Topic: Has Bitcoin mining ever been so unprofitable? - page 2. (Read 1352 times)

I'd say "one OF the most inflated cycles", not "the most".
But the point is still valid.

All depends on when you track from.

from a year ago today  diff has jumped about 15-20% less then price.

So if you are based on march 17 2017 to march 18 2018  you are better off today.


but if you count from dec 2017 to now you are worse off.

I can tell you the months of nov and dec 2017  were god like and basing your profits on that set of numbers is really not realistic at all.

but I am sure when I say that you are better off today then anytime from Jan 1 2017 to April 1 2017 I fall on deaf ears.

Staying out of the red is key and I want to emphasize what you say here because when others drop out, difficulty drops right behind them which eventually buys you more time in the green.  To me, the name of the game here is EFFICIENCY, because as long as Revenues > Expenses, I keep mining.  When the market is saturated, and everyone has the most efficient miners, and no one makes a profit, there will be a demand for more efficient miners, and that will be the way to remain profitable.

There clearly is overcapacity. That is why these miners are not selling. Breakeven used to be less than half the time dude and profitability was far higher. U now have to mine above the warranty period to break even. I have a friend mining in china and there are other cost such as building, maintenance, staff and reliability of electricity. It isnt just low electricity. It is also harder for them to find low electricity rates these days.

Dude, bitcoin difficulty has increased alot more than bitcoin price and there are tons of unsold asics unlike the past where it is out of stock. U can now get miners in 2 weeks and not 3 months....wat u mean by they cant get enough capacity? If people wanted more capacity, they can easily buy and push the delivery date 1-2 months out. That happened in the past, not now.

If u are referring to gpu, yes, there is a shortage but not asics. Holding bitcoin makes a lot more than buying.

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(Moderator's note: This post was edited by frodocooper to trim the quote from QuintLeo.)

If your spending that much money to cool your equipment, your not going to be competitive on the global marketplace.   Yes, you could use geo-thermal cooling, but you still should only do that for your intake air, not your exhaust.  If your cooling cost are anything like miner power cost, even 0.5 to 1, that is REALLY going to hurt you.

El Salvador - TROPICAL climate.
Wouldn't drop the actual miner consumption much - but might drop the AIR CONDITIONING requirement a ton - which is what I think they were claiming.

The problem with that concept is that there is NO OVERCAPACITY in Bitcoin mining gear - total network hashrate STILL has not caught up with the price rise from the lows back when it was pushing $200 AND WAS PROFITABLE AT THE TIME if you had low-enough cost electric.

They're still selling every miner they can get out the door, as they can't get enough CHIPS due to lack of FOUNDRY CAPACITY available.

I suspect that's the primary reason eBang moved to Samsung (and it's why Nvidia put the 1050/1050ti on Samsung) - TSMC and GF can't keep up with demand while Samsung had SOME slack (which has largely gotten eaten now, though not entirely).

How in the world would mineral oil cut your power consumption by half?!?!?  Its a heat transfer mechanism, not a power usage mechanism - except perhaps if your were, excuse me, but stupid enough to air condition your waste heat and recirculate the air.  The vast majority of farms just expel that waste heat.  Even if you recirculated, your air conditioning power usage would not be equal to your miner input power... and you would still need large fans to blow air through the oil radiator.  One way or another, that heat (equal to the power used by the miner) gets rejected to the outside environment.

That aside - from a macro economics perspective, profitability is VERY easy to predict:  Competition will drive it down until only the most efficient survive.  My single person 100+ mining farm has 3 costs to consider:  1) the cost of the building and land that it is on  2)  The cost of the equipment, and 3)  The cost of operating the equipment - which is just electricity since I don't draw a salary.  The first 2 are sunk cost, shy any expansion, which would just be a scaling issue.  Other operations have other issues (like rental of buildings, staff cost, etc.) to add to their electrical cost.  It is my hope that my average electrical cost will balance against their lower electrical cost plus their operating cost, at least for awhile.  Eventually it will not, and it won't matter if I have 100 or 1000 miners - once that balance tips, I'm out of business.  Good news for my competitors.  Others will likely fail before me, which is good news for me.  However note that difficulty just continues to increase, so people are not failing in sufficient numbers yet.

I fully admit your chart is accurate .

I see a gross revenue chart that is being used in a misleading manner, since you left out the gross costs chart,
but if you want to say that gross revenue has dropped  per th okay yeah fine

      To not show that cost per th and power per th  has decreased enough to fully offset the revenue per th is a joke
  Once you do that net revenue shows up.

