The Best Mining Rigs Are Now Barely Profitable -- Now What?

[a.miner]

I guess the title says it all.

The fastest rigs from KnC and Cointerra are barely able to make back their purchase price.

Yet the difficulty keeps increasing.

If you haven’t taken delivery of your miner yet, you will almost surely lose money on it.

Is there any new technology on the horizon?

Or are we all hosed?

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[jimmothy]

I guess the title says it all.

The fastest rigs from KnC and Cointerra are barely able to make back their purchase price.

Yet the difficulty keeps increasing.

If you haven’t taken delivery of your miner yet, you will almost surely lose money on it.

Is there any new technology on the horizon?

Or are we all hosed?

Please share how you are able to see in to the future.

Magic crystal ball?

[ChuckBuck]

I guess the title says it all.

The fastest rigs from KnC and Cointerra are barely able to make back their purchase price.

Yet the difficulty keeps increasing.

If you haven’t taken delivery of your miner yet, you will almost surely lose money on it.

Is there any new technology on the horizon?

Or are we all hosed?

We're all hosed, time to close up shop now.   

Attention, all miners.  Turn off all your equipment now and go home.  I'll catch up with you guys later (turns miner back on).

[a.miner]

Please share how you are able to see in to the future.

Magic crystal ball?

Well, I'm just looking at historical trends in difficulty and trending them out.

Difficulty is now at almost 7 billion and increasing at 11 percent every ten days.  That puts it at 45 billion a year from now.

Unless the difficulty stops increasing, Terraminers and Neptunes won't be able to pay for their own electricity in another 12 months' time, let alone recoup the purchase price.

Even these new SP-30s are only about 3 times the perfomance per dollar, so they won't make it past 16 months from now.

And those estimates are very generous.

So... are people expecting difficulty to level off, or much more efficient technologies to emerge...

or what?

[a.miner]

We're all hosed, time to close up shop now.   

Attention, all miners.  Turn off all your equipment now and go home.  I'll catch up with you guys later (turns miner back on).

Har!  That's funny... but seriously, if a significant fraction of miners were to go under, then difficulty would return to manageable levels.

Or we could hope for a dramatic increase in the price of bitcoins.

Or a breakthrough in mining technology.

What other way is there to return mining to profitability?

[Nagle]

The fastest rigs from KnC and Cointerra are barely able to make back their purchase price.
Yet the difficulty keeps increasing.

It's like any other commodity manufacturing industry with a fixed market size. Eventually prices stabilize just above cost.

The difficulty is probably still increasing rapidly because many of those "pre-orders" eventually get delivered. They may not be cost-effective by then, but the buyer, having paid for them, will probably plug them in and run them until the power cost overwhelms the return.

(I'm in Silicon Valley, where we have Hacker Dojo, a co-working space/club. A few months back, someone bought a membership, brought in a mining rig, and plugged it in, drawing a few kilowatts. Hacker Dojo put up with this until they discovered he was using about $500/month of power. (Membership is only $100 a month or so.) Then they refused to renew his membership and threw him out.)

[jimmothy]

Terraminers and Neptunes won't be able to pay for their own electricity in another 12 months' time

Terraminers won't but neptunes will be nearly twice as efficient so they will last longer.

In my opinion whoever has the cheapest/most efficient asic will always just barely profit.

Difficulty can only rise as much as people are willing to throw money in to it. For difficulty to follow last years rate we would need to see the value of btc increase.

If nobody is making a profit they will shut off their inefficient miners until only the most efficient miners remain.

[joshv06]

I think that as long as Asic manufactures can make a profit, they will keep selling and difficulty will continue to rise. The prices of miners will continue to fall and their efficiency will rise. I keep seeing posts of people saying to put them on Ebay. When they do, the person that buys it will plug it up. Prices of miners will fall but difficulty will keep rising unfortunately. There will be more HashFasts and BFLs selling pre-orders that will be plugged up down the road.

Mining will never be profitable unless you have free electricity.

[nuff]

Miners will continue to mine, even at a loss. It's hard to explain, it's like once you start you can't stop, at least, not before making back roi. I myself am still looking to at least another 3-4 months on before I can breakeven, only then whatever I mine after is profit. Fat chance that I'm shutting down my miners until I get my roi, but what else can I do, already bought into it.

[frankenmint]

Another way to look at it is to calculate the amount of BTC you expect from your hardware and the money you will pay for electricity.  If you pay more in electricity, then turn off your gear and buy the BTC with the cash you would have spent on electricity - still a win.  Keep your hardware for when BTC value rockets up again or to mine an alt sha-256 like terracoin or continuum.

[Puppet]

Well, I'm just looking at historical trends in difficulty and trending them out.

Difficulty is now at almost 7 billion and increasing at 11 percent every ten days.  That puts it at 45 billion a year from now.

Your math is way off. If the trend you pictured would continue we would see:
7B * 1.11^36 ~=300B

Of course it will level off at some point.

So... are people expecting difficulty to level off, or much more efficient technologies to emerge...

or what?

