What's the deal, miners?

[armedmilitia]

Why the hell are people still buying hardware?

I was simulating purchasing an sp31 for 1500 shipped (which seems to be the going price nowadays) and hosting it for 6 months @ 60usd/kw/mo (which is a pretty damned low price) and came to realize: there is no realistic chance of ever making my money back. Hell, even at 1% difficulty increments, I will only hit ~75% of my money back after 6 months. At 5% or higher, the picture gets pretty freaking dim.

Calculator link (includes hosting cost into miner cost):

http://btcinvest.net/en/bitcoin-mining-profit-calculator.php?diff=47427554951&dcosts=2724&diff_mincrease=1&blpbtc=25&dhsmhs=4900000&diff_mincreasedecrease=0.1&btcusd=274.87&dpowcon=3400&btcusd_mincrease=0&pcost=0&calcweeks=13&dleadtime=0&action=calc

So, my question for my fellow miners out there: How are you planning to break even? Free power?  

[bitcoin4eva]

I'm paying about 0.03$/kw for my electricity which is really low. I live in an apartment with two other guys and we split the electricity bill (they have no idea I have few ants running on my balcony )

[adaseb]

I'm paying about 0.03$/kw for my electricity which is really low. I live in an apartment with two other guys and we split the electricity bill (they have no idea I have few ants running on my balcony )

That's a pretty assholish thing to do. Imagine what they will do when they find out you are taking advantage of them.

[bitcoin4eva]

I'm paying about 0.03$/kw for my electricity which is really low. I live in an apartment with two other guys and we split the electricity bill (they have no idea I have few ants running on my balcony )

That's a pretty assholish thing to do. Imagine what they will do when they find out you are taking advantage of them.

Propably yea although running two S3's with one 750W PSU doesn't use much power : )
If I'll expand the mine more I'll have a discussion with them : )

[Amph]

i think people are still buying despite the non-profit, because mining it's simply fun, also many newbie want to discover it

it's a bit like gaming

[caga]

Maybe because people aren't doing the right analysis and risk calculation before putting in the money.
And its on;y the rich, who can currently go about purchasing the expensive rigs
 

[Jamphone]

It depends on your price predictions. If you see bitcoin hitting $500 this year, you may be better off mining, as your "profit" per month would improve significantly with the price. Difficulty will trail price by several months, there just isn't the capacity to host that many more miners. So you'd mine almost as many as in the $275 scenario, but get to keep more each month.

Right now, your margin is only about 50%. At $500, it would be 70%. (Although difficulty would pick up to eat away at that.)

But there are a lot of factors to consider. If the $500 rise comes in the last two weeks of the 12 month year, then no, it won't have made sense. If it comes earlier in the year, then yes it would have.

If the price drops to $100, you own a very expensive paper weight.

It isn't as simple as "buy and hold" BTC, but honestly, until the price is above $300, I would say "Buy and hold" is the safer strategy.

If the price stays steady here, then no, it is hard to justify.

Your factors are:

1) Current Price
2) Future price
3) Rate of change towards future price
4) Difficulty (from the perspective of technological innovation)
5) Rate of change of difficulty to react to future price (demand for new miners)
6) Hosting costs
7) Cost of equipment
Rate of change of hosting and equipment with future price (When profits were through the roof in late 2013, hosting was 25 cents/kwh due to lack of space and heavy demand)

Also, a big factor is whether you consider hosting a "sunk cost" upfront or a reoccurring monthly cost, that will affect your numbers as well.

[Jamphone]

Hey asswipe,

Price actually does matter a lot. Can't pay for your electricity in BTC fixed prices. You pay in currency.

You're welcome,

Someone who runs a data centre

[finlon]

Do people who buy miners and have free electricity can still have a Positive ROI after investing into mining gear in the current time ?

[Jamphone]

If you have free electricity, then yes, you could still buy gear and ROI. - But check on your electricity. A dorm room won't support an SP31, they just don't run enough power to your room. Same with a lot of small apartments. Check your electrical panel before buying a miner.

[adaseb]

Do people who buy miners and have free electricity can still have a Positive ROI after investing into mining gear in the current time ?

I got free electricity and I would NEVER pay retail for a miner, so I just got some used S3's and got ROI after a month.

[Jamphone]

Hey asswipe,

Price actually does matter a lot. Can't pay for your electricity in BTC fixed prices. You pay in currency.

