Topic: If you're thinking buying mining hardware, read this first - page 11. (Read 92726 times)

You're a few pages too late for the conspiracy theory talk. Come back when you have some math or logic to debate with.

Unless the value of Bitcoins rises quite a bit, buying a dedicated mining rig is probably not going to be profitable at this time, but buying a GPU for an existing machine could be.

A 5870 to drop into an existing machine will probably show a small profit in a month or two, particularly as the price of 5870s has dropped a bit over the last few months and they also seem to have some resale value on eBay.

At current difficulty, a 5870 will mine a little more than 3 Bitcoins per day. The next difficulty rise, probably about 40% will be in under a week, then a 5870 will be mining a little more than 2 Bitcoins per day. Power costs money and 5870s use quite a bit.

So why do I mention all this? I happen to have a machine with a spare PCIe/16 slot and I can't decide whether to order a 5870 to go in it. The 'what-if' spreadsheet suggests that there might be some profit there, but the amount of profit is very sensitive to the rate of rise of difficulty, and this is very hard to predict.

I should have bought the extra 5870 back in January when I bought 7 of them! Those 5870s have paid for themselves and made a moderate profit.

well according to my calculations, I would actually have made more money investing in btc rather than mining hardware I have now back when btc was at .7 or so. And I have to admit it's getting hotter each day and I don't think I want to be running my second machine much longer and thinking about just putting the money and buying and forgetting.

With things that still need to develop like stronger exchange system and others, it would make sense to a lot of people from outside not having to mess with hardware monitoring and getting similar/better returns than mining without headaches. Especially for people who are considering just investing in btc on the side and are not so well versed in computer hardware.

Difficulty is also rising like crazy nowadays after the overclock.net fiasco. Graphs showing network str increasing at almost 4%+ a day. My projection shows it being higher than 150000+ by next change easily

Personally as a miner who already invested in hardware, I know that the mining days are limited and it won't last much longer here. If diff keeps rising at this type of rate, it really won't last more than a few month at best unless the btc prices rise to that lvl. Currently, I personally think the btc is already way overpriced as people are trying to put money in a narrow exchange system inflating the price. This bubble will also burst one day weather people would like it to or not. Realistic price I think would be more in line of $5 or so at the end of the year, but who knows. If dust settles to $5 or so like my conservative guess, recovering cost will be even harder or not possible.

I think the other side of the fence of not mining is getting greener each day and IS a valid option for new people. Or I should say mining is not the ONLY option to invest in btc and make money. Infact mining may be one of the harder and riskier ways of the many available. If I had the money to put in btc I rather do that than deal with everything that comes with mining today with the risk as is. It's not set it and forget it like one may think running miners and keeping it up. We certainly should not discourage people from mining or otherwise, but mining isn't the only option or the best currently if you asked me.

Not buying a mining rig is a smart economic choice. It just isn't profitable at current prices, though if you think that prices will rise, then by all means go for it.

very interesting that JJG is so concerned about other people buying mining rigs ...

For miners to start leaving the pool, miners will have to reach the point where electricity costs outweigh the value of bitcoin mining. If it comes to this and you just recently bought hardware, you're screwed because you'll not only be paying electricity, but paying off the hardware as well. And difficulty probably won't go down in this case, but the growth will slow.

If you're falling back on the 'bitcoins may be worth more' bit then like I've said before, a better bet would be to buy bitcoins.

Good call on not buying a dedicated mining rig.

I wouldn't worry about asics they are highly specialised and difficult to build without resources and money, besides it would end up being pretty big piece of equipment compared to your PC box as an asic might be good on power effeciency you will most likely need more of them to equal your gpus.

I don't know, I believe mining will remain profitable for a while longer. If difficulty increases too much, it means several miners will no longer find it profitable and will leave, even if just temporally, thus decreasing difficulty until a balance point is reached. Not to mention that BTC can increase its value, too. I don't really know what to say about ASIC miners, though.

Though, I'm not a big miner. In fact, I just mine with a crappy 9600 GT when I'm not using my computer a lot, and while I pay peanuts for power, I don't think I'd buy a dedicated mining rig.

Not ASCII. ASIC. Application-specific integrated circuits. Basically, chips specifically designed to push more mhash on the lowest wattage.

What's ASCII mining? Sorry, maybe a noob question . . . .

This. Honestly, this is what worries me. ASIC mining? GPU mining could become an outmoded thing of the past...and then what. Get 60-70% of your hardware investment back maybe.

Maybe one should save one's money until this new technology is readily available, and then pounce on it as soon as it is.

And 2k-3k buying Bitcoins on the exchange is likely to do even better, except in rare scenarios.  I'm going to laugh my ass off when people who bought high end video cards get passed up by the next big innovation, much like anyone who was CPU mining a few months ago.

