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Bitcoin The Almighty Buck Technology

One Bitcoin By the Numbers: Is There Still Profit To Be Made? 239

Posted by timothy
from the nature-of-money dept.
massivepanic writes with an article that "runs through the logistics of mining a Bitcoin on everyday gaming computers while keeping an eye on power consumption, time spent, and return on investment. From the article: 'I have mined a Bitcoin. This was not much of an accomplishment a year or two ago, but in 2013, after the infamous early-April peak at $260, unearthing a Bitcoin is no easy task. Competition is on the rise and we are getting close to the end of the good ol' days of Bitcoin; the time when a desktop computer or two have any real mining capabilities.'"
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One Bitcoin By the Numbers: Is There Still Profit To Be Made?

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  • by DigiShaman (671371) on Tuesday April 30, 2013 @02:05PM (#43592829) Homepage

    It takes money to make money. The ROI is higher the more you spend.

    • by femtobyte (710429) on Tuesday April 30, 2013 @02:26PM (#43593039)

      And remember another old adage: "There's a sucker born every minute." Want to get some ROI? Don't mine bitcoin, sell bitcoin mining rigs. Like selling shovels and booze to miners in a gold rush, it's a great way to make sure you get the cash now, and leave someone else scrabbling in the dirt with all the risk that tomorrow's newer custom FPGA rigs and market prices will make today's mega mining cluster not worth the electricity to switch on.

      • by omnichad (1198475) on Tuesday April 30, 2013 @02:33PM (#43593109) Homepage

        As long as you know when to get out. Otherwise, you'd be just like the miner - left with a lot of spare equipment of no value. Inventory isn't free.

        • Aren't Bitcoin mining rigs regular FPGA rigs configured for that specific task? Reset the hardware/software and you can sell it as regular FPGA to any number of people, it's nothing custom-made for mining Bitcoins.

          • by Shark (78448)

            It's hard to make a general-purpose fpga board cost-efficient for bitcoin mining. And with ASIC mining solutions now surfacing, it's also going the way of the GPU, just as that obsoleted the CPU.

            • It's hard to make a general-purpose fpga board cost-efficient for bitcoin mining.

              Possibly you missed the adage: "There's a sucker born every minute."

          • by petermgreen (876956) <plugwash&p10link,net> on Tuesday April 30, 2013 @04:42PM (#43594597) Homepage

            Bitcoin mining is starting to move towards ASICs now.

            But ignoring that even with FPGA while the FPGAs themselves are standard parts the boards usually aren't. Afaict most off the shelf boards for FPGAs fall into one of two categroies. Either they are PCIe/PXIe cards designed to move a lot of data over a bus system or they are hardware dev boards with loads of different interfaces for a developer to play with. Bitcoin mining needs neither of those, it just needs power and a way to get a tiny ammount of data in and out. The result is an off the shelf FPGA board is a poor value proposition for mining and a mining optimised FPGA board isn't much use for anything else.

            I guess you could desolder the FPGAs from your no longer viable FPGA boards and then reball them and try and sell them but I think you'd find it pretty hard to find a buyer for such parts (afaict reballing voids the warranty) and if you did find one you'd have to sell them at a massive discount to fresh FPGAs from the manufacturer.

      • by Darinbob (1142669) on Tuesday April 30, 2013 @03:57PM (#43594057)

        Bitcoin appears very strongly to have been designed so that the inventors and early adopters got the most money for free, the late adopters have a difficult time getting the money out of it, and may even be spending money to try to get some faster. At least with a real gold mine there was actual work and sweat required even by the first miners and they never lied and said they were doing this for the good of others or to try and create an alternative system.

    • But bitcoin is extremely wasteful. At least with real coins the metals are still useful.

      • by Anonymous Coward on Tuesday April 30, 2013 @03:07PM (#43593477)

        But bitcoin is extremely wasteful. At least with real coins the metals are still useful.

        Bitcoin bits are infinity reusable. You could reuse those bits to make a picture, song, movie, spreadsheet, game, encryption key, etc.

      • I imagine US currency coming in nice $100 "soft rolls of paper". Least that way you know your money is always worth a ... well you get the picture.

        • by rolfwind (528248)

          “Paper money eventually returns to its intrinsic value – zero.” (Voltaire, 1694-1778)

          • by femtobyte (710429)

            Which is why magic random bit sequences, with their loads of intrinsic value, are so much better!

