Altcoin Mining: you WON’T pay for that card (with assumptions)

[Toughit]

Altcoin Mining: you WON’T pay for that card (with assumptions)

So, I’m going to take the position that you will NOT make your money back with altcoin mining.
Instead you will have to ‘gamble” to make money.

Change my mind.

Here are my assumptions:
1)   The price of the coin stays fixed (yah, yah, who knows what it will do?)
2)   Mining Ethereum
3)   Electricity is .20 per kilowatt USD
4)   DIFFICULTY continues to rise as per this website (3.8% per month, 29% in the last 90 days) https://www.coinwarz.com/mining/ethereum/difficulty-chart
5)   I’m buying an A4000 at 1499
6)   I’m not counting the value of the card itself (I don’t know what it will be worth in the future)
7)   Total rig cost for 5 cards is about $7500
8 )   Assuming we sell Eth for USD each month


    a4000
Card Cost   1499
Qty   5
Sub total   7495
Tax   449.7
    7944.7
Hash Rate   60
Hash Total   300
Day income per hash   0.055
Daily Income   16.5
Watts Per card   123
Rig Watts   100
Watts/hour   715
Watts/day   17160
Electric cost/killowatt   0.2
Cost/day   3.432
Net/day   13.068
ROI Days   607.9507


It will take 608 days to ROI on the A400 (not counting difficulty).
If I can get the card for $450 dollars instead of 1499, ROI is 182 days or 6 months.

BUT………..

Difficulty is eating away at your income every single month.

Right now it is reducing your net by 3.8 percent per month.

Buying 5 cards, electric to run the rig, we clear  $13 dollars a day in the first month.

But difficult increases each month.
By month 42 we actually start losing money on the rig (difficulty increases).
The closest we come to ROI is at 42 months, and we still owe $1617 dollars




Difficulty is killing your mining investment.

I maintain you would have been better off invest in a fund Like VTI.

Over the last 5 years a $7500 dollar investment would have grown to $17,000.

But….

Here is where we all are gambling.

If you took that $7500 and invested in ETH 5 years ago (forget mining), you would now have $1.6 million dollars.
It’s not the daily income from mining that makes the money, we are all hoping on the coin going up in price by 100 times.
So,  mining isn’t the answer, investing and holding is a better choice…..

[1715182062]

1715182062

[1715182062]

1715182062

[1715182062]

1715182062

[philipma1957]

20 cent power is high.

you need to understand 5,6,7 cent power is solid for mining ⛏

10,15,20 = risk ,more risk, high risk

[Toughit]

20 cent power is high.

you need to understand 5,6,7 cent power is solid for mining ⛏

10,15,20 = risk ,more risk, high risk

Yes my rates are bad.

But I had no clue how destructive difficulty was.  If I read that website right, I am making 30% less now than I was 3 months ago.

[JayDDee]

Here is where we all are gambling.

If you took that $7500 and invested in ETH 5 years ago (forget mining), you would now have $1.6 million dollars.
It’s not the daily income from mining that makes the money, we are all hoping on the coin going up in price by 100 times.
So,  mining isn’t the answer, investing and holding is a better choice…..

This is your mistake, assuming buying at the low and selling at the high. It's just not realistic.
Also you haven't made anything until you sell.

Mining is like a dividend on the mining equipment, a continuous, though decreasing income. How you invest
that income is what matters.

[Williamm07]

Return of investment from mining rigs depends on how much you build your rigs, why A4000 those cards are high costly go for something cheaper, as for electricity bill it depends on your country charges, mine is 6cent power but still I use power of the sun (solar panels) for mining, with the right calculation you will get your ROI faster

[FloridaKid]

Some times too much of 'what if' will leave you with nothing, the biggest move I've ever made is building my mining rigs in January 2021 and I never regretted it cos my ROI is been made already, everything else is free money now, consider the following

1. How cheap is your electricity?
2. What type of GPU you buying? The newer the more costly they are
3. Are you planning to keep mining even in bear market when mining profit is down?

See the truth is you will make more money if you keep mining when profit is down why?

1. Difficulty would have reduced cos many miners will be shut down due to electricity bill to keep running the rig that's why I said how cheap is your electricity

2. You will gain more coins in quantities than before just don't be deceived by the present value, you lose only when you sell

[sxemini]

Altcoin Mining: you WON’T pay for that card (with assumptions)

So, I’m going to take the position that you will NOT make your money back with altcoin mining.
Instead you will have to ‘gamble” to make money.

Change my mind.

