At what price does mining become unprofitable?

[Parzival]

At what price does 1 BTC be less worth than equipment + electricity + work needed to mine 1 BTC ? Are there any estimates?

[Prelude]

Depends on how efficient (electrically) your miners are, and how much you pay per KW/h.

[Parzival]

Depends on how efficient (electrically) your miners are, and how much you pay per KW/h.

Of course. But we can still ask what that price would be for "average miner".

[Elwar]

Miners are still mining at the price of $265/BTC.

Bears would have you believe that those miners that are "selling all of their bitcoin to pay for electricity" now will be selling all of their bitcoins to pay for electricity when the price is $2650/BTC.

The numbers obviously do not add up, if they can mine now at this price then they can mine and hold at a higher price.

[Enzyme]

Mining becomes unprofitable when the electricity costs are higher than the BTC payout, sadly, this is a reality for many home miners.

[celebreze32]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

[BuildTheFuture]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

At some point if the BTC/USD price drops far enough, it makes more economic sense to sell your solar power back to the power company rather than using it for mining. Unless you live off the grid or your power company won't buy your KWh.

[Rawted]

Miners are still mining at the price of $265/BTC.

Bears would have you believe that those miners that are "selling all of their bitcoin to pay for electricity" now will be selling all of their bitcoins to pay for electricity when the price is $2650/BTC.

The numbers obviously do not add up, if they can mine now at this price then they can mine and hold at a higher price.

I must ask, how do you come up with these numbers? Seems odd that in Jul of 2014, it cost $500-600 to mine a BTC, but it now costs less, without an appropriate drop in network hashrate, cost of mining equipment, or electricity.

Don't believe me?

Capital expenditure

Theoretically, breaking the 110 million GH/s hashrate down into equivalent KnCMiner Neptune ASIC units (3,000 GH each), this results in approximately 36,670 units, at a price of $9,995 each – a total of $366.5m.

Assuming this has to be spent twice a year, capital expenditure (CAPEX) of around $733m needs to be invested in the network. At the current block reward of 25 bitcoins per 10 minutes, 1,314,900 bitcoins are mined per year. This equates to yearly capital expenditure of $733 m/1.3149m bitcoins = $557.45 per bitcoin.

Using the less efficient CoinTerra miner as a benchmark network average, yearly CAPEX would equate to $659.9m per year, or $501.85 per coin.

For the purposes of this report, I will take an average figure of $530 per coin, or $696.9m.

Operational expenditure

As calculated earlier, yearly electricity operational expenditure (OPEX) for a CoinTerra-average network would be $106.1m, or $80.69 per coin.

Using KnCMiner consumption figures, running costs per coin would be $70.71 million, or $53.77 per coin

For the purposes of this report, I will take an average figure of $67.23 per coin, or $696.9 million.

Total cost

Adding the CAPEX and OPEX figures results in a cost to mine a bitcoin of $597.23, and a total yearly cost of $785.3m. Interestingly, this is the exact bitcoin price at time of writing.

It should be expected that price of bitcoin should grow proportionally with the cost of network CAPEX and OPEX based on hash rate from this point forward.

This goes a long way to explain the cyclical bubble nature of bitcoin’s market price, and gives us insights into local minimum prices after a burst bitcoin cycle bubble.

http://www.coindesk.com/microscope-economic-environmental-costs-bitcoin-mining/

[louisreel]

Maybe we're just looking at miners who will continue to mine as long as they are coming out ahead on electricity costs, with little or no hope to recoup capital costs? 

[goozman96]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

Yup, I'm like him. Except my electricity isn't from a green source. It's free, included in my rent. So I'll never stop mining. As for everyone else? I don't know what their excuse is...

[Rawted]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

Yup, I'm like him. Except my electricity isn't from a green source. It's free, included in my rent. So I'll never stop mining. As for everyone else? I don't know what their excuse is...

Unless you want to, you know, move or stop renting and become a homeowner.