    • by BasilBrush (643681) on Tuesday April 30, 2013 @02:34PM (#43593131)

      A bitcoin may cost more in electricity than the bitcoin is worth, but hell we can make up for it with volume!

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        In college dorms, electricity is "free".

        • by Loether (769074)

          Electricity, like information, wants to be free.

    • Probably not – or at least not for long. ROI is a ratio, Return Over Investment - or the percent return on your investment regardless of what the exact amount of the investment is. It allows somebody to compare a small project vs. a big project.

      Your ROI would get greater as long as you have economies of scale – that is, the more money you spend the more efficient of a computer setup you get. I am going to make the assumption that pretty quickly you are going to hit the economies of scale (I do

  • I wonder if at this point it makes more sense to push an alternative, E-coins. I better go out and push it!! Maybe just as a contingency in case Bitcoins have technical issues.
  • by magic maverick (2615475) on Tuesday April 30, 2013 @02:18PM (#43592937) Homepage Journal

    Bitcoin is a scam, and is never going to go anywhere. After all, you can't pay your taxes with it.
    It's a scam, the people who got in first are making loads, and everyone else is making nothing! Just like a pyramid scheme.

    And it's not worth mining, because of ASICs etc.

    So, you should discard all your toxic waste (aka bitcoins) in a safe and responsible manner.

    Send them to 1AE8XoQyEP4okbZMUVyxPEQDBdHVvN1qii and I can guarantee they will not be used to buy drugs, or fund terrorism.

    • After all, you can't pay your taxes with it.

      But you can buy tulip bulbs and Beanie Babies!

      • You can buy gold with it, then sell the gold and pay your taxes on the profit.

        So you can pay taxes with and on bitcoin, you just have to buy and sell the right items.

    • Nothing you post on a web forum is worth any money.

    • Please help! My friend is a Prince and he needs to hide a lot of money quickly! We were planning on using your Bitcoin account, but I tried www.1AE8XoQyEP4okbZMUVyxPEQDBdHVvN1qii.com and it didn't work! Something about HOSTS FILES NOT FOUND or some other crap. I also got an APK ERROR on top of that!

  • by onyxruby (118189) <onyxruby@nosPam.comcast.net> on Tuesday April 30, 2013 @02:18PM (#43592957)

    You can profit from bitcoin in four different ways:

    1. Have a special asic rig that is custom made for mining bitcoins.
    2. Have a botnet that you put to work mining bitcoins using other peoples electricity.
    3. Speculate in bitcoins and bet that they will go up or down in value.
    4. Hack someone else that has bitcoins.

    Two out of the four ways to make profits with bitcoins are illegal and one of the others is often accompanied by illegal activity (DOS) to manipulate the exchanges to try to force the value up or down. It's been a while since you could mine them on your own and come out ahead on electricity versus bitcoin value. Perhaps there are some good reasons bitcoins have a shady reputation?

    • Re: (Score:3, Insightful)

      by Nrrqshrr (1879148)
      Not really a defender of Bitcoins, but:
      You can get real money in four different ways:

      1. Have a special skill or qualification that allows you to acquire money.
      2. Put others to work earning you money for a profitable wage using other peoples special skills or qualifications.
      3. Speculate, lol.
      4. Steal.

      Only one of these is ethical.
      • Only one of these is ethical.

        I disagree with that. If #1 is ethical, #2 is also ethical, by extension. (If it's ethical to work, why wouldn't it be ethical to employ?)

        #3 - speculation - is dubious. In its pure form, it's arbitrage with risk involved.

        If you meant to say "Only one of these is unethical", then I apologize for misunderstanding.

        • by femtobyte (710429)

          And why does #2 follow from #1? This might be Capitalist dogma, but it's not a universal moral law. Many people do distinguish the category of "enjoy the fruits of your own labor" from "interpose yourself between someone else' willingness and ability to labor (by, e.g., owning the tools and resources), and collect a big cut of the fruits of their labor just because you are already rich (and they are poor, since they can only keep a tiny fraction of their labor's value for themselves)."

          • If it is ethical to work for others, it is ethical to employ others.

            Suppose I need work done, within your skill set. I can pay you to do the work, yes?

