Sign in with
Sign up | Sign in

Bitcoin Mining In 2013

All About Bitcoin Mining: Road To Riches Or Fool's Gold?
By

While the current Bitcoin valuation of approximately $120 still seems to beckon new miners to enter the game, the reality is quite different. More than half a million Avalon ASICs have been sold, and, once delivered and mounted on PCBs, they will add 150 TH/s to the current hash rate of approximately 100 TH/s.

While BFL won’t disclose sales numbers, rumors abound that 100 SC miniRigs have been ordered, each of which will add 1.5 TH/s. So, that's another 150 TH/s.

Add BFL SC Singles, complete Avalon rigs and the ever-expanding ASICminer mining farm, and it’s easy to see that the best estimate for the global hash rate in late fall of 2013 is about 1000 TH/s. You're looking at ten times the current hash rate, and thus ten times the current mining difficulty. If an Avalon rig currently nets, say, $8000 per month, the revenue will soon be a mere $800 and decline from there. But maybe that’s even an underestimate, as other startup companies, one in Switzerland and another in Sweden, have recently announced their own ASICs.

Thus, it is a fool’s errand to bid $20,000 for a pre-order of a 65 GH/s Avalon box on eBay. By the time it gets delivered, you will not be able to earn your investment back. But at least you would be able to afford to keep it running for a while, which cannot be said for GPU-based miners. Assuming a stagnating Bitcoin exchange rate, any graphics card will soon cost you more in electricity than it can generate in Bitcoins.

While existing FPGA miners can probably stay online throughout 2013, now is not the time to buy them. I recently put my only 210 MH/s ZTEX 1.15x miner on eBay for $250, expecting it not to sell, whereupon I would have lowered it to $200 and tried again. But lo and behold, a bidding frenzy ensued and it got bid up to $380 (stunningly, even beyond its Buy It Now price of $350). While I gladly accepted the payment, I sincerely pity the buyer.

If you cannot withstand the lure of mining, you basically have two options: buy an ASIC miner at factory (not auction) prices, and mine Bitcoins, or use your existing graphics card and mine Litecoins.

While I have now recouped my investment in mining hardware, you may not be so lucky. Even among ASIC-based mining hardware there is a ranking, a hierarchy based on purchase cost and energy efficiency. Tis folly to think that you’ll be able to run 130 nm ASICminer ASICs in California indefinitely. At some point, you will be outgunned by people running yet-to-be-sold 28 nm ASICs in some rural county of Washington state, where a kWh costs a mere 2.33 cents.

Bitcoin mining is not for the faint of heart, nor for the mathematically challenged. Invest only what you can afford to lose. Or better yet, enjoy this crazy sideshow from the bleachers.

Display all 151 comments.
This thread is closed for comments
Top Comments
  • 12 Hide
    phenomiix6 , June 9, 2013 11:37 PM
  • 12 Hide
    dannyboy3210 , June 9, 2013 10:39 PM
    A very interesting read. I had been reading about Bitcoins (mainly because I just couldn't figure out what they were exactly), but this clears a lot of things up.
    Also, at the bottom of page 5, in the Comparison of FPGA and ASIC Chips table it says "Power Fraw".
Other Comments
  • 8 Hide
    Darkman69 , June 9, 2013 9:49 PM
    Finally a proper write up on Mining Bitcoin with the good the bad and the reality.
  • -9 Hide
    esrever , June 9, 2013 9:54 PM
    How does mining new coins make sense if there will ever only be 21 million? I am so confused by that point.
    Another thing is, with an economic system like this, a billionaire can easily manipulate market prices and make extremely large amount of money and still be completely fine due to this being in a grey area of the law. You can't pump and dump stocks legally but it seems pretty easy for something like this considering you can dump the bit coins off as currency in any country.
  • -5 Hide
    s3anister , June 9, 2013 10:00 PM
    Quote:
    How does mining new coins make sense if there will ever only be 21 million? I am so confused by that point.


    To quote the Bitcoin wiki page: "The last block that will generate coins will be block #6,929,999 which should be generated at or near the year 2140."

