Mining Cost vs. ROI Doesn't Seem Worth It

Mining & Hardware
#1

Hello everyone. Long time lurker here.

So, I have been looking into mining for a quite a while and every time I look into an approach to it the timeline for an ROI when compared to cost never seems to make sense to me. I have looked into various ways to get into mining (small scale/cost miners, high-cost miners, various coins, pool mining, hosting services) and every time I calculate the ROI it never seems to make sense. The vast majority of my holdings are in BTC, and I while I have some other holdings as well, I don’t have a ton of interest in meme coins or super obscure long shot coins. I look at Crypto from a financial investment standpoint and the novelty of mining myself is secondary. Anyway, every time I look into an approach It almost always makes more sense for me to just buy the Crypto, I want out right. And that is just looking at an ROI based on known variables (equipment cost and energy consumption/cost) and does not consider any unforeseen circumstance that would require additional funds.

Just curious if any others are in this same situation or if anyone else was and found an approach that was worth it?

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#2

Yeah it’s pretty ugly right now. I started getting into mining in the September/October timeframe last year and the opposite was true. I think markets for miners right now are a bit out of whack and will probably either adjust accordingly in a couple months or a rise in the crypto markets will bring them back to reality. I’m still actively buying/attempting to buy miners but now it’s exclusively used equipment at reasonable-ish prices. Those deals are pretty few and far between though.

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#3

That is where I am at and most used equipment available is way over priced. I have some sites I keep an eye on and I have trigger points to buy, but they never seem to get where they need to be for me to feel comfortable for a reasonable ROI. I am willing to accept a long term ROI in some investments but when it comes to anything tech related, something that hinges on functional equipment, and/or markets that are so variable it is tough to justify investment. I totally get the hobby aspect of mining and I would very much enjoy to break into it, but financial gain is priority 1 for me and it has to at least make some financial sense before I will move. Every time I calculate things out the ROI timeframe just says buy the Crypto I want outright or in the dips.

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#4

Mining is a full on bet. You are correct, many times just buying the coin on a dip is the way to go. And most all the miners are overpriced for a dip in prices, but quick to soar when the coin goes up. Problem is Mining allows recieving the coin at all times. High or low. That’s up to you to decide if it’s worth it or not. I have had covos with miners of all stripes. They all have their reasons and it’s 50/50. For me I hold the coin for the peak. Sometimes sell some to cover some expenses. the real bet is that you can mine enough coins between bear markets to win in a bull.

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#5

Cheaper than buying it.

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#6

NachLibre ---- Not in all instances. Also, when you only see a positive ROI on some machines (when considering energy costs) in the 2-3 year range it can just make more financial sense to just buy if you goal is long term financial investment. This is assuming your machine maintains is mining capability over that time. This also doesn’t account for unforeseen circumstance like broken machine, outpaced by technology, loss of mining capability (ETH), and/or Regulation.
Again, every time I have looked into a mining operation when I have calculated out my ROI point and the amount of crypto I could mine in that time it almost always makes more sense to just buy it. In some instances I may make marginally more Crypto through mining, but I have to assume a risk to make a very small amount more over operational time period. So while your statement may be technically true, when it comes to large scale financial investing the risk to make minimally more profit is not a sound move.

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#7

IMO we can wrap our heads in circles. We know the simple facts. If Electricity was 100% free to you, you’d be the best miner in the world.
That is the big variable factor. The 70K machine … who cares about machine cost either it returns or not.
So before we even address this, Are you living in Eastern Washington or Idaho operating your mining farm from hydro electronic? If not , are you sure this topic of conversation is worth having? If your preferred location is a variable, it kind of jacks the business equation. I would rather be selling bottled water in the desert than the bottom of the sea.

So lets assume you have mitigated your electric/location cost as well as you can. Your profit margins should be very easy to calculate with the giant variable being BTC’s price. And yeah, I’m probably like everyone here that it took me a little while longer before my projected ROI came back.

Are you mining for yourself or using a 3rd party miner like NiceHash ? that right there is a couple-few % right off the top. Are you being paid in what you mine? Nothing is for free, if you mine some other coin but get paid in BTC/ETH you should expect to pay premium transaction fees of 0.8%, that will add up if you get paid daily.

The only way to mine is for yourself and into you CLI or Core Wallet. This would be compared to someone doing a bank Vs one being paid in cash. Anything else is extra steps, extra fees and a waste of your time. Transfer fee’s alone can kill you. A LTC CLI transfers for .0001 LTC , Kucoin transfers for .001 , Tradeogre for .01. Notice the differences- Ku 10X to CLI standard, tradeogre is 100X the CLI standard. So a transfer with tradeogre just cost 100X more than needed. that 99 parts profit gone.

