Last week I found what I felt was a reasonable deal on a Bitcoin ASIC, so I decided to give it a try and bought a couple Bitmain AntMiner S1 ASICs. Each is good for 180GH/s SHA256, or when overclocked around 400GH/s combined. At a price of about 1BTC each, I thought it was worth a shot. Now I'm thinking I may be lucky to break even. Let me run some numbers for you.
Lately, like since about March of 2013, Bitcoin has been pretty
consistent about increasing in difficulty by 20% or so every 12
days. In fact, I can do one better and say that the average increase
every 2016 blocks since last March is... wait for it... 23.73%.
That's pretty massive when you think about it, and it's the reason
why difficulty has gone from 6,695,826 on March 24, 2014 to a
staggering 5,006,860,589 today. Put another way, the difficulty --
and thus the returns for mining -- have changed by a factor of nearly
750. And what's worse: there's no sign of slowing down just yet.
So let's take a closer look at the AntMiner S1. At a price of $600
(around 1 BTC), assuming you have spare power supplies and
everything else you need, we can get a pretty good idea of your
profit estimates using any number of online calculators. Personally,
I think the calculator
over at BitcoinWisdom is one of the best, and it's what I
used. Since I now have my AntMiner S1 ASICs up and running, I know
power, performance, etc. With the current difficulty and running at
400GH (overclocked) with a power draw of 850W, my two AntMiners are
looking at the following scenarios:
1) 15% difficulty increase every 2016 blocks = 233 days before the
power costs outweigh the income. I can make around $454 in that time
off my ~$1200 investment. This is basically the "best case"
2) 20% difficulty increase every 2016 blocks = 177 days before it's
no longer worth mining. I'll only earn about $70 off my investment.
3) 23% difficulty increase every 2016 blocks = 163 days before I
should stop mining; I'll lose $82 based on current prices.
Now, obviously the price of BTC is the big wild card. If we see
$1000+ again, and I think we will some time in the next 9 months, I
easily earn back far more than the initial investment. If we take a
nose dive on the other hand and don't recover, I stand to lose even
more of my investment. So it's a risk, but a calculated one. And in
another 10 days or so when the difficulty jumps up 20%, things start
looking even worse. At $600 for an S1, you'd stand to lose $70 in
the "reasonable" 20% increase scenario -- a swing of $140 in just 10 days (and the reason ASIC prices are tumbling).
If you're thinking, "Okay, but the AntMiner is a 55nm ASIC -- what
you need to look at is a good 28nm ASIC," well, you're only partially correct.
If you took a chance and pre-ordered a Terraminer IV a while
back, you're rolling in the BTC right now. If you order one right now from
the June batch however, let's be optimistic and say you get it in 60
days (before the end of May). With difficulty jumps of 20%, you'd
end up losing half your investment! Even smaller 15% increases would still result in a loss of over $1000. That's a pretty
sobering thought -- one of the fastest, most efficient BTC ASICs right
now is looking like a terrible risk for future buyers; either price needs to come down or difficulty needs to stabilize. BTC prices basically need to double for
you just to break even, and the rate of difficulty increases
will likely slow down before then, but be careful.
What about the scrypt ASICs? Well, Alpha Technologies is now
promising 90MH instead of 25MH, which is pretty great to hear.
Depending on when the hardware arrives and the difficulty at that
time, however, it's not looking so hot. Let's say it ships in just
60 days (which is very aggressive). At a moderate 5% increase in
difficulty every LTC cycle that would mean mining LTC would never recover
the initial investment cost. Even if we assume you can beat LTC
returns by 50%, you'd still only make about $1850 on the $10,000
investment. I suspect those who pre-ordered the first batch will do
pretty well, but the future (most likely) second and third batch orders are far more suspect.
The big problem with ASICs of course is that once it becomes
unprofitable to mine with them, they're essentially useless. With a
PC, you can at least use it to run Windows (or Linux or whatever if
that's your thing), play games, do real work, etc. You might not
need dozens of GPUs, but you can at least recover some of
the initial investment. Perhaps you'll find some people willing to
buy your outdated BTC ASICs as well, but I'd expect very low prices
In short, ASICs are mostly going to make a lot of money for the
people selling the ASICs, not for those buying the ASICs. It's the
Gold Rush all over again, where the real winners are the people
supplying the miners. It will certainly be interesting to see where
pricing and difficulty stabilize over the coming months, but don't
be surprised if a lot of the Scrypt ASICs turn out to be losing
propositions. Unless of course we see a repeat of last November
where prices shot up 20X on Litecoin in only a week or so, which is
what we're all probably hoping to see. :-)
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