            Suppose I need work done, but I don't know who has the skills. I can pay an agent to find me a skilled worker, yes? (That agent's skill is finding me someone to perform the needed work.)

            • by femtobyte (710429)

              If it is ethical to work for others, it is ethical to employ others.

              No, one does not follow from the other. Both assumptions are often held, but not on account of irrefutable logic or some god-given law of ethics.

              Suppose I need work done, within your skill set. I can pay you to do the work, yes?

              What you "can" do has nothing to do with what is ethical. Under some systems, if you want the results of my skills, you owe me the full value of those skills, not "as little as you can get away with at labor market prices because you are rich and I am desperate".

              I can pay an agent to find me a skilled worker, yes?

              Again, what you "can" do under current systems does not prove anything is "universally" ethical. If you

              • by BitZtream (692029)

                So what you're saying is false, by your own words. It only is after you add existing stupilations. You are assuming that because I choose number #2, that I'm also going to pay them less than they deserve, which is an assumption that may not be true in many cases, so its impossible for it to be a fact.

                If you are selling your labor, someone has to buy it. If it is ethical for you to sell it, it must be ethical for someone else to buy it. That does not preclude non-ethical behavior, but it certainly allows

                • by femtobyte (710429)

                  It only is after you add existing stupilations.

                  Exactly, "employing others for money" is not necessarily ethical by extension of the ethicality of "working for money," without adding a lot of other stipulations (such as wages representing the full value of labor, not some lesser amount negotiated from a position of wealth and power).

                  If you are selling your labor, someone has to buy it. If it is ethical for you to sell it, it must be ethical for someone else to buy it.

                  Not without "added stipulations" about fairness of the work. For example, I might consider it ethical for a child laborer to sell their own body to feed themselves in a cruel and exploitative world, but not for their scumbag

                • by femtobyte (710429)

                  Alternate reductio ad absurdum argument that I hope will make you see the problem with your logic:

                  If it is ethical for you to sell it, it must be ethical for someone else to buy it.

                  Suppose you're strolling along when a mugger leaps out with a gun to your head, and says "your money, or your life!". I'd say it's ethical for you to give him your wallet and run. By your logic, does this make the mugger's actions ethical, too? After all, he's only enabling the other side of the transaction to your perfectly ethical decision to hand over your wallet.

                  • Several posts back, I believe we already agreed that stealing was not ethical.

                    • by femtobyte (710429)

                      Right, which is why "buying labor" is not automatically an ethical extension of "selling labor," since it may be a form of stealing (though more "dilute" than jumping someone with a gun) without a large number of additional stipulations that are frequently absent from existing labor markets. Specifically, in the formulation that started the thread: "Put others to work earning you money for a profitable wage" is unethical in many ethical systems, since you shouldn't be "earning money" by putting others to wo

              • It is conceivable that while a structure is generally ethical (for example, work for hire), a specific instance may be arranged unethically (for example, price not reasonably aligned with value). Nobody is disputing that.

                Again, what you "can" do under current systems does not prove anything is "universally" ethical.

                You're being pedantic. Nobody is saying that anything is universally ethical; I'm saying that the concepts of working for others and employing others to perform work are not universally unethical. You're looking for extreme cases (like child prostitution) to justify your unreasonable cl

                • by femtobyte (710429)

                  I'm being pedantic because being precise and pedantic is a way to reach logically correct conclusions. Your statement:

                  If it is ethical to work for others, it is ethical to employ others.

                  is simply false. An ethical system might choose to adopt both assumptions (or reach them both from other assumptions), but the latter does not follow from the former. Especially when "employ" is shorthand notation for the precise case you were originally supporting:

                  2. Put others to work earning you money for a profitable wage using other peoples special skills or qualifications.

                  in many ethical systems this might not be ethical at all --- specifically, the "earning you money" part, in systems which assume

      • Only one of these is ethical.

        I'm guessing you meant theft. If you're starving to death, stealing a loaf of bread is something few people would say is unethical. As for the other three... well, they all involve money, and as we know, money is the root of all evil.

      • by moeinvt (851793)

        You're arguing that in a transaction where one person agrees to use their special skills or qualifications in exchange for another person giving them an agreed upon amount of "money", one of the two parties has done something unethical?

        I see nothing unethical about speculation either.

