Truth is i went gung-ho an set up a buncha rigs myself.. and i'm regretting it already. I did a spreadsheet with minor 20% difficulty increases every 2 weeks (which is very optimistic) at 20$ a bit coin, and its a loss. And if bitcoins get hot again, and prices shoot up, we'll just get more 30%+ difficulty increases.
The fact is there's enough kids with graphics cards who will run the miners part time at no electrictiy cost (college dorms) to overwhelm the current network of about 30,000 GPUs. I'm in chicago and paying 15 cents per kilowatt hour. What ends up killing the profability is electricity, depreciation of equipment, and difficulty increases.. not so much the value of bitcoins themselves. If you do believe in bitcoin appreciate then just buy the bitcoins themselves.
My partner has dropped out and if anyone is in the chicago area and wants to buy some 6870's please private message me. It's not a realistic business plan to compete against a miner who's 'happy to pay off part of his graphics card to play the next cool game'.
On the plus side i got all rigs running and fully operational, very sweet set up, i may take pics.
Topic: A Reality Check - page 2. (Read 5273 times)
1. See my Wal Mart reference. You think Wal-mart wouldn't operate at a loss for a while, to drive the Mom & Pop stores out of business (who CAN'T compete in the same way; they don't have the money or resources -- they're not "big enough")
2. And a big operator adding a new machine to increase his bottom line by 1% would certainly do so -- while an individual might not be "set up" to have that many machines yet (space, cooling, finances, etc.)
3. Speaking of which, HOW did you get to 5 GH/s? How many addresses are you mining from? And how long have you been mining? That's a lot of $ in hardware/power draw/cooling need/space taken/etc. As they say, that's a lot of iron.
2. And a big operator adding a new machine to increase his bottom line by 1% would certainly do so -- while an individual might not be "set up" to have that many machines yet (space, cooling, finances, etc.)
3. Speaking of which, HOW did you get to 5 GH/s? How many addresses are you mining from? And how long have you been mining? That's a lot of $ in hardware/power draw/cooling need/space taken/etc. As they say, that's a lot of iron.
1. I don't think Wal-Mart is analogous because people can simply shut off their rigs if they're losing money, they don't have to sell them. Sabotaging yourself just to put someone else out of business couldn't possibly be a viable plan with BTC unless you could somehow end up with over 50% of the hashing power and control the network. Other than that being a big player doesn't really have any advantage like economies of scale, so it wouldn't be worth losing money to get there.
2. Your bottom line is net income. If you do things that are negative expectation it hurts your bottom line. Just because someone could afford to burn money doesn't mean they would.
3. I've never heard anyone say "that's a lot of iron" but right now I think I have 17 5830s online. It would be a lot more, but GD70s are pieces of shit and I've had 3 arrive DOA so I have a lot of idle capacity.
Here is the REALITY of the situation.
I have 1600 in hardware purchases for the past month. Ive made over 3k in btc. It works.
I have 1600 in hardware purchases for the past month. Ive made over 3k in btc. It works.
No one can really tell how rational the market will be when difficulty is approaching the point where GPU mining is breakeven. It's possibly that big miners will keep adding capacity, but it doesn't make any more sense for someone with 100 paid off computers mining to add 1 more than it doesn't for someone with zero to buy 1. Either way that specific computer earns the same rate of payback. If people are rational they will do a cash flow analysis on every piece of equipment before purchasing it, factoring in all direct and indirect costs, and never take a negative cash flow investment.
However you could also get in the situation where people continuing purchasing even though they are losing money, or have the difficulty propped up by a bunch of 14 year olds who find out late about bitcoin and run their computers 24/7 at a loss because their parents paid for their electricity.
Conversely you could get in a situation where people are too risk adverse after the first shock wave to add on any more hardware (the stuff that came online in the past week or so would have been ordered during the run up to $34/BTC) and actually have GPU mining profitable for a long time to come.
However you could also get in the situation where people continuing purchasing even though they are losing money, or have the difficulty propped up by a bunch of 14 year olds who find out late about bitcoin and run their computers 24/7 at a loss because their parents paid for their electricity.
Conversely you could get in a situation where people are too risk adverse after the first shock wave to add on any more hardware (the stuff that came online in the past week or so would have been ordered during the run up to $34/BTC) and actually have GPU mining profitable for a long time to come.
See my Wal Mart reference. You think Wal-mart wouldn't operate at a loss for a while, to drive the Mom & Pop stores out of business (who CAN'T compete in the same way; they don't have the money or resources -- they're not "big enough")
And a big operator adding a new machine to increase his bottom line by 1% would certainly do so -- while an individual might not be "set up" to have that many machines yet (space, cooling, finances, etc.)
