how can mining still be profitable even for the big farms

[btcmonster]

Hi,
Was wondering how mining still can be profitable even with free power??
For example
the SP20 (1.7Th/s) goes for 1200$ and ships mid this month and will not earn the money back spent on the miner.
the antminer s4 (2 Th/s) goes for 1250$ and will not earn the money back spent on the miner.
how would this make a profit at all for larger mining companies and individuals?
Do they do special deals with the producers of the miners?
How do they still make money with overpriced hardware?
thanks

[1715598325]

1715598325

[xstr8guy]

Hi,
Was wondering how mining still can be profitable even with free power??
For example
the SP20 (1.7Th/s) goes for 1200$ and ships mid this month and will not earn the money back spent on the miner.
the antminer s4 (2 Th/s) goes for 1250$ and will not earn the money back spent on the miner.
how would this make a profit at all for larger mining companies and individuals?
Do they do special deals with the producers of the miners?
How do they still make money with overpriced hardware?
thanks

The big farms ARE the manufacturers of the machines... Bitmain, KNC, Bitfury, Cointerra, etc. That's how they do it.  

However, I don't think Spondoolies have much of a mining operation at this moment.

[mwizard]

No one knows what the costs of the hardware is to the big miners.

If you are a miner manufacturer selling to small consumers it is likely at least 30% of the sale price is to cover sales and marketing and the need to provide ongoing support.  Selling to, and supporting, individual consumers is expensive.

But the big miner manufacturers can make extra miners very cheaply through volume manufacturing and bulk buying of components.

For example Bitfury,  claim at least 20% of the entire bitcoin network is running from their data centres.  They may be  running more than 20,000 of their energy efficient BF3500 and BF4500 miners in their three data centres.  

The BF3500 and BF4500 are made to be cheap data centre miners. They are not sold to the general public.

http://www.coindesk.com/bitfury-raises-20-million-asic-development-mining-output/
 
.  

[btcmonster]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

[philipma1957]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

maybe this is a hosting farm in the state of Washington.  they pay 5 cents to a power company  and charge 10 cents to host.

[brian_23452]

Hi,
Was wondering how mining still can be profitable even with free power??
For example
the SP20 (1.7Th/s) goes for 1200$ and ships mid this month and will not earn the money back spent on the miner.
the antminer s4 (2 Th/s) goes for 1250$ and will not earn the money back spent on the miner.
how would this make a profit at all for larger mining companies and individuals?
Do they do special deals with the producers of the miners?
How do they still make money with overpriced hardware?
thanks

Obviously they don't pay 1200 dollars for the unit.  They, being the manufacturer, pay some small fraction of 1200 dollars for the unit.  They typically accept payment in advance for units (so there is little up front cost or risk to them), take the units and mine with them for a while, then deliver them to you when they are no longer profitable.  It's almost impossible for them to NOT make money. 

[btc-facebook]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

They don't pay "retail" prices for mining equipment. They can get a significant discount on the hardware because it cost much less to produce miners then they are sold to retail customers. The mining manufacturers simply let the retail customers pay for the R&D via higher prices and preorders and let the corporate mining farms buy the miners at a discount as there are less logistical costs involved in selling to them (less salesmen, less shipping to various places, ect)

[btcmonster]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

They don't pay "retail" prices for mining equipment. They can get a significant discount on the hardware because it cost much less to produce miners then they are sold to retail customers. The mining manufacturers simply let the retail customers pay for the R&D via higher prices and preorders and let the corporate mining farms buy the miners at a discount as there are less logistical costs involved in selling to them (less salesmen, less shipping to various places, ect)

so the person who owns this farm would have gotten larger discount for the units? It still needs to be significant to cover all the hosting, maintenance and power to make a profit that is worth the investment and risk. so do u just email the manufacturer and ask for a discount for only 25 units ??

[xstr8guy]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

PIC OMITTED

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

Farms just like this are being shutdown as we speak because they no longer make money.

In fact, the guy who's farm that's shown in the pic... Here's what it looks like today.

https://bitcointalk.org/index.php?topic=813649.0

[btcmonster]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

PIC OMITTED

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

Farms just like this are being shutdown as we speak because they no longer make money.

In fact, the guy who's farm that's shown in the pic... Here's what it looks like today.

https://bitcointalk.org/index.php?topic=813649.0

he stated that he made some profit

Yeah, Price + Difficulty = S1 and Jupiter retirement.

All said and done about 50TH offline now. Dunno what I'm going to do with them.

Sucks, but yeah... Keeping all that running would be expensive. You could try to sell to some location with (extremely) cheap electricity for some petty cash.

Out of curiosity, did you make any profit with your setup?

