If you're thinking buying mining hardware, read this first

[colossus]

I wouldn't worry about asics they are highly specialised and difficult to build without resources and money, besides it would end up being pretty big piece of equipment compared to your PC box as an asic might be good on power effeciency you will most likely need more of them to equal your gpus.

[JJG]

I don't know, I believe mining will remain profitable for a while longer. If difficulty increases too much, it means several miners will no longer find it profitable and will leave, even if just temporally, thus decreasing difficulty until a balance point is reached. Not to mention that BTC can increase its value, too. I don't really know what to say about ASIC miners, though.

Though, I'm not a big miner. In fact, I just mine with a crappy 9600 GT when I'm not using my computer a lot, and while I pay peanuts for power, I don't think I'd buy a dedicated mining rig.

For miners to start leaving the pool, miners will have to reach the point where electricity costs outweigh the value of bitcoin mining. If it comes to this and you just recently bought hardware, you're screwed because you'll not only be paying electricity, but paying off the hardware as well. And difficulty probably won't go down in this case, but the growth will slow.

If you're falling back on the 'bitcoins may be worth more' bit then like I've said before, a better bet would be to buy bitcoins.

Good call on not buying a dedicated mining rig.

[bitcoin_ent]

very interesting that JJG is so concerned about other people buying mining rigs ...

[Garrett Burgwardt]

Not buying a mining rig is a smart economic choice. It just isn't profitable at current prices, though if you think that prices will rise, then by all means go for it.

[Litt]

very interesting that JJG is so concerned about other people buying mining rigs ...

well according to my calculations, I would actually have made more money investing in btc rather than mining hardware I have now back when btc was at .7 or so. And I have to admit it's getting hotter each day and I don't think I want to be running my second machine much longer and thinking about just putting the money and buying and forgetting.

With things that still need to develop like stronger exchange system and others, it would make sense to a lot of people from outside not having to mess with hardware monitoring and getting similar/better returns than mining without headaches. Especially for people who are considering just investing in btc on the side and are not so well versed in computer hardware.

Difficulty is also rising like crazy nowadays after the overclock.net fiasco. Graphs showing network str increasing at almost 4%+ a day. My projection shows it being higher than 150000+ by next change easily

Personally as a miner who already invested in hardware, I know that the mining days are limited and it won't last much longer here. If diff keeps rising at this type of rate, it really won't last more than a few month at best unless the btc prices rise to that lvl. Currently, I personally think the btc is already way overpriced as people are trying to put money in a narrow exchange system inflating the price. This bubble will also burst one day weather people would like it to or not. Realistic price I think would be more in line of $5 or so at the end of the year, but who knows. If dust settles to $5 or so like my conservative guess, recovering cost will be even harder or not possible.

I think the other side of the fence of not mining is getting greener each day and IS a valid option for new people. Or I should say mining is not the ONLY option to invest in btc and make money. Infact mining may be one of the harder and riskier ways of the many available. If I had the money to put in btc I rather do that than deal with everything that comes with mining today with the risk as is. It's not set it and forget it like one may think running miners and keeping it up. We certainly should not discourage people from mining or otherwise, but mining isn't the only option or the best currently if you asked me.

[cdb000]

Unless the value of Bitcoins rises quite a bit, buying a dedicated mining rig is probably not going to be profitable at this time, but buying a GPU for an existing machine could be.

A 5870 to drop into an existing machine will probably show a small profit in a month or two, particularly as the price of 5870s has dropped a bit over the last few months and they also seem to have some resale value on eBay.

At current difficulty, a 5870 will mine a little more than 3 Bitcoins per day. The next difficulty rise, probably about 40% will be in under a week, then a 5870 will be mining a little more than 2 Bitcoins per day. Power costs money and 5870s use quite a bit.

So why do I mention all this? I happen to have a machine with a spare PCIe/16 slot and I can't decide whether to order a 5870 to go in it. The 'what-if' spreadsheet suggests that there might be some profit there, but the amount of profit is very sensitive to the rate of rise of difficulty, and this is very hard to predict.

I should have bought the extra 5870 back in January when I bought 7 of them! Those 5870s have paid for themselves and made a moderate profit.

[JJG]

very interesting that JJG is so concerned about other people buying mining rigs ...

You're a few pages too late for the conspiracy theory talk. Come back when you have some math or logic to debate with.

[clonedone]

very interesting that JJG is so concerned about other people buying mining rigs ...

well according to my calculations, I would actually have made more money investing in btc rather than mining hardware I have now back when btc was at .7 or so. And I have to admit it's getting hotter each day and I don't think I want to be running my second machine much longer and thinking about just putting the money and buying and forgetting.

With things that still need to develop like stronger exchange system and others, it would make sense to a lot of people from outside not having to mess with hardware monitoring and getting similar/better returns than mining without headaches. Especially for people who are considering just investing in btc on the side and are not so well versed in computer hardware.

