Monday, September 22, 2014

Welcome to the End of GPU Mining

It's been a long, slow decline, but outside of a major jump in cryptocurrency prices we have finally reached the end of the road for GPU mining. That's not to say that people won't continue to mine with GPUs, but based on the cost of electricity and the current price of Bitcoin combined with the alt-coin exchange rates...well, you get the point. GPU mining is "dead". Let's quickly run some figures to give you an idea of where we stand.

The best-case mining opportunity right now (as far as I can tell -- there are so many coins that it's possible I'm missing some "secret" coin that's highly profitable) would be GPU mining of Monero, one of the Cryptonight coins. With the current difficulty, block reward, exchange rate, and price of BTC, a rig with three R9 280X GPUs might mine around 1.5 XMR per day, which would equal about $1.90. That same rig will draw about 450W of power, and at $0.10 per kWh you'd spend $1.08 per day in electricity. Factor in wear and tear on the GPUs and the net profits of $0.80 per day probably isn't worth your time, but that's about the best option for GPUs right now.

Okay, that's XMR and Cryptonight, but what about some of the other proof of work algorithms that can't be run on an ASIC? We have X11, X13, X15, Keccak, and maybe a few others as potential PoW options. There are a few others as well, but let's just stick with those for now.

X11 was made famous with Darkcoin, which is currently averaging a difficulty of around 3300 with a block reward of 4 DRK being typical. If your hash rate is 12000 KH/s for X11 (which is about right for three 280X GPUs), and your power draw is only 450W, you'd still be in the red. You might mine 0.3 DRK per day, worth about $0.90, with a power cost of $1.08. Even R9 290X wouldn't be much better: 16 MH/s for three 290X GPUs and at a power use of 500W you'd basically break even. CANN is about the same right now, so is URO, and basically we're looking at best-case breaking even or making pennies per day per GPU.

Actually, your best bet is often to just go with leasing your hash rates on a service like NiceHash -- let others do the work of figuring out which new alt-coins to mine, let them take the risk, and you just get paid directly in BTC. Or go with a multi-pool like BlackcoinPool, MultiPool, WafflePool, etc. The current best rates for X11 are around 0.0003 BTC per MH per day, so three R9 290X could make about $1.90 per day, with a power cost of $1.25 (give or take). That's "profitable", but not enough that I'd seriously invest time and effort into it. So X11 is out, unless prices go up, difficulty goes down, or hash rates can be increased without using more power.

X13 and X15 really aren't much different in concept from X11, just with lower hash rates thanks to the additional hashing algorithms. X13 you might make a bit more per MH (currently looking like 0.00037 BTC/MH/day, give or take), but with lower hash rates in general it's less profitable (or more unprofitable). X15 is paying less than X11 and X13 with even lower hash rates, so obviously that's out as well.

If you're after really high hash rates, you could look to Keccak, but just because it has high hash rates (450MH for a 290X?) doesn't mean it's profitable. The going rate is about 0.0000023 BTC/MH/Day, or $1.25 per day for 3x290X. Nist5 is another "faster" hashing PoW, but it's only about three times the hash rate of X11 and it's paying about 10% of X11, so that's a dead end as well.

The net result is that across the current list of coins and PoW algorithms, there's really nothing out there that can even hit a 2:1 ratio for value vs. power. The best I can currently find is Monero, which gives about a 1.7:1 ratio of income vs. electricity. If you were to use a $300 R9 280X GPU, not accounting for the rest of the PC, you would need to mine Monero for over two years straight just to break even. And let me tell you, my personal experience is that running a GPU 24/7 at 100% load (which is what you do with cryptocurrencies) could very well kill the GPU before two years pass -- or at least the GPU fans will likely need to be replaced.

If you're wondering why I've become so pro-ASIC (or pro-Hashlet), this is the answer. All of my GPUs are now powered down, and I for one welcome the blessed silence. Maybe I'll fire them back up to help heat my house as it gets colder, or maybe prices will shoot up again and make GPU mining profitable. Until one of those things happen -- or something else comes along to make me want to mine with GPUs -- I'm going to be investing my time and energy elsewhere. Anyone interested in buying some GPUs?

