
Can I Make a Living Off Bitcoin Mining? Probably Not - nigekelly
http://decryption.wordpress.com/2013/04/13/can-i-make-a-living-off-bitcoin-mining-part-2/
======
thenomad
Important note: this is not current information. Bitcoin and Litecoin mining
have both changed a lot in the last few months, and this post is from April.

I spent some time looking into mining about three weeks ago - with the proviso
that my hardware would be free, since I run a 3D animation company that's in
the process of transitioning to GPU-based rendering - and came to the
conclusion that right now, it __still __ain 't worth it.

~~~
pcl
Was your conclusion that the power costs would outweigh the value of the mined
bitcoins, or that the value would be marginal enough that it's not worth the
bother?

~~~
thenomad
A combination of the two. Power costs plus wear-and-tear on mission-critical
components weren't outweighed by the tiny amounts of money we'd make.

To be fair, there's a bit of a conflict between the best rendering hardware -
Nvidia, because of CUDA - and the best mining hardware - ATI. Obviously, I'd
have been mining on NVidia. However, the numbers didn't even make much sense
using ATI.

Bitcoin mining has been screwed because of the dedicated hardware, which has
meant a flood of miners into Litecoin - which has proceeded to screw the
Litecoin ecosystem too.

I shall keep an eye on the situation - I suspect there will be pockets of
opportunity in the future. But right now, not so much.

------
nwh
The story ultimately ends when Anthony decides to switch to Litecoin mining,
and gets rather burnt by the whole experience.

[http://reckoner.com.au/2013/07/my-three-months-as-a-
litecoin...](http://reckoner.com.au/2013/07/my-three-months-as-a-litecoin-
farmer/)

~~~
wintersFright
The finale if anyone missed it [http://reckoner.com.au/2013/08/im-done-mining-
litecoin/](http://reckoner.com.au/2013/08/im-done-mining-litecoin/)

------
M4v3R
Mining was profitable to average users (i.e. not sitting on huge piles of
cash) in 2011 and early 2012 probably (source: I owned two 5970s and some
5870s at mined quite a few coins with them). Right now you have to invest much
money in ASICs (GPU mining isn't worth anything at this moment) which may also
be never delivered or delivered so late that you're out of game by then.

Most people agree that if you believe in Bitcoin, the best way to invest is
just to buy some coins and leave them in a safe place for a year or more. The
economy is deflationary so if whole Bitcoin doesn't fail in near future, the
price will eventually rise above the price at the moment you invested.

~~~
wintersFright
Is it deflationary because of the 21 million limit? That limit won't hit until
2140. Or is it deflationary because the projected velocity will go up faster
than the mining output?

~~~
skriticos2
Please don't mix supply with perceived value.

It's deflationary in the sense that with passing time each coin is worth more
than before. There is some correlation with money supply, but deflation
ultimately means: how much can you buy for a set amount of currency.

The inflation/deflation of the US dollar for instance is measured by
statistics like the CPI, which boils down to how much consumer goods you can
buy. If you can buy 10 peaces of bread this year for $10 but only 9 peaces of
bred next year, you have inflation. If you can buy 11, you have deflation. How
the dollar supply (number of existing dollars) changes has a correlation to
this (i.e. it influences this), but it's not defining it.

[http://en.wikipedia.org/wiki/Consumer_price_index](http://en.wikipedia.org/wiki/Consumer_price_index)

~~~
wintersFright
OK, so with passing time, coins are worth more than before because the usage
demand is increasing faster than the mining supply. I'm not sure if that is
your argument though?

~~~
skriticos2
Essentially, yes. More precisely demand is increasing faster than readily
available supply (people selling Bitcoins for goods or other currencies, also
called liquidity).

------
ianstallings
GPUs? It's ASICs or not at all these days. Start with an FPGA prototype that
can be used to create an ASIC, like an Altera. If you want to muck around with
this stuff for fun you can buy a Cyclone or Stratix for relatively low cost.

~~~
astrodust
It's an older article, but it serves to show just how fast these things swing.
Just as CPU mining became worthless when GPU mining took off, GPU mining is
totally useless now. Even with free power it's barely worth the trouble.

FPGA is still viable, the chips are fairly cheap and performance can be
improved with better designs, but ASIC will absolutely crush it.

The good news is that getting your FPGA design taped out as an ASIC is
actually not all that expensive, relatively speaking. Some will give you a few
hundred samples for around $15K. Not cheap per-chip, but avoids the $250-500K
setup fee you normally incur with most ASIC runs.

~~~
ianstallings
Yeah the main hurdle to getting an ASIC taped out these days is actually that
most production lines are backed up. I think the sample route might be a good
idea for what will hopefully be a small run.

