Mining by the Numbers

Andrew_Carr

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So I wanted to run some numbers to see if it makes sense to be a miner full-time. I think we all know that during bull markets like right now, mining is great. But I wanted to see if it's worth getting into mining in the middle of a bull market when GPU prices are already sky-high and availability is slim. Basically, does it make sense for the everyday Joe to invest money into mining without the full-benefit of commercial power rates, standardized rigs, experience, etc? Here are my findings:

Methodology: Take a budget of about $25,000 and allocate it towards the most cost efficient hardware. The limiting factor is generally going to be GPUs at low prices, so if something cheap is listed on ebay/Craigslist/[H]/FBM, "buy" it immediately and remove that from the overall budget. Generally we're looking at GPUs with ROIs of less than 6 months as of the sale date. ROI is calculated roughly via Whattomine and kryptex.org before deciding if a GPU is a good buy or not. CPUs, Motherboards, RAM, and PSUs are all plentiful in supply and at MSRP so that's generally what I've used. It's possible sometimes to buy stuff used for cheaper, so you could probably take off 10-20% from my other expenses.


1.) Distribution of Costs by equipment type (see graph)
What I've found is that, unsurprisingly, GPUs are the largest expense. This is followed by CPUs, Motherboards, and then Accessories. From my experience Accessories should probably be a little higher depending on how you set things up. If you buy expensive $150 mining rig setups and spend awhile finding the right fans, cables, etc., I would say Accessories would be the #2 expense at around $2k or around 10% of your total expenses. This is avoidable, but it's something you need to watch out for so you don't waste money on items not earning you any direct profit.

Power supplies are consumer level power supplies. The positive to this is that you can run these in your home without going deaf and keep things relatively normal, the negative is increased power costs and increased equipment costs. Using server power supplies would decrease your upfront expenses by about 50% or more but might not be a good fit for everyone.

Rough Cost Breakdown (On a $22-25k budget)
Accessory $795 3.47%
CPU $1730 7.56%
GPU $18242.85 79.67%
Motherboard $950 4.15%
Power Supply $1180 5.15%
(I left out RAM, and probably didn't account for all the misc. costs so I would increase the Accessory amount to roughly $1500 or so).


2.) Income
So you've spent $25k in mining hardware at peak levels, so what does that get you? Well, at a hashrate of about 1,379 MH/s (ETH), 133 MH/s (RVN), and 62 KH/s (XMR), that gets you a net income of about $4,125 per month after subtracting $468 or so in power @ $0.10 / kWh. Your ROI is now approximately 6 months.



3.) Summary & Conclusion
So can it make sense to get into mining after it's already "too late"? Yes, if you consider the following.

a.) Monero Mining has a much longer ROI. With my example numbers, you're paying about $1700 (CPUs) and $500 (Motherboards) above a "baseline" cheapo mining setup of $50 motherboards and $5 CPUs. This nets you an extra $241 / month in XMR revenue so you'd pay off the difference in about 10 months. GPUs for comparison would be on the order of 3-6 months ROI. So it can make sense to buy up Ryzen CPUs at good prices if you want to do this long-term, but you're not going to be making any profit for awhile.
b.) If you can get good prices (see below) then it can make sense. If you're paying scalper prices then probably not unless you're ok with no profit for a year and can eat the losses if you sell everything after a crash. If you're buying older, power inefficient cards, you need to make ROI quickly so that you can be safe in the event of a crash. If you have power efficient hardware you'll probably remain profitable throughout a crash, but you'll be earning much less so it's risky of course to bet on making a consistent income on this.

So what would it take to make it full-time? I would say that at least 10x this in upfront capital would be needed. You would be able to reduce your accessory costs significantly and you would have lower operational costs (electric bill), but during a crash I think you'd want significantly more hashing power than this to be comfortable and you'd want to have the latest, most power efficient hardware as well.

Does it make sense to just buy & resell instead? Maybe. If you're limited by power, then as long as you have a steady supply of cheap GPUs you can resell a portion to recoup your initial investment faster. If you're not limited by space/power then I think it makes more sense to put your GPUs to work immediately while the money is best.

Is it better to bargain hunt or just buy GPUs at scalper prices? Buying at scalper prices would probably double your GPU costs at a minimum, at the benefit of getting you more power efficient cards that are future-proofed better.

Is it better to buy one "big" card (ie. RTX 3080 @ 100MH/s) or two "small" cards (ie. 2 x Vega56 @ 50MH/s)? There is definitely a point in favor of less cards = less headache, but the additional cost of risers, motherboards, CPUs, etc. is fairly small. I saw someone selling their entire RX 470 mining setup of 100+ cards plus risers, PSUs, etc. back in January at $125/card and that would've been a great buy despite the added headache.