Here are my assumptions:
1)   The price of the coin stays fixed (yah, yah, who knows what it will do?)
2)   Mining Ethereum
3)   Electricity is .20 per kilowatt USD
4)   DIFFICULTY continues to rise as per this website (3.8% per month, 29% in the last 90 days) https://www.coinwarz.com/mining/ethereum/difficulty-chart
5)   I’m buying an A4000 at 1499
6)   I’m not counting the value of the card itself (I don’t know what it will be worth in the future)
7)   Total rig cost for 5 cards is about $7500
8 )   Assuming we sell Eth for USD each month


    a4000
Card Cost   1499
Qty   5
Sub total   7495
Tax   449.7
    7944.7
Hash Rate   60
Hash Total   300
Day income per hash   0.055
Daily Income   16.5
Watts Per card   123
Rig Watts   100
Watts/hour   715
Watts/day   17160
Electric cost/killowatt   0.2
Cost/day   3.432
Net/day   13.068
ROI Days   607.9507


It will take 608 days to ROI on the A400 (not counting difficulty).
If I can get the card for $450 dollars instead of 1499, ROI is 182 days or 6 months.

BUT………..

Difficulty is eating away at your income every single month.

Right now it is reducing your net by 3.8 percent per month.

Buying 5 cards, electric to run the rig, we clear  $13 dollars a day in the first month.

But difficult increases each month.
By month 42 we actually start losing money on the rig (difficulty increases).
The closest we come to ROI is at 42 months, and we still owe $1617 dollars


Difficulty is killing your mining investment.

I maintain you would have been better off invest in a fund Like VTI.

Over the last 5 years a $7500 dollar investment would have grown to $17,000.

But….

Here is where we all are gambling.

If you took that $7500 and invested in ETH 5 years ago (forget mining), you would now have $1.6 million dollars.
It’s not the daily income from mining that makes the money, we are all hoping on the coin going up in price by 100 times.
So,  mining isn’t the answer, investing and holding is a better choice…..

Yes this is what i say very often here, but every day people say they get their money back in 3 month.

Return of investment from mining rigs depends on how much you build your rigs, why A4000 those cards are high costly go for something cheaper, as for electricity bill it depends on your country charges, mine is 6cent power but still I use power of the sun (solar panels) for mining, with the right calculation you will get your ROI faster

Google ROI -> ROI is an number from 0% to 100% and not how much days you need to get your money back. Call it payback time or so.

ROI is used wrong every day here.

"To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio."
​   
​

Some times too much of 'what if' will leave you with nothing, the biggest move I've ever made is building my mining rigs in January 2021 and I never regretted it cos my ROI is been made already, everything else is free money now, consider the following

1. How cheap is your electricity?
2. What type of GPU you buying? The newer the more costly they are
3. Are you planning to keep mining even in bear market when mining profit is down?

See the truth is you will make more money if you keep mining when profit is down why?

1. Difficulty would have reduced cos many miners will be shut down due to electricity bill to keep running the rig that's why I said how cheap is your electricity

2. You will gain more coins in quantities than before just don't be deceived by the present value, you lose only when you sell

Yeah we will see if you keep your rigs running when i does 1.5$ a day like in the last bear market. Miners must pay their bills, and they not all mining to hodl the coins. And by the way this is also a gamble.

[swogerino]

I believe that if you want to gamble then gamble it for good.Why believe in Ethereum when you can mine Ethereum and get paid in Bitcoin in certain pools like 2miners for example.I would say that this bet can be risky but can be extremely rewarding if you pay the losses and keep your coins,who knows what the Bitcoin value will be in 2025 for example.You can also sell every month your coin like you said but it will still take you 600 or more days to ROI,most probably more because of the difficulty but a much less risky gamble.

I am saying a much less risky gamble as if your cards are RTX A4000 they have resale value,they are used by engineers and architects so you can sell them easily.

[rdluffy]

You made a good post, with some good logic, but I have some things to add

1 - Your electricity rate is expensive to mine, some people have less than .10cents per kilowatt or solar energy

2 - This is not a good time to buy hardware, specially for new miners starting their first rig. For some people is good to add power to their rigs or have plenty of power to use.
The good time to buy was 2020, now you're too late because all cards have the price based on mining

3 - Difficulty is important to consider, good job

4 - You have to consider the price of GPU, because it's like a hedge for you, if you didn't like mining, or have any problem, or mining is not profitable anymore, you can sell and recover part of your money, so, to break even, you don't need to recover 100% of the money you paid


Now, it's importart to understand there are a lot of approaches to mining:
You can have cheap power and mine for a long time, maybe you have solar panels and don't use all power you generate, or you like the project and want to contribute in some way
Some people use mining to acquire coins instead of buying directly due to privacy.
Gamers want to have a super machine to play and earn some cash
and so on...

