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How a total n00b mined $700 in bitcoins

• maaku 13y ago
  Watch that $20/week become $14/week, then $10/week, then $7/week in the span of a month. Still a good investment then?
  • akkartik 13y ago
    Which raises the question: what's the breakeven volume for Butterfly Labs customers? As more and more people buy their miners, how does the time to recover its cost dilate?
    • i_am_dead 13y ago
      The main problem is that the waiting list is currently almost a year. If you order a miner today you won't see it until 2014.
      • t0 13y ago
        What about the ones on Ebay for $500-1000? If the breakeven is so good, why wouldn't those people just plug them in?
        • maaku 13y ago
          They probably are plugged in while the auction is going. But with each day the resale value decreases as well.
  • corin_ 13y ago
    It would have to go down further to be not worth doing, since he covered the cost in ten days, and the electricity cost is less than $2/week. At $7/week for example he would roughly break even over a year even factoring in the cost of the device.
    • maaku 13y ago
      Yes, but (a) the decline / rise of difficiulty will continue, and (b) there's a year long waitlist.
      • zanny 13y ago
        You can make more money playing the ups / downs of btc (for example, right now, there is a down explicitly because gtx halted US dollar transfers so everyone is panic transferring BTC out and selling it off). Than trying to invest in a btc mining rig and playing a literal lottery with computing hashes, or joining a mining guild and making very little very consistently.
  • drivebyacct2 13y ago
    Sounds like they already recouped the cost of the miner. So if power consumption is $100/year, they need to make at least $2/week.
  • cocoflunchy 13y ago
    It's $20/day though, not $20/week. At that rate, if you can grab one right now, you don't really have anything to lose; you will have recouped your investement in about 3 weeks, maybe 4, and everything else is extra.
• ryhanson 13y ago
  Total BitCoin mining n00b here. How much could you mine per week without a device like this? A few dollars?
  • sp332 13y ago
    I was mining with a medium-low grade GPU for about 6 weeks. I ended up with 0.3 BTC which is about $30 right now. If you had a $250 Radeon you could probably have done better at the time, but this was just at the beginning of the ASIC invasion so it's probably harder now.
  • maaku 13y ago
    Its in the article, but bitcoin mining is a race to the bottom. You are commiting a major fallacy if you extrapolate current rates.
  • citricsquid 13y ago
    Depending on your graphics card, a few dollars a week sounds about right. A mid-range graphics card (eg: a 2GB 6970, $300) has a MH/s of about 400, as far as I know the top range consumer graphics cards (about $1000) top out at around 1200MH/s, which is 1/4th of what the Jalapeno has. A 6970 would probably generate about $8/week at present, but the power costs will dwarf that so it's not really worth it, unless you're not paying the power bill. The major problem is right now mining profitability is dropping fast and is going to drop even faster as all these custom built miners ship, you might be able to make a few dollars a week at the moment with your graphics card but once all these custom built miners start to ship (and there's tens of thousands of pre-orders) it'll become pennies. You've missed the boat on mining profitability with consumer hardware and anyone looking at custom built miners is going to be losing money too unless the value of Bitcoin sky rockets.
    • AJ007 13y ago
      I've been watching blockchain.info the past few weeks, and the estimated ROI has dropped from -30% to -50% in the course of about 2 weeks. A few months ago it was positive. I'm assuming blockchain's estimates are based on standard hardware.
• xentronium 13y ago
  Could someone please explain why Butterfly Labs don't mine the coins themselves, but sell their devices instead? As far as I understand bitcoin (and please correct me if I'm wrong), bitcoin output of the system is fixed, so if you produce (or buy) a lot of super-duper fast ASICs, they will generate less bitcoins per unit. If it is correct, then butterfly labs success inversely correlates with specific miner success, as in the more ASIC-s they sell for a fixed dollar price, the less profit their buyers receive. This seems somewhat conflicting to me.
  • arn 13y ago
    from the article "the second reason [they aren't just mining themselves] is far more practical: bitcoins, for all their current value, are still speculative. A large amount of US dollars is a large amount of US dollars no matter which way you cut it. It can be readily exchanged for goods and services. Bitcoins themselves don't necessarily hold value, and it's difficult to exchange them in large quantities for an equivalent amount of dollars. "
  • LoganCale 13y ago
    In a gold rush, it's often better to be the one selling shovels.
    • marvin 13y ago
      People keep repeating this meme. But in this case, setting up a mining business is trivial. If these devices will have a payback period of ~10 days in the near future, it does not make sense at all to just sell them to end-users. What gives?
      • notdrunkatall 13y ago
        My completely uninformed guess is that they are. If I were the one selling these things, you'd better believe that I'd have a room full of them mining bitcoins, and my room would take priority over sales. But I'd also sell them, because why not?
      • deleted 13y ago
• fnordfnordfnord 13y ago
  Sigh, more ARS blatantly advertising for BFL. If anyone is inclined to try this, buyer beware. Do some research on BFL before you spend money with them.
