Most will never make a profit mining if BTC stays under $650 for long

[bozo333]

My company invested about 10K into various BTC and script mining machines incl. a SP10, a couple of S1, A2, Dragon Miner, and a few assorted smaller miners. Power costs are low here, about 10 cents per KWH.
After trying out various approaches during the last 2 months and negotiating much better prices from dealers should we buy miners for $250K+ the fact of the matter is one will not make any money mining using a 6 month horizon if difficulty continues to increase at about 30%/month average as it has during the last year and BTC does not go above $650 for any length of time. The only 'profit' would be whatever you can get for your then obsolete machines after those 6 months. And that is a pure crap shoot...

And in my calculations I did not factor in incidentals like setup, removal, maintenance, repairs (many cannot be fixed du to lack of parts), internet blackouts, other failures.

[SMB-2525]

yep. I've run a ton of calcs. 0.10/KWH does not work for now - if ever again.

[Bitsaurus]

The fiat price of Bitcoin really doesn't matter much.

If I buy 10 BTC worth of mining equipment and I mine 20BTC with it then I have made a profit irrespective of whether BTC is $650 or $6.5.  Conversely if I only manage to mine 7BTC with the same miners I am at a loss irrespective of fiat price.  If all you care about is the fiat price, why even mine in the first place?

With the current difficulty spike it looks like no current hardware will ROI in BTC terms (at least until vendors drop BTC prices).

[cloverme]

The fiat price of Bitcoin really doesn't matter much.

If I buy 10 BTC worth of mining equipment and I mine 20BTC with it then I have made a profit irrespective of whether BTC is $650 or $6.5.  Conversely if I only manage to mine 7BTC with the same miners I am at a loss irrespective of fiat price.  If all you care about is the fiat price, why even mine in the first place?

With the current difficulty spike it looks like no current hardware will ROI in BTC terms (at least until vendors drop BTC prices).

Thank you! I was trying to make that point about the difficulty in a hardware thread earlier and it was going over everyone's head. The prices need go down and the hashrate of the miners with respect to Gh or Th per KwH needs to go up.  Difficulty going up combined with prices falling on BTC/USD are a very bad combo. He is mining for a profit though, so he has to convert some of his BTC into fiat to pay operating expenses.

[bozo333]

The fiat price of Bitcoin really doesn't matter much.

Not sure how that can be...can you buy your gas with bit coins? Pay for the electricity your miners use?
Bitcoins are not somehow magically disconnected from the real world. I buy stuff in Euro and Dollars. The prices
get adjusted one way or the other if the same thing has a big price difference based on the exchange rate. Bitcoin goes to $100 rest assured anybody selling you stuff will adjust the BTC price accordingly. Can't be any other way my friend.

PS I am talking a commercial mining enterprise, not hobbyist mining at home with a couple of S1 or similar.

[Bitsaurus]

The fiat price of Bitcoin really doesn't matter much.

Not sure how that can be...can you buy your gas with bit coins? Pay for the electricity your miners use?
Bitcoins are not somehow magically disconnected from the real world. I buy stuff in Euro and Dollars. The prices
get adjusted one way or the other if the same thing has a big price difference based on the exchange rate. Bitcoin goes to $100 rest assured anybody selling you stuff will adjust the BTC price accordingly. Can't be any other way my friend.

PS I am talking a commercial mining enterprise, not hobbyist mining at home with a couple of S1 or similar.

Obviously you have not done enough reading on the forums.  If your goal is to convert every transaction for fiat for payment then there's no point in getting into Bitcoins.

The whole point of mining (other than supporting the network) is that you believe you can get more coins with your hardware than you could have if you bought the coins.  The value of the coins in fiat is more or less pointless.  In fact if you buy them you obtain the coins instantly and are not forced to wait 6-8 months to recoup you investment.

Bitcoins are not magically disconnected from the real world, but the price you pay for electricity is the same as if you had used that money to buy the coins from an exchange.