20 comments:

  1. So sad ans so true.
    I built 3 fancy plexiglas 5x7950 rigs last year. No they are powered down. I regret their scream waking me up in the morning. At that time, miners used to have a soul. Now you just buy a 10k Asic, plug it, and let it mine until the profitability increases, not a funky job anymore.

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  2. Well summed up Jarred. What are your thoughts on the Lyra2RE (reduced efficiency) algo that vertcoin is switching to shortly? Do you think that it may attract enough 'retired' GPU miners if the efficiency is low enough to make it profitable?

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    1. Honestly? No, I don't think it's a question of changing algorithms. The problem is that difficulty scales with the number of miners, so unless the power draw is low enough that you can earn substantially more than you spend on power (I'd say a 2:1 ratio is the minimum needed), it's not really worth doing.

      VTC is currently under 0.0002 BTC, but let's just use that number. The target time is 2.5 minutes, with 50 VTC per block, which means 576 blocks per day on average, and 28800 new VTC per day, worth about 57.6 BTC. At the current price of BTC, that means VTC generates less than $25000 of total worth per day.

      So let's say that right now, you can do 500KH/s on an R9 290X with Vertcoin, and the card will use about 250W of power. That's $0.60 per day in power (being somewhat conservative) and the VTC you generate will only be worth about $0.46.

      To make VTC mining worthwhile, at the current difficulty I'd say the power requirement would need to be effectively zero to even consider mining it. I mean, seriously: $0.60 per day from an R9 290X would take 2.25 years to pay off the GPU cost even if power were free. So if VTC switches algorithms but price doesn't change, it does nothing to make it more attractive to mine.

      That's the problem pretty much all of the alt-coins are facing: how do you make people want to buy and/or use your currency instead of one of the alternatives? Or more importantly, why should someone want to use anything other than BTC, LTC, BC, or perhaps a few other coins? I've reached the point where the answer is simply, "they do not want to use other coins."

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  3. Great article, Jarred. What are your thoughts on the current status of cryptocurrency mining? Specifically, what about the Ethereum Project (which came to power after the writing of this article)?

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    1. Honestly, I'm rather disenfranchised with the whole mining and cryptocurrency idea. The biggest proponents of any currency usually end up being people who are already invested hoping to get others to join, increase the price, and thus the earlier comers make a lot of money. Classical ponzi scheme stuff.

      And we have now had five years of watching all of this go down. Sure, BTC is accepted at a few places, and you can actually buy stuff with it. But it's more volatile than even the GBP after Brexit, so it's risky to deal with. And everything else tends to be even worse. I remember when Litecoin and Darkcoin were the new hotness. DRK is dead now, and LTC is pretty much fading away.

      Will Ethereum buck the trend and be better than all the other alt-coins? It has the best chance right now, certainly. It's also mildly profitable apparently -- but by mildly profitable, we're talking maybe $1 per day profit per GPU. At a price of $250 per GPU, you're looking to pay them off in half a year, which is a long time in the crypto world -- things can change fast.

      Anyway, I'm almost interested enough to do some testing of Ethereum... almost. Maybe I can work it into an article for my day job? LOL

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    2. I dabbled with some mining as well and quickly figured out that the return on investment was simply not worth it. Money could be made at a much faster and consistent rate doing arbitrage between crypto currencies.

      Mining for the average PC builder is dead. How many dollars per day would make it worth it to do? It would not be worth it to me even if it could make $5 daily. That is a drop in the bucket compared to my income from my day job or my expenditures.

      Is it worth the hassle and investment? For me personally, no.

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    4. Exactly, Edward.

      Let's take as an example a typical person who is savvy enough to actually get cryptocurrency mining up and running. I'd say it's a safe bet they're earning at least $50,000 per year, probably more, which means they make approximately $135 per day at their regular job.