Speaking of which, HOW did you get to 5 GH/s? How many addresses are you mining from? And how long have you been mining? That's a lot of $ in hardware/power draw/cooling need/space taken/etc. As they say, that's a lot of iron.
Bitcoins is a hobby, i bought 1 6970 that i use to mine and play games. I am very satisfied at the .5 bitcoins i make per day. i can buy a video game once a week if i feel like it, thats good enough for me.
No one can really tell how rational the market will be when difficulty is approaching the point where GPU mining is breakeven. It's possibly that big miners will keep adding capacity, but it doesn't make any more sense for someone with 100 paid off computers mining to add 1 more than it doesn't for someone with zero to buy 1. Either way that specific computer earns the same rate of payback. If people are rational they will do a cash flow analysis on every piece of equipment before purchasing it, factoring in all direct and indirect costs, and never take a negative cash flow investment.
However you could also get in the situation where people continuing purchasing even though they are losing money, or have the difficulty propped up by a bunch of 14 year olds who find out late about bitcoin and run their computers 24/7 at a loss because their parents paid for their electricity.
Conversely you could get in a situation where people are too risk adverse after the first shock wave to add on any more hardware (the stuff that came online in the past week or so would have been ordered during the run up to $34/BTC) and actually have GPU mining profitable for a long time to come.
However you could also get in the situation where people continuing purchasing even though they are losing money, or have the difficulty propped up by a bunch of 14 year olds who find out late about bitcoin and run their computers 24/7 at a loss because their parents paid for their electricity.
Conversely you could get in a situation where people are too risk adverse after the first shock wave to add on any more hardware (the stuff that came online in the past week or so would have been ordered during the run up to $34/BTC) and actually have GPU mining profitable for a long time to come.
Yes, you're right about even these small miners stopped, it won't prevent the rise of the difficulty because they weren't even the reason it went up in the first place.
But honestly, all we can do right now is *hope* that this difficulty stays on 800k+ for at least.... a month or two. At least on my part, I can break-even on the hardware cost that I just spent.
But honestly, all we can do right now is *hope* that this difficulty stays on 800k+ for at least.... a month or two. At least on my part, I can break-even on the hardware cost that I just spent.
Except a lot of us (myself included) don't even do this for the money, although it's a nice secondary benefit. Some of us are gadget freaks and just enjoy building systems and doing something other than playing WoW 24/7.
5830 -- the favorite card for price/performance -- makes 0.26 BTC per day according to Deepbit's estimator (pay-per-share). Proportional would be about 7% higher.
This isn't an unrealistic estimate, as Deepbit is currently almost 1/2 the Bitcoin network hashing power, so many people are obviously using them.
The current price of BTC as I write this is $13.58 (not $20, and certainly not $30!)
Of course, this assumes you can *get* a 5830. They are out of stock in most places, and when they come back in stock it's like Black Friday trying to get your hands on one. They last about 10 minutes once word gets out. And if you can't get a 5830, you won't get the same price/performance.
.26 BTC/day is exactly $3.53 per day -- without subtracting electricity, which is $0.42 for the 160W card alone (assuming an electric rate of $0.11/KwH). The amount your PC uses will vary, but it's going to be at least another 60W (or $0.16/day). So that leaves $2.95 after electricity costs are subtracted.
Now overclocking might result in SLIGHTLY higher profit per day (though you risk shortening the life of the card & fan), and some youngsters have free electricity -- but that gives you a rough idea of "how much can you make today". Not exactly a cash bonanza.
How long would it take to pay back the card itself, much less a card plus mobo, CPU, ram, etc.?
I think the manic phase of "I *gotta* expand unless I'm stupid" is over. At least for now.
Sure, some people would do anything for a few (as in, not even 3) bucks. But it's not like decent amounts of money are materializing out of thin air with no effort. You *do* need to tie up a machine for 24 hours to get that $2.95 ($3.53 for those who still live with Mom), pay for A/C to counter the heating effects, endure the noise/heat the machine produces, give up gaming/outdoors/family, mess around with Linux/Windows/overclocking/dummy plug headaches, etc.
And then you have to worry about downtime/DDoS/outages -- you have to make sure your miners are always mining.
And then there's taking that $2.95 a day and turning it into cash in your wallet. Once you decide to sell, you need to get a good price. When you do find a price you're willing to live with, Mt. Gox charges 0.65% for the trade into dollars. Then you have to get it into your hands somehow. Either pay someone a % to a middleman to get gift cards, precious metals, etc. or you can just transfer it to Dwolla (indeed that costs just 0.25 per transfer -- at least something is easy!)
And, last but not least, there's the periodic Difficulty Level resets every 8 days or so. Each time it happens, you lose a hefty chunk of what you were making before. So you can't multiply $2.95 by 30 to see what you'd make in a month. "$2.95 a day? That's $88.50 a month. Almost a free video card!" Yes, if difficulty held steady, which it HASN'T and WON'T in the future. Don't talk about how "difficulty dropped once" because that was a long, long time ago well before most people found out about Bitcoin.
