Is rig building still profitable?

[Orbit45244]

Hello Everyone,

I'm thinking about building a mining rig, but with the difficulty of mining rising exponentially, is it still profitable? I'd be spending $600-$800, and would probably get somewhere around 0.5-1.5Ghash/sec.

Any insight is appreciated.

EDIT: The rig would be up and running in about 1 and a half weeks, and the difficulty will be even higher by then.

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[Dhomochevsky]

Rig building is still profitable and my guess is this will still be the case for some time. The problem is your returns will keep diminishing so you'll face an ever slowing ROI. It's hard to say how long it will take for you to recoup your investment, but with such a small sum I don't think it will be longer than 6 to 8 weeks. The last difficulty jump was huge but the next ones are bound to be a little smaller, if you take some history into consideration. There was an investment calculator spreadsheet floating around on the forum...

Keep in mind though that at any one time somebody can plug the giant cock of doom into the grid and screw us all with 3 THps jizz rates.


As a side note, if it's just gains that interest you, I think (and most people here seem to agree on this) that you'll be far better off by simply buying bitcoins for those money. With the grid hash speed being what it is now it's safe to say that BTC production will slow down eventually and judging by its growing popularity, prices will climb quite a bit more. It's your call though.

[Basiley]

marginally.
in countries with inexpensive energy and skilled people.
but when complexity grow up and/or other[than hash-related]workload become ordinary its become hardly marginably at all.
if you ALREADY had horserpower you may try use it.
but build specially for mining ..

[ensign_lee]

How are you planning on achieving 1.5 Ghash/sec with an $800 budget?

5870's are $250 apiece at the moment and each only get around 350 Mh/s and are one of the most cost efficient GPUs at the moment. Even 3 of them would not get 1.5 Ghas / sec and that's not including the substantial cost of the rest of the equipment that goes with a computer.

[Jaime Frontero]

How are you planning on achieving 1.5 Ghash/sec with an $800 budget?

5870's are $250 apiece at the moment and each only get around 350 Mh/s and are one of the most cost efficient GPUs at the moment. Even 3 of them would not get 1.5 Ghas / sec and that's not including the substantial cost of the rest of the equipment that goes with a computer.

well, in fairness, he did say "0.5 - 1.5".

two 5870s can be had (recently, anyway - if not today) for $225 each - and the rest of the box (CPU, motherboard, RAM, the box, a couple extra fans, and a PSU [all software is free, of course]) can be put together for $225 if you're careful and maybe a bit experienced.

and really, you should be able to get 775 Mh/s out of a couple of 5870s without trying too hard.  i do.

his numbers work.  and mining is still quite profitable.

[Steve]

I started mining back in March...I would have been much better off putting that money directly into bitcoin due to the appreciation in that time.  If the price remains stable however, it will be good for a few weeks until difficulty catches up and diminishes the profit margins.  Then you have to hope for further price increases.  But, with mining you own the hardware and could later sell.  For that reason, I view mining as a lower risk way of obtaining bitcoins, but one that may not pay nearly as well compared with buying bitcoins directly.  Also, don't underestimate the amount of time you'll spend on mining.

[SgtSpike]

I have made it my new aim to convince everyone that mining is NOT profitable.

So no, rig building is a terrible investment, and you will lose all of your money.  And your home.

[SlaveInDebt]

I have made it my new aim to convince everyone that mining is NOT profitable.

So no, rig building is a terrible investment, and you will lose all of your money.  And your home.

Due to recent developments I have to agree, it's like or better yet worse than throwing money into a wishing well at the moment.

[Jaime Frontero]

I have made it my new aim to convince everyone that mining is NOT profitable.

So no, rig building is a terrible investment, and you will lose all of your money.  And your home.

Due to recent developments I have to agree, it's like or better yet worse than throwing money into a wishing well at the moment.

"recent developments"?

hmmm...  i dunno - i do quite well.

i started seriously in march, paid my rigs off in about three weeks, and now 1-1 1/2 days' mining pays my monthly electric cost.

i must've missed the memo.   

[Zibbo]

if you ALREADY had horserpower you may try use it.
but build specially for mining ..

This argument comes up every so often when talking about the profitability of mining, and it has always somewhat bothered me.

If you take two persons:
Person A) Is thinking about buying a used computer for $1000, planning to use as a dedicated mining rig.
Person B) Already owns a same kind of computer with resale value of $1000 just sitting idle, and plans to start using it as a dedicated mining rig.

Now B has an option to sell his computer for $1000 or start mining. Person A has an option to not do anything, or buy a computer for $1000 and start mining. In both cases, if you decide to start mining, you will end up initially with $1000 less money compared to when you decide to not mine, so they are economically the same decisions. Of course in a lot of cases, situations are not this simple and there are some other factors to consider, but still if I presented these two exact scenarios separately, I predict that the same people would recommend person A to not waste his money, and for person B to start mining.

[DustinEwan]

I noticed that eventually the plan is that people will be paid for processing transactions instead of mining, so at what point do you think enough people will be paying for transactions such that transaction processing to be profitable?