Data / Further Information:
-Notional $25k spent on hardware total
-Mixture of Algorithms (ETH, RVN, XMR). FIRO looks to require additional setup costs so I didn't include it, and if all ETH GPUs switched to Ravencoin mining (ie. after ETH PoS transition) some of the bang/buck situations would change (ie. an RX 470 becomes relatively better, while a vega56 loses some of its advantages).
-Instead of using cheap motherboards and CPUs, all motherboards and CPUs are Ryzen 3600 or higher for extra XMR income
- Approximately 5-10% DOA rate on GPUs
-Only a few items bought new and at MSRP (Microcenter finds, lucky catches online). Not a consistent source of supply so they only make up approximately 10% of the GPUs

GPU Prices:
GTX 1080TI: $600-700
GTX 1080: $400-500
GTX 1070: $300-400
5700XT: $500-800
Vega56: $300-400
GTX 1060: $200-300
RX470: $150

CPU / Accessory Prices:
Ryzen 3600: $200
Motherboards: $75-100
Baseline CPU + Motherboard Combos: $55
PSUs: $200 / rig roughly
Baseline PSUs: $60-100 / rig (if using server power supplies on 220V)
RAM: $20-80 / rig
Mining Specific Cases/frames: $150
Baseline Cases/frames for rigs: $20 Home Depot shelves
Risers & Fans: $100 / rig roughly

Theoretical GPU List:
5700XT x 3
GTX 1080 TI x 6
GTX 1080 x 3
GTX 1070 x 8
Vega56 x 7
RX 470 x 11
RTX 3080 x 1
RTX 3060 x 1

These are all prices I've seen items sold for online in the past 3 months. Prices on older 4GB cards have risen dramatically, but the others you can still occasionally find deals on. I know this is much lower than the going rate in some cases so this probably won't work if you're trying to buy hundreds of cards at once, but if you have time to bargain hunt then it's worth doing.



TLDR: Reduce your GPU expenses as much as possible, then try to save on the rest.
 

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sgrinavi

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If I were going to try to mine for a living I wouldn't even consider 10 series gpus, they are going to be obsolete sooner or later. I would also stick to commercial PSUs & Drives, they are far more reliable and are designed for 24x7 ops.

I have an acquaintance that runs a couple of large farms, he will not buy boards that require risers and sticks to 8 gpu rigs max.
 
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Andrew_Carr

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If I were going to try to mine for a living I wouldn't even consider 10 series gpus, they are going to be obsolete sooner or later. I would also stick to commercial PSUs & Drives, they are far more reliable and are designed for 24x7 ops.

I have an acquaintance that runs a couple of large farms, he will not buy boards that require risers and sticks to 8 gpu rigs max.

Yeah, I didn't think most people starting out casually would jump right to server PSUs though. They're noisy and less familiar. But if you can get over that they're definitely better. I don't know if I agree on riserless motherboards. They'd be nice if they were competitive in price, but right now those things are going for $500+ and cheap motherboards with 8 slots can go for $50 + $80 in risers.
 

vegeta535

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Everyone's taxes are different. Every state has different laws on crypto taxes, and every country has different laws. This isn't a tax thread.
You are in the states so yes federal taxes apply to you and crypto. Your numbers are inaccurate if you ignore federal taxes. You are correct about state. Do what you want but don't cry when the IRS comes for you.
 

Andrew_Carr

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You are in the states so yes federal taxes apply to you and crypto. Your numbers are inaccurate if you ignore federal taxes. You are correct about state. Do what you want but don't cry when the IRS comes for you.

Do you have something to contribute or are you just trolling? Everyone's tax liability is different. I'm not starting a thread on everyone's individual circumstances and what they would owe on taxes. Everyone here, I think, is a big boy and can figure that out themselves and there's too many variations to cover.
 
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Martin the Kiteboy

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If you make a post titled “Mining by the numbers” with some attempt at authority, then neglecteven mention in passing significant tax implications, that is akin to posting “Operating an Automobile by the numbers” and again fully ignoring insurance, registration, and maintenance costs.

I think that what you have put together still has good info, it just seems disingenuous or even ignorant to not mention that aspect. Hell, taxes add up to much more than electricity cost and pushes the ROI point back 50% or more.

For a US audience (Based on your prices and EL costs) at minimum I think you need to mention that coins are taxed at the value they are mined immediately as income, and then again when sold, along with the short and long term capital gains rate at the time of sale.

We are big boys, and you may need to be too and take the criticism to update your post. Not trying to be harsh, just pointing out refinement. We could also steal electricity to keep costs low.
 

sgrinavi

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Yeah, I didn't think most people starting out casually would jump right to server PSUs though. They're noisy and less familiar. But if you can get over that they're definitely better. I don't know if I agree on riserless motherboards. They'd be nice if they were competitive in price, but right now those things are going for $500+ and cheap motherboards with 8 slots can go for $50 + $80 in risers.