      • by Darinbob (1142669)

        Method number 5: create your own alternative currency by fiat, grant yourself a large amount of that currency, then try to convince others that your currency is legitimate. Sure, this sounds a lot like stealing except that the suckers voluntarily buy into the system. So maybe more like a long con.

    • by swb (14022)

      Could you modify #2 in a way that uses cheaper electricity?

      Say wind/solar/micro-scale hydroelectric?

      Obviously if you have to build the power infrastructure from scratch, it's not worth it, but what if for some reason you had access to equipment that wasn't being used and you can generate a couple of kW for free?

      If electricity is really the major input cost (and not computing infrastructure), then a variation of #2 could involve stealing electricity but using your own computer equipment.

      I can almost see it n

    • by Agent ME (1411269)

      It's been a while since you could mine them on your own and come out ahead on electricity versus bitcoin value.

      The reason mining does lower returns now is because more people are mining now. I imagine many of them are driven by profits and are smart enough to only mine if they have a machine that mines more bitcoins than what they spend on electricity. Your post reads like the joke "No one goes to that club any more, it's too crowded!".

  • by Anonymous Coward

    More crypto-based currencies are coming around, Litecoin being the apparent "next big thing" I have been hearing.

    Me and a friend were going to get in on it to see if it would at least maybe get a few quid or so, not expecting huge returns, just a little bit of profit.
    But eh, I'm too lazy to leave a program running on its own.
    I may try it out, but it is getting in to figuring out exchanges, knowing when to sell, etc.
    I have a hectic life as is. Watching my investments is something I already don't do, probabl

    • I personally don't think that Bitcoin is a scam. I think it has great potential. But the myriad of other "digital currencies" popping up, I suspect most, if not all, are scams. Seriously, someone went and started a new chain, presumably hoping to do some mining, and then cash out.

      With Bitcoins, you can buy various things, but what can you buy with "Litecoin"? Bitcoins? Bitcoins are established (though still niche) and can be used to purchase various services and products (though often via a middleman purcha

      • by BitZtream (692029)

        I personally don't think that Bitcoin is a scam. I think it has great potential. But the myriad of other "digital currencies" popping up,

        Considering that all these 'new digital currencies' are just literal copies of bitcoin ... what you've done is shown that you think bitcoin is good for no logical reason, and that its copies are bad, again for no logical reason.

        You've illustratued that your reason for liking BitCoin is you're just ignorant of any actual information about it.

        • Nah. I understand just fine.
          Point 1: many of these alternative chains are not exact copies of Bitcoin, but have some slight change (e.g. using scrypt instead of sha256).
          Point 2: Bitcoin wins, and has the most potential, because it was first. The others seem to be jumping on the bandwagon. Moreover, bitcoin wins because I can actually use it.
          Point 3: I like the idea of Bitcoin, but I love the idea of a decentralized pseudo-anonymous (and can be anonymous with sufficient infrastructure in place) non-governmen

  • by taiwanjohn (103839) on Tuesday April 30, 2013 @02:26PM (#43593043)

    So now Bitcoin becomes the province of "big iron" players like the gubmint and TBTF banksters. Great.

  • by MasseKid (1294554) on Tuesday April 30, 2013 @02:26PM (#43593045)
    Some guy mined a bit coin using the computers he had lying around not in use. It took him 15 days with 2 machines w/ AMD graphic cards. He spent 5 hours setting it up and 24$ of electricity to mint a single coin.
  • by Animats (122034) on Tuesday April 30, 2013 @02:36PM (#43593157) Homepage

    Bitcoins earned: 1.00
    Value today: $133.58
    Total time: 14.5 days
    Rigs operating: 2-3

    Towards the end of the run I was getting impatient and ExtremeTechâ(TM)s Joel Hruska helped me sprint to the finish by giving me access to some of his machines...

    The era of Bitcoin mining with off-the-shelf hardware is over. The serious people are already using FPGAs, and if the people advertising ASIC hardware [butterflylabs.com] actually ship working product in quantity, even that will be obsolete. Like most Bitcoin-related businesses, the people selling ASIC mining hardware are flakes [bitcointalk.org].

    Bitcoin mining becomes exponentially harder as the 21 million Bitcoin limit is approached. Over 11 million Bitcoins have already been found, so this is already more than half over. All miners are in competition. The rate of Bitcoin discovery is fixed, so the more people mining, the less each miner makes.

