Bitcoin mining more profitable than January.

[steelhouse]

Even with increased difficulty

BTC value per day at 1GH/s
1/20/2011   $16.29
2/8/2011   $25.98
2/28/2011   $17.76
3/1/2011   $12.15
3/17/2011   $8.08
4/3/2011   $7.54
4/15/2011   $9.34
4/18/2011   $9.43
4/26/2011   $14.06
4/30/2011   $24.95

dont buy mine!

[1714019809]

1714019809

[Veldy]

Even with increased difficulty

BTC value per day at 1GH/s
1/20/2011   $16.29
2/8/2011   $25.98
2/28/2011   $17.76
3/1/2011   $12.15
3/17/2011   $8.08
4/3/2011   $7.54
4/15/2011   $9.34
4/18/2011   $9.43
4/26/2011   $14.06
4/30/2011   $24.95

dont buy mine!

Of course, this is the reason for the increasing difficulty.  If you are a cash investor in bitcoins, be careful.  I suggest thinking long-term (but keep a close eye on the community).

[JJG]

Like I've been saying this whole time:

If you've already got hardware and your electricity is cheap, mining isn't a problem.

If you're thinking about running out to buy the latest hardware or a dedicated computer, don't. At this rate, difficulty will be up at least 30% in only 10 days and then again in another ~10 days, and then again...

The only way to win this game is if the exchange rate continues upward as well. You have to be pretty crazy to think the exchange rate will continue upward indefinitely. And if you're really convinced the exchange rate will go up, then buying a small amount (e.g. less than you would have spent on hardware) is a better move.

[Veldy]

Like I've been saying this whole time:

If you've already got hardware and your electricity is cheap, mining isn't a problem.

If you're thinking about running out to buy the latest hardware or a dedicated computer, don't. At this rate, difficulty will be up at least 30% in only 10 days and then again in another ~10 days, and then again...

The only way to win this game is if the exchange rate continues upward as well. You have to be pretty crazy to think the exchange rate will continue upward indefinitely. And if you're really convinced the exchange rate will go up, then buying a small amount (e.g. less than you would have spent on hardware) is a better move.

The cost of electricity here is $0.07 per KW/h.  My card is using ~200W plus some case fan power [over and above what it would normally be using as my primary workstation].  So, 0.07 * 1000 / 200 * 24 = $0.336 / day.  Even if the power consumption turns out to be more, say 50%, then let's call it an even 50 cents per day.  As long as I can make significantly more than 50 cents per day, then it is worth the energy cost to me.  Besides, where I live, the heat generated is beneficial to my home for at least 7 months of the year, neutral for about 2 months of the year and negative (meaning I am running air conditioning) for at most 3 months of the year.  So, there is at least 4 months (7 beneficial - 3 detrimental months) of the year where I am actually earning even more money since I am lowering my heating bill a bit.  CURRENTLY, a decent card can pay itself off with significant profit assuming your numbers are correct.  I think with the current level of difficulty increasing though; many people with lower end cards [for mining purposes that is], will begin to drop out; especially gamers who keep shutting down their miner anyway to play games.

What this does show and what people pretty much already know is that CPU mining is completely obsolete.

I hope that proves useful to you.

[keybaud]

Like I've been saying this whole time:

If you've already got hardware and your electricity is cheap, mining isn't a problem.

If you're thinking about running out to buy the latest hardware or a dedicated computer, don't. At this rate, difficulty will be up at least 30% in only 10 days and then again in another ~10 days, and then again...

The only way to win this game is if the exchange rate continues upward as well. You have to be pretty crazy to think the exchange rate will continue upward indefinitely. And if you're really convinced the exchange rate will go up, then buying a small amount (e.g. less than you would have spent on hardware) is a better move.

The cost of electricity here is $0.07 per KW/h.  My card is using ~200W plus some case fan power [over and above what it would normally be using as my primary workstation].  So, 0.07 * 1000 / 200 * 24 = $0.336 / day.  Even if the power consumption turns out to be more, say 50%, then let's call it an even 50 cents per day.  As long as I can make significantly more than 50 cents per day, then it is worth the energy cost to me.  Besides, where I live, the heat generated is beneficial to my home for at least 7 months of the year, neutral for about 2 months of the year and negative (meaning I am running air conditioning) for at most 3 months of the year.  So, there is at least 4 months (7 beneficial - 3 detrimental months) of the year where I am actually earning even more money since I am lowering my heating bill a bit.  CURRENTLY, a decent card can pay itself off with significant profit assuming your numbers are correct.  I think with the current level of difficulty increasing though; many people with lower end cards [for mining purposes that is], will begin to drop out; especially gamers who keep shutting down their miner anyway to play games.

