Topic: What is the average loss of profit in mining? (Read 1486 times)

You could keep bitching around all year without any conclusion, only mine bitcoin if you have more than $10M and even then you'll need to add $1M every month to stay in green zone, it's a +$15B industry for pete's sake what did you expect?

From every thread about mining one thing I've learned is that buying and holding bitcoins is more profitable for small investments. 

I want to know how long time the investment will return to me as I will do for bitcoin mining. Can you show that the difference fell below 5% in 300 days?

What you need to understand is that there is such a notion as "yield per TH/s". This one is for sure will decrease over time in btc, but in fiat it tends to stay the same (at least for half of the year as I've been mining and not including such events as halvings). The math you did has a pretty high chance of becoming real except for the last part of it, where your btc price is fixed and therefore it is less likely to turn out as you wrote (once again for the FIAT part).

If you believe in bitcoin and that its price will keep rising, than you are probably looking at decrease in fiat profit from $190 to $150 or so over this period of time. If you don't believe in it, then the math you did has a chance (maybe a little, but still) that btc price won't go higher than 1k during this year and your overall profit will be negative. Once you've chosen your side you can decide whether or not mining is for you

For a better picture, one should keep two comparative values - the bitcoin cost and the fiat cost (converting one into the other for comparative purposes).

If you were a long-term miner, then you're also likely to be holding the coins for a long period of time, accumulating in the expectation that price will go up. In this case, you aren't really going to keep track of fiat costs, you'll be aiming for a certain number of coins by a certain time frame.

If you were mining only to sell off frequently, then yes, you'd make only a little profit which quickly plateaus with less subsidies and rewards coming in from mining. You're also more exposed to the ups and downs of btc price.

The next jump will be over 15%

The last jump and was not 2 weeks it was 13 days.

Run three of these in a row and the drop in 39 days is huge.

Or do 3 negative 5 percent   And it last around 44 days.

No one even the biggest farm with the most hash can be fully sure if either case will happen.


But Phil let's say bitmain knows it will open a 300 ph farm next jump. They would know hash rate will jump.


No they will know the chances are it will jump barring fires earth quake flood.

And that is someone with a ton of inside info.

Trying to predict the future hash rate out a few years is wasting time.

Try to find free or"cheap power instead.

The average can only be taken after the fact because absolutely nothing is set in stone. What if difficulty is up 20%? What if it somehow went down 2%? That's your biggest variable that if you have right margins you'd better think twice about when you're going to be mining. You can look at the mast and see every two weeks what the average was in the past, but that won't exactly tell you what the future will hold. It will show you a fairly accurate guess though assuming nothing major happens that causes a huge spike for months or a huge decrease for months.

Too simple on your part or my explanation sucks.

Let's try again
You can not analyze with a simple factor of diff and set it to a flat number say 10% per month to calculate your decrease of earnings.
It is not accurate and fails to,encompass what diff can do.

I can show,you 300 day time slots where diff moved under 5 % for the entire 300days

it does not work like that, you don't reduce your hashrate to have an indication of the earning, you reduce the income based on the diff

a 15% increase should be equal to a 12-13% decrease in profit

I understand you mean that the BTC value will increase over time. But this may be the exact opposite. So the BTC value may decrease over time. To me, mining is a bit of a risky investment. Profit and loss analysis is not fully realized.

But the increasing difficulty level determines the amount of BTC my machine will win. A machine with 11 TH/s power is operating at 100% efficiency for the first month. When the difficulty level increases by 15%, the machine works with 85% efficiency. The machine determines the amount of BTC that the work efficiency will take. Naturally, the amount of BTC determines how much I will earn.

You can not do any long term calculations with any degree of accuracy. By the methods above.

 Look at month 12  where you say 0.035546639 BTC = 31.75 USD.   Suppose  coins are worth 1000  the number would be  35.54 usd

Coins where as high as 1150 usd in DEC 2013  as low as 180 usd in JAN 2013  as high as 1100 USD  in JAN 2017

Taking you example above  you neglect to mention the machine has value after a years use.

I have a batch 1 s9  I can sell it for 1200  it has mined from June 2016  to Jan 2017.  

Coins  were only 676   when I purchased it
Coins are now    880.

Many people do not understand how to combine btc/usd  and do calculations.

I paid 3.172 btc on jun 12th coins = 676  so 2144 usd value day I purchased it.  Today I can sell it for 1200 so 944  is my net price.  

My deal is free power but split the coins

so 944 is still my price.

  that 1 machine  earned about .86 coins before the ½ ing or  .43 for me  it earned  about 2.31 after the ½ ing that is 1.15

so it earned 1.58 coins x 880 = 1390 - 944 =  446 usd profit.



now coin wise  1.58 + 1.36(current value in btc of machine)   = 2.94 coins    since I paid  3.172  the loss in coins =  -0.232 coins

no country in the world  calculates via coin profits..  they all  convert to their currency to btc values  to calculate profit.


