

Ask HN: Bitcoin mining: anyone doing it? - rms

From my brief research, the economics of Bitcoin mining with a Radeon HD 5970 seem a little too good to be true, especially if I buy a supercomputer for a friend in a college dorm with free electricity, or something.<p>Can anyone tell me how much bitcoin they are really generating per month with various setups, how much you are paying in electricity, as well as broad future on the future value of bitcoin?
======
sgornick
A typical system with a 5970 consumes just under 500 Watts lets say, including
the GPU (some examples here:
<http://www.bitcoin.org/smf/index.php?topic=3892.0> ).

That's 12kWh at let's say a $0.12/kWh residential electric rate (
[http://www.bitcoinminer.com/post/2361900289/where-to-mine-
el...](http://www.bitcoinminer.com/post/2361900289/where-to-mine-electricity-
rates) ) that's about $1.44 per day for your electricity.

A 5970 hashes at just under 600 Mhash/s, per
<http://en.bitcoin.it/wiki/Mining_hardware_comparison> so punch that 600000
number in as khps here: <http://www.alloscomp.com/bitcoin/calculator.php>

and it shows that at the current difficulty level, you should generate 50 BTC
about every 3 days and 29 minutes.

So in a 24 hour period you get about 16.55 BTC per day. Converting that 16.55
BTC to USD: <http://bitcoin.1t2l.net/widget/?from=BTC> shows you earn about
$15.28 per day with a rig holding a single 5970.

Then to send those BTCs to your PayPal, you use <http://coincard.ndrix.com>
(starting again monday morning) and you lose 3% doing that conversion so you
end up with $14.82 in revenue per day. Subtract the $1.44 in electricity that
nets you $13.38 a day. If that were to hold, you'ld have the card paid off in
well under two months.

That said, ... difficulty is rising (fast! ...
<http://bitcoin.sipa.be/speed.png> ). If the BTC/USD exchange rises more (
it's had quite a run
[http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g2...](http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25)
), then that payout might continue at these levels. Otherwise, the payout from
mining will decrease.

~~~
rms
Thanks!

I was reading that the switch to generating 25 BTC at a time instead of 50
will happen very soon.

Even then, if you were only earning $7/day with a single 5970 rig, the payback
period is not that long. It seems obviously worth doing, unless you think
there will be a run on Bitcoin within the next 6 months or that a sudden move
to ASIC will make GPU mining obsolete. I think I'm going to go for it. I might
even take the risky investment and hold my bitcoins.

~~~
sgornick
The switch to 25 BTC will happen at block 210,000, which will happen in
January 2012.
[https://en.bitcoin.it/wiki/File:Total_bitcoins_over_time_gra...](https://en.bitcoin.it/wiki/File:Total_bitcoins_over_time_graph.png)
Just like how GPU mining made CPU mining unprofitable, something else could
come along and make GPU mining unprofitable. Probably couldn't happen before
you've gotten your hardware purchase paid off though. Of course, if the
exchange rate drops significantly, like the scenario pointed out here: (
<http://mtgox.com/blog/?p=262> ) and doesn't recover for a while, you could
end up never covering the cost of the equipment for your rig.

------
gawker
From an economics standpoint and a personal opinion, I don't think there is
any future value for Bitcoin (or any digital or virtual currency).

From what I've been told, there is a finite amount in Bitcoin which means
there is a limit on how much one can theoretically amass.

However, that's not to say that people will not trade money for it. If it is
worth a lot to someone (and I suppose not everyone), then the value of Bitcoin
will be high. But not everyone wants a Bitcoin. Not everyone can do much with
a Bitcoin compared to other currencies. It will only be worth a lot to those
who know what to do with it.

It's not knocking on Bitcoin alone - currencies and gold work the same way.
The only reason gold has such a high value is because of its perceived value
and it's theoretically accepted everywhere in the world. If everyone said they
will not accept gold but silver instead, then the value of gold will certainly
drop.

That said, if you do want to data mine, make sure you do it when the times are
hot. :) (which could well be right now)

~~~
rlpb
I think it's a bootstrapping problem. Gold was bootstrapped eons ago because
it was shiny and rare (and survives because it remains rare to this day). Fiat
currencies are bootstrapped by governments (you can pay your taxes in them and
governments pay their workers and contractors in them).

I'm not sure how Bitcoin is going to be bootstrapped, how one might conclude
if/when it becomes a stable currency or if it is even possible. I think a
significant proportion of the market might need to receive some benefit to
switching before they will buy in, much like any new product in a traditional
economy.

~~~
sgornick
Bootstrapping is growing daily: <http://bit.ly/bitcoinnodes> though there are
too many areas where Bitcoin does not yet exist.

Hmm ... a benefit? How about "no payment network fees"? When you send $20 to a
friend, your friend gets all $20. Not $19.12 like if you paid your friend with
PayPal, ... Not $19.50 like if you paid your friend with SquareUp. No, .. the
transaction settles at par value (all $20 goes to the recipient). Do you buy
gas from the fueling station that charges $0.10 less per gallon because they
only accept cash? Not everyone does, but enough do such that it continues to
stay in business.

Does Bitcoin need "a significant portion of the market" to succeed, or can it
succeed simply by growing just in the niches that it already excels at today
(transactions that benefit from anonymity, transactions that benefit from
having no fees whatsover, transactions that are too small to be cost effective
on other payment networks, etc.)?

~~~
kd0amg
_Bootstrapping is growing daily:<http://bit.ly/bitcoinnodes> though there are
too many areas where Bitcoin does not yet exist._

Are these places that are generating bitcoin, or are they places where I could
spend bitcoin if I had it? If it's just people producing bitcoin, the
fundamental problem is still that it can't generally be exchanged for
anything. Unless bitcoin is accepted a lot more widely than I thought, you'll
have an easier time convincing me to take payment in the form of gift cards
for the local grocery store.

~~~
zck
You can buy tea, socks, domain names, t-shirts, nightlights, video games,
books, pen testing, and more using bitcoins:
<https://en.bitcoin.it/wiki/Trade>

------
impendia
After going to their website and reading their FAQ in its entirety, I am still
confused.

Why would anyone dream of offering goods, services, or other currencies in
exchange for "bitcoins"?

~~~
mquander
<http://en.wikipedia.org/wiki/Money>

"The main functions of money are distinguished as: a medium of exchange; a
unit of account; a store of value; and, occasionally, a standard of deferred
payment."

------
sgornick
<http://news.ycombinator.com/item?id=2200705>