Definitely

When he bought those machines he must have gotten a large amount off the retail price to be able to make a profit thats worth it? do u need connections to get that or do u just email the producer (in this case bitmaintech ) and ask for a discount for large number of miners 25+?

[jonnybravo0311]

25?  Try 250.  You need to think way bigger than you are.  25 is hobby mining.

[philipma1957]

25?  Try 250.  You need to think way bigger than you are.  25 is hobby mining.

even 250 s-3's is only 125th at best.

and 125th earns about 2 blocks a month.

 back in the day i earned a coin a day oh i spent 5kwatts an hour in gpu's, but i got a coin a day for 5 kwatts.

 5kwatts now gets me 6.6th or about 2.8 coins a month


vs
    13gh in gpus and 33 coins a month

[btcmonster]

25?  Try 250.  You need to think way bigger than you are.  25 is hobby mining.

in the pictures those where not 250 miners max 120 s1 and 25 s2, how can u run and setup those miners and be profitable??

[xstr8guy]

25?  Try 250.  You need to think way bigger than you are.  25 is hobby mining.

in the pictures those where not 250 miners max 120 s1 and 25 s2, how can u run and setup those miners and be profitable??

Why don't you ask the guy himself? I don't think he took everything offline. I believe he's still running his most efficient gear. And yes, he probably made a profit on the old machines which he most likely got a bulk discount on.

But the point I'm making is... you can't go out and buy a bunch of machines and duplicate his success. No one can. It's just not possible now. The ASIC manufacturers are the only people who can do this in the current mining landscape.

[iglasses]

iirc he said he took 50Ths offline.  Even sitting in his garage collecting dust he is unsure what he is going to do with the hardware.  I PMd a bit with him and let's just say he isn't exactly looking to give it away so even unplugged and unprofitable, he feels it has value (and he's right).

[scarsbergholden]

but how do those that are not manufacturers make money?
 a farm like this:

How about a panoramic?

That investment would never have been able to be able to pay back for the hardware and make a profit that is worth it.
How do they do it?? buy hardware then mine for some time and sell them on ebay overpriced?? thats how i did it when i was mining. however this is inefficient as u always would need to change cooling power management to fit new hardware stuff like that which would cause long down time if needet to be done correctly with cable management

They don't pay "retail" prices for mining equipment. They can get a significant discount on the hardware because it cost much less to produce miners then they are sold to retail customers. The mining manufacturers simply let the retail customers pay for the R&D via higher prices and preorders and let the corporate mining farms buy the miners at a discount as there are less logistical costs involved in selling to them (less salesmen, less shipping to various places, ect)

I think the "motto" behind this is that it certainly pays to have a lot of money. If you only pay retail prices for miners then you will be at a huge disadvantage compared to someone who is able to buy miners by the tens or hundreds of thousands of dollars worth. The price difference between the two classes of people will be huge

[lowbander80]

Since now technology is not advancing as fast as expected and currently we face the first lower difficulty change the machines get more greedy for electricity the difficulty may slow down for a while untill new asics come.So until then only free power saves all big farms

[BitcoinHeroes]

Since now technology is not advancing as fast as expected and currently we face the first lower difficulty change the machines get more greedy for electricity the difficulty may slow down for a while untill new asics come.So until then only free power saves all big farms

16 nm is coming, another big hike in difficulty...

[ChuckBuck]

Only if these farms have extremely cheap electricity, own the facilities, have natural cooling like say in Iceland or a cooler temperature country, or have solar panels setup already is there possibility of profit for a mega farm.

Otherwise, the only farms that are really profitable are the ones making the pickaxes: Bitmain, Spondoolies, AsicMiner, Bitfury, KNC etc

[taipo]

Noone sinks that many millions into huge facilities like that without a long term plan so people should not assume the big farms are turning a profit 'at the moment'.

My guess is its a waiting game, as Ive said in the past, first to blink.

5 or more large players owning a huge chunk of the hashrate, holding the difficulty up to break point and waiting firstly for the small players to drop out then medium players rigs to become unprofitable enough to drop out eventually only leaving those players too big to quit.

If they can hold the hashrate to dollar value high enough that noone in their right mind would every want to contest them, then they have won the arms race.

The end game then is a bitcoin version of OPEC (  perhaps Organization of the Bitcoin Exporting Companies - possibly a reincarnation of the Bitcoin Foundation ) which will be an economic cartel with the task to coordinate the policies of the bitcoin mining conglomerates. The goal would be to secure a steady income to the large mining conglomerates and to steady the price of bitcoin while guaranteeing constant supply to the markets.

Basically a complete bastardisation of everything Satoshi tried to create.