• malloreon 13y ago
  Take note that as of a week ago BFL is shipping units that were ordered in August of 2012, that perform worse and use more power than promised.
  • gigq 13y ago
    As someone who ordered back in August 2012 and received his 2 jalapenos a week ago I can say I'm still very happy with my order. I wouldn't advise someone to buy into it now as this article doesn't do enough to explain the geometric rise in difficulty will most likely make it difficult to recoup costs on the hardware by the time an order made today ships. BFL estimates they will clear the backlog of orders by September of this year, but their estimates are notoriously bad so take that with a grain of salt. These units don't perform worse than what I originally ordered, in fact they hash at a rate that is 24% higher than what I ordered (5.6GH/s vs 4.5GHs). While it is true to say they use more power than promised as they were originally going to use 5 watts and instead use 30 watts saying they perform worse AND use more power is misleading.
    • cupcake-unicorn 13y ago
      I thought it was fairly sleazy of them to offer the hashing "upgrade" for 100 dollars when from what I can understand it's a firmware only thing, and should have been done for free for forcing people to wait anyway. Do you feel angry at all that you lost so many months of potential income?
      • gigq 13y ago
        Back when I bought my jalapenos they were only $150 and I chose not to do the upgraded pricing to 7GH/s for $100. The speedup I was referring to was simply a bump in the base model from the original 4.5GH/s specs to what the units I received actually ran at. Given that the units have almost paid for themselves in one week it's hard to be upset about any lost income. On the other hand I still have only received part of my order and am waiting on multiple 60GH/s units that are just now starting to ship to people who ordered in June 2012. Depending on how long it takes them to get to my order I may have some regrets I didn't just order all jalapenos instead.
• cupcake-unicorn 13y ago
  It is very unfortunate that BFL is getting publicity over this article - they're a company with a terrible reputation and have treated their customers horribly. I got bitten by the mining bug recently and was stupid enough to almost buy one without doing proper research, until I ran into an issue with checkout. They were ridiculously unprofessional and rude dealing with it, and slow to get back to me, and that was a blessing, as I realized how worthless it was in the end. What it's probably not going to say in this article is: People have been waiting to have one shipped to them for over a year. Use a calculator to find out how much lost profit that is. If you buy one now, or even if one is shipped to you in the next few months (unlikely, unless you ordered it 10 months ago), it will be basically worthless due to more and more ASIC hardware coming out on the market. If you must go into mining, check out some of the custom Klondike K16 Boards that are being developed. These will be shipped much faster than anything BFL ships out, but even then you're looking at a few months lead time, which could be significant in terms of increasing difficult and return value.
• joejohnson 13y ago
  For everyone wondering how much you'd need to mine to pay for the equipment, here is a handy calculator: http://www.bitcoinx.com/profit/ http://www.bitcoinx.com/profit/ The BFL Jalapeño (5GH/s) is $274 and where I live electricity costs $0.19/kWh. From the article, the device "pulled 50 watts of power when actively hashing". So, this will pay off in 3 days, and will generate 9321.64 USD over 3 months (given 0.61 profitability decline per year).
  • notaddicted 13y ago
    The timing of when you get the device is crucial, check out how fast the total power of the mining network is going up: http://bitcoin.sipa.be/ http://bitcoin.sipa.be/ (it is the 1st graph).
• bugsbunny4341 13y ago
  How ethical and sustainable is it to earn money that you did not toil for?
  • colanderman 13y ago
    Moreover, how economically viable is it for the generation of currency to be proportional to wasted wealth (i.e. electricity spent mining coins)? Isn't money supposed to track created wealth?
  • vertex-four 13y ago
    They are toiling for this money. Specifically, the mining system exists in order to verify transactions, put them together into a block, and distribute that block to be added to every client's copy of the blockchain. The reward for performing this very important task is a certain number of Bitcoins "generated" at present, along with transaction fees that the miner can collect from any transaction which includes them. The reason for centralising the Bitcoin network on the miners (and for each block, one particular miner) this way is simple - consensus. It's of paramount importance that every client on the network has exactly the same copy of the blockchain, otherwise double-spending can occur - causing one half of the network to believe that some Bitcoins were transferred to one address, and the other half to believe they were transferred to another. The easiest way to do this is to build the network in such a way that one node holds an authoritative copy of the blockchain, and distributes that out to everyone else. But that goes against the concept of a decentralised network. So instead, what Bitcoin has done is built a system where every mining node races to solve a computationally hard problem, that they can prove they found the answer to, in order to become authoritative in order to add a single block to the blockchain. The incentive to do so is the "mined" Bitcoins, along with the transaction fees for every transaction included in that block. Without this system, Bitcoin could not exist. For the record - even though the miner is authoritative in adding a block to the blockchain, it cannot forge transactions. It can however refuse to add a transaction to the block, which sometimes happens if the offered transaction fee is too low. The transaction might be added to future blocks if other miners are OK with the transaction fee.