But phil  if you held coins  for that time  you would have earned more usd.  yes  3.172 coins was 2144 today it is  2791

  so holding would have been a 647 profit  vs my 446 profit .

My point is your models do not reflect what I just wrote  they are simply not accurate to predict earnings if you leave out price/btc factor and diff factor flux

no not lost, if you face an increase of 10% in the difficulty, it's not equal to a loss of 10%

for example a increase of 50% is equal to a reduction of 33%, an increase of 10% should be equal to a decrease in profit around 8%-10%

I did my estimates with an average difficulty increase of 5% over the next 48 months - rightly or wrongly lets see how this plays out.

When I get the average of the change of difficulties between Apr 05 2015 and Jan 10 2017, it is 4.24%. Does this percentage change make any sense?
For example, an estimate of +12.94% is set for the next level of difficulty.

For example, when I calculate for 11 TH/s the first month is 0.24989525 BTC the second month is 0.22547303 BTC BTC.

(0.22547303 / 0.24989525) * 100 = 90%

As you say, about 10% is lost. On average, let's assume the lost value is 15%.

Month 1: 0.24989525 * 0.85 = 0.212410963 BTC ~ 189,8 USD
Month 2: 0.212410963 * 0.85 = 0.180549318 BTC ~ 161,4 USD
Month 3: 0.180549318 * 0.85 = 0.15346692 BTC ~ 137.2 USD
Month 4: 0.15346692 * 0.85 = 0.130446882 BTC ~ 116,7 USD
Month 5: 0.130446882 * 0.85 = 0.11087985 BTC ~ 99,23 USD
Month 6: 0.11087985 * 0.85 = 0.094247872 BTC ~ 84.34 USD
Month 7: 0.094247872 * 0.85 = 0.080110691 BTC ~ 71,54 USD
Month 8: 0.080110691 * 0.85 = 0.068094088 BTC ~ 60,81 USD
Month 9: 0.068094088 * 0.85 = 0.057879974 BTC ~ 51,70 USD
Month 10: 0.057879974 * 0.85 = 0.049197978 BTC ~ 43,93 USD
Month 11: 0.049197978 * 0.85 = 0.041818281 BTC ~ 37,35 USD
Month 12: 0.041818281 * 0.85 = 0.035545539 BTC ~ 31,75 USD

189,8 + 161,4 + 137,2 + 116,7 + 99,23 + 84,34 + 71,54 + 60,81 + 51,70 + 43,93 + 37,35 + 31,75 = 1085, 75 USD

https://shop.bitmain.com/productDetail.htm?pid=00020161116015622659M8nhWeAc06B1
The price of the antminer device is 1232 USD Also electric, cooling etc. There will be extra costs such as.
If the device works for 1 year without any malfunction, it will save 1085.75 USD.
Mining does not look very profitable. Is there a mistake in my calculations?

Difficulty always changes and it's not linear; sometimes it doesn't increase as quickly as you might think it increases, and it drops too. Price is a big factor in mining indeed with big changes, if price were to spike I guarantee some old S5 and SP20 miners will start jacking the difficulty up again.

In my point of view, if the diff is rising highly per month Maybe you can lose your profit in next 10 months depending on the present situation however if the price hit 1,500$ in this year, you will never worry about this but if the price is down under 700$ you will think your miner again.

the average increase per month for the diff was estimated around 10%, and up to 20% on some months

but it also vary in comparison to the value, it may increase or decrease farthur

Some research will provide more useful information.

Every 2016 blocks, the Bitcoin network determines how long it took to solve those 2016 blocks. If it took LESS than 14 days, it INCREASES difficulty. if it took LONGER than 14 days, difficulty is decreased. The Network tries to keep the network solve rate right at 2016 blocks in 14 days. Difficulty increases happen way more often than decreases. To get a little history:

https://bitcoinwisdom.com/bitcoin/difficulty

Scroll down a bit, and there is a list of the last sereval adjustments and when they happened, and by how much. I personally find the calculator at the top of the above page to be very useful.

I am doing a calculation through the site https://alloscomp.com/bitcoin/calculator. As an example I enter 11.0 TH / s and calculate.
Earnings in the first month seem to be 0.24989525 BTC. As the level of difficulty increases, the gain for the next month is estimated at 0.22547303 BTC. The difference between two months is 0.02442222 BTC. As the level of difficulty increases, I earn an average of 0.02442222 BTC less per month.
Does this decrease periodically happen this way? How can I calculate how much I earn per month?