Yes, you ONCE could buy a video card and a cheap rig and pay it off reasonably soon. But that was then. I think it's too late to go out and buy new hardware today -- unless you're already sitting on some partially paid-off rigs (as in, 2 GH/s worth at least). Even then it's risky. The Big Bad Drop to 25 BTC per block is closer than many people think. When that happens, anyone who hasn't paid off their hardware NEVER WILL. So be careful.
Mark my words: difficulty will continue to increase, even if all the small-time miners drop out. As long as you make *anything* over the cost of electricity, the big boys will find it worth their while to keep adding capacity -- their existing hardware is already paid for. When you have 100 paid-off video cards, you can buy a few new cards and pay them off within hours using your existing hardware. It's the "snowball rolling down a hill" effect.
Just like Wal-mart can drop prices to the basement and drive all the small Mom & Pop shops out of business -- then take all the customers, and the profits that go along with it. Call it fierce competition, the law of the jungle, unbridled capitalism, or whatever you want.
Just a bit of a reality check.
Matthew
This isn't an unrealistic estimate, as Deepbit is currently almost 1/2 the Bitcoin network hashing power, so many people are obviously using them.
The current price of BTC as I write this is $13.58 (not $20, and certainly not $30!)
Of course, this assumes you can *get* a 5830. They are out of stock in most places, and when they come back in stock it's like Black Friday trying to get your hands on one. They last about 10 minutes once word gets out. And if you can't get a 5830, you won't get the same price/performance.
.26 BTC/day is exactly $3.53 per day -- without subtracting electricity, which is $0.42 for the 160W card alone (assuming an electric rate of $0.11/KwH). The amount your PC uses will vary, but it's going to be at least another 60W (or $0.16/day). So that leaves $2.95 after electricity costs are subtracted.
Now overclocking might result in SLIGHTLY higher profit per day (though you risk shortening the life of the card & fan), and some youngsters have free electricity -- but that gives you a rough idea of "how much can you make today". Not exactly a cash bonanza.
How long would it take to pay back the card itself, much less a card plus mobo, CPU, ram, etc.?
I think the manic phase of "I *gotta* expand unless I'm stupid" is over. At least for now.
Sure, some people would do anything for a few (as in, not even 3) bucks. But it's not like decent amounts of money are materializing out of thin air with no effort. You *do* need to tie up a machine for 24 hours to get that $2.95 ($3.53 for those who still live with Mom), pay for A/C to counter the heating effects, endure the noise/heat the machine produces, give up gaming/outdoors/family, mess around with Linux/Windows/overclocking/dummy plug headaches, etc.
And then you have to worry about downtime/DDoS/outages -- you have to make sure your miners are always mining.
And then there's taking that $2.95 a day and turning it into cash in your wallet. Once you decide to sell, you need to get a good price. When you do find a price you're willing to live with, Mt. Gox charges 0.65% for the trade into dollars. Then you have to get it into your hands somehow. Either pay someone a % to a middleman to get gift cards, precious metals, etc. or you can just transfer it to Dwolla (indeed that costs just 0.25 per transfer -- at least something is easy!)
And, last but not least, there's the periodic Difficulty Level resets every 8 days or so. Each time it happens, you lose a hefty chunk of what you were making before. So you can't multiply $2.95 by 30 to see what you'd make in a month. "$2.95 a day? That's $88.50 a month. Almost a free video card!" Yes, if difficulty held steady, which it HASN'T and WON'T in the future. Don't talk about how "difficulty dropped once" because that was a long, long time ago well before most people found out about Bitcoin.
Yes, you ONCE could buy a video card and a cheap rig and pay it off reasonably soon. But that was then. I think it's too late to go out and buy new hardware today -- unless you're already sitting on some partially paid-off rigs (as in, 2 GH/s worth at least). Even then it's risky. The Big Bad Drop to 25 BTC per block is closer than many people think. When that happens, anyone who hasn't paid off their hardware NEVER WILL. So be careful.
Mark my words: difficulty will continue to increase, even if all the small-time miners drop out. As long as you make *anything* over the cost of electricity, the big boys will find it worth their while to keep adding capacity -- their existing hardware is already paid for. When you have 100 paid-off video cards, you can buy a few new cards and pay them off within hours using your existing hardware. It's the "snowball rolling down a hill" effect.
Just like Wal-mart can drop prices to the basement and drive all the small Mom & Pop shops out of business -- then take all the customers, and the profits that go along with it. Call it fierce competition, the law of the jungle, unbridled capitalism, or whatever you want.
Just a bit of a reality check.
Matthew
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