I suggest you spend some time in the economics forum and speculation subthread.

Only newbies are looking to make more in fiat by mining.

[Benjig]

My company invested about 10K into various BTC and script mining machines incl. a SP10, a couple of S1, A2, Dragon Miner, and a few assorted smaller miners. Power costs are low here, about 10 cents per KWH.
After trying out various approaches during the last 2 months and negotiating much better prices from dealers should we buy miners for $250K+ the fact of the matter is one will not make any money mining using a 6 month horizon if difficulty continues to increase at about 30%/month average as it has during the last year and BTC does not go above $650 for any length of time. The only 'profit' would be whatever you can get for your then obsolete machines after those 6 months. And that is a pure crap shoot...

And in my calculations I did not factor in incidentals like setup, removal, maintenance, repairs (many cannot be fixed du to lack of parts), internet blackouts, other failures.

If you think the price of bitcoin will raise so dont buy miners, buy bitcoins itself.. the point fo mining is that you will make more coins than if you just buy them, as someone said above me.

[Syke]

The fiat price of Bitcoin really doesn't matter much.

Not sure how that can be...

More bitcoins = more fiat.
Less bitcoins = less fiat.

The fiat price of Bitcoin really doesn't matter much...when calculating the profitability of an already purchased miner.

[Nagle]

yep. I've run a ton of calcs. 0.10/KWH does not work for now - if ever again.

So many people ordered so much mining capacity that the whole mining industry may go into negative ROI.

That's often happened in real-world mining and agriculture. Especially agriculture, which has a history of doing that.

[herebittybittybitty]

My question: Do these massive mining farms hedge against Bitcoin price drops somehow?

[bozo333]

The fiat price of Bitcoin really doesn't matter much.

I suggest you spend some time in the economics forum and speculation subthread.
Only newbies are looking to make more in fiat by mining.

If you think the price of bitcoin will raise so dont buy miners, buy bitcoins itself.. the point fo mining is that you will make more coins than if you just buy them, as someone said above me.

Guys, thrown common sense overboard? Obviously most on the forums do not understand two very important issues... Risk and Money Management. I have 20 years experience in a algo trading outfit. Again, I am talking BTC mining as a business not a hobby / way to stick it to the man.

Those just taking their brand spanking new SP30 online right now are having a bad surprise...BTC around $500 and a big difficulty increase looming. Even at 7 cents per KWh no way to make money..

[bozo333]

My question: Do these massive mining farms hedge against Bitcoin price drops somehow?

Since I am advising my fund to stay out of BTC mining for the moment I did not really look into this but that would be hard as you cannot buy or write BTC options and Scypt coins are too correlated.

[gallery2000]

The price of btc is at $500 right now.

[ChuckBuck]

I think the whole concept of "Coins Invested - Coins Mined = ROI or Loss" that the other posters were trying to allude to, went over the OP's head.

Anytime you mention the fiat price or dollar value of Bitcoin, either investing, trading, or mining, you're doing it all wrong.  Fact of the matter is, for the $10k investment a couple months ago you could've had 17 Bitcoins already.  Using http://retrocalc.net/ and let's say conservatively 5TH/s(converting the Scrypt to equivalent power) shows you'd probably mined 9-10 BTC or so not figuring in variance.  Break even shows never based on https://bitcoinwisdom.com/bitcoin/calculator.

Basically, for someone that has 20 years + experience in the risk/trading field, it doesn't look like you did the necessary legwork calculating the risks with Bitcoin mining.  Doesn't look like you factored in the high difficulty we're now, considered variance, use the right Bitcoin calculators, possibly invested in the wrong inefficient asics etc.

Only hope to recoup some of your losses, is to sell your equipment on eBay or here in the Hardware / Computer Hardware subforum for BTC's.

Good luck, either way.

[Bitsaurus]

The fiat price of Bitcoin really doesn't matter much.