Mining hardware prices will continue to drop, and difficulty will continue to increase almost to the point where mining revenue equals electricity cost. Which is we know is really low in some places. Individual miners will continue miscalculating or betting on BTC price increase and therefore will continue getting raped.

[bitndx]

I think that as long as Asic manufactures can make a profit, they will keep selling and difficulty will continue to rise. The prices of miners will continue to fall and their efficiency will rise. I keep seeing posts of people saying to put them on Ebay. When they do, the person that buys it will plug it up. Prices of miners will fall but difficulty will keep rising unfortunately. There will be more HashFasts and BFLs selling pre-orders that will be plugged up down the road.

Mining will never be profitable unless you have free electricity.

Aren't you the guy posting the videos of the "biggest mining operation in Texas"? the electricity in that data center you are running in Houston is not free yet there you are.

[joshv06]

I think that as long as Asic manufactures can make a profit, they will keep selling and difficulty will continue to rise. The prices of miners will continue to fall and their efficiency will rise. I keep seeing posts of people saying to put them on Ebay. When they do, the person that buys it will plug it up. Prices of miners will fall but difficulty will keep rising unfortunately. There will be more HashFasts and BFLs selling pre-orders that will be plugged up down the road.

Mining will never be profitable unless you have free electricity.

Aren't you the guy posting the videos of the "biggest mining operation in Texas"? the electricity in that data center you are running in Houston is not free yet there you are.

Correct. I can see myself paying electricity for the DC down the road and that's it.

What I am pondering about is that Bitcoin has only only seen one halving dro, and we are just about 5-6 years into it. If it keeps going up at this rate, it could be unprofitable in terms of electricity toward the end of this year.

[a.miner]

Your math is way off. If the trend you pictured would continue we would see:
7B * 1.11^36 ~=300B

Of course it will level off at some point.

Good catch, Puppet!  I calculated 1.11^36.5  ~= 45, but I forgot to multiply in the 7 billion.  When I do, it comes out to about 316 billion.

[bitndx]

I think that as long as Asic manufactures can make a profit, they will keep selling and difficulty will continue to rise. The prices of miners will continue to fall and their efficiency will rise. I keep seeing posts of people saying to put them on Ebay. When they do, the person that buys it will plug it up. Prices of miners will fall but difficulty will keep rising unfortunately. There will be more HashFasts and BFLs selling pre-orders that will be plugged up down the road.

Mining will never be profitable unless you have free electricity.

Aren't you the guy posting the videos of the "biggest mining operation in Texas"? the electricity in that data center you are running in Houston is not free yet there you are.

Correct. I can see myself paying electricity for the DC down the road and that's it.

What I am pondering about is that Bitcoin has only only seen one halving dro, and we are just about 5-6 years into it. If it keeps going up at this rate, it could be unprofitable in terms of electricity toward the end of this year.

Agree. something will have to give

[pjviitas]

Now what?....I will tell you what.

The smart residential miners are closing up shop this summer because before the end of the year no one in a house will be able to make money.

The smart commercial miners are already planning their exit strategy for the end of 2015.

The smart industrial miners are making connections with governments and banks for when mining becomes 100% centralized.

Mining is pretty well over folks...most people just don't realize it yet.

[Syke]

Mining is pretty well over folks...most people just don't realize it yet.

That's what people said 3 years ago:

Hi fellow miners,

I bought a HD 5970 recently and was waiting for this weekend to get the rest of the hardware needed to complete a mining platform. However with the increase of 37% difficulty recently, I am hesitant now if I should continue with the project. ... Based on using the online bitcoin calculator. I will hit negative income on the 5/12/11. Will that be accurate?

The big unknown - the exchange rate. If the exchange rate goes back up again, miners will continue to be profitable. If it keeps dropping, then yeah, miners are going to start shutting down their machines.

[pjviitas]

Mining is pretty well over folks...most people just don't realize it yet.

That's what people said 3 years ago:

Hi fellow miners,

I bought a HD 5970 recently and was waiting for this weekend to get the rest of the hardware needed to complete a mining platform. However with the increase of 37% difficulty recently, I am hesitant now if I should continue with the project. ... Based on using the online bitcoin calculator. I will hit negative income on the 5/12/11. Will that be accurate?

The big unknown - the exchange rate. If the exchange rate goes back up again, miners will continue to be profitable. If it keeps dropping, then yeah, miners are going to start shutting down their machines.

it has absolutely nothing to do with the exchange rate and everything to do with the number of available 15A breakers in your home.

[jimmothy]

Now what?....I will tell you what.

The smart residential miners are closing up shop this summer because before the end of the year no one in a house will be able to make money.

The smart commercial miners are already planning their exit strategy for the end of 2015.

The smart industrial miners are making connections with governments and banks for when mining becomes 100% centralized.

Mining is pretty well over folks...most people just don't realize it yet.

I have to disagree with everything you said.

PUE of home miners = 1.03

PUE of industrial miners = 1.3-1.5

How can you speak for "smart miners" without being one?

[a.miner]

PUE of home miners = 1.03

PUE of industrial miners = 1.3-1.5

Hey, jimmothy, what does PUE stand for?