When you're talking about doing it for a living you are, by definition, a professional and need to protect your income. The cost of a riser-less board is peanuts compared to the cost of the GPUs. Reliability is probably the most important variable when setting up a farm.
 

Andrew_Carr

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If you make a post titled “Mining by the numbers” with some attempt at authority, then neglecteven mention in passing significant tax implications, that is akin to posting “Operating an Automobile by the numbers” and again fully ignoring insurance, registration, and maintenance costs.

I think that what you have put together still has good info, it just seems disingenuous or even ignorant to not mention that aspect. Hell, taxes add up to much more than electricity cost and pushes the ROI point back 50% or more.

For a US audience (Based on your prices and EL costs) at minimum I think you need to mention that coins are taxed at the value they are mined immediately as income, and then again when sold, along with the short and long term capital gains rate at the time of sale.

We are big boys, and you may need to be too and take the criticism to update your post. Not trying to be harsh, just pointing out refinement. We could also steal electricity to keep costs low.
Here's an idea. If you want to discuss taxes and crypto start a separate post about it and stop derailing this one. You can use my numbers as a jumping off point or recalculate everything on your own. Taxes could eat up 20% of your profits, 40%, or 50% in some cases. I don't know, everyone's situation is different, so it seems like a waste of time to me to say: "Your ROI could be 6 months, or 9 months, or 12 months, or 14 months, depending on these 20 different factors."
 

Andrew_Carr

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When you're talking about doing it for a living you are, by definition, a professional and need to protect your income. The cost of a riser-less board is peanuts compared to the cost of the GPUs. Reliability is probably the most important variable when setting up a farm.
Yeah, I wonder if there's any higher failure rate of GPUs related to risers or stuff like that. Or if you have consistent reliability issues with risers that cost you a few dollars a day every now and then I could see that eventually adding up as well.
 

bizzmeister

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I've been looking more and more into doing this whole mining thing. Its just intimidating since i know very little about it but this post is very helpful. Thank you.
 

Andrew_Carr

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I've been looking more and more into doing this whole mining thing. Its just intimidating since i know very little about it but this post is very helpful. Thank you.

Yeah, if I had to redo my first rigs all over again they might look something like this:

Case/rack: $25 metal racks from Home Depot / wherever
Power Supply: HP Server 1200W PSU + breakoutboard + PCIE power cables ($90)
RAM: 2x8GB ECC DDR3 ($30)
Motherboard: Supermicro X8DTE Dual Socket 1366 E-ATX Motherboard or something ($50)
CPU: Intel Xeon L5630 or similar ($4.5/pair, 40W cpu)
Fans: 6 x high RPM fans ($30-60)
Risers: If you go for used, maybe $5 / each, new are roughly $10 / each (including USB cables, SATA adapter, etc.)

That puts you at about $270 / rig plus the GPUs. Generally 6 GPUs per rig is what I would do, so that's an extra $45 / GPU ($55 / GPU if using risers) when doing ROI calculations for GPUs.
 

Zeoclang

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Should mining difficulty increases also be taken into consideration? Or is the assumption that if difficulty has increased so has the value?
 

Andrew_Carr

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Should mining difficulty increases also be taken into consideration? Or is the assumption that if difficulty has increased so has the value?
Yeah, that's something I'd like to get into next. Based on past cycles, what would be a conservative estimate on profit? It's pretty much guesswork though. For example, ETH profits had dropped by about 50% the other week due to a combination of difficulty increases + the Berlin update. But it seems like increased use and increased price have now offset that.
 

Parja

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With that kind of budget wouldn't it make more sense to look at ASICs?
Yup, with that kind of money, I'd be trying mighty hard to get an early Antminer E9.

https://news.bitcoin.com/bitmain-re...m-miner-asic-device-commands-3-gh-s-hashrate/

Of course, with GPUs, there's a lot more of a resale market. If you could find a way to get your hands on a good number of 3000-series cards, you could mine on them for 6 months then likely resell them for what you paid for them.
 

jmilcher

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Everyone's taxes are different. Every state has different laws on crypto taxes, and every country has different laws. This isn't a tax thread.
Then it should clearly be stated you need to factor in tax on hardware, and remember crypto is taxed. So many people it seems think crypto is tax free.
 

mnewxcv

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Server psus are the way to go. 1500w ones are available for 240v. They arent loud at half load, so get twice as many as you need and you won't hear them over the gpus.
 

Andrew_Carr

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With that kind of budget wouldn't it make more sense to look at ASICs?

