Who is still Mining?

[TragicWish]

I just started learning about BitCoin a few days ago. Like many before me, I have experienced the emotional rollercoaster ride from “I’m going to be rich!” to “holy crap how is anyone doing this?” and everything in between.

I’ve run a ton of estimates and I have read tons of threads on this forum about power vs. hash rates etc. I believe I have the basic limiting factors understood. But all this has left me with one question. Almost every thread where someone starts talking about becoming a new miner they are talked out of it by people who are currently doing it. (I won’t argue whether they are right or not. I’m just saying that most people are convinced that there is no profit in it)

So my question is, with so many people convincing new miners it’s a hopeless cause, who is still mining? I’ve been looking into different options and have seen floods of support for experienced miners buying new FPGA devices at an average price off $600 a pop. So what gives? Are experienced miners holding out for the BTC/$ price to go up and speculating on that? With increasing difficulty and decreasing BTC block value why are some people who claim to know better still investing in new mining tech?

This is in no way an attempt to defend one position over another. I’m just wondering if someone can explain a scenario where mining has the potential to be profitable. Obviously someone out there thinks it is so I’m asking you to give us some idea what you are basing your motivation on.

(I’m posting this in the NEWB area since I am still new to all of this. If a moderator thinks it holds value in another area feel free to move it.

[PatrickHarnett]

Bitcoin has always been a get rich slow scheme.  If you already own a heap of stuff, mining can be marginally profitable.  For instance, I used to do boinc, now I mine, and it covers my power costs and keeps the house warm (about 6Ghash).  But my main interests in BTC are elsewhere, and mining is just a hobby.

Back when coins were $15+ the payback was short, but at $5, most will be break-even or slightly profitable.

[conspirosphere.tk]

if you have a decent electricity cost you can give a shot to mining with little risk with some second hand GPUs to see if it's worthwhile, and easily resell the gpus with little loss if you find that is not. Or you can mine just in the winter to have "free" heating. I wonder what the fpga crowd will make of their investment if something goes wrong.

[BadBear]

One thing you should think about is that for every new miner that starts, difficulty will go up and other miners will lose profits. They have an incentive to stop new people from ever starting.

So while they are probably right, just keep that in mind. 
 

[TragicWish]

One thing you should think about is that for every new miner that starts, difficulty will go up and other miners will lose profits. They have an incentive to stop new people from ever starting.

So while they are probably right, just keep that in mind. 
 

The thought has crossed my mind. I want to think the best in people, but it looks like the gap based on the initial cost of new hardware that can compete in the current system will likely start to grow even faster over the next few years. Likely the number of miners will decrease leaving more room for the people who have the money to continue to upgrade. Not that it’s a bad thing. I’m concerned though that the economy wont be able to sustain itself with less miners unless more vendors start using it. Which I know has been said a million times already. One would have to speculate that most people who buy BitCoins are speculating and most people who mine them are doing so to sell to the speculators. So the value of a BitCoin has a long way to go towards earning real legitimacy.

[TragicWish]

if you have a decent electricity cost you can give a shot to mining with little risk with some second hand GPUs to see if it's worthwhile, and easily resell the gpus with little loss if you find that is not. Or you can mine just in the winter to have "free" heating. I wonder what the fpga crowd will make of their investment if something goes wrong.

There are a lot of interesting sides to the entire BitCoin economy. I wish I had been involved in the GPU hay day simply because I love building custom rigs. I think I going to order a BFL just for fun and if it never pays for itself I’ll live and if it does I’ll buy more. I have pretty cheap electricity and another project I’m working on is Solar/Wind for my home. I don't have any delusions of getting rich but I just want to get involved on as many angles as i can for the fun of it.

[worldinacoin]

Mine is setup quite sometime ago and my electricity costs are fixed no matter how much I used, been mining and is still mining until all my GPUs die and I will slowly replace than with FPGAs. 

[tsla]

I am, running a 5970 and a 6970 on an old lga775 board, currently my profit margin is about 100% at 2.88 MH/J and an electricity cost of $0.15 per kWh.