~~~
astrodust
They sell surplus area on their wafers to those making small runs, and the
yields are not that great as these are the less desirable parts of the wafer.
Still, it's actually quite cheap all things considered, especially if you only
want a few hundred units.

------
vidarh
It starts looking like the best way to profit of coin mining is to start your
own bitcoin alternative and be the only guy mining for a while...

~~~
hcho
The main work will be to convince others that your version is worth anything.

------
justinhj
The environmental ethics of this activity are horrible. Buy hardware that
consumes lots of power and will soon be useless, and run it 24/7\. I guess
many of mans enterprises are just as unfriendly to the Earth but this one
makes it particularly vivid.

------
Simple1234
I have a noob bitcoin question. Even after all the bitcoins are mined there
will still be a need for "mining" for all the active transactions, correct?
How does that work?

~~~
cschneid
There are two ways to get bitcoins from mining.

The block reward, which halves every once in a while, eventually hitting 0
after all are mined

And then the transaction fees. Basically if I want to send a BTC to somebody,
I send the coin to them, and also sign over a small extra amount as a
transaction fee. A miner who solves a block (ie, a bundle of transactions) can
send those fees anywhere they like (their own account).

So in a long-run situation, mining effort will balance out transaction fees to
come to some sort of equilibrium.

------
mavhc
Obviously the amount a bitcoin is worth is exactly the amount of money the
average person spent to generate it, so you can't profit from it.

~~~
thenomad
... if you're the average person. Usually, in a situation like this, it isn't
too hard to out-execute the average person at some point.

~~~
caf
The easiest way in this case looks to be somewhere with cheaper electricity
than the average person.

~~~
thenomad
That's the conclusion most of the Bitcoin mining forums have come to, at least
last time I reviewed them.

------
coin
> The increase in difficulty isn’t necessarily a bad thing, as the more
> difficult it gets to mine the blocks, the more people are willing to pay
> cash for bitcoins

That's the problem with his logic. Bitcoin's exchange rate has remained pretty
much constant while the difficulty rate has increased 10x in the last 6
months.

------
raverbashing
Which is funny, even after all the math and concluding that, no, you can't
turn a big profit, people still do it.

I mean, ok, you benefit the bitcoin community with it, still...

Not to mention the maintenance costs (assembling the rigs, wiring, parts that
stop working, etc)

~~~
Tichy
I did it for fun two years ago and made a plus.

Since the future price of Bitcoin is unknown, at the end of the day you can
not really decide if mining is profitable with maths.

I stopped mining when I generated less money than I spent for electricity (the
gear had already been paid off). However, back then the exchange rate was
maybe 5$. If I had known that it would be 100$ two years later, perhaps I
could have mined longer.

~~~
caf
Even if you'd known that the exchange rate would eventually rise to $100, once
the cost of electricity exceeded the current market price of the bitcoins
produced the rational thing to do would have been to turn off the rig and use
the money to buy bitcoins on the open market instead of mining them.

~~~
Tichy
True, I just thought of that and came back here to add that :-)

What the Bitcoin experiment taught me is that I am not a very good investor...
The good part of mining was that I did it for fun, so there wasn't much to
lose. The mining rig is now my new gaming computer. So even if I hadn't made
any money at all, at least I would have gained a new gaming rig. In that sense
it was a good speculation, for me personally (no real downsides but potential
upsides).

I felt that by mining I also supported the idea of BitCoin, so it had
ideological value for me, too.

------
warrenmiller
tl;dr: not with GPU but possible with ASIC

~~~
mrmagooey
And possibly not with ASIC given the potential of multiple vendors worth of
ASIC's coming online at roughly the same time. I believe at least one has
shipped the bare hardware.

~~~
sp332
Several have shipped, including Butterfly Labs (although they're still
backordered). Here's a review [http://arstechnica.com/gadgets/2013/06/how-a-
total-n00b-mine...](http://arstechnica.com/gadgets/2013/06/how-a-
total-n00b-mined-700-in-bitcoins/) Looks like they'll be profitable for a
while yet.

------
nodata
What does doing it "full time" mean? Is he sitting there watching the
machines?

~~~
nwh
Not casually.

I've a little ASIC device sitting in the corner, but it's more a mild
curiosity than any actual income. I've made a lot more money reselling the
devices than I have mining with then.

~~~
gaius
In any gold rush, sell shovels.

~~~
junto
This is a great analogy!

~~~
Lewton
which is why it gets repeated everytime bitcoin articles get posted on HN ;)

------
mesozoic
Only if you're butterfly labs.