[Refrumatrix]

Present crypto market can't be predicted so it's safe to say that now is a bad time to buy GPU, if market crash tomorrow in a month time GPU will flooded the whole online market that's the time to buy GPU, the cheaper your mining components the faster you get your money back

[minerja]

20 cent power is high.

you need to understand 5,6,7 cent power is solid for mining ⛏

10,15,20 = risk ,more risk, high risk

Hi Phil,
Try the UK, residential power is now over 20p (£0.20) pkwr, plenty of miners making money over here though...just don't mine what the sheep mine

[philipma1957]

Return of investment from mining rigs depends on how much you build your rigs, why A4000 those cards are high costly go for something cheaper, as for electricity bill it depends on your country charges, mine is 6cent power but still I use power of the sun (solar panels) for mining, with the right calculation you will get your ROI faster

he is at 20:cent power so efficient cards are important.

I can get the same a4000 for 1250 after tax and shipping

and multiple rebates would be 100+37+18

that means 155

so 1250-155= 1095 cost

13 cent power

with a pay date interest free to 10/10/22

also my 13 cent power is cheaper as the heat they give off will lower my heating bill.

So I have ten on order due by fri the 21 or mon the 24

these cards make good sense for me.

I have an ace in the hole and can move the rig to the farm in may when summer power rates come in.

so feb mar apr 90 days and 10 in jan are 100 days

card burns 115x24= about 3 kwatts or 39 cents the heat is about 9 cents.

so they cost me 30 cents to run they earn 60 x 4.5 = 2.70-.30 = 2.40 x 100 that is 240  so by may 1 my cost is down to 1095-240= 855 usd.

I move to the farm then.

[adaseb]

Yes difficulty is your enemy here. You can always sell ETH at a specific price just by shorting the futures contract and just covering when you are sent the mined coins. So if it will take you a year to make 1 ETH and you short the future contract at today’s price then if price goes down you still get to sell it at the higher price.

The issues with this is that difficulty is very hard to predict. Right now it might take a year to make that 1 ETH but in 3 months it might take a year and a half. So given how fast the difficulty is rising you might never make that 1 ETH back, especially if prices keeps going up. And you are mining at a higher difficulty and selling at a lower price.

It’s a gamble there will always be some form of risk.

[alucard20724]

Return of investment from mining rigs depends on how much you build your rigs, why A4000 those cards are high costly go for something cheaper, as for electricity bill it depends on your country charges, mine is 6cent power but still I use power of the sun (solar panels) for mining, with the right calculation you will get your ROI faster

he is at 20:cent power so efficient cards are important.

I can get the same a4000 for 1250 after tax and shipping

and multiple rebates would be 100+37+18

that means 155

so 1250-155= 1095 cost

13 cent power

with a pay date interest free to 10/10/22

also my 13 cent power is cheaper as the heat they give off will lower my heating bill.

So I have ten on order due by fri the 21 or mon the 24

these cards make good sense for me.

I have an ace in the hole and can move the rig to the farm in may when summer power rates come in.

so feb mar apr 90 days and 10 in jan are 100 days

card burns 115x24= about 3 kwatts or 39 cents the heat is about 9 cents.

so they cost me 30 cents to run they earn 60 x 4.5 = 2.70-.30 = 2.40 x 100 that is 240  so by may 1 my cost is down to 1095-240= 855 usd.

I move to the farm then.

my hosting place just doubled thier rate... it's going up to $0.25 a kwh... ugh... and this is texas where power is suppose to be cheap. 

[OgNasty]

I’m not sure I agree with your entire premise. You seem to be saying that you won’t make money from GPU mining, but then only give examples proving that to be wrong and with an extremely short time frame. Then you pivot to saying that investing in crypto would give you a better return. Those are two pretty different statements. You also don’t figure in sale of the GPUs the way you are figuring in sale of the purchased currency.

I think what you mean to say is that if you purchase crypto when the price is low and sell when it’s high you’ll end up with more money then if you buy a GPU and mine during that period. I know which one looks more like gambling to me, but we are all free to have our opinions.

[Toughit]

Here is where we all are gambling.