[goozman96]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

Yup, I'm like him. Except my electricity isn't from a green source. It's free, included in my rent. So I'll never stop mining. As for everyone else? I don't know what their excuse is...

Unless you want to, you know, move or stop renting and become a homeowner.

Yes, of course.
My meaning was I'll never stop mining as long as I'm renting and have free electricity, cuz, you know, why not?

[Elwar]

Seems odd that in Jul of 2014, it cost $500-600 to mine a BTC, but it now costs less, without an appropriate drop in network hashrate, cost of mining equipment, or electricity.

It does seem odd, but for some reason, whatever the price. Bears would have you believe that mining costs exactly the price of those bitcoins.

Every single price. Even $10/BTC the stupid threads about how much the network was losing by mining costs every month.

[Rawted]

Seems odd that in Jul of 2014, it cost $500-600 to mine a BTC, but it now costs less, without an appropriate drop in network hashrate, cost of mining equipment, or electricity.

It does seem odd, but for some reason, whatever the price. Bears would have you believe that mining costs exactly the price of those bitcoins.

Every single price. Even $10/BTC the stupid threads about how much the network was losing by mining costs every month.

So you just pulled the $265/btc figure out of your ass?

[Elwar]

Seems odd that in Jul of 2014, it cost $500-600 to mine a BTC, but it now costs less, without an appropriate drop in network hashrate, cost of mining equipment, or electricity.

It does seem odd, but for some reason, whatever the price. Bears would have you believe that mining costs exactly the price of those bitcoins.

Every single price. Even $10/BTC the stupid threads about how much the network was losing by mining costs every month.

So you just pulled the $265/btc figure out of your ass?

I pulled it from the current price.

I look around, and mining is still going.

[picolo]

The number is very different depending on the costs you had to face to buy the equipement and the maintenance costs you have. Cloudminr increased its price from 0.0014 to 0.0016/GHS because the BTC price went down but you can still theorically ROI if the difficulty doesn't increase too much.

[NUFCrichard]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

Yup, I'm like him. Except my electricity isn't from a green source. It's free, included in my rent. So I'll never stop mining. As for everyone else? I don't know what their excuse is...

Unless you want to, you know, move or stop renting and become a homeowner.

Yes, of course.
My meaning was I'll never stop mining as long as I'm renting and have free electricity, cuz, you know, why not?

I hope you aren't in Germany, otherwise you'll end up with a bill at some point for going above the expected usage.
Someone pays at the end of the day, if you are in uni housing then it's probably fine, in private accommodation I doubt your landlord will kindly pay your massive bills!

[Rawted]

Seems odd that in Jul of 2014, it cost $500-600 to mine a BTC, but it now costs less, without an appropriate drop in network hashrate, cost of mining equipment, or electricity.

It does seem odd, but for some reason, whatever the price. Bears would have you believe that mining costs exactly the price of those bitcoins.

Every single price. Even $10/BTC the stupid threads about how much the network was losing by mining costs every month.

So you just pulled the $265/btc figure out of your ass?

I pulled it from the current price.

I look around, and mining is still going.

LOL @ this rationalization. I now know to never discuss anything related to Bitcoin or economics with you.

[goozman96]

One guy here said his profits already paid for his equipment and he does not pay for electricity because he gets it from a green energy source. He can mine for nothing until his energy generating equipment or mining hardware breaks. No doubt he's in a minority but there must be others like him.

Yup, I'm like him. Except my electricity isn't from a green source. It's free, included in my rent. So I'll never stop mining. As for everyone else? I don't know what their excuse is...

Unless you want to, you know, move or stop renting and become a homeowner.

Yes, of course.
My meaning was I'll never stop mining as long as I'm renting and have free electricity, cuz, you know, why not?

I hope you aren't in Germany, otherwise you'll end up with a bill at some point for going above the expected usage.
Someone pays at the end of the day, if you are in uni housing then it's probably fine, in private accommodation I doubt your landlord will kindly pay your massive bills!

Nope, not in Germany. It's private accommodation, but it is mostly university students that rent and it's owned by a large real estate company.