Mining profitability - September 2014

[Chris Sokolowski]

Steve and I decided we needed two miners to perform testing on the development server. I spent a few hours last week evaluating the profitability of miners to heat my house during the winter, and I came across a few findings that I thought were interesting and that I should share with everyone. I compared three miners that I could purchase today (pre-ordering was not an option since the arrival date could not be guaranteed). I have attached the spreadsheet I created for this purpose so that others may use it to calculate their own profitabilities. The spreadsheet is available at http://www.shoemakervillage.org/chris/a ... ility.xlsx.

My constraints:

There must be two separately controllable miners
Electricity costs $0.09/kWh
A miner generates $0.33/MH/s/day, decaying exponentially (with decay constant controllable)
The miners are turned on on September 13

Climate control:
In the summer, air conditioning adds about 50% on top of the electricity cost to run a miner
In the winter, I have a 500W electric heater in the basement that I would have turned on anyway, so the first 500W consumed during the heating season is free
In the winter, the rest of the house is heated with natural gas heat, which is about 2.5x cheaper than electric heat. Therefore, 40% of the electricity costs (above 500W) used by the miner are free
In the fall and spring, there is no air conditioning and no heat, so the miner's costs as much to run as the electricity it directly consumes.

Dates of the seasons
The fall (no air conditioning or heat) lasts from September 6 to November 4.
The winter (heat turned on) lasts from November 5 to April 9
The spring (no air conditioning or heat) lasts from April 10 to May 31
The summer (air conditioning on) lasts from June 1 to September 5

The miners available:

I compared three miners available for purchase. I would have liked to also compare a Zeusminer Lightning X6, but I couldn't find any available for sale. Included in their prices is the cost of power supplies and accessories (if any) needed for operation; however, since these accessories are resalable for 50% their initial cost after the miner is no longer profitable, only the 50% depreciation is included as a cost.

Option 1:
Two Gridseed Terminator A2 miners (source: Zoomhash, new)
30 MH/s each (estimated on Prohashing)
350W each
$950 each ($800 + $100 shipping + $50 depreciated for power supply and accessories)

Option 2:
Two Zeusminer Thunder X6 miners (source: eBay, used)
18 MH/s each (estimated on Prohashing)
500W each
$950 each ($370 + $0 shipping + $75 depreciated for power supply and accessories)

Option 3:
Two Zeusminer Thunder X3 miners (source: Zoomhash, new)
28MH/s each (estimated on Prohashing)
950W each
$475 each ($275 + $75 shipping + $125 depreciated for power supply and accessories)

The results:

I evaluated three scenarios:

Scenario 1 is what I believe to be the most likely scenario. Scenario 1 assumes that payout will decline 96% in one year, meaning that the payout will be $0.0132/MH/s at this time next year. With this scenario, the two Zeusminer Thunder X3s are the only miners that will earn back their cost, netting $135 for two over their lifetimes. The two Thunder X6s lose $44, and the two Terminator A2s lose $70. The Zeusminer Thunder X3 and X6 are optimally retired as soon as the winter ends, while the Gridseed Terminator A2s are optimally retired as soon as the summer begins.



Scenario 2 is more pessimistic and assumes that payout will decline 98% in one year, meaning that the payout will be $0.0198/MH/s at this time next year. With this scenario, none of the miners ever earn back their costs. The two Zeusminer Thunder X3s still loses the least money over their lifetimes at $87, while the two Terminator A2s are lose the most at $353.



Scenario 3 is more optimistic and assumes that payout will decline 94% in one year, meaning that the payout will be $0.0198/MH/s at this time next year. With this scenario, all miners earn money over their lifetimes. The two Thunder X3s continue to be the best deal earning $290 over their lifetimes, with the two Thunders X6s earning $57 and the two Terminator A2s earning $139. While the Lightning and Thunder X6 must be retired at the onset of the spring, the Terminator A2s must be run into the beginning of the summer.



With this data, I considered what it would take for the Terminator A2s to become the most profitable miners given the current pricing. I determined that this point is an extremely optimistic 90.7% decline. In other words, the Terminator A2s are highly overpriced for their efficiency. They need to be at least $100 each cheaper before they become competitive in Scenario 1. The price of electricity is not relevant because increasing the price of electricity (which would favor efficient miners) just makes all the miners lose money over their lifetimes.

My decision

In the end I decided to purchase two Zeusminer Thunder X6s. While they are not the most profitable and will most likely lose money over their lifetimes, the noise of the Thunder X3 in my small house would be unbearable, and despite the costs we need them for testing. With the Thunder X6s the heat generation is low enough to make feasible the replacement of its default loud fans with quieter ones, and while the Terminators also would be quieter, they are just too expensive to consider.