If you took that $7500 and invested in ETH 5 years ago (forget mining), you would now have $1.6 million dollars.
It’s not the daily income from mining that makes the money, we are all hoping on the coin going up in price by 100 times.
So,  mining isn’t the answer, investing and holding is a better choice…..

This is your mistake, assuming buying at the low and selling at the high. It's just not realistic.
Also you haven't made anything until you sell.

Mining is like a dividend on the mining equipment, a continuous, though decreasing income. How you invest
that income is what matters.

JayDDee,

I agree completely that buying low and selling high is unrealistic to expect. 

My real point is that, with difficulty rising so fast (28% every 3 months), you have maybe 25 months of declining income before the card generates zero positive income, at that point you probably won't sell the cards for much.

[Toughit]

I’m not sure I agree with your entire premise. You seem to be saying that you won’t make money from GPU mining, but then only give examples proving that to be wrong and with an extremely short time frame. Then you pivot to saying that investing in crypto would give you a better return. Those are two pretty different statements. You also don’t figure in sale of the GPUs the way you are figuring in sale of the purchased currency.

I think what you mean to say is that if you purchase crypto when the price is low and sell when it’s high you’ll end up with more money then if you buy a GPU and mine during that period. I know which one looks more like gambling to me, but we are all free to have our opinions.

Og, Philip

Let me try to explain my position this way.
Assumptions that are arguable:
1)   Resale price of the card (in a declining ETH, cards are less; rising ETH, cards sell for full value)
2)   Difficulty continues to rise as it has for the last 3 months (this is the key)


With
1)   The current price of cards so high
2)   Difficulty going up 28% over 3 months (which means I make 28% less now than I did 3 months ago)
         https://www.coinwarz.com/mining/ethereum/difficulty-chart  
3)   Income taxes eat 20%+ (forgot that in the first post, and I don't include it here, only makes it worse!)
4)   High electric prices (my electric eats 20% of gross income daily, higher as time goes on)

My argument is that it is not worth it to purchase a new card and mine right now.

There are 2 scenario’s
1)   Price of ETH is stable or declining
2)   Price of ETH is rising

Scenario 1 (ETH stable or declining)

-   With difficulty reducing income by 28% over each 3 months, I will never get enough gross income to pay back the initial price of the card, at some point the income minus electric will be negative, and then it is not profitable to mine the card.
-   With the card no longer generating cash, its resale value is not going to be much.  
-   Lets say the resale value of the cards is equal to the amount not recovered from mining, you essentially break even.



Scenario 2 (ETH rising)

-   I assemble the stated rig above for $7500
-   ETH is rising, lets say 50% per year
-   Difficulty rising 28% every 3 months (if I did the calculation right, in 1 year I will make 37% of what I make now, 3 years I will pull in 6% of the first month)
Basically the questions are
a)   Do I invest $7500 in a mining rig
b)   Do I invest $7500 directly in ETH

a) Invest $7500 in a mining rig
-  A $7500 mining rig will have brought in (really) roughly $4100 by month 26  (Difficulty rising 28% every 3 months, reducing income, and ETH rising 50% per year (assumption).  At 26 months, ETH diff has risen to the point that mining is a negative return, and you stop mining).

-   So lets say you are able to sell the rig for full price of $7500.  You have $4100 in ETH, and $7500 in a mining rig, you now have $11,500.  Invest that for 1 year at 50%, and you have $17,000+ in 3 years

c)   Invest $7500 in ETH directly
-   A $7500 investment in ETH at 50% per year would return (roughly) $25,000 in 3 years (50% increase in price/year)


My Conclusions

I do not see a clear reason to invest in a new mining card right now.

If you can change some of the parameters like Philip has done
-   Lower priced card
-   Lower cost electric
You will mine with positive dollars longer.

My point is that difficulty is rising so fast that I currently don’t think it is profitable to buy new cards

[adaseb]

I think the reason why people are still mining is because they are assuming that the price will increase sometime in the future. Every bear cycle someone goes on bitcointalk and asks if it’s a good idea buying GPUs to mine and everybody says no, they do it anyways and make a great profit.

So there are many miners out there that are mining a low profits in hopes of ETH ending the dip and one day going past $5-6K and they will sell sometime there. This is what many miners did in the past during bear markets. Wasn’t profitable to mine but they did it anyways because they knew BTC price would go up.

[philipma1957]

20 cent power is high.

you need to understand 5,6,7 cent power is solid for mining ⛏

10,15,20 = risk ,more risk, high risk

Hi Phil,
Try the UK, residential power is now over 20p (£0.20) pkwr, plenty of miners making money over here though...just don't mine what the sheep mine

We are not bear yet. When bear  is truly awake 20p a kwatt
 is always losing.

