, no, everything does NOT balance out.

There is no certain answer to this ongoing debate of mining vs buying BTC, there are many factors involved, but if you were to take a large enough sample over a long enough period then without a shadow of a doubt - buying bitcoin would be more profitable by a few orders of magnitude.

[jeyzeus]

It costs 8000 (after 3% credit card fee).

Assuming a starting BTC price of $30,000, with starting difficulty at 1.4363, with both increasing at 4.4% per month:

Prove me wrong!

use a bitcoin standard.

S19 - $8000
8000/30,000 = 0.26 BTC

Power costs per month divided by BTC price.

$146.02 / $31,200.00 = 0.004680
$146.02 / $32,448.00 = 0.004500
$146.02 / $33,745.92 = 0.004327
$146.02 / $35,095.75 = 0.0041606
$146.02 / $36,499.58 = 0.0040005
$146.02 / $37,959.56 = 0.0038467
$146.02 / $39,477.94 = 0.0036987
$146.02 / $41,057.05 = 0.00355651
$146.02 / $42,699.33 = 0.0034197
$146.02 / $44,407.30 = 0.003288
$146.02 / $46,183.59 = 0.0031617
$146.02 / $48,030.93 = 0.00304012
$146.02 / $49,952.17 = 0.00292319

Total BTC accumulated/in cold storage instead of electricity mining costs after 1 year: 0.04860272
+ the .26 BTC you didn't spend:

End balance: 0.308602 BTC

Let's assume the S19 mines appx 0.025 BTC per month and that number goes down 4% every month.

Month 1:    0.025 BTC
Month 2:    0.024
Month 3:    0.02304
Month 4:    0.02211
Month 5:    0.0212256
Month 6:    0.020376
Month 7:    0.01956
Month 8:    0.018777
Month 9:    0.018025
Month 10:  0.01730
Month 11:  0.01661
Month 12:  0.01593

Total btc mined in 1 year: 0.2419536
-0.04860272 BTC in opportunity costs

End balance: 0.1939536 if you immediately sold coins to pay for electricity.

If you didn't sell your coins and because you paid the monthly costs out of pocket, same as you would for "buying bitcoin instead" (because you buy to hold & wait for appreciation, correct?) you would have .24 BTC in cold storage + 1 barely used S19. Value? No idea.

Let's say the value of the miner + hard to find cheap rack space with all in hosting fell by 50% due to a huge increase in available rack space and the chip shortages were somehow resolved. Demand is low because people are not interested in mining a $49,952.17 asset. Using your own numbers, if the person spent ~$150 to buy Bitcoin from an exchange where they would need to show ID, a face scan and submit KYC information, and after all of that, they would get appx ~0.003 BTC for their $150 monthly buy.

The miner can either continue to mine $795.73 (0.01593) worth of BTC for $146.02 per month or sell his miner at a 50% discount and buy bitcoin with it.

$8000-50% = $4000

$4000/49,952.17 = 0.0800766 BTC

0.0800766 + the .24 BTC you have in cold storage from mining = end balance of: 0.3200766

Not Mining End Balance: 0.308602 BTC @ $49,952.17 = $15,415.21806
Mining End Balance: 0.3200766 BTC @ $49,952.17 = $15,988.468

mining and immediately selling coins is a terrible strategy imo. this also doesn't take into account that there is no KYC on the bitcoin you mine. To get btc without KYC you usually need to use an exchange like BISQ or you need to use coinjoin to maintain a similar privacy profile which has higher fees associated with it.

[joniboini]

At less than 1% rise per month, mining does better than purchasing.

I think this speculation itself has little to no accuracy. What if the ROI is in the negative value, how much did you lose?
In the end, it depends on your capital and risk profile. If you don't have the money to buy a rig then buying might be the best choice. It's not like you have to choose one over the other if you have the money and time to do both of them.

[mikeywith]

mining and immediately selling coins is a terrible strategy imo.