What this does show and what people pretty much already know is that CPU mining is completely obsolete.

I hope that proves useful to you.

Then there's the view that if you had spent your hardware money on BTC at the start and spent the money you would have spent on electricity on bitcoins every month, you'd have more money than if you'd mined; however, this does depend on what happens next to the price. Of course, this isn't true for those that didn't spend much anyway.

[Veldy]

The cost of electricity here is $0.07 per KW/h.  My card is using ~200W plus some case fan power [over and above what it would normally be using as my primary workstation].  So, 0.07 * 1000 / 200 * 24 = $0.336 / day.  Even if the power consumption turns out to be more, say 50%, then let's call it an even 50 cents per day.  As long as I can make significantly more than 50 cents per day, then it is worth the energy cost to me.  Besides, where I live, the heat generated is beneficial to my home for at least 7 months of the year, neutral for about 2 months of the year and negative (meaning I am running air conditioning) for at most 3 months of the year.  So, there is at least 4 months (7 beneficial - 3 detrimental months) of the year where I am actually earning even more money since I am lowering my heating bill a bit.  CURRENTLY, a decent card can pay itself off with significant profit assuming your numbers are correct.  I think with the current level of difficulty increasing though; many people with lower end cards [for mining purposes that is], will begin to drop out; especially gamers who keep shutting down their miner anyway to play games.

What this does show and what people pretty much already know is that CPU mining is completely obsolete.

I hope that proves useful to you.

Then there's the view that if you had spent your hardware money on BTC at the start and spent the money you would have spent on electricity on bitcoins every month, you'd have more money than if you'd mined; however, this does depend on what happens next to the price. Of course, this isn't true for those that didn't spend much anyway.

Playing the market is a little different than minting.  There is more inherent risk.  Granted, lately, any investment would have paid off ... but when to sell?  If you mint the coins, you just have to put a sell watch rates and sell if the price drops below your required profit target [at which point you would quit mining].  MtGox, if not fully capable already of buy/sell limits, will have the option soon (I need to do some more research there ... I was never into day trading back in the 90s - 2000).  One thing to remember as well, is that buying and selling bitcoins comes with some hefty fees depending upon the manner you do it. 

Last ... if you treat the video cards well while mining, there is still a market to sell the cards to gamers to recoup some of your money on the original purpose (or game with it yourself ).

[marcus_of_augustus]

Bitcoin minting ... i prefer that term to the mining term i think ... with a pool it is more like minting, while going solo it is more like mining (due to the variance differences).

What the current crop of GPU miners need to be aware of is the fpga threat on the horizon. As the CPU miners were out-moded when capital values involved in bitcoin became high enough, then so to maybe GPUs become out-moded when capital values of bitcoin minting gets to high enough levels to justify fpga investment. It has been more about capital equipment cost (silicon chip) than electricity.

Some banks and trading houses already have fpga hardware, some may even have it sitting around idle after the financial crash, so some programming and electricity and they are in business bitcoin minting without significant capital expenditure ... (ps PM me if you would like to know how to do this, if you can pay in BTC).

Edit: big GPU clusters may be around for a long time too, hard to know

[JJG]

The cost of electricity here is $0.07 per KW/h.  My card is using ~200W plus some case fan power [over and above what it would normally be using as my primary workstation].  So, 0.07 * 1000 / 200 * 24 = $0.336 / day.  Even if the power consumption turns out to be more, say 50%, then let's call it an even 50 cents per day.  As long as I can make significantly more than 50 cents per day, then it is worth the energy cost to me.  Besides, where I live, the heat generated is beneficial to my home for at least 7 months of the year, neutral for about 2 months of the year and negative (meaning I am running air conditioning) for at most 3 months of the year.  So, there is at least 4 months (7 beneficial - 3 detrimental months) of the year where I am actually earning even more money since I am lowering my heating bill a bit.  CURRENTLY, a decent card can pay itself off with significant profit assuming your numbers are correct.  I think with the current level of difficulty increasing though; many people with lower end cards [for mining purposes that is], will begin to drop out; especially gamers who keep shutting down their miner anyway to play games.