    So to directly answer your question, the whole reason for mining bitcoins is because you'll most definitely be dead before the last block chain is even completed.
  • -6 Hide
    smeezekitty , June 9, 2013 10:14 PM
    Shitcoins definitely = fools gold!
    Huge waste computing power IMO
  • 1 Hide
    vmem , June 9, 2013 10:27 PM
    Quote:
    Shitcoins definitely = fools gold!
    Huge waste computing power IMO


    someone needs to rewrite the algorithm and somehow hook up block generation to folding@home or some similar constructive use of the computational power.
  • -1 Hide
    smeezekitty , June 9, 2013 10:28 PM
    Quote:
    Quote:
    Shitcoins definitely = fools gold!
    Huge waste computing power IMO


    someone needs to rewrite the algorithm and somehow hook up block generation to folding@home or some similar constructive use of the computational power.

    That would be a great idea. Verifying a relatively small hash to screen out the cheaters then perform something useful like F@H.

  • 12 Hide
    dannyboy3210 , June 9, 2013 10:39 PM
    A very interesting read. I had been reading about Bitcoins (mainly because I just couldn't figure out what they were exactly), but this clears a lot of things up.
    Also, at the bottom of page 5, in the Comparison of FPGA and ASIC Chips table it says "Power Fraw".
  • -8 Hide
    slomo4sho , June 9, 2013 11:02 PM
    Fiat currencies... I guess for some people the dollar wasn't worthless enough.
    It is amazing how you can lose your "wallet" and your funds permanently disappear from the pool.
  • -9 Hide
    toarranre , June 9, 2013 11:02 PM
    Never heard of this and I'm quite confused by it. Use graphics cards to find units of a currency that from what I can tell must be extremely succeptable to artificial inflation or all out collapse.
  • 12 Hide
    phenomiix6 , June 9, 2013 11:37 PM
  • 9 Hide
    csf60 , June 10, 2013 12:53 AM
    In 2010 I started bitmining and reached 3 bitcoins in 2 months with a 5850. Each bitcoin was worth 3$ at that point so I just gave up and lost my wallet. If I only knew 3 years later they would change for 150$ each... :face palm:
  • 3 Hide
    choz , June 10, 2013 12:58 AM
    Thanks for your calculations. I now have more things to laugh about here in Australia when I read about bitcoin "miners" setting up multi-gpu rigs when our power price is around the 25c per KWh mark and rising by 5% annually.
  • 0 Hide
    ET3D , June 10, 2013 1:16 AM
    I've only skimmed the article, but I didn't see a good discussion of mining pool, trading and all the DDoS, phishing and hacking that goes with it.
    The technical aspects and financial calculations are one thing, but going bitcoins is somewhat of a hornets' nest, and it's really worth discussing this stuff.
    I haven't mined seriously, but the first time I tried (for two weeks, generated half a bitcoin), I left the bitcoins in the pool and one of the pool's founders embezzled and took what was there and left. I've seen other pools hacked, and there are regular DDoS attacks on them, changes in the terms, all kinds of things you really need to follow carefully if you want to mine effectively. Just leaving your miner running and hoping that you'll get the expected coins eventually doesn't cut it.
    I currently mine a little LTC for fun (partly because after installing Catalyst 13.4 I can't mine BTC and can only mine LTC with an old cgminer version I have installed). I'm not sure that it's worth it financially, and I'll probably shut down mining in the not too far future.
  • 4 Hide
    Madn3ss795 , June 10, 2013 1:19 AM
    Quote:
    I bought a few Radeon HD 7790 graphics cards

    7790 already out in June 2011 ? :lol: 
  • 2 Hide
    immanuel_aj , June 10, 2013 2:28 AM
    Quote:

    Or better yet, enjoy this crazy sideshow from the bleachers.


    Yup, that's exactly what I'll be doing! There's always something in the news about it every month these days. :) 

  • 5 Hide
    uruquiora , June 10, 2013 3:05 AM
    this is why i think TH is one of the best IT news website around nowadays... thanks for a very interesting article and for sharing the good and the bad with newbies like me on that subject.
  • -1 Hide
    somebodyspecial , June 10, 2013 3:29 AM
    Maybe now we won't have to see this in benchmarks. It's over for gpus.
  • 0 Hide
    tlg , June 10, 2013 4:17 AM
    I am also wondering how he got the HD7790 in June 2011, except if this is a typo because later on in the same page he talks about November 2012.
  • 0 Hide
    dalmvern , June 10, 2013 6:05 AM
    Great article, I have been wondering what the fuss was all about. Now the only question I have is:
    What is all this processing power being used to do?
    As it was mentioned in an earlier comment, it would be great to use it for something like scientific research like F@H...but I have never seen anything explaining IF it is being used, and if it is, what it is being used to do.
Display more comments