      To match that with mining, you need to manage a farm of 135 GPUs, give or take, which means probably three to six GPUs per mining rig -- but getting a six GPU rig to run properly is far more difficult than getting a three GPU rig up and running. Anyway, let's assume you go the six GPU route for cost reduction purposes.

      You would now have 23 PCs up and mining. Each one is probably pulling at least 900W, which means you'd need a place that can provide about 25kW. On a 100A line in the US, you're about half of that, so you'd need at least double the typical home power... but really, you need cooling as well, so triple the power would be a better guess.

      So you're using about 35kW to provide cooling and run all the systems, which adds up to about $85 per day just in power use (give or take). And in order to pay for that, you need to cash out of your mining funds, but you also had to buy the systems in the first place. Conservatively, you'd be investing $46,000 into computer equipment...and you need to have a place to run all of the equipment, so a cheap warehouse location might add another $1500 per month or more to the bill.

      With all of that, mining Ethereum you could possibly do 3.5GH/s and get 25 ETH per day. At current prices, that's over $250, but like I said, you have to pay all the other costs of power and such. But let's assume you're willing to do all that. You've got a small warehouse now, using $84 per day in power (cooling plus mining). You're paying an additional $50 per day for renting the warehouse plus Internet and whatever. Now you've got your little investment plugging away and bringing in $116 in profit, every day.

      At this point, it's looking like 400 days to break even on hardware costs. Assuming nothing changes, which it always will -- but maybe you'll get lucky and prices will go up rather than down? That's the gambler's dream.

      Here's the killer for me. Even if you could get mining set up and working, and you're willing to take a long view and hope that you break even on costs in a year or two (after which point, it's all profit)... well, consumer PC hardware isn't really designed to run 24/7 at 100% load. PCs will go down and require maintenance, mining profitability will vary and so you may need to manage those 23 PCs to switch to a different pool/coin/whatever. God help you if there's a fire or robbery!

      But what you've ended up with is a full-time job, earning about $115 per day, except now you don't really get weekends and evenings off. You're a full-time 24/7 IT administrator for your own private mining farm, and while you have all the expertise necessary to keep it running, you're getting paid about half what you might make in the real IT workforce.

      And that, in a nutshell, is why I quit messing with cryptocurrencies. My wife and family are much happier this way.

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    2. A few things.

      First: Monday, September 22, 2014

      That's the date this was written. You're responding to a 2.5 year old article, where the most recent comments are from September 2016.

      As to your calculations, right now you might make $4 per day with six RX 470 cards. That changes over time. That's ambitious, to be honest, and if you're using WhatToMine.com as an example, I'd subtract about 10-15 percent from their estimate. That's just my overall impression of their accuracy, based on hardware I have available, but take it as you will.

      You're also looking at things through the rose tinted glasses of a current 50 percent spike in ETH prices. That could evaporate just as easily as it happened over the past few weeks.

      Historically, prices trend downward, and GPUs in particular will -- WILL! -- burn out if you run them full tilt 24/7. Again, I speak from experience. So probably underclock most cards, including the RX 470, by about 10 percent for safety. Now you're looking at more like $3 per day in profit, trending toward $2 per day over the next year (and maybe lower, though possibly maybe higher depending on what BTC prices do).

      At $3 per day, your $2280 PC with six GPUs will require 760 days to break even. And all six GPUs will potentially die before then, or at least require fan replacements. Two years is a very long time in cryptocurrency. If you think BTC is going to take off like gangbusters, just put $2280 (or $13000 or whatever) into buying 2BTC (give or take) and you'll likely end up better off. It will definitely take less time to manage.

      Anyway, if you want to invest in $19,000 worth of mining equipment, and then try to keep it all running 24/7 for a couple of years, how much is your time worth? And the tax write offs aren't particularly big -- basically, everything you pay for power you could write off, but that's not the same as earning money, and at best it's a 20 percent gain for most people. Meaning, you spend $500 on electricity as a write off, which reduces my tax liability by about $100 (or less).