[loszhor]

Forgive this one for reviving an old topic but I would like to add in that just mining alone will most likely never get your money back along with profits. The usage of a multipool's selective payout feature along with trading along side the exchanges that it buys from has been a great source profit. But one has to carefully consider which coin, price, exchange, and the amount of time to turnover the mined coins in advance. Depending on the market and difficultly one can increase what they "mine" anywhere from 20% - 100%. My personal experience has mostly been on the 20% - 40% side not including trading already in progress. Developing such a strategy for yourself will also greatly extend the life of inferior mining equipment long past their prime.

[Steve Sokolowski]

Forgive this one for reviving an old topic but I would like to add in that just mining alone will most likely never get your money back along with profits. The usage of a multipool's selective payout feature along with trading along side the exchanges that it buys from has been a great source profit. But one has to carefully consider which coin, price, exchange, and the amount of time to turnover the mined coins in advance. Depending on the market and difficultly one can increase what they "mine" anywhere from 20% - 100%. My personal experience has mostly been on the 20% - 40% side not including trading already in progress. Developing such a strategy for yourself will also greatly extend the life of inferior mining equipment long past their prime.

Would your profits significantly increase if we were able to pay out "on credit" the next day, rather than waiting until the coins mature two days later?

[JiveTonto]

Forgive this one for reviving an old topic but I would like to add in that just mining alone will most likely never get your money back along with profits. The usage of a multipool's selective payout feature along with trading along side the exchanges that it buys from has been a great source profit. But one has to carefully consider which coin, price, exchange, and the amount of time to turnover the mined coins in advance. Depending on the market and difficultly one can increase what they "mine" anywhere from 20% - 100%. My personal experience has mostly been on the 20% - 40% side not including trading already in progress. Developing such a strategy for yourself will also greatly extend the life of inferior mining equipment long past their prime.

Would your profits significantly increase if we were able to pay out "on credit" the next day, rather than waiting until the coins mature two days later?

most would typically answer yes because they can be moved sooner in an exchange,Ive seen other pools implement this and instant payouts with heaver levy's than users who wish to wait for the coins to mature

[loszhor]

Forgive this one for reviving an old topic but I would like to add in that just mining alone will most likely never get your money back along with profits. The usage of a multipool's selective payout feature along with trading along side the exchanges that it buys from has been a great source profit. But one has to carefully consider which coin, price, exchange, and the amount of time to turnover the mined coins in advance. Depending on the market and difficultly one can increase what they "mine" anywhere from 20% - 100%. My personal experience has mostly been on the 20% - 40% side not including trading already in progress. Developing such a strategy for yourself will also greatly extend the life of inferior mining equipment long past their prime.

Would your profits significantly increase if we were able to pay out "on credit" the next day, rather than waiting until the coins mature two days later?

I would prefer the usual 24 hours or fixed daily payout time but so long as the payouts would be consistent the next day with continuous use then all is well. An example would be, I still wait the two days for maturity for the first day of mining and the next day I would get my payout on time for the second day since the twos day will have passed already by then. Multipool trading isn't profitable short term, it requires patience and about a week of time to start seeing some meaningful desired results.

A visual aid on what I mean:

Mined day - O
Maturity day - 1
Payout day - X

O 1 X
- O 1 X
- - O 1 X
- - - O 1 X

So long as the payouts remain consistent each day it will be fine. Missed days and gaps in payout times means that it may be time to check for another multipool. The now defunct thepool.pw, where I used to mine for currency payouts, was doing fine until they suddenly started saying they were taking losses for months without telling anyone and delayed payout times and start spreading payouts that eventually lead to gaps in trading. So if the maturity saves fees it is fine so long as the consistency demonstrated above is present. "Gap days" are not good. A day in altcoin trading time can sometimes be like a week in real world time.

[Steve Sokolowski]

Forgive this one for reviving an old topic but I would like to add in that just mining alone will most likely never get your money back along with profits. The usage of a multipool's selective payout feature along with trading along side the exchanges that it buys from has been a great source profit. But one has to carefully consider which coin, price, exchange, and the amount of time to turnover the mined coins in advance. Depending on the market and difficultly one can increase what they "mine" anywhere from 20% - 100%. My personal experience has mostly been on the 20% - 40% side not including trading already in progress. Developing such a strategy for yourself will also greatly extend the life of inferior mining equipment long past their prime.

