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Profitability calculators typically rely on the current market rate of BTC. Even if they paid for electricity, they could make up for it by keeping their earni
by josefresco 5y ago
Profitability calculators typically rely on the current market rate of BTC. Even if they paid for electricity, they could make up for it by keeping their earnings in BTC/whatever. Whether that's a smart decision is another issue, but for some mining is like a startup in that you burn cash early in hopes of a big exit down the road.
Edit: Several people have pointed out that you can just buy BTC or crypto directly. Besides the initial hardware cost (which requires cash up front) how do you generate income to buy crypto on a regular basis?
- scrollaway 5y agoIf you have cash, mining is unprofitable, and you want btc, there's a more profitable solution you're not seeing here.
- josefresco 5y ago> If you have cash This is key. You can't "just buy BTC directly" if you don't have cash. Even if you have cash for the initial purchase of crypto, you then have no recurring income. The startup model is again relevant here as you're trading a short term loss, for the potential of a long term gain. Similarly, why don't VC's just invest in profitable, stable companies?
- scrollaway 5y agoVery fair point.
- why_only_15 5y agoIf you have to pay $50k in electricity to mine a $40k bitcoin, it would be better to just turn off the mine and buy the bitcoin directly.
- mewwts 5y agoNot if you have all that money tied up in an old mining rig which has close to zero resale value.
- lippel82 5y agoNo, if you need 50k for electricity, it does not matter how much money you put into the mining rig, you're better off buying 40k bitcoin directly.
- whall6 5y agoIf all your money is gone because you spent it on a mining rig, how will you pay the electricity bill
- ekianjo 5y agoSunk cost fallacy
- staticautomatic 5y agoCan mining rigs be repurposed for anything useful?
- _joel 5y agoNope, the ones in the article are ASICs, so specifically for bitcoin. There are GPU based ones but the number of coins that you can mine with them is dwindling. You could probably reuse the beaglebone black or whatever little auxillary computer they're using but it's not really worth it. It's just e-waste.
- rtkwe 5y agoNot really they're extremely specialized chips that only do lots of hashes fast. They can't even be used for an different blockchain unless it's block hashing is similar enough and uses the same algorithm.
- OJFord 5y agoDepends what they actually are, some 'mining rigs' are just PCs with lots of beefy GPUs, so yeah. Others are FPGAs programmed to compute the hash for whatever cryptocurrency (e.g. BTC is `sha256(sha256(x))`); they can be re-programmed to do something else instead. Others are ASIC (Application-Specific Integrated Circuits) based, physical chips designed to do nothing else but compute those hashes. So essentially 'no', but 'yes and they'd be very good at it' if you for some reason had another use for that particular hash function (lots and quickly). That's also a progression of cost & performance, by the way. As the difficulty increases GPUs get slower at finding whatever coin, and people (pay a bit more and) move to FPGAs, and then again to dedicated ASIC hardware.
- deleted 5y ago[deleted]
- thinkmassive 5y agoSome industrial scale miners might have commitments to buy electricity at a certain rate. It could be more expensive to break a contract than to keep their equipment running when the exchange rate temporarily falls below profitability. Also not everyone has easy access to an exchange. Others may prefer to avoid the KYC paperwork, or simply be willing to pay a premium for freshly mined coins.
- gaff33 5y agoThere's a healthy power market - so the providers can and should work out a way for their clients to exit their contract and for them to sell the electricity elsewhere. Sure the client might be liable for some loss-of-earnings fees but this really should be better for everyone than this.
- thinkmassive 5y agoSure, but also take into account that a mining operation large enough to enter into electricity contracts probably has other obligations like facilities and staff. Overall it may not be worth the hassle to shutdown for what could be interpreted as typical exchange rate fluctuations.
- josefresco 5y agoThis assumes you have a source of income, outside of your mining operation.
- paulcole 5y agoIf you’re spending $1500 to mine $1000 in BTC and are bullish about the future of BTC, why not just buy $1500 of BTC?
- SamBam 5y agoBut surely there's some reality where only buying $1000 BTC and just setting fire to another $500 is somehow more profitable, right?
- thinkmassive 5y agoIf you agree to purchase $1500/mo from the power company for 12 months, and they’re going to bill you that no matter what, then losing $500/mo (and keeping BTC that’s likely to increase in value eventually) is preferable to shutting down and losing $1500/mo.
- josefresco 5y agoWhere do you get the $1500?
- rtkwe 5y agoIf you have the money to pay for the electricity you'll see more profit by just buying the BTC at the current market price. You start making money immediately instead of having to make it to the electricity price you paid. So it still only makes sense as a strategy if you're stealing electricity, have an off grid system with excess electricity (or you don't get paid for back feeding the grid) or have a (really really) weird cashflow situation.
- josefresco 5y agoLet's assume your mining rig costs $1 to run, generates 1 FAKECOIN with a current value of $.90. That first month you pay $0.10 out of pocket for 1 FAKECOIN. If you had just purchased 1 FAKECOIN, it would have cost you $1. 10x the cost. Like a startup, this is not sustainable without external factors changing. "Just buy it directly" requires a separate income.
- addingnumbers 5y agoHang on. You think the power company only asks for $0.10 after you use $1 worth of power that month?
- josefresco 5y agoMy mistake, I'm a moron. The math is just worse, because you'd have to cash out some of your FAKECOIN for electricity. I'll accept the downvotes with dignity!
- cecilpl2 5y agoYou'd have to cash out all of your FAKECOIN for electricity and still be out $0.10, with no FAKECOIN left.
- josefresco 5y agoClearly, mining and math on Friday is not for me lol