Frankly gross revenue means nothing to me
Now  the fact that net revenue which is what you are leaving out is clearly what matters to me.
Proper way is to show that  is gross revenue decreased  per th
and show that gross expenses decreased per Th.


 So I fully admit your chart is accurate
I don't bother most of the time but the accountant in me hate to see gross revenue  without gross expense and of course net profit.

That is why I said your chart is a joke. < and that is not what I should have said although I did say I did it as a shock value statement. To get attention
Below is what I could have said:

I stand corrected your perfectly accurate chart on gross revenue  was used in a manner that is a joke. Since you left out the charts showing cost and net revenue many people without a background in accounting  will be mislead and not realize net profits have not dropped.

That is a more  accurate  description on my part. But it lacks the shock value of my first statement.

Hopefully people read this post and realize what I am talking about.

Yep, they did at first. The smart ones are those that sold out early but most sold out only after huge losses or near bankruptcy. Everyone expected to do better than their competitor. In shipowners case, everything from the shipowners to shipyards suffered. Tons of layoffs and some went bankrupt. Survivors lost alot of money.

Another thing shippers did back then when oil price was above 100 bucks was to spend more on more fuel efficient vessels since fuel cost are around 40-60% of operating costs. Unfortunately, everyone had the same idea to outmaneuver their competitors lol. That increased the tonnage overcapacity further as they competed more. I believe this will also be the case if btc price were to suddenly jump. Everyone will wanna buy an ASIC, news sources will trumpet it and mining difficulty will skyrocket to these bad numbers again.

I dont know any bitcoin miner in salvador. Are u sure it is worth it to use mineral oil? Mining profitability is horrible now.

Right now, if bitcoin price rise up suddenly to 20k, a huge flood of mining equipment orders will flood the asic manufacturers. In 3 weeks to 2 months, a ton of asics arrive and mining goes back to this bad profitability or close to it. Only bitcoin holders win. Thats the problem with overcapacity.

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(Moderator's note: This post was edited by frodocooper to trim the quote from Sr.Urbanist.)

Lol, I remember when the oil shippers made tons of money and also when they went belly up and lost it all. Too much overcapacity is right. The comparison of shippers to miners is appropriate. And there's a lot more capacity coming online this year so profit will be declining in BTC mining as profit declined for the shippers! Anyone paying over 2k for a 13TH miner now will probably never break even!

You're welcome!

I'm not sure what the first part means, so here's what I actually did.  First, I downloaded .csv data from this chart:  https://blockchain.info/charts/miners-revenue?timespan=all.  It incorporates block rewards, transaction fees, and difficulty (actual data for the entire network).  On a log scale, you can see the downward steps resulting from block reward halving.  Blockchain.info logged the data in USD based on the exchange rate each day (I don't know what kind of averaging they used for that).

Next, I downloaded .csv data from this chart:  https://blockchain.info/charts/hash-rate?timespan=all.  As I mentioned previously, this is an estimate based on block solution times. 

I divided the first data set by the second one in order to normalize the revenues to a constant mining hashrate and thereby get a result representing individual miners rather than the entire network.  Also as mentioned previously, it's standardized to 1 TH/s.  Any individual miner would see results on any particular day based on his own specific hashrate that day.  And of course, individual results vary because of randomness inherent in the system

That's all I did.  I used the data directly from blockchain.info, and added no assumptions about pools, utility costs, depreciation, etc.  The overall downward trend indicates that over long time periods, the exchange rate has failed to keep pace with increasing difficulty.  There have been many intervals when the opposite occurred (bumps in the curve), but the long-term trend is undeniable.  That's why it takes more and more computing power to make the same money year after year.  And it's only possible to profit from increased computing power because hardware energy efficiency has improved so much.  All of which ties in with Sandal_Hat's comparison to the shipping industry.

Indeed.  I've been looking at mineral oil, but it has a lot of up front expenses. If done right, and at scale, it could provide an edge by consuming about half the electricity.  Though I see the next big area of profit being a big jump in hashpower.  If somebody would make a 50 TH/s miner, that'd surely be profitable for a while.  However, I'm not sure I see that playing out due to high up front costs.


But only other people's gear ... at least that's how I feel. 


Insane, but true. 


