Cost of a bitcoin generated

[Pekelo]

The average is about $50 per coin, making it kind of the bottom of the price range at a crash. But it also makes it one of the most expensive currencies. Of course this cost is much less with the newest miners, but we are talking about averages...

But if you use the news you get a much bigger number:

"Fascinating Number: Bitcoin Mining Uses $15 Million's Worth Of Electricity Every Day"

http://www.forbes.com/sites/timwors...s-15-millions-worth-of-electricity-every-day/

Well, 15 mill divided by 3600ish, you do the math...

 

[Hoi]

Quote from Pekelo:

The average is about $50 per coin, making it kind of the bottom of the price range at a crash. But it also makes it one of the most expensive currencies. Of course this cost is much less with the newest miners, but we are talking about averages...

But if you use the news you get a much bigger number:

"Fascinating Number: Bitcoin Mining Uses $15 Million's Worth Of Electricity Every Day"

http://www.forbes.com/sites/timwors...s-15-millions-worth-of-electricity-every-day/

Well, 15 mill divided by 3600ish, you do the math...

Pffff... That's all incorrect.

An KnC-miner of 550 Gh/s costs about 6000 USD, and uses 650 Watt and currently makes 0.3 BTC per day.

Current network is 7,300,000 Ghs
Say this network is built out of KnC-miners then: 7,300,000 / 550 gives a total of 13,272 machines.
Using: 13,722 x 0.650 Kw x 24 Hours = 207,054 Kwh for a day
Then lets take 0,25 USD per Kwh = 207,000 x 0.25 = 51,750 USD
So energy per BTC coin is: 51,750 / 3600 = 14.38 Dollar.


Now try to calculate the Investment of the 6000 USD for one Miner.
With 550Gh/s miner and current network difficulty you make only 0.3 BTC per day.
I don't know where you have that $50 per coin from? But if that was true, then a Miner would earn:
($50 -14,38) x 0.3 coins/day = 10,68 USD per day
Then a miner could reach Break-even in: 6000 / 10,68 = 562 days !! (and only if difficulty stays the same for that long).

Conclusion: this $50 per coin isn't enough to "cover the cost of generating a coin". A Miner needs at least a Break-even point in 100 days, otherwise his Risk is too much (and will not invest unless equipment becomes cheaper or difficulty decreases).
Then I think this is a better price: $214,38
6000 / (($214,38 - 14,38) x 0.3)) = 100 days Break-even.

 

[Humpy]

yer well

 

[newguy05]

Quote from Hoi:

Pffff... That's all incorrect.

An KnC-miner of 550 Gh/s costs about 6000 USD, and uses 650 Watt and currently makes 0.3 BTC per day.

Current network is 7,300,000 Ghs
Say this network is built out of KnC-miners then: 7,300,000 / 550 gives a total of 13,272 machines.
Using: 13,722 x 0.650 Kw x 24 Hours = 207,054 Kwh for a day
Then lets take 0,25 USD per Kwh = 207,000 x 0.25 = 51,750 USD
So energy per BTC coin is: 51,750 / 3600 = 14.38 Dollar.


Now try to calculate the Investment of the 6000 USD for one Miner.
With 550Gh/s miner and current network difficulty you make only 0.3 BTC per day.
I don't know where you have that $50 per coin from? But if that was true, then a Miner would earn:
($50 -14,38) x 0.3 coins/day = 10,68 USD per day
Then a miner could reach Break-even in: 6000 / 10,68 = 562 days !! (and only if difficulty stays the same for that long).

Conclusion: this $50 per coin isn't enough to "cover the cost of generating a coin". A Miner needs at least a Break-even point in 100 days, otherwise his Risk is too much (and will not invest unless equipment becomes cheaper or difficulty decreases).
Then I think this is a better price: $214,38
6000 / (($214,38 - 14,38) x 0.3)) = 100 days Break-even.

he's talking about the cost basis for a miner to generate a bitcoin, which is just electricity cost (although that's a bit flawed if you dont factor in hardware depreciation).

We are at the end game now, you still have some gpu miners left which uses tremendous amount of power, followed by the first generation 110nm / 55nm asic chips which also uses a lot of power. All those will be phased out and shut down as difficulty continues to ramp up at 20% gap every ~2 weeks.

The 28nm / 20nm asic chips which will start shipping by next year is the end, they are much more efficient watt/gh wise and there wont be much more improvement you can make. Once those chips have matured, it's just a matter of putting as many as you can in 1 board.

We started the asic evolution from gpu with ~10GH power = 20x as powerful as the fastest graphic card at the time with much less electricity. Then the 110/55nm chips matured and you ended up with companies jamming 50-65 GH onto a single machine.

Fast forward today we are looking at around 200-500Gh range, and by next year the 28/20nm asics will be able to get 1-5TH (1TH = 1000GH) in 1 machine easily out the door. Then once those chip matures, it will just be a final ramp up, i predicate at the end you will have a single box capable of doing 50-100 TH for the same cost and difficulty will be so high at this point, the cost of manufacturing the hardware will come to equilibrium to the btc it can generate (profit). At which point the hardware gig will be up.