If that were the case, would it be worth running a machine to process transactions instead of just mining?  Am I missing something, entirely?

[Basiley]

its had other overhead, than buying hardware cost and paying electricity.
and bigger you solution, bigger # problems you have.
starting from cost of you time.
if its you personal PC - its one thing.
then you need [costly]space for it, power/air supply, support, etc.
people then forgot about it, when they ALREADY paid for that all for personal purpose.
and talking about profitability, using bitcoin-farming-targeted PC' from animation rendering[movies for example]and science computing for separate contract can be 15x more profitable, according for current prices for such resources and GPU's performance on such tasks. and thats become ordinary, after someone write OpenCL appz for such things. i mean, complete solution[like nowdays hashminers], not only GPU renderer or molecules crunching, in "press here and install" package.

[kjj]

Mining is how transactions get processed.  Every 4 years or so, the fixed part of the blockfinding reward halves.  The theory is that the transaction fee will gradually increase as that happens to ensure that miners keep getting rewarded.

[DustinEwan]

Don't users have to voluntarily provide a transaction fee though?  We're not getting paid right now for any transaction fees are we?

[gigitrix]

I noticed that eventually the plan is that people will be paid for processing transactions instead of mining, so at what point do you think enough people will be paying for transactions such that transaction processing to be profitable?

If that were the case, would it be worth running a machine to process transactions instead of just mining?  Am I missing something, entirely?

Transactions is mining. It's extra bitcoins you get above the 50.00 per block (that will diminish).

I'm starting to see about 0.03 worth of TX fees in each block: it's definitely already making a small impact...

[DustinEwan]

Ah, got it now.

I'm still a bit new to the game, so all the terms/jargon is getting mixed up in my head between blocks/shares/transactions/ etc., etc.,

Thank you very much

[Basiley]

i tell short story then.
one of my friends, on my answer "why you do that, cuz its under $xx income in best case?", answer "im got four kids, so even extra-$20/month matter". he usually put his PC[one 5870 GPU if am not forgot soemthing] into mining mode, only when he out[and his PC unused].
for similar purposes its ok: to extract some extra-income from already bought and underutilised hardware.
but build specifically form mining... keeping in mind relatively near complexity skyrocketing... not matter.

[BitLex]

to answer the initial question: yes, it is.

let's say you only get 2x5850 (not 5870s) for $800,
2 5850s get around 700MHash/s and the rig will need ~375W (probably less, but let's just be sure),
at (very expensive) $0.3 per kW/h you'll pay $2.7 per day
at current difficulty the expected average output is 2.88BTC per day,
at current market rates (of roughly $6.5) that's $18.72 per day.

$18.72 - $2.7 == $16.02 per day
16 / 800 == 2% ROI per day

show me an investment opportunity that pays you 2% per day and i'll join it.

[CubedRoot]

I'm hoping im profitable enough to pay off my rig.  I just spent around 800 on a rig that includes 3 Sapphire Xtreme 5850's (which are on backorder for another 2 weeks GAH!)

I plan on using the rig at my office in my test lab (since I work in IS/IT) so, i wont have to pay for power

Is it possible this rig will be profitable when the cards come in in two weeks, if I am not paying for the electricity?

[MoonBuggy]

$18.72 - $2.7 == $16.02 per day
16 / 800 == 2% ROI per day

show me an investment opportunity that pays you 2% per day and i'll join it.

This was my initial thinking, but then I started accounting for predicted difficulty increases and it looked less hopeful; clearly I'm new here, so feel free to point out any foolish mistakes, but here's how I was looking at it:
The $16/day figure applies at current difficulty, which should last for another 10 days or so (probably less, looking at the figures on blockexplorer.com), so that nets you $160 total. A guesstimate based on the previous data would optimistically suggest a difficulty jump of 40% (again, quite possibly more), reducing the daily income to (18.72/1.4)-2.7=$10.67. Say the difficulty levels off somewhat, you might make a further $130 or so at that price, followed by another 20% jump, giving a subsequent daily income of (18.72/(1.4*1.2))-2.7=$8.44. Your daily revenue has halved in less than a month, and break-even might take three months total. Investing in more hardware can't help with break-even time, since Mhash/$ remains largely the same, although it will make the absolute potential profits higher once you do pay off the investment (at the price of a higher risk if the investment is not paid off for any reason).

Of course, the key point left out here is the changing value of the bitcoins themselves - the overall trend seems to be that value very approximately tracks difficulty, so if you're confident that the increases will continue to more or less offset the difficulty increases then my 'diminishing returns' theory is totally irrelevant. It also doesn't account for the resale value of the rig, which diminishes, but may be enough to generate an overall profit once mining itself becomes unprofitable.

Basically, I'm not saying that mining is a bad idea, just that it's a moderately high-risk investment which is inextricably linked to the assumption that the bitcoins themselves will continue to increase in value faster than the increase in mining difficulty.