Well if you cherry-pick the period you want, your theory will be valid, but you can only do that in theory, because selling coins directly is a lot better when the price after time+n has gone lower, so if you start mining say 4 months before we reach to a price peak which is followed by an 85% drop in price over the course of 16 months, then selling the coins as you mine them would be a lot better as far as your fiat earnings are concerned.

Again it all depends on what happens in the future, selling could be to your advantage or disadvantage, you can't tell until enough time has passed.

[jeyzeus]

mining and immediately selling coins is a terrible strategy imo.

Well if you cherry-pick the period you want, your theory will be valid, but you can only do that in theory, because selling coins directly is a lot better when the price after time+n has gone lower, so if you start mining say 4 months before we reach to a price peak which is followed by an 85% drop in price over the course of 16 months, then selling the coins as you mine them would be a lot better as far as your fiat earnings are concerned.

Again it all depends on what happens in the future, selling could be to your advantage or disadvantage, you can't tell until enough time has passed.

i just picked the data the OP provided starting today w. compass mining. i didn't really cherry pick that. IMO mine and hodl is just a different way to DCA bitcoin which has proven to be one of the highest ways to ROI on BTC over the long term. literally anyone who's mined or held anything and miners who held for 4+ years hasn't lost money and would probably be up when compared to a regular dca i believe. you shouldn't mine unless you are long term bullish on btc cause otherwise you're just gambling and trying to time shit. the move is to instead of pay an exchange for coins, you buy a computer and pay for electricity. this obviously changes if you are pushing several PH/s and run it more like a business. it's def not for everyone but for worth it for those who are willing to put in the effort.

when i buy from an exchange i don't plan on selling a single coin for less than $1M per coin, so why would it be different for mining? what's the roi if my i price my coins at those levels? if i get into an emergency where i can't afford the electricity bill i would take a collateralized loan against the BTC and try that before selling it.

i wouldn't buy the miner if i couldn't afford the electricity bill. Most miners pushing 80+ TH at less +-3500W under 10¢ energy will do fine if they hodl for a cycle or two.

[mikeywith]

the move is to instead of pay an exchange for coins, you buy a computer and pay for electricity.

This is based on the assumption that the miner you buy will generate more or at least the same amount of BTC which you can buy directly from an exchange otherwise, but that is a false thought and things don't work that way.

When you head to exchange and pay 34k - you are guaranteed to receive a whole BTC which according to your strategy can be held until it hits one million dollars, there will be zero operational cost to hodl that BTC, but if you pay 34k to buy miners instead, there is no guarantee that they will generate a whole bitcoin before they die, need major repair or simply become obsolete and the power bill exceeds the income.

We have run the numbers a dozen times and you will find many posts talking about this, it's very unlikely that any miner will generate the same amount of BTC they could have directly bought, or else, there would be no debate about whether mining is better/worse than buying the coin directly, if you look at the difficulty chart and compare it to the price you will notice that the difficulty always goes up and the correction to the downside only last for a few epochs, where the price can go down for years, another thing is that that the difficulty grows faster than price does (all of these facts can be seen in the history data)

MO mine and hodl is just a different way to DCA bitcoin which has proven to be one of the highest ways to ROI on BTC over the long term

DCAing bitcoin is indeed a great strategy, but mining isn't a different way to DCA, it's a completely different strategy, when you throw 8k at an S19 pro today, if the price drops to 15k the next week, there is no DCAing for you, I know you might be thinking that if the price falls down to 15k then the difficulty will drop 50% and thus your earnings in BTC won't be affected, but that isn't the case either, the price can drop 80% while difficulty goes up 100%, and we have seen this happen many, many times.

There are of course expectations, and there are many people who mine more bitcoin than they could have bought, but this requires

1- Getting the gears at a very good price
2- Having a very low power rate
3- Starting at the right time of the cycle
4- Lots of prayers that the Chinese piece of gear which has little to no quality control will not break in 2 weeks.