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We all know that mining is supposed to keep the Bitcoin system secure. However, difficulty has risen so much that costs for power currently outstrip possible revenue for mining for a large portion of hardware - not only CPUs, but also many GPUs. Essentially for everything but specially built mining rigs.

That is, if you don't take transaction fees into account. Are they already high enough to support mining? Or are mining rigs going to be enough to keep Bitcoin secure?

edit: the question is about the current situation, not some arbitrary point in the future.

  • 3
    -1 - I think we would want to create questions that are timeless. This question may be out of date in a month. – ripper234 Aug 30 '11 at 22:57
  • Let's try this a little bit differently: bitcoin.stackexchange.com/questions/118/… – ripper234 Aug 30 '11 at 22:59
  • Have a look at: blockchain.info/charts/miners-operating-profit-margin – Felipe Jan 10 '13 at 23:20
  • disagree with the close on this question. its a highly relevant question to bitcoin future etc... why would the question be out of date in a month? also does the graph show its already unprofitable? and that the network is already long being subsidized not by the gains from mining? – vzn Mar 2 '14 at 19:19
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There are two factors that define the profitability of mining, and they tend to change somewhat independently of one another or at least lag one another quite significantly.

The first factor is difficulty. Blocks should be generated every 10 minutes on average, regardless of the amount of processing power available to the network, so difficulty adjusts how hard it is to find the solution to a block. This factor is based solely on the total hashrate of the bitcoin network.

The second factor is price. Assuming we're speaking of profitability in terms of US Dollars or other fiat currencies, we have to account for our earnings in the same currency that was used to pay for our costs. To my knowledge there is not (yet) a power company that will allow you to pay your electric bill in bitcoins.

From personal experience I can say that my dedicated rigs consume about $4 worth of electricity to produce 1 BTC and if I'm lucky enough to be average my hardware will have a long enough MTBF (mean time between failures) that its cost amortized over the life of the machine will perhaps bring that up to $4.50 or $5 per coin. At today's rate of $8.69 per BTC, it is still profitable though just barely.

CPU mining cannot produce at a high enough efficiency to be worth the electricity cost, and the same can likely be said for less efficient GPUs. Of course some folks don't pay per kilowatt-hour for electricity usage and for these folks ANY kind of mining is still profitable.

There are also a few folks on the forums selling FPGA boards which, though quite expensive up front, consume only 10-15% of the electricity of a comparable GPU. A single Xilinx Spartan6 board, for example, produces 100 MH/s at a little under 7 watts, compared to a Radeon HD 5830 which produces around 200 MH/s (without overclocking) at about 108 watts (54 watts per 100 MH/s).

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Mining will probably always be profitable to someone, and there is no threat of a low global hash threatening security. It has built in checks and balances...

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    Fees are somewhat of a non-factor from the miner's perspective currently. They will most definitely be important for miners down the road. Right now it is probably better to invest in bitcoins than mining gear for 99.9% of people... – Alex Waters Aug 30 '11 at 21:24
  • It may not always be profitable... if the price of bitcoin drops, people with high electricity costs may pay more for the electricity to mine coins than they can sell the coins for. – tysat Aug 30 '11 at 21:32
  • This would cause difficulty to drop to a point where it is profitable for someone. We have seen this recently... – Alex Waters Aug 30 '11 at 21:38
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This is a very open-ended question and it kind of depends on how optimistic/pessimistic you may be toward the Bitcoin community and the value of the currency.

A while back PC Perspective ran an article (located here) comparing various GPUs and did a very thorough analysis of the hardware that was out there and in common use for mining. There tests found that mining can still be considerably lucrative, however, a bitcoin was going for $14.30 each, where today it's closer to the $8.50-8.75 range.

If you are optimistic about bitcoins, then, yes, it's worth mining and banking your coins. If, however, you feel that the price of each coin has dropped and will most likely not go back up for a while, if at all, you may feel that it's not worth the effort.

The answer really is relative.

  • I wanted to know whether mining is profitable right now, not in the future. I'll clarify the question. – Mononofu Aug 30 '11 at 21:31
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If I had more disposable income right now, I'd be investing another mining rig. I have faith in bitcoin and want to support it, but sadly 2.2 Ghash/s is all I can contribute right now.

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