Potential ROI Graphs, speculation *read entire post before commenting*

chasewdchasewd Member Posts: 25
edited April 2016 in Mining
**Disclaimer, these numbers are in no way meant to be 100% accurate. The concepts will carry through to any real scenario, but these graphs are just examples!! **

There's no possible way to predict the future. Ethereum mining will hopefully be around for a long while. Please, before posting a comment, consider that I am on the side of potential miners. I like seeing people succeed, but I want to present some information that most people leave out or do not consider when building a mining rig.

I'm pretty new to this forum, but I'm not new to mining. It seems the users here are a healthy mix of GPU and other mining veterans (Ethereum or other), and some people who have no idea what they're doing. Hopefully this post will shed some light on the things new miners need to consider when planning out some kind of mining adventure.

Today I was doing some napkin math on two different scenarios for people just starting to mine. It's napkin math and I'm sure someone will comment on how I'm wrong. I'm not saying this will be 100% the case, but based on my very simple understanding of the direction Ethereum GPU mining is heading in this is the data I would present to a friend asking about the profitability of mining going forward. Of course this excludes people who have already seen their ROI. Also as I said my understanding of this topic is extremely simple and I do not have the knowledge of some of the people on here. Here is what I've come up with:

Please note that these scenarios assume that Ether will stay the same price for the next 3 months. This is highly unlikely and it could go up or down in a huge way. The data also assumes a 1% decrease in profitability per day due to the increasing difficulty. This is also somewhat unrealistic but it was the only way I could predict a decline in mining efficiency which is inevitable.

This first graph shows my predicted profit generated by a single standard R9 380. Running at ~22MH/s a single card will realistically generate about $3.00 US worth of Ether on your average pool. The decline reflects an admittedly steep and somewhat unrealistic "diminishing returns" style curve.




click the image to make it bigger, or right click and copy the image address into a new tab



I would imagine that the 380 will remain profitable much much longer than that but that data helps me explain the ideas in my next few graphs. The data on this graph is displayed over WEEKS instead of DAYS like the other two graphs

Scenario 1 involves a miner that thinks that by starting with a single card, they can offset the cost of purchasing more mining hardware over time. While this is a good idea in theory, and it very well may work, what is hard to visualize is the change in profitability due to network hashrate increases, next to the climbing hardware cost to keep up with said hashrate, and again next to the estimated resale value of the hardware to coincide with a ROI plan.

I know I'm not the best with words, but one of the most valuable lessons I learned 2 or so years ago is that dumping all your cash from mining into more gear isn't always the best idea. Thankfully I came out on top in the LTC game. B)

In short:
1. As the hash rate increases your cards make less money (assuming Ether price stays the same, which likely won't be the case but let's keep it simple)
2. To compensate for the hash rate increase you buy more hardware
3. Said hardware loses value for being "used" essentially putting you in the hole for the amount that is the difference between purchase price and resale price
4. Reduced revenue from each card makes it more and more difficult to break even on hardware


Here is a graph modeling this idea:



The orange line assumes the person is throwing about $25 per day out of their own pocket into the rigs for new hardware. The difference between the orange line and the blue line is the amount of money being made from mining, which is then being reinvested into new hardware. The gray line represents the growing resale value relative to the hardware being purchased. As you can see the last possible break even point is about 31 days in this specific scenario.

Now you could probably see a profit if you upped your daily investment to something like $50 or $75. I'm only referring to it as a "daily investment" because it makes the graph look nice and accurately shows where and when you could potentially break even or see a profit. It also shows how profitability declines relative to a steady investment/reinvestment into new hardware.


I mentioned increasing the "daily investment" to double or triple the amount modeled in the graph. This ties nicely into my second scenario which features someone who might have a chunk of cash to throw at a new mining setup.

Scenario 2 has a person with roughly $3,000 to spend on new rigs. I priced out 10x 380s with all the necessary hardware to run them. You could likely get this running a little cheaper or possibly add a 6th card to one of the machines if you play your cards right and find some deals online.