What this does show and what people pretty much already know is that CPU mining is completely obsolete.

I hope that proves useful to you.

If you already had the hardware and it's just a matter of running the software or not, then it's an easy problem. My warnings don't apply to people like you, like I said above.

The problem is that people are coming across bitcoin profitability calculators on the internet, plugging in current numbers, extrapolating these out six months, and deciding that they'll have their card paid off and a significant income stream in no time.

Meanwhile, enthusiasts across the internet who already own powerful GPUs and have cheap or free electricity are piling on, driving the difficulty sky high. The next difficulty jump is already projected to be 30%. That's huge! If the 30% increases continue for two months, you'll be making only 20% of what you are right now. Meanwhile, the exchange rate is absurdly volatile. It has only been above $2 for less than a week in the entire history of bitcoins. It could very easily fall below $1 if the old guard of miners decides to cash out.

This is why I keep warning people to not buy mining rigs and mining hardware. The mining rig era is quickly coming to an end.

[tomcollins]

I spent all day working numbers on different projections of the price and difficulty for the next year.

There is a fundamental problem in setting up mining rigs- other miners are not acting as if they are running a business and tend to overinvest in rigs.  This drives difficulty up, even if the price stalls.  The only model I could come up with that made mining more profitable than buying was when miners backed off faster when the price : difficulty ratio dropped to low levels, although historically this doesn't hold.  If the price of bitcoins goes up significantly (equal to the current rate of 18% per difficulty level), you are way better off buying (73% more profitable buying coins).  This is based on a 30 million difficulty in 1 year, and $425/Bitcoin in 1 year.  I modeled difficulty increases based on the current price and difficulty to get the difficulty level.

Based on more conservative estimates, (1.07% increase in the price of bitcoins), I came up 35% more profits on buying vs. mining ($25/BTC in 1 year, 3.2million difficulty in 1 year).

Based on no growth, mining was more profitable (9% ROI vs. 0%).  (600k difficulty, $3.50 BC target).

Based on -1% growth per 2016 blocks, mining loses 14% vs. 25% buying. (2.62 BTC target, 467k difficulty)

Based on -5% growth per 2016 blocks, mining loses 66% vs. 77% buying ($.79 BTC target, 173k difficulty)

Based on -10% growth per 2016 blocks, mining loses 77% vs. 95% buying ($.16 BTC target, 49k difficulty) (in this case, electricity costs more than its worth to mine and you stop mining pretty early)

If you are bullish on BTC futures, you are far better off buying now.  The more bearish you are, the more rigs make sense.  Also there is some residual value in your equipment if you abandon mining, so there's at least some recouping of your investment.

With the release of 6990s, the difficulty I'm projecting could go up quite a bit more than my model, which hurts miners quite a bit.

Of course, my models could be garbage, and the difficulty might not increase beyond a certain linear amount, in which case mining becomes more profitable.

But if you expect rising prices of BTC, you are going to be a lot better off just buying coins now.  If you already have equipment and mining is more profitable than what you pay for electricity, mine away!

[JJG]

...
With the release of 6990s, the difficulty I'm projecting could go up quite a bit more than my model, which hurts miners quite a bit.

Of course, my models could be garbage, and the difficulty might not increase beyond a certain linear amount, in which case mining becomes more profitable.

But if you expect rising prices of BTC, you are going to be a lot better off just buying coins now.  If you already have equipment and mining is more profitable than what you pay for electricity, mine away!

Thanks for sharing your hard work here! It's nice to see some actual projections.

Did you use 18% jumps for your difficulty predictions? I was using 15% a few weeks ago when I  started my predictions, but the most recent jump was 19% and the next predicted jump is already over 30%.

[Veldy]

Bitcoin minting ... i prefer that term to term i think ... with a pool it is more like minting, while going solo it is more like mining (due to the variance differences).

What the current crop of GPU miners need to be aware of is the fpga threat on the horizon. As the CPU miners were out-moded when capital values involved in bitcoin became high enough, then so to will GPUs become out-moded when capital values of bitcoin minting gets to high enough levels to justify fpga investment. It has been more about capital equipment cost (silicon chip) than electricity.