Difficulty is also rising like crazy nowadays after the overclock.net fiasco. Graphs showing network str increasing at almost 4%+ a day. My projection shows it being higher than 150000+ by next change easily

Personally as a miner who already invested in hardware, I know that the mining days are limited and it won't last much longer here. If diff keeps rising at this type of rate, it really won't last more than a few month at best unless the btc prices rise to that lvl. Currently, I personally think the btc is already way overpriced as people are trying to put money in a narrow exchange system inflating the price. This bubble will also burst one day weather people would like it to or not. Realistic price I think would be more in line of $5 or so at the end of the year, but who knows. If dust settles to $5 or so like my conservative guess, recovering cost will be even harder or not possible.

I think the other side of the fence of not mining is getting greener each day and IS a valid option for new people. Or I should say mining is not the ONLY option to invest in btc and make money. Infact mining may be one of the harder and riskier ways of the many available. If I had the money to put in btc I rather do that than deal with everything that comes with mining today with the risk as is. It's not set it and forget it like one may think running miners and keeping it up. We certainly should not discourage people from mining or otherwise, but mining isn't the only option or the best currently if you asked me.

your calculations were made after the markets moved.
unless someone could tell the future, mining rigs are the safer option rather than trading.
bitcoins arent moved by a small article on the NYTIMES like stocks are, they are completely random.
if some guy says bitcoins are going to fall before 2012, you think the bitcoin market would be affected?
if donald trump tells you citibank is sucking at the moment, the stocks would drop considerably.
there is no bitcoin guru to tell people how to trade, and most of the traders could be adolescents for all you know.
unlike stocks where you need to be atleast 16 to open an account.

mining is safe for now since it is still relativly early. you can make calculations after the market moves cus it just happened, no one predicted the bitcoins would have hit $4.

[Litt]

very interesting that JJG is so concerned about other people buying mining rigs ...

well according to my calculations, I would actually have made more money investing in btc rather than mining hardware I have now back when btc was at .7 or so. And I have to admit it's getting hotter each day and I don't think I want to be running my second machine much longer and thinking about just putting the money and buying and forgetting.

With things that still need to develop like stronger exchange system and others, it would make sense to a lot of people from outside not having to mess with hardware monitoring and getting similar/better returns than mining without headaches. Especially for people who are considering just investing in btc on the side and are not so well versed in computer hardware.

Difficulty is also rising like crazy nowadays after the overclock.net fiasco. Graphs showing network str increasing at almost 4%+ a day. My projection shows it being higher than 150000+ by next change easily

Personally as a miner who already invested in hardware, I know that the mining days are limited and it won't last much longer here. If diff keeps rising at this type of rate, it really won't last more than a few month at best unless the btc prices rise to that lvl. Currently, I personally think the btc is already way overpriced as people are trying to put money in a narrow exchange system inflating the price. This bubble will also burst one day weather people would like it to or not. Realistic price I think would be more in line of $5 or so at the end of the year, but who knows. If dust settles to $5 or so like my conservative guess, recovering cost will be even harder or not possible.

I think the other side of the fence of not mining is getting greener each day and IS a valid option for new people. Or I should say mining is not the ONLY option to invest in btc and make money. Infact mining may be one of the harder and riskier ways of the many available. If I had the money to put in btc I rather do that than deal with everything that comes with mining today with the risk as is. It's not set it and forget it like one may think running miners and keeping it up. We certainly should not discourage people from mining or otherwise, but mining isn't the only option or the best currently if you asked me.

your calculations were made after the markets moved.
unless someone could tell the future, mining rigs are the safer option rather than trading.
bitcoins arent moved by a small article on the NYTIMES like stocks are, they are completely random.
if some guy says bitcoins are going to fall before 2012, you think the bitcoin market would be affected?
if donald trump tells you citibank is sucking at the moment, the stocks would drop considerably.
there is no bitcoin guru to tell people how to trade, and most of the traders could be adolescents for all you know.
unlike stocks where you need to be atleast 16 to open an account.

mining is safe for now since it is still relativly early. you can make calculations after the market moves cus it just happened, no one predicted the bitcoins would have hit $4.

I didn't mention anything about trading. All I said was instead of investing in mining hardware, I could have bought the btc for the same dollar invested and today I would have ended up with a bigger profit with investing. This is all I said. I also said that mining isn't the only way to make profit and the days of making profit may be more limited than getting involved by investing. My calculation involved buying and forgetting since it was at .7 when I got involved. Has nothing to do with guru and genies or w/e you believe in.

[JJG]

your calculations were made after the markets moved.
unless someone could tell the future, mining rigs are the safer option rather than trading.
bitcoins arent moved by a small article on the NYTIMES like stocks are, they are completely random.
if some guy says bitcoins are going to fall before 2012, you think the bitcoin market would be affected?
if donald trump tells you citibank is sucking at the moment, the stocks would drop considerably.
there is no bitcoin guru to tell people how to trade, and most of the traders could be adolescents for all you know.
unlike stocks where you need to be atleast 16 to open an account.

mining is safe for now since it is still relativly early. you can make calculations after the market moves cus it just happened, no one predicted the bitcoins would have hit $4.