This scenario also assumes the person wants to resell the hardware at the end of all the mining. Day 1 shows $3,000 in brand new hardware less the estimated resale value of roughly $1,900. The graph includes estimated declining profit due to hash rate increase.






I hope this post was able to clear up some things for people looking to get a mining setup. I just got tired of reading posts from people assuming their 370 was going to make $3.50 for the next few months because some calculator told them it would.

Let me know if you have any corrections to any major issues I have with my scenarios. The whole thing is set up in a spreadsheet so I can remake those graphs with different data in a matter of seconds.
Post edited by chasewd on
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Comments

  • dittoditto Member Posts: 139 ✭✭
    edited April 2016
    This does not clear up a single thing for anyone wanting to get into mining - and in fact adds to the lies as well as further confuse people.

    This is based on speculation, just like what everyone else is posting.

    You don't know what difficulty will be along with the price of Ethereum, you can only make wild assumptions mixed with bias beliefs on where Ethereum will go.

    But hey you made some nice looking graphs so it must be right?
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @ditto I didn't get to see them, but I suspect he/she took it personally.
  • chasewdchasewd Member Posts: 25
    dlehenky said:

    @ditto I didn't get to see them, but I suspect he/she took it personally.

    I did, ha
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @chasewd Hey, no worries. You believe what you believe. Your beliefs are every bit as valid for you as everyone else's are for them. Don't concern yourself with what other people say. Be yourself and let the world do whatever it will. :)
  • chasewdchasewd Member Posts: 25
    dlehenky said:

    @chasewd Hey, no worries. You believe what you believe. Your beliefs are every bit as valid for you as everyone else's are for them. Don't concern yourself with what other people say. Be yourself and let the world do whatever it will. :)

    @dlehenky well after sifting through @ditto 's posts and created threads I see that they're just a troll. Kinda mad at myself for deleting my post.

    I wasn't even trying to claim that Ethereum mining was some kind of sinking ship, I just made some graphs showing that increasing difficulty (which is inevitable) will affect the break even rate of new mining rigs
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    That's a topic heavily covered in the forum recently, but it bears repeating, because a lot of noobies may find themselves in a hole if they don't understand the dynamics of mining and the risks that go along with it. It may all turn out just dandy, but more than likely, no so much.

    -Best Care
    David
  • oslakoslak Member Posts: 191
    I like the graph and the breakeven point. You have your basis on those figures. It is what it is.
  • dittoditto Member Posts: 139 ✭✭
    chasewd said:

    dlehenky said:

    @ditto I didn't get to see them, but I suspect he/she took it personally.

    I did, ha
    You didn't need to take them down, but trying to claim it is better advice than the other endless people is just wrong and miss leading.

    Many more variables than that when deciding if you should mine such as power cost - which has been discussed a lot but then also ignored a lot.

    Then how resourceful you are, and many - many more steps after that to come up with any realistic conclusion.. You just can't sum it up for everyone, you have to be a lot more open minded than fancy graphs.. ;)
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @ditto Everyone has an equal voice, just because you don't agree with the message doesn't make it "wrong". You've expressed your opinion twice now; we get it. Btw, "misleading" is one word, unless you know a gal named Miss Leading, but that would be capitalized.
  • dittoditto Member Posts: 139 ✭✭
    edited April 2016
    dlehenky said:

    @ditto Everyone has an equal voice, just because you don't agree with the message doesn't make it "wrong". You've expressed your opinion twice now; we get it.

    Yes it is equal voice and yes this person was directly wrong, trying to confuse potential miners even more.

    That much is fact.
    dlehenky said:

    Btw, "misleading" is one word, unless you know a gal named Miss Leading, but that would be capitalized.

    Did you really just use "BTW" and then correct an obvious mistake? Nice one troll.
  • workwork Member Posts: 2,084 ✭✭✭✭
    ditto said:

    Did you really just use "BTW" and then correct an obvious mistake? Nice one troll.

    Can you say, kettle calling the pot black?
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    edited April 2016
    @ditto Well, it's an obvious mistake to *some* people, but apparently not to you. No, just giving you a taste of how you treated the OP. You're just another forum bully, it seems to me.
  • dittoditto Member Posts: 139 ✭✭
    edited April 2016
    dlehenky said:

    @ditto Well, it's an obvious mistake to *some* people, but apparently not to you. No, just giving you a taste of how you treated the OP. You're just another forum bully, it seems to me.