[thatbluedude]

I mined a little when I upgraded my gpu to a 6870, but stopped rather soon again. I would have had to get into cpu untervolting because of a wastefull 125W amd, and I have several internal data hdds who would have idled uselessly. So instead of having my pc run 24/7 forever I just spend a few bucks and got the same result. 

[DeathAndTaxes]

The thought has crossed my mind. I want to think the best in people, but it looks like the gap based on the initial cost of new hardware that can compete in the current system will likely start to grow even faster over the next few years. Likely the number of miners will decrease leaving more room for the people who have the money to continue to upgrade. Not that it’s a bad thing. I’m concerned though that the economy wont be able to sustain itself with less miners unless more vendors start using it. Which I know has been said a million times already. One would have to speculate that most people who buy BitCoins are speculating and most people who mine them are doing so to sell to the speculators. So the value of a BitCoin has a long way to go towards earning real legitimacy.

That is flawed logic.  "Upgrades" are new capital.  If it makes sense for existing miners to deploy new capital then it makes sense for new miners to do so also.

I think most of the caution comes from the fact that noobs tend to make horribly stupid rigs (gaming CPU, fast HDD, expensive cases, etc) and have lots of naive assumptions.  At one point when margins were much higher, pretty much any two GPUs in a box could be profitable so mistakes were less painful.  Today it is all about MH/$, MH/W and your electrical cost.  The days of slamming together some random junk and breaking even in 3 months are gone and will never ever come back.

If you got a 6-12 month time horizon and cheap electricity (<$0.10 per kWh) new GPU rigs can still be viable but you likely need to be willing to build a large number of them be comfortable buying used GPU, and know what parts you are buying and why.  Margins are very tight.

If you got a longer time horizon, access to significant capital, and willing to lose almost everything if Bitcoin fails then FPGA are another option.

If your goal is to casually throw some random parts together and make 20% profit per month well you shouldn't be mining.

Mining will never be a get rich quick system.  It is a commodity based "business" with almost no barriers to entry and global access.  Margins will be a small % over the lowest cost producers.

[AngryCatfish]

About 6 months ago I got an AMD 5700 series and have been mining ever since. In all I've gotten over 20 bitcoins from it, and am pretty happy with it (I don't directly pay for energy cost). I've made a purchase that went well and plan on making more. It has pretty much covered the cost of my video card, something I got primarly for playing video games. I figure your questions more directed at dedicated miners, but I see no reason not to be doing it with whatever you have (if energy cost aren't an issue).

[Stephen Gornick]

Almost every thread where someone starts talking about becoming a new miner they are talked out of it by people who are currently doing it.

Let's take the ideal situation.  Let's say the question started out like:

Hi guys.  I have an extra $2K lying around to buy hardware. I pay $0.10 per kWh.  I have a garage that is secure and stays cool.  It has plenty of outlets and I already have ethernet out there connected to my broadband internet.  I know my way around the command line and can troubleshoot problems fairly well.  I've got a little extra time and mining would be a better use of it than watching TV.  Once I get my feet wet, I might expand capacity as there is extra room and power to do so if I want.

I doubt anyone would try to dissuade this person from proceeding.

Let's take the more typical situation:

Hi guys. I got laid off and need money.  I have an old Dell PC but think I can borrow a thousand dollars from my girlfiend's father who will go in on this venture 50/50.  We live in California so electricity isn't cheap, unfortunately.  It gets hot in the summer so I suppose I won't be able to mine year-round.  I don't care about the noise or heat, but when the new baby comes I'll have to figure something better as the rig will have to share the room.  I'm not really technical but I ran this virus sweeper and it fixed my mom's PC so I should be able to do mining too.  The IT guy where I used to work was telling me about how he brings in a thousand dollars a month, all for free, because he already earned more than his hardware cost.  What should I buy and how much money can I get from mining?

Or worse:

Hi guys. I want to build a mining farm am looking for investors.  What hardware do I need?