Don't forget that those same moves in the value of bitcoin will also swing the present value of your mining rig.

Buying a mining rig is not, necessarily, less risky. Hardware depreciation and electricity costs are very real.

[slurch]

very interesting that JJG is so concerned about other people buying mining rigs ...

You're a few pages too late for the conspiracy theory talk. Come back when you have some math or logic to debate with.

Maybe that's his objective reality. Then it's not conspiracy at all...it's fact. Of course, that's only if you ask him...

I have taken the advice in this thread to heart. It has not, however, dissuaded me from buying hardware...especially after a visit to CL last night, where I saw that I can get most of the pieces I need (sans video cards and power supplies) for half the price I was thinking of. If anything, I would take the message in this thread as "Watch your ass when buying hardware that you can't turn over when you're done with it."

Also, defending against the >50% attack would be the most altruistic reason I can think of for running a farm. That's not the only reason I want to help, but it is definitely a consideration.

Again, I seriously do not know why you would spend this much effort on this particular topic.

[njloof]

Electricity keeps coming up again and again, so let's talk electricity for a minute.

I'm looking at a 700W, dual 5870 rig here right now on a Kill-A-Watt, and it's drawing ~700 Wh a day.

Yes, a *day*. No, I'm not dropping a zero. The power supply may be capable of drawing 700W, and maybe it does on startup with all those fans winding up, but sitting here happily mining all day at ~680 kH/s, it's spending a total of... less than 1 kWh. I can run this thing for a *year* and pay $35 (at $.14/kWh, which is an overestimate of my yearly electricity cost).

Now, sure, you could overclock this thing and draw more power. And there's certainly a conversation to be had about hardware cost. But the electricity cost does not seem like a dealbreaker by at least a factor of ten.

[greenlander]

I'm looking at a 700W, dual 5870 rig here right now on a Kill-A-Watt, and it's drawing ~700 Wh a day.

I suspect that you're not measuring something quite right.  ~700 Wh a day is about 30 Watts.  That's about what a laptop draws.  I have a hard time believing that you're really drawing only 30 Watts with a dual-GPU rig.

[slurch]

You forgot to multiply that by 24, didn't you? kWh is kilo watt hour, not kilo watt day.

I think he did.

[njloof]

Ah, uh, oops. No, math was right, but data was bad (wrong device plugged into Kill-a-Watt). Updated data soon.

[njloof]

OK, would you believe 11 kWh a day?

And just so you can check my math: it's drawing ~480 watts. So, about 70% of the power supply's rating. At $.14/kWh, that's $45 a month. If I can't get 15 BTC in a month, time to shut it down.

[mjsbuddha]

Just my own story. I bought my first bitcoin mining rig and got it mining on April 1st. 2x5970's, system cost me $1500. In April it made just under 500 bitcoins for me. I sold them when bitcoins hit $3.80 shortly before coinpal went down. I made enough money in one month to pay for the machine and the electricity it used. So yes, building a mining rig right now is still very profitable.

[bitcoin_ent]

shhhhhhh ... JJG won't like hearing that

[Litt]

OK, would you believe 11 kWh a day?

And just so you can check my math: it's drawing ~480 watts. So, about 70% of the power supply's rating. At $.14/kWh, that's $45 a month. If I can't get 15 BTC in a month, time to shut it down.

Glad you can have correct elec rates, but the real question wasn't really a discussion of "is mining more profitable than electricity cost?" but more "is mining the most profitable?"

I think we can all assess that mining is profitable at least for the time being if you had elementary math skills. The real question is, would you look back and wish you had spent the money buying btc instead of mining hardware because it would have yielded you more profit. In my case I would have been better off today just buying outright looking both at profit and time spent.

If network grows as fast as it is today which is about 4% a day, the decision to buy hardware instead of btc outright is looking worse. I already rolled my dice and now I'm just looking for the right moment to sell my equipment. I already see some people listing ads and I worry that I will be selling my hardware with a huge competition if I hold out too long also. I won't be surprised if the difficulty starts going up by 30%+ as it seems it's picked up some steam after people jizzing forum guides all over the net. I would not be surprised things like a press release jump difficulties by chunks this year also. I hear there is a Forbes article and a Time magazine something coming up.. I never thought when I bought my hardware that the difficulty would rise this much this fast and I suspect it's only gonna pick up steam even faster now.

If I had to do it over again, I think I would have gone with just buying route. You might agree or disagree, but it would have saved me a lot of time and hassle. And yes I'm a bit bitter that I have all this hardware that I might have to try to unload because the difficulty is so high now, but it is what it is. 

[BookLover]

The difficulty is limited by the price because most people will only mine when it is profitable.  A large amount of hashing power was added to the network after the rise in price by people who turned there miners back on because it was profitable to mine again. (sorry that's a bit of a run on)  I'm rather surprised someone else didn't mention this when discussing the problem with the rising difficulty.  I agree that to many people are using bitcoin as a get rich quick scam (who really knows what other people are thinking) but I know many people are mining because they really believe in bitcoins.