    As far as I'm concerned, the person trying to convince potential miners they will never get paid off based on very few variables is what makes a forum bully. The truth sucks. Get over it.

    And then you have people like you, very disgusting.
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @ditto You mean the OP's truth sucks, not yours, right? Or did I get that backwards?
  • dittoditto Member Posts: 139 ✭✭
    edited April 2016
    dlehenky said:

    @ditto You mean the OP's truth sucks, not yours, right? Or did I get that backwards?

    ditto said:

    This does not clear up a single thing for anyone wanting to get into mining - and in fact adds to the lies as well as further confuse people.

    This is based on speculation, just like what everyone else is posting.

    You don't know what difficulty will be along with the price of Ethereum, you can only make wild assumptions mixed with bias beliefs on where Ethereum will go.

    But hey you made some nice looking graphs so it must be right?


    Won't repeat myself, yes it is the truth the OP did not even come close to using the many other variables to try and give a reasonable prediction for potential and current miners.

    Seems like you are trying to suggest using very little variables like this is right, in that case I'm just talking to a complete closed minded moron who doesn't read and would rather "be a bully" than truthful.
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @ditto No, what I'm suggesting is: THAT"S JUST YOUR OPINION, and the OP is allowed to have his OPINION. And EVERYONE, should be able to read it and form their own OPINION. But you come in and stump on the OP to the point that he removed his post, so now nobody else even gets a chance to read what he said and decide for themselves. That's a bully.
  • dittoditto Member Posts: 139 ✭✭
    dlehenky said:

    @ditto No, what I'm suggesting is: THAT"S JUST YOUR OPINION, and the OP is allowed to have his OPINION. And EVERYONE, should be able to read it and form their own OPINION. But you come in and stump on the OP to the point that he removed his post, so now nobody else even gets a chance to read what he said and decide for themselves. That's a bully.

    Learn to read before you talk closed minded troll.
  • workwork Member Posts: 2,084 ✭✭✭✭
    On another note, ethereum price appears to be in free-fall.
  • dittoditto Member Posts: 139 ✭✭
    work said:

    On another note, ethereum price appears to be in free-fall.

    http://rs176.pbsrc.com/albums/w192/sage_boucher/onoz.gif~c200
  • workwork Member Posts: 2,084 ✭✭✭✭
    chasewd said:

    **Disclaimer, these numbers are in no way meant to be 100% accurate. The concepts will carry through to any real scenario, but these graphs are just examples!! **

    I'm pretty new to this forum, but I'm not new to mining. It seems the users here are a healthy mix of GPU and other mining veterans (Ethereum or other), and some people who have no idea what they're doing. Hopefully this post will shed some light on the things new miners need to consider when planning out some kind of mining adventure.

    Today I was doing some napkin math on two different scenarios for people just starting to mine. It's napkin math and I'm sure someone will comment on how I'm wrong. I'm not saying this will be 100% the case, but based on my very simple understanding of the direction Ethereum GPU mining is heading in this is the data I would present to a friend asking about the profitability of mining going forward. Of course this excludes people who have already seen their ROI. Also as I said my understanding of this topic is extremely simple and I do not have the knowledge of some of the people on here. Here is what I've come up with:

    Please note that these scenarios assume that Ether will stay the same price for the next 3 months. This is highly unlikely and it could go up or down in a huge way. The data also assumes a 1% decrease in profitability per day due to the increasing difficulty. This is also somewhat unrealistic but it was the only way I could predict a decline in mining efficiency which is inevitable.