I’m not trying to sound ill. You are expressing what we all feel. I’ve mined strait through since I started. Try mining in 2018 when BTC was 4K, then come talk with me, lol.

Of course as I say all this, I’m reminded of what a crypto pal told me, I’m in this for the glory while others just want to make a buck. Mining is not “how much it cost” it is “how much native fiat did you put into the crypto’s production which is doing your part to steal your nations adherent wealth and place it into crypto for the entire world to use in opposition to your government funding a war machine and convincing little kids to cut their junk off to satisfy sexual deviants”. Potato / potatoe

Another thought, what you do with your mined crypto is a giant variable. Did you hodl until April of 2021? in that case that person would have been spot on, did they sell all their coins when BTC was 9K Vs. 45K ? Does the mined crypto go into/through a DeFi cycle before cash out?

We have come a long ways from just swinging our picks and walking into town with nuggets. They now expect us to melt the nugget down and have them checked for purity at our cost and they will only buy set amounts. I know metaphors are a joke but they do apply, in a way.

I’ve also just considered using gas as a source of energy. In the US (where live) the idea of using a gas generator myself is nearly at the point of being the more profitable choice. 10 gallons of gas might be cheaper in many cases than daily electric cost.

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#8

I appreciate the well thought out response. I should say I am not someone who is looking for answers here, but I enjoy the conversation around this topic and it can be difficult to find engaging folks to have a chat with. Your thoughts and considerations are in the same arena to the ones I have had, but it seems we have landed on different sides of the fence at this point. I admire that you have planted your flag on mining side and wish I could convince myself to do the same…but alas it comes back to my original post. Thanks for taking the time to offer a considered response.

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#9

This is just my opinion and view on the subject and is not financial advice.

I think it really depends on why you want to get into cryptocurrency. Are you mainly just looking for money, or are you interested in it as a hobby as well? I think you could make a good amount of profit through trading, but I have not done it. If you do end up trading, make sure you keep good records for your taxes with all of the buying and selling.

However, with mining, I personally started out by mining on GPUs and built a 6 GPU rig in May 2021. I eventually got my ROI at the end of the year. I just built a new 12 GPU rig with RX 6600’s. With that rig, I was going for efficiency so that it would remain profitable even though the market is what it is. I like the flexibility of GPU mining because right now I am mining ethereum, but I get paid out in bitcoin, so when ethereum does go to proof of stake, I would personally feel safer knowing my money was in bitcoin instead.

I have spoken with many people who say GPU mining isn’t the way to go and you most certainly could make more money with ASICs, but I enjoy that I won’t be limited to just one or two algorithms. At the end of the day, if all of that goes away, I believe I would make more money selling GPUs to gamers than trying to sell my ASICs that are no longer profitable or are paperweights.

I should also add that I am mining in an apartment with 18 GPUs and 2 HS-Box ASICs. So I do have some decent power restrictions, but I would love to expand when I get a bigger place or a house.

At the end of the day, it just depends on your reasons. For me, it just ended up being GPUs because I am only using 1760W total for all of that mining, and I just have them on different 15A breakers, so no modifications needed. Right now, I believe I am making about $25.50/day, but I am mining the amount of coin and not the dollar amount. Honestly, you could be mining $5/day right now, but that same amount of coin when prices go up would be $10/day. So really, how much you mine and profit per day doesn’t really matter at the moment, it only matters when you go to sell.

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#10

Another great response! I initially ventured into this with the intention of GPU mining and would be more willing to sacrifice profit to go down this road. The idea of having a hobby like this is very enticing to me and I would be willing to operate at a zero sum rate if I could go down this road. The problem I see right now and have seen for a while is that it seems almost impossible to get a quality GPUs at a decent price. It is almost absurd what they cost right now. Then trying to get your hands on enough to put a rig together seems like quite a hill to climb (I know, where there is a will there is a way).

I don’t want to come across as complaining too much (ASICs don’t have a good ROI, GPUs are too hard to get) and I realize that is how it may seem. Just trying to put my thoughts out there to see if others have found themselves in the same loop when it comes to venturing into mining.

