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A lot of news accounts are pointing out that bitcoin mining is getting more difficult over time, murch even said recently in chat its getting "exponentially harder". I am not sure if that is the case, but has anyone studied the economics and difficulty/hardness of bitcoin mining over spans of time? it appears clearly & by design to be subject to "diminishing marginal returns".

Is there a forecast when bitcoin mining will reach "break-even" level & be exactly as expensive as the hardware/energy required to mine it?

I am looking for quantitative/scientific analysis where possible. By the way, its a completely separate question of whether this would mean that bitcoin is no longer usable as a currency. (To me that is very likely not the case.)

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found this similar question why does mining profitability trend to zero –  vzn Mar 3 at 0:55

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It's a fact that difficulty is increasing over time, and dramatically so. You only need to consult a chart of the last nine months of hash rate v. difficulty to determine that for yourself.

The question of whether it will reach break-even (zero returns) is more difficult. People around the world have different inputs to the cost side of the equation. For example, the power cost in Hawaii is quite a bit higher than the power cost in Washington state, and could be quite different still from some other location.

I'm sure you've seen the various calculators around. They can't predict the future, they can only produce an anticipated result for a specific set of assumptions as inputs. Whether mining is profitable depends on your assumptions for the future (bitcoin price, difficulty increase, power costs, mining efficiency, date when miner goes operational, etc.)

Demand for mining hardware is still robust and I think the primary reason is that actual cost inputs vary (electricity, etc), and people have different views on the other inputs required for the profitability equation. Some people will be wrong.

I mine today, but my 30 g/hash equipment is long past it's prime. Not sure that I'm ready to sign up for the current arms race.

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It's already here. At present, you're simply not going to be able to mine Bitcoin with consumer grade hardware. Even with ASICs, you're still looking at returns that would have been laughable just a year ago. You're better off mining something like Mint or Aurora, or Doge, and turning them in for Bitcoins. Just my 2400 satoshis.

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ok, right. the pt of the question is that given trends (incl eg even rate of moores law not outpacing bitcoin mining difficulty) maybe even "professional grade" hardware will not be profitable in the foreseeable future. –  vzn Mar 3 at 0:52
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If you buy new hardware now it will be unprofitable. Predicted difficulty increase means that hardware cost plus electricity won't even be covered. The only people who are making anything now are those with hardware already, those with cheap/free electricity (that someone somewhere is paying for) and of course the people who sell mining hardware. –  JamesRyan Mar 3 at 10:31
    
First miners to get a new, improved ASIC see an enormous boost in their profits in the first few days. But as more people receive theirs and put them to work, difficulty raises rapidly until everyone is just recovering costs rather than profiting: only the first people to use a new ASIC model actually make money off of it. –  Joe Pineda Mar 7 at 2:58

All of the above answers are incorrect. Bitcoin mining will always be profitable, for as long as there are transactions to be confirmed there will always be utility in "mining," even beyond year ~2140 when all bitcoins are thought to have been mined.

Alternatively, I agree with above re: BTC difficulty rendering all but commercial mining operations or cloudpools etc profitable being here, now. When I think about how, to date, the most reputable mining company (as far as I'm aware) is Terraminer I'm taken aback by the state of mining. After having shipped 1000 pre-orders for their 2TH mining rigs, we saw them weeks postponed from original promised date, and with all of them under-clocking at just 1.7TH at BEST!

Couple this trend, that of mining companies falling far below expectation, even farther behind promised schedule, being "new" seems like a fairy tale all things considered --- with the knowledge that every single miner is "tested" before it is shipped it's not hard to see why they have consistently sucked.

Tera chose to ship their models, at a time where bitcoin's $ value was decreasing steadily. Perhaps if it had not been dealt a huge blow at the hands of Gox, they would have withheld shipments for several more weeks. Perhaps they would not ship out at all if they price again skyrocketed to $2000.

It is somewhat scary to think that all of these channels are dirtied with the stain of avarice, corrupted absolutely by cut throat companies who are almost never releasing anything earth shattering without getting their own bang out of the product first.

The bitcoin market and it's miners are forever inextricably linked due to their necessity in confirming transactions, in securing the network. The ties between them are tainted unfortunately.

I can't imagine any really profitable mining equipment being sold ... at all ... until key measures are put in place to level the mining field.

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"utility" is not the same as "profit". dont fully understand the bitcoin architecture but it appears there could be a point where it is unprofitable to mine new bitcoins but the computational effort/overhead reqd to run existing network will continue/be maintained, maybe based on a small transaction tax by large providers or something. as for "avarice"/"corruption" it appears what you describe is just a basic aspect of capitalism (long predating bitcoin), nothing more sinister than that.... –  vzn Mar 3 at 3:40
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The OP didn't ask whether you would still be able to receive btc after all the coins were mined. Everyone understands transaction fees. He asked whether mining is/would be profitable, which is a debatable point. –  ChrisW Mar 3 at 6:20
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Please note that the order of answers is configurable and in two of the three settings it changes over time (depending on votes and edits), so "above" is not a useful description of other answers in relation to your one. –  Paŭlo Ebermann Mar 3 at 9:18
    
Terraminers were not profitable at all. At 1.7TH, with the 17 amps of power draw, and at $6000/box and being shipped mid april.... totally burned. The day ours arrived cointerra announced they'd sell the same box for $4700... in-stock shipment. That they pre-mined those machines is pretty much a foregone conclusion... now they are dumping stock. And even after all they, they are the best deal in town.... ie: unprofitable at best. –  Erik Aronesty Apr 24 at 16:49

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