But if you have a machine sitting idle and just need to pop in a video card and it's not terribly expensive and you might use it anyway, go for it!   You can likely pay for the card, and if not, it's still useful to you.  Or you could resell it.  But it's a terrible business model (unless you get other people to pay for your rigs through investing).  Renting a mining rig was an absolute terrible investment in my calculations based on the market rates.  But an absolute goldmine for those who could find the bigger suckers.

JJG appears to be purposely discouraging people imo.

Think of it this way, 1 year of bitcoin mining on 2k to 3k USD in hardware (almost anywhere in America, power-wise) is better than letting 10k USD sit in your average savings account accumulating interest.

It's a hobby. And a money hole. And in the unlikely event that each Bitcoin is worth as much as a share of Berkshire Hathaway in 15 years, it's as you say...it's still cheaper to buy them. Take that $700 a year ago and buy a whole PILE of bitcoins...but don't buy hardware solely to mine with.

Now, if you'll excuse me, I found a good deal on some 5870's that I'm not letting go to someone else.

Full Disclosure: I purchased a 5830 3 weeks ago with the primary intent of mining with it. It was $109, and it could already pay for itself almost twice now if it wanted to at current market rates. Fortunately for me, I was also replacing an nVidia 9300GS, so it wasn't like I was actually buying some frivolous thing. The rig I'm looking at building, though, is probably very frivolous.

Full disclosure: I am mining with a 5870 that I already owned. The financial models and projections I base my claims on sprang from my analysis of whether or not I should add another card to my machine for mining. It doesn't take much math to realize that by the time the card showed up, the mining boat would have sailed. I would have broken even after several months, but the profits weren't nearly the rosy predictions many forum members here have.

Then, I came across threads here where people were spending thousands of dollars to build mining rigs and expecting to make their money back right away, with no apparent understanding of the huge difficulty increases coming down the pipe. I started this thread to balance the gold-rush sentiment out and make people think a little bit harder before plowing their money into mining rigs.

And the noble, passionate miner you speak of is probably not as common as you might think. Just take a look at the Overclock.net bitcoin thread where people were desperately searching for Radeons so they could make bank without any work.

Welcome.

Bitcoin and Esperanto both get their usefulness from the fact that other people use them. The reason I think Bitcoin will take off and Esperanto didn't is that you can get into Bitcoin for a little bit of money and maybe waiting a few days at worst. Learning a language takes a lot more effort and the vast majority can't be bothered. So it doesn't get critical mass and is just for idealists. Bitcoin started with idealists for sure, but it's so easy for others to give it a shot. And they can do it to whatever degree they want and still get some value. Learning 1% of Esperanto doesn't do much for you, but a tiny amount of Bitcoins is great.

That's why there's were two differing points in my OP.

Say...are YOU mining? Have you purchased any hardware specifically to mine with?

Guh. It doesn't matter if you're right. Of course you're right...some basic math would prove that. It matters if people agree with your point of view. It also matters as to what I want to spend my hashes on. I happen to really enjoy mining as a hobby, and even if Bitcoin went belly-up tomorrow, I would point my mining hardware at SETI@Home or something like that...so it wouldn't be a complete waste. Plus, retired Bitcoin miners can play ANY GAME THEY WANT.

Let's also consider it a good thing to have more people mining, if only because it protects us that much more from a >50% attack. There's a botnet out there, ya know? And maybe he hasn't seen your thread... (of course, it wouldn't matter if he did, since he's not paying for things like power and mining hardware, for starters)

Regardless of your motives (which are unclear at best), I think that hardcore mining (the kind I am NOT doing...yet) attracts a certain kind of person with a passion for this sort of work. You'd be hard-pressed to show that person any convincing math to make them stop...and the world needs more people like that.

There is a definite place for math and numbers and a place for people do just do whatever the hell it is they want to do. I believe that this is a case of the latter...PROVIDED they have understood the former.

Sorry if I appeared a bit abrasive. You're definitely on the right track with your efforts and your mentality.

You might be want read over tomcollins' projections, though. He ran several different scenarios depending on the exchange rate going up or down and at different rates. In other words, the exchange rate doesn't matter as much as you might think.

Just to be clear, I'm not advancing any of the arguments that mining is the most profitable investment, a more profitable investment than directly buying bitcoins, or that mining is a better investment because mining assets offset the risk of potential bitcoin failure.  You said that "no one has provided any sort of projections or calculations that show I'm wrong", and in my response I was essentially agreeing with you and explaining that the calculations needed to show you're wrong depend on something nobody can reliably calculate (i.e. future exchange rates).  In other words, given what we can know, you're right.  Also, I was saying that at this point, having realized that mining is not the best bet in terms of profitability, I mine because I think mining is worthwhile for reasons other than merely generating bitcoins (e.g. network security, and all that).  Even in the case that there's no chance of me generating a profit, I will still mine to some extent because I think it advances a worthwhile project -- a decentralized currency.