I suggest you spend some time in the economics forum and speculation subthread.
Only newbies are looking to make more in fiat by mining.

If you think the price of bitcoin will raise so dont buy miners, buy bitcoins itself.. the point fo mining is that you will make more coins than if you just buy them, as someone said above me.

Guys, thrown common sense overboard? Obviously most on the forums do not understand two very important issues... Risk and Money Management. I have 20 years experience in a algo trading outfit. Again, I am talking BTC mining as a business not a hobby / way to stick it to the man.

Those just taking their brand spanking new SP30 online right now are having a bad surprise...BTC around $500 and a big difficulty increase looming. Even at 7 cents per KWh no way to make money..

Common sense doesn't come into play since we're talking about investing - and most people don't know how to do that.  I will give you that any mining company looking to make profits strictly in fiat does have to be concerned with the fiat price since they have to pay their investors back typically in fiat, as well as paying their operating overhead in fiat - yes that is true.  But nobody on these forums cares about those guys since we are not them and they will do whatever they want regardless of what we say.

I'm talking about the home user and bitcoin enthusiast who wants to actually acquire more bitcoin via mining.  In this case fiat price doesn't matter since the fiat is considered a spent asset - it's already been written off.  The only expectation is to mine more BTC than the money would have bought.  With the BTC dropping sub $500 today it makes a lot more sense to buy BTC than to mine for pretty much all miners.  Of course if you already bought hardware nothing you can do but to mine.

The only people who care about fiat prices are the big farms.  The little guys who want to see Bitcoin become widely accepted can sit and wait on our "little" investments.

[bozo333]

I think the whole concept of "Coins Invested - Coins Mined = ROI or Loss" that the other posters were trying to allude to, went over the OP's head.

Anytime you mention the fiat price or dollar value of Bitcoin, either investing, trading, or mining, you're doing it all wrong.  Fact of the matter is, for the $10k investment a couple months ago you could've had 17 Bitcoins already.  Using http://retrocalc.net/ and let's say conservatively 5TH/s(converting the Scrypt to equivalent power) shows you'd probably mined 9-10 BTC or so not figuring in variance.  Break even shows never based on https://bitcoinwisdom.com/bitcoin/calculator.

Basically, for someone that has 20 years + experience in the risk/trading field, it doesn't look like you did the necessary legwork calculating the risks with Bitcoin mining.  Doesn't look like you factored in the high difficulty we're now, considered variance, use the right Bitcoin calculators, possibly invested in the wrong inefficient asics etc.

Only hope to recoup some of your losses, is to sell your equipment on eBay or here in the Hardware / Computer Hardware subforum for BTC's.

Good luck, either way.

OK buddy, you keep doing it your way and we do it ours (as we trade another 1000+ futures contracts today...). Some miners think they have it figured all out... good luck with that too.
PS And you really think that RetroCalc tell you what one 'actually' makes/made...hahaha. You just disqualified yourself totally. That's like guys who approach us on a daily basis with their
trading systems which have only been paper traded, not with an actual account. We do not even look at those.

[ChuckBuck]

I think the whole concept of "Coins Invested - Coins Mined = ROI or Loss" that the other posters were trying to allude to, went over the OP's head.

Anytime you mention the fiat price or dollar value of Bitcoin, either investing, trading, or mining, you're doing it all wrong.  Fact of the matter is, for the $10k investment a couple months ago you could've had 17 Bitcoins already.  Using http://retrocalc.net/ and let's say conservatively 5TH/s(converting the Scrypt to equivalent power) shows you'd probably mined 9-10 BTC or so not figuring in variance.  Break even shows never based on https://bitcoinwisdom.com/bitcoin/calculator.

Basically, for someone that has 20 years + experience in the risk/trading field, it doesn't look like you did the necessary legwork calculating the risks with Bitcoin mining.  Doesn't look like you factored in the high difficulty we're now, considered variance, use the right Bitcoin calculators, possibly invested in the wrong inefficient asics etc.