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#11

My thoughts
I love the ease and quiet of ASIC box miners. I would love to upgrade one day but it needs to be an inside miner as I am not pissing off my neighbors.
I am tired of hearing the term ROI because you act like the miner has 0 value I see old used miners going for more than original purchase Just my two cents

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#12

I bought a Helium hot spot, had my pay back in three months and now I just get paid 100 dollars a month for how many years? Yea that specific one was WORTH IT.

Bought KDA Box miners for 4k each and pay back was months when market was topping, now its like a year. Either way, ROI there was definitely worth it.

If your closing off all your avenues to strictly blue chip coins like BTC, yea the competition is fierce lol. But that’s what you get when your close your options up .

When your looking at ROI are you using the current value of the coin or the value from two months ago or the value from 5 years from now ?

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#13

I agree that old miners tend to go for more than the purchase price right now, but the market has taken a drastic upswing in the last 2-3 years. Also, there is a shortage of available equipment right now which drives the price up. But the market is also exploding and I think we will see much more availability in the next 18 months. Furthermore, the technology is also expanding rapidly and I think (just my opinion) we will see miners lose their value more quickly than we have up to now.

As for the dislike for ROI, I get it. If you are a purist the sole consideration of ROI could seem repugnant. But everyone jumps in for their own reasons. When I look at ASICs I only care about ROI because there is not much novelty or hobby to buying a machine to do work. If I went the GPU route I would be less concerned, but I would still consider it. To each their own.

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#14

Helium is a good arena right now, but I have some concerns with that specific method and coin so I have been hesitant to dive into it. But for what is going on right now it seems like a good concept.

ROI of a year is not too bad, but like I said in my initial post when I consider electric cost for most miners I don’t usually see an ROI anywhere close to that.

I don’t entirely close off my thoughts to only blue chip coins, but from an investment standpoint that is the end goal. So if I mine obscure coin I also have to consider transaction fee to get it where I want it…which also cuts into ROI time.

When I calculate ROI I try to look at averages over reasonable time. Seems the best way to make a sound decision with limited information. But when I try to speculate where the Coin will be in 5 years and I look at operating cost in that time compared to how much Coin I could buy today if I just outright bought it, it almost always tells me to just buy it now (especially if there is a dip). This is also operating under the consideration that my machine will run perfectly in that time and won’t be outpaced by technology.

Again, these are just my thoughts and I am not saying they are right or wrong. I have said if I could get my hands on reasonably priced GPUs I would mine at a zero sum profit for the fun of it.

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#15

ROI changes daily with the price of the coins. It can go up or down daily so who is to say what a good price is. If you are in for the long haul just get in.

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#16

You are not wrong, but you can still get a good approximation of an ROI. Again, the importance of ROI depends on your view and I am not saying it is the end all be all but it is relevant from my perspective. I appreciate your view on it, but it is not mine. And I am not here to argue the importance of it, just offering my thoughts when I calculate investment opportunity.

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#17

I know what you mean. It seems that everything is hard to get right now without scalpers or everything being out of stock. I believe the further into 2022 we get, the cheaper and more available GPUs and ASICs will be. I think there is major FOMO right now. I mainly reinvest my ROI into more hardware and keep going from there. I also mine alt coins like helium (HNT), ScPrime (SCP) and TONcoin (TON). I like to convert my crypto into bitcoin as a store of value, especially when there is a significant price drop. If you don’t like the price, just wait a few months! :joy:

I know that Microcenter has been getting more GPU stock recently and the prices are going down, so maybe that’s an idea for you. I started with GPU mining and then, when I mined enough, I bought my ASIC box miners with that crypto. It was a good way for me to get into ASICs for sure.

At the end of the day, if you like a project, then support it or mine it. Terms like “ROI” are very subjective and change daily based on the price at which you sell the crypto.

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#18

The best way to take advantage of everything you can is start an LLC and talk with an accountant on what expenses can be written off as tax deductions which can be a lot of things such as electricity, office space, credit card interest, Unreimbursed business expenses, tax preparation fees, business use of your home and many more…

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#19

This what I was getting at. If you are into the mining world already and have been, of course it makes sense to keep going at it. You were likely able to get your equipment at a reasonable price and can move your operation along with what you make (which I am sure is satisfying).

But if you are looking to get into this world, it seems you are going to be operating under water just to be part of the “in crowd”. Hopefully, this changes shortly and I think it will. But I worry that it may make a lot of the systems working well now not as functional in the near term.

I am also regretting using the term ROI in a community that devote followers…poor choice on my part.

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#20

You shouldn’t. ROI is an important consideration. If you don’t keep it mind, you are being a tad irresponsible.

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