Some banks and trading houses already have fpga hardware, some may even have it sitting around idle after the financial crash, so some programming and electricity and they are in business bitcoin minting without significant capital expenditure ... (ps PM me if you would like to know how to do this, if you can pay in BTC).

Intriguing.  I am not sure that the technology in FPGA packages isn't already used in the modern GPU [hence why there is OpenCL and Cuda].  I see there are open source and commercial libraries to make programming with FPGA packages easier, so it probably isn't rocket science [the difficulty is building the interface to your computer as a card or similar device and making it commercially profitable There are probably higher end FPGA packages available that can outpace modern GPUs, but a custom board would have to be created to interface with the PC.  By the time this is necessary [or feasible], I am not sure there will be much more minting to be done before the bitcoin economy hits the 21 million max.  In any event, there is always the option to sell your video card to a gamer when mining becomes unprofitable and that helps recoup some of the capital expenditure.

Anyway, certainly something to look into further (and sooner rather than later I suppose).

And then there are crypto cards.  They also do similar work and I wonder if this is another avenue.

[tomcollins]

...
With the release of 6990s, the difficulty I'm projecting could go up quite a bit more than my model, which hurts miners quite a bit.

Of course, my models could be garbage, and the difficulty might not increase beyond a certain linear amount, in which case mining becomes more profitable.

But if you expect rising prices of BTC, you are going to be a lot better off just buying coins now.  If you already have equipment and mining is more profitable than what you pay for electricity, mine away!

Thanks for sharing your hard work here! It's nice to see some actual projections.

Did you use 18% jumps for your difficulty predictions? I was using 15% a few weeks ago when I  started my predictions, but the most recent jump was 19% and the next predicted jump is already over 30%.

I have a model based on "expected" price based on difficulty (what is the historical difference ratio between difficulty and price).  If that "expected" price gets too low, then difficulty increases will be smaller (or even negative).  If expected price gets too high, then difficulty will rise more.

Right now the ratio is 2.26 between price and expected price.  2/18 we saw the only ratio close to this, which was 2.017.  The next difficulty rise was 50% after that. It was followed by a 37% difficulty rise (in a 1.32 ratio), then the ease in difficulty of 9%.

I'm predicting around a 60% rise in difficulty which tapers down to a constant rate of 18% in my 18% growth model (it hits 20% by 8/4).  It eventually levels out to 18% once the ratio gets near a stable value of 1.086.

In my 7% model, I am predicting difficulty rises of 50%, 38%, 26%, 19%, etc... down to 7% where it levels out.

My model is actually fairly optimistic, since the predicted increase in difficulty tends to rise more even when the ratio is below 1 between my "expected" price vs. real price.

It is a model and it's only based on a few historical data points (23 sets of 2016 blocks since August), and I'm looking mostly at data since 12/21, so that's only 12 data points.  I averaged all transactions in each set of block difficulties to try to model the next difficulty.  It could be way off, and there are so many things that could really screw up the model (new cards that are faster, FPGAs, etc...).

[Litt]

I spent all day working numbers on different projections of the price and difficulty for the next year.

There is a fundamental problem in setting up mining rigs- other miners are not acting as if they are running a business and tend to overinvest in rigs.  This drives difficulty up, even if the price stalls.  The only model I could come up with that made mining more profitable than buying was when miners backed off faster when the price : difficulty ratio dropped to low levels, although historically this doesn't hold.  If the price of bitcoins goes up significantly (equal to the current rate of 18% per difficulty level), you are way better off buying (73% more profitable buying coins).  This is based on a 30 million difficulty in 1 year, and $425/Bitcoin in 1 year.  I modeled difficulty increases based on the current price and difficulty to get the difficulty level.

Based on more conservative estimates, (1.07% increase in the price of bitcoins), I came up 35% more profits on buying vs. mining ($25/BTC in 1 year, 3.2million difficulty in 1 year).

Based on no growth, mining was more profitable (9% ROI vs. 0%).  (600k difficulty, $3.50 BC target).