When this whole market awakened the bull in summer 2020 eth earned 2 cents a mh

when the peak hit in early spring of 2022 eth earned 20 cents a mh

we are down to 4-5 cents a mh.

if we drop to 2 cents per mh  a 3080 will earn 2 bucks and burn 5 kwatts
or 1 pound or 1.70 usd

that would mean 2-1.70 = 30 cent profit.

and if we drop to 1 cent a mh the bear  will be roaring.
hard to tell if we go to that.

earn 1 dollar burn 5 kwatts means breakeven is 20 usd cents.

but a six cent power guy earns 70 cents. that means the 3080 will sell low on ebay.

I’m not sure I agree with your entire premise. You seem to be saying that you won’t make money from GPU mining, but then only give examples proving that to be wrong and with an extremely short time frame. Then you pivot to saying that investing in crypto would give you a better return. Those are two pretty different statements. You also don’t figure in sale of the GPUs the way you are figuring in sale of the purchased currency.

I think what you mean to say is that if you purchase crypto when the price is low and sell when it’s high you’ll end up with more money then if you buy a GPU and mine during that period. I know which one looks more like gambling to me, but we are all free to have our opinions.

Og, Philip

Let me try to explain my position this way.
Assumptions that are arguable:
1)   Resale price of the card (in a declining ETH, cards are less; rising ETH, cards sell for full value)
2)   Difficulty continues to rise as it has for the last 3 months (this is the key)


With
1)   The current price of cards so high
2)   Difficulty going up 28% over 3 months (which means I make 28% less now than I did 3 months ago)
         https://www.coinwarz.com/mining/ethereum/difficulty-chart 
3)   Income taxes eat 20%+ (forgot that in the first post, and I don't include it here, only makes it worse!)
4)   High electric prices (my electric eats 20% of gross income daily, higher as time goes on)

My argument is that it is not worth it to purchase a new card and mine right now.

There are 2 scenario’s
1)   Price of ETH is stable or declining
2)   Price of ETH is rising

Scenario 1 (ETH stable or declining)

-   With difficulty reducing income by 28% over each 3 months, I will never get enough gross income to pay back the initial price of the card, at some point the income minus electric will be negative, and then it is not profitable to mine the card.
-   With the card no longer generating cash, its resale value is not going to be much. 
-   Lets say the resale value of the cards is equal to the amount not recovered from mining, you essentially break even.



Scenario 2 (ETH rising)

-   I assemble the stated rig above for $7500
-   ETH is rising, lets say 50% per year
-   Difficulty rising 28% every 3 months (if I did the calculation right, in 1 year I will make 37% of what I make now, 3 years I will pull in 6% of the first month)
Basically the questions are
a)   Do I invest $7500 in a mining rig
b)   Do I invest $7500 directly in ETH

a) Invest $7500 in a mining rig
-  A $7500 mining rig will have brought in (really) roughly $4100 by month 26  (Difficulty rising 28% every 3 months, reducing income, and ETH rising 50% per year (assumption).  At 26 months, ETH diff has risen to the point that mining is a negative return, and you stop mining).

-   So lets say you are able to sell the rig for full price of $7500.  You have $4100 in ETH, and $7500 in a mining rig, you now have $11,500.  Invest that for 1 year at 50%, and you have $17,000+ in 3 years

c)   Invest $7500 in ETH directly
-   A $7500 investment in ETH at 50% per year would return (roughly) $25,000 in 3 years (50% increase in price/year)


My Conclusions

I do not see a clear reason to invest in a new mining card right now.

If you can change some of the parameters like Philip has done
-   Lower priced card
-   Lower cost electric
You will mine with positive dollars longer.

My point is that difficulty is rising so fast that I currently don’t think it is profitable to buy new cards

Yes if difficulty rise is higher than price rise mining ⛏ sucks as simple as that.

[moderator's note: consecutive posts merged]

[kaya11]

I was planning to buy more new cards for mining but then when I see some reports like this it destroys the will and now planning to sell my active cards. The good thing is I already got the ROI, bought my cards last year January and the price of cards of those days were fine not like today. Also I already made profits about 1000 dollars, so it should be fair to sell my cards half the price. The only thing that keeps me from mining today is I get almost free electricity, I would like some second opinion if I should continue mining or sell my rigs before it is too late? I know the difficulty in mining is getting worst but at the moment I am still okay and earning for about 200 or more dollars a month.