You're welcome,

Someone who runs a data centre

No retard, you still dont get it do you? Power consumption is fixed so the cost of mining back the BTC you spent to buy miners is easily estimated. If you speculate on the price of BTC to calculate your mining ROI (again nominated in BTC not $), you're dumb as fuck. Speculate the price? do it right and TRADE BTC , dumb fuck

I can tell you're poor and angry. I'm sorry for that. I agree now is not the time to be paying retail, but there were plenty of times int he last 18 months where you did better by buying miners rather than buying BTC.

But many large operations do pay their electricity monthly from their BTC mining, like KNC, Bitfury and Bitmain, and I don't think they're "dumb as fuck".

[9000]

There's no market for the hobbyist miner anymore, only big operations in places with really cheap electricity and direct source for hardware purchase can make a profit out of mining.

[cramved]

If miners think the price of btc will go up they will buy hardware and use it to amass bitcoin in hopes of future profits when the price is higher.

[alh]

It seems to me that if you are the kind of person that calculates ROI only in terms of Bitcoin, it makes no sense to just buy and hold Bitcoin. No matter how much, or how little, you pay to purchase N Bitcoins, that's exactly what you'll have 1 year from now (i.e. N Bitcoins). In that case your return on investment is actually zero, since you neither gained or lost anything (as measured in Bitcoins). You strictly "broke even" as measured in Bitcoins.

[hedgy73]

Nothing has changed in the last few months regarding ROI.

If you believe in bitcoin you are better to buy and hold at the moment rather than invest in equipment unless you get it at a good price and have free or dirt cheap electricity.

[sidehack]

Actually, your return on investment will be 1, since BTC in = BTC out.

Also, if you really believe in bitcoin you'll buy and then spend. The exchange rate may grow if supply exceeds demand because people are hoarding coins, but the economy as a whole will not because overall utility decreases. A healthy economy will have plenty of purchases of goods and services in bitcoin, and as that process becomes more mainstream and more vendors accept bitcoin in exchange for their various wares, everyone benefits. This doesn't really happen if all we do is hoard.

[MCHouston]

Buy in bulk and it will reduce costs considerably.

Do not buy 1-3 SP31, order 20-40 then the pricing makes it so you can make profit.

[jonnybravo0311]

Actually, your return on investment will be 1, since BTC in = BTC out.

Also, if you really believe in bitcoin you'll buy and then spend. The exchange rate may grow if supply exceeds demand because people are hoarding coins, but the economy as a whole will not because overall utility decreases. A healthy economy will have plenty of purchases of goods and services in bitcoin, and as that process becomes more mainstream and more vendors accept bitcoin in exchange for their various wares, everyone benefits. This doesn't really happen if all we do is hoard.

I think that pretty much boils down to semantics.  Generally, when people speak of a return on investment they are speaking of the difference between what they put in and what they get out - just like you state.  However, when people put 10BTC into something and get the same 10BTC out at the end of the investment, the usual response is an ROI of 0, not 1 - i.e. they made 0% on their investment.

Anyway, if we're speaking strictly of BTC ROI, then you need only consider how many coins a miner will mine during its existence.  All other factors (electricity, hosting, whatever) are irrelevant to the equation.  Will that hardware produce more coins than it cost to purchase it?  If yes, you've made positive ROI.  

Of course, it's naive to speak strictly in terms of BTC simply because there are indeed costs associated with the production of the coins by the miner - most notable among them is the electricity required to run the miner.  Because, at least to my knowledge, there are no utility companies that currently accept payment in BTC, you must consider conversion of BTC to USD (or CAD, or GBP, or YEN, or whatever).  This is where it becomes murky because you're effectively gambling.  If you think that your hardware will produce more coins than it cost to purchase, inclusive of all associated fees to run the hardware, then you make the purchase.  You're betting that the network difficulty won't rise too much and the value of BTC to fiat will increase.  If you don't believe it will, but you do believe the value of the coin will increase, you buy and hold.

[armedmilitia]

Because, at least to my knowledge, there are no utility companies that currently accept payment in BTC, you must consider conversion of BTC to USD (or CAD, or GBP, or YEN, or whatever).

Correct! Mind you, lots of small-medium miners (like me!) use miner colocation services like SEG, allinvain's colo, or ASICSPACE.
These colocation services do accept BTC for hosting.