Based on -1% growth per 2016 blocks, mining loses 14% vs. 25% buying. (2.62 BTC target, 467k difficulty)

Based on -5% growth per 2016 blocks, mining loses 66% vs. 77% buying ($.79 BTC target, 173k difficulty)

Based on -10% growth per 2016 blocks, mining loses 77% vs. 95% buying ($.16 BTC target, 49k difficulty) (in this case, electricity costs more than its worth to mine and you stop mining pretty early)

If you are bullish on BTC futures, you are far better off buying now.  The more bearish you are, the more rigs make sense.  Also there is some residual value in your equipment if you abandon mining, so there's at least some recouping of your investment.

With the release of 6990s, the difficulty I'm projecting could go up quite a bit more than my model, which hurts miners quite a bit.

Of course, my models could be garbage, and the difficulty might not increase beyond a certain linear amount, in which case mining becomes more profitable.

But if you expect rising prices of BTC, you are going to be a lot better off just buying coins now.  If you already have equipment and mining is more profitable than what you pay for electricity, mine away!

This is very similar to my current real situation after buying hardware to mine. I admit I was swept away by the decentralized idea based currency and a chance at profit. But in hindsight, investing in the currency and buying instead of paying electricity would have definitely paid off more with a whole lot less headaches of setting up miners and dealing with additional heat at home.

I'm tired of seeing new miners nerd raging about mining being profitable when in reality they also could have easily been more profitable if they invested instead as well. Sure I made some money so far to cover my cost of hardware because I got in earlier, but I could have easily triple the amount of money I made if I invested personally. People think that I'm trying to sway people away from mining when infact I'm just sharing my own experience. If I had to do it again, I would simply invest because I believe in BTC and it's outlook being bullish over long term. More price goes up more profits I make by investing rather than mining. This is certainly less risky and more long term than mining. Not to mention no more ongoing cost or inc difficulty to account for.

People say mining is safer long term, but this is exact opposite from the truth as someone who can think like Tom here finally demonstrated for the people to see for themselves.
It's not a conspiracy theory to keep people from mining... I wish all the "mine or die" crowd to stop being so dense. Mining is not end to all bitcoin profits and far from it. It's a fact it's the opposite. If you still decided to mine I hope you make your money back, but don't try to make people think that it's the best option when it's not. I stand by my words.

[error]

I'm not making any big mining investments; just using the card I already had. Though I do plan to switch from NVIDIA to AMD very shortly.

[proudhon]

This is very similar to my current real situation after buying hardware to mine. I admit I was swept away by the decentralized idea based currency and a chance at profit. But in hindsight, investing in the currency and buying instead of paying electricity would have definitely paid off more with a whole lot less headaches of setting up miners and dealing with additional heat at home.

I'm tired of seeing new miners nerd raging about mining being profitable when in reality they also could have easily been more profitable if they invested instead as well. Sure I made some money so far to cover my cost of hardware because I got in earlier, but I could have easily triple the amount of money I made if I invested personally. People think that I'm trying to sway people away from mining when infact I'm just sharing my own experience. If I had to do it again, I would simply invest because I believe in BTC and it's outlook being bullish over long term. More price goes up more profits I make by investing rather than mining. This is certainly less risky and more long term than mining. Not to mention no more ongoing cost or inc difficulty to account for.

People say mining is safer long term, but this is exact opposite from the truth as someone who can think like Tom here finally demonstrated for the people to see for themselves.
It's not a conspiracy theory to keep people from mining... I wish all the "mine or die" crowd to stop being so dense. Mining is not end to all bitcoin profits and far from it. It's a fact it's the opposite. If you still decided to mine I hope you make your money back, but don't try to make people think that it's the best option when it's not. I stand by my words.

I was going to post something very similar.  I was lured in by the nerd factor, and without fully educating myself on the market, I jumped into mining.  The nerd-factor of it all has been fun, and I wanted a new video card anyway; although I spent more on a new card than I would have had I not known about bitcoin.  Nevertheless, in hindsight, I wish I would have just invested the same amount of money into buying bitcoins.  I would have already more than tripled my investment.

[tomcollins]

This is very similar to my current real situation after buying hardware to mine. I admit I was swept away by the decentralized idea based currency and a chance at profit. But in hindsight, investing in the currency and buying instead of paying electricity would have definitely paid off more with a whole lot less headaches of setting up miners and dealing with additional heat at home.