I have purchased 4x(2 mining, 2 pending delivery) 180GH miners recently at 4btc each to stay in the game. Also going to preorder 1-2 20nm 2-3 TH box for next year delivery to try catch the last leg of the mining fun.

The ramp up from $200 to $1000 was absolute insane, i have to say it caught me by surprise, i was vacationing (in china of all places), when i checked the price after came back about a month later, almost had a heart attack.

Quickly unloaded 25% inventory, then locked in 25% more into mining hardware since now it only cost a few btc instead of few dozen btc to purchase those hardware. Letting the rest of my btc to ride the price wave.

Fun times....absolute crazy, i never thought btc could reach $1000 this fast.

 

[Hoi]

Quote from newguy05:


Fast forward today we are looking at around 200-500Gh range, and by next year the 28/20nm asics will be able to get 1-5TH (1TH = 1000GH) in 1 machine easily out the door. Then once those chip matures, it will just be a final ramp up, i predicate at the end you will have a single box capable of doing 50-100 TH for the same cost and difficulty will be so high at this point, the cost of manufacturing the hardware will come to equilibrium to the btc it can generate (profit). At which point the hardware gig will be up.

A show-breaker will be the "energy consumption" per Machine....

Already KnC tells us that the Neptune (3TH, delivery Q2 2014), will be their last "non-industrial machine". As it will eat 2100 Watt which will be a problem for USA-homes.
Even if a 14/20nm could be build to use "only" 0.2 Watt/Ghs, then a 50 TH machine would use 10,000 Watt (90 Amp/110V or 45 Amp/220V). This will make it impossible for the average Miner to participate in the Network (even if he can easily purchase such a beast). I see this as a huge problem (for 2015 and later) as the network should be as de-centralized as possible....(I don't think Satoshi had this in mind).

 

[Pekelo]

Quote from Hoi:

Pffff... That's all incorrect.

Which part? That Bitcoin is the most expensive currency to create? Your number was 200+ bucks, I would call that pretty expensive. A 100 dollar bill costs like 5 cents to create....

I talked to a guy on reddit who mines, his electricity cost was $49 per coin, so that is first hand data, argue against that....

Also, the whole network's energy consumption is always just GUESSED, nobody knows the exact amount, not to mention there are still all kind of miners being used, so nobody knows the exact average hash rate either not to mention the average cost of electricity what people use all over the world...

Bottomline, this energy cost per coin is always will be an educated GUESS....

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And by the way, what a fucking big waste of energy. An altcoin would be much better off by premining everything, distributing it widely (nobody is holding 10% of all the coins) then miners would be there just to charge a small fee for transactions.

 

[Hoi]

Quote from Pekelo:

Which part?

The calculation part and your link to the 15 million per day!

That link shows completely wrong calculation (and if you read Reddit well, then you find a thread which explains you exactly why this is false).

My calculation of 51,750 USD is more accurate. And although this sounds a waste of energy costs...it is FAR less than costs made by companies like PayPal and WesternUnion to do the same: transporting money in a secure way (and also this you can find on Reddit).

 

[Hoi]

Quote from Pekelo:

I would call that pretty expensive. A 100 dollar bill costs like 5 cents to create....

Then you forget how much it costs to keep that 100 dollar bill secure for counterfeiting and transport. Expensive departments and law enforcements are there to give you as user of that bill the trust and confidence to except that bill as a real 100 dollar value.
All these costs, you have to add to this 5 cents to create, in order to compare it to bitcoin.

 

[Pekelo]

Quote from Hoi:

The calculation part and your link to the 15 million per day!

I never backed that calculation, I just included it (as a conversation starter). My calculation was the $50 per coin.

Again, nobody knows for sure the real number. Since electricity is relative cheap, I doubt that it is over 200 bucks, maybe a year from now.

This brings up another point, the cost in the future. So far even with the adding of newer and more effective machines, the cost has been going up. Since the difficulty keeps increasing, even if the whole system finally losing the less effective miners, the energy cost of mining still can keep growing....

Now let's assume this is correct, then price should stabilize at that price where the energy cost reaches the then current market price.

 

[Hoi]

Quote from Pekelo:

I never backed that calculation, I just included it (as a conversation starter). My calculation was the $50 per coin.

Again, nobody knows for sure the real number. Since electricity is relative cheap, I doubt that it is over 200 bucks, maybe a year from now.

This brings up another point, the cost in the future. So far even with the adding of newer and more effective machines, the cost has been going up. Since the difficulty keeps increasing, even if the whole system finally losing the less effective miners, the energy cost of mining still can keep growing....

Now let's assume this is correct, then price should stabilize at that price where the energy cost reaches the then current market price.

OK, correct. You didn't backed that calculation...but some readers who clicked that link could be misinformed.

Further, there is no relation between Market-price and energy-costs other then that it will be a show-stopper (Miners drop out) if market-price drops below energy-costs.
There is also no relation at all between Bitcoin's market-price and network-difficulty or other Mining-related-costs. But, if market-price drops below the total-cost of mining, then Network will not grow anymore with new miners (old miners stay till energy costs prevents them).

I cannot predict future energy costs. Mining-equipment will be less Watt/Ghash, but Network-hash will grow as well....