[TragicWish]

The thought has crossed my mind. I want to think the best in people, but it looks like the gap based on the initial cost of new hardware that can compete in the current system will likely start to grow even faster over the next few years. Likely the number of miners will decrease leaving more room for the people who have the money to continue to upgrade. Not that it’s a bad thing. I’m concerned though that the economy wont be able to sustain itself with less miners unless more vendors start using it. Which I know has been said a million times already. One would have to speculate that most people who buy BitCoins are speculating and most people who mine them are doing so to sell to the speculators. So the value of a BitCoin has a long way to go towards earning real legitimacy.

That is flawed logic.  "Upgrades" are new capital.  If it makes sense for existing miners to deploy new capital then it makes sense for new miners to do so also.

I think most of the caution comes from the fact that noobs tend to make horribly stupid rigs (gaming CPU, fast HDD, expensive cases, etc) and have lots of naive assumptions.  At one point when margins were much higher, pretty much any two GPUs in a box could be profitable so mistakes were less painful.  Today it is all about MH/$, MH/W and your electrical cost.  The days of slamming together some random junk and breaking even in 3 months are gone and will never ever come back.

If you got a 6-12 month time horizon and cheap electricity (<$0.10 per kWh) new GPU rigs can still be viable but you likely need to be willing to build a large number of them be comfortable buying used GPU, and know what parts you are buying and why.  Margins are very tight.

If you got a longer time horizon, access to significant capital, and willing to lose almost everything if Bitcoin fails then FPGA are another option.

If your goal is to casually throw some random parts together and make 20% profit per month well you shouldn't be mining.

Mining will never be a get rich quick system.  It is a commodity based "business" with almost no barriers to entry and global access.  Margins will be a small % over the lowest cost producers.

First let me say, Thanks for responding. I was hoping at least one hero member would jump in on this so I could hear from someone who is actuly doing this on a simi large scale.

That is flawed logic.  "Upgrades" are new capital.  If it makes sense for existing miners to deploy new capital then it makes sense for new miners to do so also.

That makes since to me with one exception. If someone were involved in mining when the profits were high then I can see them reinvesting their capital into new mining gear even though profits may not be as high as they were, simply because they have already reached a breakeven point. Also, since the community of miners is somewhat small it’s hard for me, being new to the idea, to know if they are anticipating profits or just haven’t given up on a lost cause.

I think most of the caution comes from the fact that noobs tend to make horribly stupid rigs (gaming CPU, fast HDD, expensive cases, etc) and have lots of naive assumptions.  At one point when margins were much higher, pretty much any two GPUs in a box could be profitable so mistakes were less painful.  Today it is all about MH/$, MH/W and your electrical cost.  The days of slamming together some random junk and breaking even in 3 months are gone and will never ever come back.

I’m disappointed that I missed this window because I would have loved to build some rigs specifically for this. Right now I have a gaming setup with a 5770 in it and I starting mining with it just to see what it was all about. Now I’m thinking about buying a BFL single and seeing where that takes me. I have <.10$ electricity so I doubt I’ll completely lose my investment. I may even buy two just for the hell of it. That should put me at 1.6 GH/s if I understand correctly which might make me be able to pull down a few coins. I really want to coins for the sake of trading on the exchange anyway. I’m also planning to buy some directly for that sake. I’d be lying if I said I didn’t dream of huge profits and getting rich quick. But ultimately I’m not dumb enough to get my hopes up. I’m more interested in this as a hobby. I love all the start ups, contracts, and trading you can do. It is a micro economy and I think it could be fun for experimentation sake.

Mining will never be a get rich quick system.  It is a commodity based "business" with almost no barriers to entry and global access.  Margins will be a small % over the lowest cost producers.