Would your profits significantly increase if we were able to pay out "on credit" the next day, rather than waiting until the coins mature two days later?

I would prefer the usual 24 hours or fixed daily payout time but so long as the payouts would be consistent the next day with continuous use then all is well. An example would be, I still wait the two days for maturity for the first day of mining and the next day I would get my payout on time for the second day since the twos day will have passed already by then. Multipool trading isn't profitable short term, it requires patience and about a week of time to start seeing some meaningful desired results.

A visual aid on what I mean:

Mined day - O
Maturity day - 1
Payout day - X

O 1 X
- O 1 X
- - O 1 X
- - - O 1 X

So long as the payouts remain consistent each day it will be fine. Missed days and gaps in payout times means that it may be time to check for another multipool. The now defunct thepool.pw, where I used to mine for currency payouts, was doing fine until they suddenly started saying they were taking losses for months without telling anyone and delayed payout times and start spreading payouts that eventually lead to gaps in trading. So if the maturity saves fees it is fine so long as the consistency demonstrated above is present. "Gap days" are not good. A day in altcoin trading time can sometimes be like a week in real world time.

This seems more complicated than it needs to be, though. The only reason we wait for the coins to mature is because of money. I can solve that problem pretty easily by just making a withdrawal from my own account to pay people out before we actually sell the coins.

I didn't realize that people actually were trading with these coins. I had figured that the only people who really cared about prompt payouts were the people who selected Coinbase, because they wanted to be rid of the bitcoins as soon as possible. Now that I know that, we can do some testing, buy some bitcoins, and get that wait time reduced.

By the way, there is a reason why we mandate payouts as soon as possible, and it's exactly what you said. The best way to eliminate the problem of being short is simply to hold as little customer money as possible. It can't get lost or stolen if you don't have it. We want to pay as soon as possible and get our profits out of the system to our personal wallets as quickly as possible.

[loszhor]

This seems more complicated than it needs to be, though. The only reason we wait for the coins to mature is because of money. I can solve that problem pretty easily by just making a withdrawal from my own account to pay people out before we actually sell the coins.

I didn't realize that people actually were trading with these coins. I had figured that the only people who really cared about prompt payouts were the people who selected Coinbase, because they wanted to be rid of the bitcoins as soon as possible. Now that I know that, we can do some testing, buy some bitcoins, and get that wait time reduced.

By the way, there is a reason why we mandate payouts as soon as possible, and it's exactly what you said. The best way to eliminate the problem of being short is simply to hold as little customer money as possible. It can't get lost or stolen if you don't have it. We want to pay as soon as possible and get our profits out of the system to our personal wallets as quickly as possible.

The way I described now is how I am currently being paid. Since I am continuously mining I am enuring a payout everyday from earlier mature credit the two days prior. I calculated for the extra day and everything is fine but as shown I desire consistency as in no "gap days" in payouts which would mean healthy exchange volume.

Multipool trading is one strategy of mining but as I stated earlier it has many facets to consider and requires patience to be effective but I find it is the best use of outdated mining equipment next to rig rental which is also done intervals when doing so. You must also actively keep watch of the markets you are participating in and mining is actually a force multiplier for the trading itself unless your goal is to obtain a proof stake only coin via mining. I'm oversimplifying it all but I'm sure you get the idea.

One major reason that a developer will request a multipool pay out in their currency, and not just mine it, is that it will cause volume to occur on the exchange that it is purchased on and keep it alive. Depending on the exchange, if a coin does not maintain a certain trading volume it will be removed. Having it supported by a multipool is an easy way someone can keep a coin alive without resorting to gray tactics like buying their own currency from themselves which some exchanges frown upon. I know as of last year Poloniex has banned the practice so a multipool payout would be the only legitimate way of doing so unless a group of the dev/supporters just colludes to buy it from each other which I am sure will have it's own problems.

But to the original point, a multipool with a user chosen currency payout option is a powerful tool for trading. A Multipool without a chosen coin payout is one that is mostly for mining profit alone such as Ispace.co.uk or GHash.io since no actual exchange buying is taking place.

[cdt]

My curiosity is killing me, so I have to ask: If you owned two A2s, why on earth would you only be getting 30MH/s when they're rated at between 90-110MH/s each?

[Chris Sokolowski]

If I recall correctly, the A2s are sold in three capacities - 30, 60, and 90 MH/s - the only difference being the number of chips in each miner. We were considering the 30 MH/s versions because no one had stock of any of the larger miners at the time.

[cdt]

Aaah okay, that makes sense Thanks for clarifying.