      Can you make money with GPU mining right now? On a daily basis, yes, of course you can. How that plays out over two years is a much more difficult thing to predict. Do you sell all coins as fast as you mine, or hold and hope that prices continue up? Or do you only sell enough to cover electricity? Hard math using immediate trends might say you can break even in a year, but plan on two or three as more likely, and by then most of your GPUs are old and probably making more like $1 per day (profit) for the 6x 470 rig. Putting your time and energies into just about any other endeavor has a better ROI in my opinion. Says the guy who started a cryptocurrency blog for fun, who still happens to do mining on spare GPUs.

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    1. People mining something doesn't equate to it being highly profitable. I mine stuff as well, but for entirely different reasons than most people. If you have the hardware, sure, make a few bucks. But the power, maintenance, and volatility are all real -- very real. Cryptocurrency has a real possibility of behaving as a ponzi scheme, and I can point to literally hundreds of coins that meet that classification. Basically, everything except BTC, Ethereum, and maybe a few others.

      Where does $1 per day profit come from at the end of 2-3 years? Easy. Difficulty increases, hardware becomes faster and more efficient, and after two generations of new GPUs from AMD and Nvidia, the profitability of old GPUs drops. The same thing happens with ASICs -- the early ASICs are all basically worthless now, because newer models have made them obsolete.

      I get that you're a true believer, and there are thousands of people just like you out there. There are also thousands that think everything cryptocurrency related is a complete scam. Which group is right? But your math is still extremely ambitious.

      I have numbers to back me up if you want them. Since last June, with something like 10 desktops mining nearly 24/7, I have sold about $6800 worth of Ethereum and BTC. The cost of the hardware, were I to purchase it all in the most efficient fashion possible, would be about $10,000. (The systems I'm running are *not* the most efficient and cost effective mining equipment, but that's a different topic.)

      $6800 in coins for $10,000 in hardware might look pretty good, for about nine months of mining. But the power costs during that time are pretty close to $300 per month, which means $2700 off the 'income'. Call it $4000 in profit. But $1000 of that came from a very good few weeks (thanks Zcash).

      Anyway, you're right that there are some ways to make this work, but it all requires time, and in my experience I probably spend at least two hours every week checking on the status of my mining rigs to ensure they're not down, updating software, etc. Because straight Ethereum mining is more risky than some other options, but those other options require a bit more hands on time. And I'm a computer expert.

      All I'm saying is, don't get involved in GPU mining unless you have the time, energy, and money to make it work. Two years ago, GPU mining had really trailed off. The past year, BTC prices picked up and things became a lot more profitable again. But I wouldn't be shocked to see prices on BTC drop well below $1000 again, and if they do, Ethereum will drop right along with it. And then instead of $4-$5 per 6x470 mining rig, you're down to $2-$2.50, maybe less. And a year from now, it's $1-$2. For a $2500 piece of equipment, that's pretty low.

      But if you want to stick with Bitcoin/mining for five years? Sure, go for it. You'll almost certainly come out ahead, though it's highly doubtful you'll become a millionaire. Maybe I'm just too jaded after seeing so many scam coins over the years.

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    3. I'm not mining ETH specifically, because that would be trying to guess where the market will go in the future. Things change, constantly, so I generally stick with an algorithm switching mining approach that will pay out in BTC. On a daily basis, it will inevitably make less than the best option over the long haul.

      But if you say, "You should have just mined ETH" then you're basically that I should have just bought ETH instead. Last year, ETH was going for about $10. $10,000 worth of ETH would now be worth $18,000 -- that's $8,000 in earnings, with no expenses on power and such. And over the past year, with difficulty and price fluctuations, with the equivalent of about 25 RX 470 cards mining (it's a far more eclectic mix than that, with plenty of Nvidia GPUs), I've made about $4000 in profit.

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    5. Nvidia tends to be more power efficient, but the GPUs cost more. I haven't burned out any Nvidia GPUs mining, though. (Yet? Hahah.) I find Nicehash is a good way to go, regardless, and now and then you get a great payout for a few days without having to constantly monitor which coin(s) are doing best. But you do need to update the software at least every other week to stay current, it seems. If it weren't for Nicehash, I'm not sure I'd bother much with mining anymore.

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