I still have to argue that with FPGA’s coming to market there will soon be little incentive that I can see for a person to mine with a GPU. I don’t think they are dead yet, but wont be around much longer. Given that, I doubt most people who first learn about BitCoin will be willing to make the required investment to purchase a FPGA device. That means the mining power will probably be consolidated into smaller and smaller groups of people who were able/willing to invest at the right time. That might be a good thing for the price of BTC since more people who are interested in BTC will need to buy it on the market in order to get involved. Another possible scenario is that the more people going to FPGA’s will drive their price down which will make them more viable for entry level miners, but I don’t see the consumer base being large enough to support that.
If anything I’ve said is completely off base feel free to let me know. I lack the experience with BTC to support my ideas fully. But I’ll be watching to see how things turn out.

[TragicWish]

Almost every thread where someone starts talking about becoming a new miner they are talked out of it by people who are currently doing it.

Let's take the ideal situation.  Let's say the question started out like:

Hi guys.  I have an extra $2K lying around to buy hardware. I pay $0.10 per kWh.  I have a garage that is secure and stays cool.  It has plenty of outlets and I already have ethernet out there connected to my broadband internet.  I know my way around the command line and can troubleshoot problems fairly well.  I've got a little extra time and mining would be a better use of it than watching TV.  Once I get my feet wet, I might expand capacity as there is extra room and power to do so if I want.

I doubt anyone would try to dissuade this person from proceeding.

Let's take the more typical situation:

Hi guys. I got laid off and need money.  I have an old Dell PC but think I can borrow a thousand dollars from my girlfiend's father who will go in on this venture 50/50.  We live in California so electricity isn't cheap, unfortunately.  It gets hot in the summer so I suppose I won't be able to mine year-round.  I don't care about the noise or heat, but when the new baby comes I'll have to figure something better as the rig will have to share the room.  I'm not really technical but I ran this virus sweeper and it fixed my mom's PC so I should be able to do mining too.  The IT guy where I used to work was telling me about how he brings in a thousand dollars a month, all for free, because he already earned more than his hardware cost.  What should I buy and how much money can I get from mining?

Or worse:

Hi guys. I want to build a mining farm am looking for investors.  What hardware do I need?

Haha, when you put it like that it does clear things up a bit.
I’m particularly fond of this one.

Hi guys. I want to build a mining farm am looking for investors.  What hardware do I need?

You make some great points here. So let me phrase my question in what you have pointed out might be the correct format. I have a stable job with a steady middle class income. I can afford to lose my investment (which I consider, for me at least to be investing in a hobby and not a business). I have cheap electricity and also may be converting part of my house to solar on an unrelated project.

I want to invest in two BFL singles and see where it goes from there. I also want to buy BTC on the exchange. I’m no hacker but I have higher than average skillz and will likely be able to figure out how to operate my equipment with little to no help. And to be honest a big reason I want to get into BTC mining is it gives me a reason to educate myself further on programming, and Linux skills. So having said that all that… I guess I don’t a question. I’ve pretty much convinced myself to give it a shot. What the hell, I’ve wasted money on a lot worse ideas over the years.

[mokahless]

I missed the "gold rush" last year but started mining on and off when I got my 6950. I've got free electricity for now and have been more dedicated the past couple months. Added the 6770m from my laptop and 6450 I got to expand my number of desktop numbers. But even the most efficient $/MH cards aren't worth the purchase because it would still take 5+ months to pay them off. Starting mining litecoin recently and immediately exchanging it for bitcoin. Seems more efficient than CPU bitcoin mining directly.

[arby]

I guess it depends mostly on electricity costs. Like another user said, last year when the BTC was $15, it was really profitable, now its not as much profitable, but if you have cheap electricity it is still worth it.

Also, maybe in the future BTC will grow again and you will recover your investment faster.

You can also mine other coins, like LTC.

The other miners are obviously not wanting anyone starting,just think about the gold rush.

Anyway, I think maybe you should first test it, as a hobby, and if you like it and decide its profitable go ahead with it.

If you dont try it, you will always be sorry you did not try it, if you try it and not make any money, you have a small loss, and no regrets.

[arby]

Also you may find this interesting:

https://bitcointalk.org/index.php?topic=77352.0

Its a person posting his mining experiences so far.