Only hope to recoup some of your losses, is to sell your equipment on eBay or here in the Hardware / Computer Hardware subforum for BTC's.

Good luck, either way.

OK buddy, you keep doing it your way and we do it ours (as we trade another 1000+ futures contracts today...). Some miners think they have it figured all out... good luck with that too.
PS And you really think that RetroCalc tell you what one 'actually' makes/made...hahaha. You just disqualified yourself totally. That's like guys who approach us on a daily basis with their
trading systems which have only been paper traded, not with an actual account. We do not even look at those.

Must've touched a nerve with you, if you're getting so defensive.  Guess the truth hurts sometimes. ...

Also, $10k isn't such a big investment for such an alpha 20 year big timer like yourself.  Step it up big papa!   

[bozo333]

I think the whole concept of "Coins Invested - Coins Mined = ROI or Loss" that the other posters were trying to allude to, went over the OP's head.

Also, $10k isn't such a big investment for such an alpha 20 year big timer like yourself.  Step it up big papa!   

Like I said, no money to be made mining at the moment, regards of how much you might sink into it...

No problemo, there are many pastures to graze on....

[MrTeal]

Common sense doesn't come into play since we're talking about investing - and most people don't know how to do that.  I will give you that any mining company looking to make profits strictly in fiat does have to be concerned with the fiat price since they have to pay their investors back typically in fiat, as well as paying their operating overhead in fiat - yes that is true.  But nobody on these forums cares about those guys since we are not them and they will do whatever they want regardless of what we say.

I'm talking about the home user and bitcoin enthusiast who wants to actually acquire more bitcoin via mining.  In this case fiat price doesn't matter since the fiat is considered a spent asset - it's already been written off.  The only expectation is to mine more BTC than the money would have bought.  With the BTC dropping sub $500 today it makes a lot more sense to buy BTC than to mine for pretty much all miners.  Of course if you already bought hardware nothing you can do but to mine.

The only people who care about fiat prices are the big farms.  The little guys who want to see Bitcoin become widely accepted can sit and wait on our "little" investments.

A good home miner would not ignore the fiat costs of running their hardware; they have operating expenses just like a big miner. The cost of electricity and the fiat price of bitcoin most definitely should factor into your buying decision.

[Bitsaurus]

Common sense doesn't come into play since we're talking about investing - and most people don't know how to do that.  I will give you that any mining company looking to make profits strictly in fiat does have to be concerned with the fiat price since they have to pay their investors back typically in fiat, as well as paying their operating overhead in fiat - yes that is true.  But nobody on these forums cares about those guys since we are not them and they will do whatever they want regardless of what we say.

I'm talking about the home user and bitcoin enthusiast who wants to actually acquire more bitcoin via mining.  In this case fiat price doesn't matter since the fiat is considered a spent asset - it's already been written off.  The only expectation is to mine more BTC than the money would have bought.  With the BTC dropping sub $500 today it makes a lot more sense to buy BTC than to mine for pretty much all miners.  Of course if you already bought hardware nothing you can do but to mine.

The only people who care about fiat prices are the big farms.  The little guys who want to see Bitcoin become widely accepted can sit and wait on our "little" investments.

A good home miner would not ignore the fiat costs of running their hardware; they have operating expenses just like a big miner. The cost of electricity and the fiat price of bitcoin most definitely should factor into your buying decision.

A good home miner would be sitting on 500BTC from 2011 and 2012 and know that any mining done now is just for fun.  Come on Mr Teal, I know where your stash is hehe.

Well it depends on what your purpose of mining is.  I already have a lot of coins. I only mine to keep it distributed and help protect my investment - not to earn more coin.  I find working my day job and buying the coins better for that at the moment.

For those mining for business rather than hobby I guess the nit picky penny counting matters - but then why mine when you have to watch the fiat price since mining takes 6-8 months to recoup investment.  A good home miner would be a better home trader would they not?