Maybe. The problem with ASICs is they're still money printers but they're not commodity items like GPUs. The ASIC manufacturers, realizing this, mine with them when they're new and only sell to consumers when they have a few months of projected profitability left. So as a consumer by the time you're able to buy one there's probably a new, more power efficient version being used in China already and you may / may not break even. Right now just about anything is profitable due to high prices. Asicminervalue.com has a good list and lets you sort by efficiency. Usually the most efficient ones all require a preorder months in advance to be able to get the latest models. Resale value isn't as awful as I had expected though if you buy them in bulk. There seems to be a growing market of people that want to experiment with ASICs or are willing to mine speculatively at a loss to learn how they work.
 

noko

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Yes and probably potentially way more profitable. Still a risk in any aspect.
  • Innosilicon A11 Pro 8GB 2000Mh
  • Bitmain 3gh/s Ethash miner, unknown when it will be released
When these miners hit, they will make the hashrate go up for Ethereum, making it less profitable for GPUs. In addition, Ethereum is going to more and more staking. The value of GPUs mining ETH will be forced down by these ASICs and by staking. I would say investing in GPU mining for Ethereum is high risk at this point. Now if the coin keeps going up then yeah, still viable. There is risk where you can definitely loose while also win.
 

Andrew_Carr

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Yeah, ASICs can definitely have upsides. For example, these ASICs for mining Litecoin/Doge were selling for about $800 / each when they were earning about $2 / day. https://www.asicminervalue.com/miners/innosilicon/a4-ltcmaster

That's an ROI of about 400 days and you might not meet it if the market crashed. Instead DOGE boomed in price and these now make $17 / day in profit. That's about triple what $800 in GPUs would make. Generally when I was looking at ASICs, they're a better way to invest your money if you can buy them in bulk, buy them new, and have a lot of 220V power. In a home type mining setup though you would have to redo a lot of wiring, they'd be noisy, and if you're maxed at 200A, you can usually earn more money with GPUs currently for the same amount of power.
 

noko

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Yeah, ASICs can definitely have upsides. For example, these ASICs for mining Litecoin/Doge were selling for about $800 / each when they were earning about $2 / day. https://www.asicminervalue.com/miners/innosilicon/a4-ltcmaster

That's an ROI of about 400 days and you might not meet it if the market crashed. Instead DOGE boomed in price and these now make $17 / day in profit. That's about triple what $800 in GPUs would make. Generally when I was looking at ASICs, they're a better way to invest your money if you can buy them in bulk, buy them new, and have a lot of 220V power. In a home type mining setup though you would have to redo a lot of wiring, they'd be noisy, and if you're maxed at 200A, you can usually earn more money with GPUs currently for the same amount of power.
Yes if you pick the right coin and it moons, well you can make a lot of money with ASICs or GPUs. Dogecoin is just a freak moon coin, usually you see younger coins that moon and not a joke coin but it is what it is. Usually ASICs are way more efficient initially then a GPU for a given Algorithm but much less versatile with less leeway in going to another coin when something happens to the one initially bought for. I lost money on one ASIC, maybe now broke even, on the other (ahmmm over 50x on the cost of the ASIC alone and counting). Wild guess, some prudence, insight, smartness or just blind luck, who knows.
 

noko

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You are in the states so yes federal taxes apply to you and crypto. Your numbers are inaccurate if you ignore federal taxes. You are correct about state. Do what you want but don't cry when the IRS comes for you.
You do know if you claim self-employment, then everything bought is tax deductible? All electrical costs, all equipment, space used etc. etc. Even time spent. If you get into taxes it can get super complicated really fast. If anyone is going to spend $25,000+ -> Beyond a hobby miner like me -> You can get some great tax breaks and not pay hardly anything on the coins mined. If you keep the coins for over a year, you now looking at capital gain tax of 0% if married and earned income (working job) is less than $77,000. 15% married up to like $440,000. Getting into mining in a significant way is not easy, is actually hard work especially if you are running a lot of GPU's where you have to manage, maintain, switch, update. Anyways tax laws can actually make going into mining possible.
 

Andrew_Carr

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You do know if you claim self-employment, then everything bought is tax deductible? All electrical costs, all equipment, space used etc. etc. Even time spent. If you get into taxes it can get super complicated really fast. If anyone is going to spend $25,000+ -> Beyond a hobby miner like me -> You can get some great tax breaks and not pay hardly anything on the coins mined. If you keep the coins for over a year, you now looking at capital gain tax of 0% if married and earned income (working job) is less than $77,000. 15% married up to like $440,000. Getting into mining in a significant way is not easy, is actually hard work especially if you are running a lot of GPU's where you have to manage, maintain, switch, update. Anyways tax laws can actually make going into mining possible.

Also, you always have the option of filing as an S Corp and employing yourself. Then your wages are separate from your business' income, so you might for example take wages of $50k / year and have income of $100k / year for the corporation minus all kinds of deductions. Whether or not this makes sense depends on the level of income you're bringing in so it's not an across the board recommendation that can be made. That's why I didn't get into taxes here. It's complicated, I'm not a CPA, and it varies by state and country.
 
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