Bitcoin Mining In 2013
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.