We have entered a new era. There were a lot of early promises over the past couple years, from banking the unbanked to overturning the entire power structure.  It's going to take a time and nobody knows how it will develop.  All we know is that before government decree for money, it was commodities like stones, shells, metals.

I, also, know that I've used crypto for many payments and the highest points of friction have been exchange between USD. 



Do you know anybody with experience running a BTM business?  I'm exploring starting one in El Salvador.

Well, my thoughts. The problem is OVERCAPACITY of mining equipment.


From mid Nov to mid Feb, the difficulty went from 1.4T to 2.8T. Price didnt double from Nov to Feb.

-Price of btc rose 10x from a year ago and mining difficulty increased to keep up. BTC price isnt going to increase 10x this year, so, there is EXCESS mining equipment for sale.
-ASICS production capacity has increased greatly and this is without new manufacturers like Dragonmint miners coming in later.
-This thing has 6 months warranty, so, there will be miners that dont break even, regardless of electricity input cost.
-GPUs make more than asics now and it used to be GPUs make half of wat ASICS make. This is because GPU has a shortage now, but ASICS have excess capacity.  
-Current btc mkt cap is 155 billion, a 10x rise makes it 1.55 trillion and a further 10x rise means 15.5 trillion. That isnt possible as gold price is only 7.8 trillion. Max btc mkt cap is around 7.8 trillion and that make take years to reach if it does occur.
-People are used to btc already. It isnt hyped up in news like last year. So, price increases are slower assuming they continue.


That being said, any bitcoin price increase will be accompanied by alot of new miners coming in and thus, bitcoin mining will never be as profitable as before. There is too much stock of mining equipment. The biggest issue is if new stronger miners come in to make old ones obsolete.

This reminds me of the baltic dry index and bulk carriers

http://static3.uk.businessinsider.com/image/54cb8c4edd0895065b8b45b7-1099-514/baltic%202.png

The baltic dry index (BDI) is around 1200 now. It was above 10k at one point. Huge losses for shipowners.

http://www.bbc.com/news/business-38653546


Miners will be taking this attitude more going forward lol. And there will be few or no winners. In shipping case, shipowners spent more money on more fuel efficient vessels when they were available, thinking they got an edge. The competitors did the same. Many shipowners went bankrupt though some survive but with losses or tiny profits. It is gonna be the same here if new more efficient miners come out quickly.

Many shipowners and shipyards have gone bankrupt, similar to how some miners and asic manufacturers have gone bankrupt. Shipowners had alot more overcapacity than miners I believe. And unfortunately, mining will now enter the same overcapacity issue stage. Low electricity cost is an edge but not a huge edge when the difference is like 5cents per kwh for big miners over home miners. Overcapacity just means intense competition and far less winners.


In my opinion, there is even less reason to be optimistic if u consider that LTC/BTC is going to halve in 2019/2020 and it halves further 4 years later. ETH risks going to POS in the future and stop mining. To me, this looks like the last leg of the race. Companies like bitmain are already going for AI as well.

Anyways, to each his own. If u are optimistic still, good for u. I dont see it. I have never seen anything good come out of overcapacity in any market.

Just my 2 cents.

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(Moderator's note: This post was edited by frodocooper to remove inline image tags.)

Good point on the March comparisons but it has gotten worse than before by quite alot though. Electricity cost isnt a big factor with these kinda difficulty increases.

I calculated 4 months breakeven for antminers around middle last year. It is at least 10+ months now and this is without difficulty increases. And there is major asic overcapacity going forward, thus, bitcoin mining will never have good profitability like before. Hmmm the biggest winners are still bitcoin holders though. From 1050 to 9168, it made 9x the money just from holding. Miners didnt make that much at all.

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(Moderator's note: This post was edited by frodocooper to trim the quote from philipma1957.)

Thanks for confirming that.  So there you go.  The 'joke' chart answers your question, since it gives the full history of 'profitability' (as used in the OP).  It has been somewhat worse in the past.  I think it will get still worse in the future. 

It did not include input costs, though that's the only place where one is able to get a competitive edge.

That makes it easier.

If you took the block rewards off blockchain.info, then it would include the value at time of production.  

 
Thanks for mining the data  

No, it's gross mining revenue in USD.  Basically (block reward)x(market price)/difficulty at a constant hashrate, using published historical data.  Electric bill is not in it.  Did your OP involve utility or other costs at all?  It looked to me like you were simply lamenting low gross revenue.  Please clarify if I misread it.