I'm tired of seeing new miners nerd raging about mining being profitable when in reality they also could have easily been more profitable if they invested instead as well. Sure I made some money so far to cover my cost of hardware because I got in earlier, but I could have easily triple the amount of money I made if I invested personally. People think that I'm trying to sway people away from mining when infact I'm just sharing my own experience. If I had to do it again, I would simply invest because I believe in BTC and it's outlook being bullish over long term. More price goes up more profits I make by investing rather than mining. This is certainly less risky and more long term than mining. Not to mention no more ongoing cost or inc difficulty to account for.

People say mining is safer long term, but this is exact opposite from the truth as someone who can think like Tom here finally demonstrated for the people to see for themselves.
It's not a conspiracy theory to keep people from mining... I wish all the "mine or die" crowd to stop being so dense. Mining is not end to all bitcoin profits and far from it. It's a fact it's the opposite. If you still decided to mine I hope you make your money back, but don't try to make people think that it's the best option when it's not. I stand by my words.

I was going to post something very similar.  I was lured in by the nerd factor, and without fully educating myself on the market, I jumped into mining.  The nerd-factor of it all has been fun, and I wanted a new video card anyway; although I spent more on a new card than I would have had I not known about bitcoin.  Nevertheless, in hindsight, I wish I would have just invested the same amount of money into buying bitcoins.  I would have already more than tripled my investment.

If you are just buying a single card, and it has some value to you on its own, then you can very well be more profitable than buying BTC under all but the most extreme price increases.  It all depends on a lot of variables and what your projections are.  For my example, if the rig I had would cost me $1200 or less, it would have been far superior to mine.  I can recover my investment before difficulty increases too much in that case, and then I only have to mine better than electricity rates (not hard where I live and with an efficient card).

[proudhon]

This is very similar to my current real situation after buying hardware to mine. I admit I was swept away by the decentralized idea based currency and a chance at profit. But in hindsight, investing in the currency and buying instead of paying electricity would have definitely paid off more with a whole lot less headaches of setting up miners and dealing with additional heat at home.

I'm tired of seeing new miners nerd raging about mining being profitable when in reality they also could have easily been more profitable if they invested instead as well. Sure I made some money so far to cover my cost of hardware because I got in earlier, but I could have easily triple the amount of money I made if I invested personally. People think that I'm trying to sway people away from mining when infact I'm just sharing my own experience. If I had to do it again, I would simply invest because I believe in BTC and it's outlook being bullish over long term. More price goes up more profits I make by investing rather than mining. This is certainly less risky and more long term than mining. Not to mention no more ongoing cost or inc difficulty to account for.

People say mining is safer long term, but this is exact opposite from the truth as someone who can think like Tom here finally demonstrated for the people to see for themselves.
It's not a conspiracy theory to keep people from mining... I wish all the "mine or die" crowd to stop being so dense. Mining is not end to all bitcoin profits and far from it. It's a fact it's the opposite. If you still decided to mine I hope you make your money back, but don't try to make people think that it's the best option when it's not. I stand by my words.

I was going to post something very similar.  I was lured in by the nerd factor, and without fully educating myself on the market, I jumped into mining.  The nerd-factor of it all has been fun, and I wanted a new video card anyway; although I spent more on a new card than I would have had I not known about bitcoin.  Nevertheless, in hindsight, I wish I would have just invested the same amount of money into buying bitcoins.  I would have already more than tripled my investment.

If you are just buying a single card, and it has some value to you on its own, then you can very well be more profitable than buying BTC under all but the most extreme price increases.  It all depends on a lot of variables and what your projections are.  For my example, if the rig I had would cost me $1200 or less, it would have been far superior to mine.  I can recover my investment before difficulty increases too much in that case, and then I only have to mine better than electricity rates (not hard where I live and with an efficient card).

Oh, I'm definitely not doing bad with my one 24/7 miner.  It cost me $690 to turn ~5 year old hardware I already had into a 24/7 ~670Mhash/s mining rig.  I was going to spend ~$400 anyway on a new card.  Of course, now I'm not using it for anything other than mining; but I will in a few months, and it'll still be a perfectly fine card for gaming.  However, had I just taken that same ~$700 and put it directly into bitcoins, I would have been able to sell off a portion of those bitcoins today sufficient to cover the costs of both my initial investment plus a new video card and still have a little stash of coins left over.