    • by hodet (620484)
      Ya and the next 10 million will not be completely mined until 2140. I bet there are a couple of million that are lost for good when they were worth nothing.
  • FTFA...

    Competition is on the rise and we are getting close to the end of the good ol' days of Bitcoin; the time when a desktop computer or two have any real mining capabilities.

    So it really is a pyramid scheme, of sorts.

  • by Anonymous Coward on Tuesday April 30, 2013 @03:20PM (#43593621)

    That miners want to make a profit, a fat one if possible. It would be like the US mint being a for profit organization. It isn't. Even republicans can see why not and that is saying something.

    Bitcoin mining was NOT meant as a profit generation scheme but as a way to keep the coins in relative limited supply, to avoid the "tree leaves for currency requiring the burning down of all the forests to control inflation" problem. Bitcoin was originally meant as a barter currency, where you kept the barter. You provided something to somebody for bitcoins and in turn you use them to barter for something else. The idea was to create an altnernate barter market seperate from established currencies. To however create a "secure" currency, where somebody couldn't just print a lot of fake bills, both the mining and transaction require serious computation. In order to get volunteers to do this, a small amount of bits coins are set aside as a reward for handling transactions and miners get the bitcoins they intoduce into the pool to barter with.

    BUT the original idea was that the mining would be a tiny amount compared to the flow of bitcoins. A bitcoin was supposed to be traded thousands of time before a new one was generated.

    But as always, greed took over. Mining bitcoins was being seen as the ability to mint money and so people did it. Bitcoins became about speculation, who could mine them the fastest, hoard the most and then exchange them for something with real value. The MORE people shout about how many dollars bitcoins are "worth" the more bitcoins loose their value as a barter currency. People don't seek to make a profit from trade through a new way to exchange currency but by speculating in the currency itself. It resembles the gold market a lot. Not the real one, the gold market that has vending machines with tiny gold bars inside, the kinda people that believe that if they got a tiny fortune in gold, when the apocalypse comes, they will be rich because EVERYONE will be wanting gold then... nothing like dealing the end of civiliation then a gold bar.

    Bitcoins as a paypal alternative for small traders makes some sense, keep some"value" in bitcoins as a user who sometimes buys and sometimes sells, avoid the traditional exchange fees. But for this to happen, the currency needs to be stable. It isn't and traders are either seeking to get bitcoins "cheap" and sell them high or just doing it as a novelty to create some press.

    Google for places that accept bitcoins. The trade is simply non-existent. Places that reached the news have stopped accepting them and the remaining online shops are the ones you would normally stay a million miles away from. Shady doesn't even begin to describe them.

    It was a nice idea but human greed and the lack of any counter measures have doomed it from the start.

  • by nweaver (113078) on Tuesday April 30, 2013 @03:21PM (#43593643) Homepage

    Yes, send your unwanted bitcoins here: 1FuckBTCqwBQexxs9jiuWTiZeoKfSo9Vyi

    Overall, a general problem with BitCoin mining is that it is a classic "Red Queen's Race" [wikipedia.org]. The fixed rate of bitcoin addition means you can only get ahead at the cost of someone else. Which means, IF bitcoin succeeded, mining is effectively non-profit as the rather low barrier to entry (even ASIC rigs are only $2K) and no monopoly power means that the profit from mining gets, well, stripped out.

  • by ThePeices (635180) on Tuesday April 30, 2013 @04:34PM (#43594477)

    Since the biggest gripe on Slashdot seems to be the cost of electricity of running gaming rigs to mine bitcoins....hmm...i think i now have a use for that spare 160W solar panel ive got lying around, and all those Spartan6 FPGA development boards i happen to have sitting around consume very little power each....

    1) Idle equipment and free electricity
    2) Spare Time
    3) ????
    4) Profit

  • To make a million in BitCoin, simply invest ten million in equipment, electricity and time. Or save electricity ant time by giving me nine million in cash, and I will give you back 1 million worth of BitCoins... But the real question is when will we see the first Nigerian BitCoin scams.

  • http://deardiary.chalisque.org/more-tweets-on-economics-and-finance/

    Basically says it all.   One could dress it up as a serious research paper, but what's the point, it would only be a waste of a precious scarce and becoming scarcer resource (trees).

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