    This first graph shows my predicted profit generated by a single standard R9 380. Running at ~22MH/s a single card will realistically generate about $3.00 US worth of Ether on your average pool. The decline reflects an admittedly steep and somewhat unrealistic "diminishing returns" style curve.

    https://i.gyazo.com/4db42a9de4ac6f66819d202ca7a834fe.png

    click the image to make it bigger, or right click and copy the image address into a new tab


    I would imagine that the 380 will remain profitable much much longer than that but that data helps me explain the ideas in my next few graphs. The data on this graph is displayed over WEEKS instead of DAYS like the other two graphs

    Scenario 1 involves a miner that thinks that by starting with a single card, they can offset the cost of purchasing more mining hardware over time. While this is a good idea in theory, and it very well may work, what is hard to visualize is the change in profitability due to network hashrate increases, next to the climbing hardware cost to keep up with said hashrate, and again next to the estimated resale value of the hardware to coincide with a ROI plan.

    I know I'm not the best with words, but one of the most valuable lessons I learned 2 or so years ago is that dumping all your cash from mining into more gear isn't always the best idea. Thankfully I came out on top in the LTC game. B)

    In short:
    1. As the hash rate increases your cards make less money (assuming Ether price stays the same, which likely won't be the case but let's keep it simple)
    2. To compensate for the hash rate increase you buy more hardware
    3. Said hardware loses value for being "used" essentially putting you in the hole for the amount that is the difference between purchase price and resale price
    4. Reduced revenue from each card makes it more and more difficult to break even on hardware


    Here is a graph modeling this idea:
    https://i.gyazo.com/038a244a7bb772c3ca43ec216760280f.png

    The orange line assumes the person is throwing about $25 per day out of their own pocket into the rigs for new hardware. The difference between the orange line and the blue line is the amount of money being made from mining, which is then being reinvested into new hardware. The gray line represents the growing resale value relative to the hardware being purchased. As you can see the last possible break even point is about 31 days in this specific scenario.

    Now you could probably see a profit if you upped your daily investment to something like $50 or $75. I'm only referring to it as a "daily investment" because it makes the graph look nice and accurately shows where and when you could potentially break even or see a profit. It also shows how profitability declines relative to a steady investment/reinvestment into new hardware.


    I mentioned increasing the "daily investment" to double or triple the amount modeled in the graph. This ties nicely into my second scenario which features someone who might have a chunk of cash to throw at a new mining setup.

    Scenario 2 has a person with roughly $3,000 to spend on new rigs. I priced out 10x 380s with all the necessary hardware to run them. You could likely get this running a little cheaper or possibly add a 6th card to one of the machines if you play your cards right and find some deals online.

    This scenario also assumes the person wants to resell the hardware at the end of all the mining. Day 1 shows $3,000 in brand new hardware less the estimated resale value of roughly $1,900. The graph includes estimated declining profit due to hash rate increase.


    https://i.gyazo.com/54a18e929dc5729127f19bcefff324a9.png


    I hope this post was able to clear up some things for people looking to get a mining setup. I just got tired of reading posts from people assuming their 370 was going to make $3.50 for the next few months because some calculator told them it would.

    Let me know if you have any corrections to any major issues I have with my scenarios. The whole thing is set up in a spreadsheet so I can remake those graphs with different data in a matter of seconds.

    It is hard to delete something from the internet once you put it out there.
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @work Yep. If you can't go up, you eventually retest the recent lows. I guess that's about 10 days or so ago, if memory serves me, before the Ethereum blog posts last Monday.
  • chasewdchasewd Member Posts: 25
    ditto said:

    dlehenky said:

    @ditto No, what I'm suggesting is: THAT"S JUST YOUR OPINION, and the OP is allowed to have his OPINION. And EVERYONE, should be able to read it and form their own OPINION. But you come in and stump on the OP to the point that he removed his post, so now nobody else even gets a chance to read what he said and decide for themselves. That's a bully.

    Learn to read before you talk closed minded troll.
    I think you are the definition of a close minded troll
  • chasewdchasewd Member Posts: 25
    ditto said:

    dlehenky said:

    @ditto You mean the OP's truth sucks, not yours, right? Or did I get that backwards?

    ditto said:

    This does not clear up a single thing for anyone wanting to get into mining - and in fact adds to the lies as well as further confuse people.

    This is based on speculation, just like what everyone else is posting.

    You don't know what difficulty will be along with the price of Ethereum, you can only make wild assumptions mixed with bias beliefs on where Ethereum will go.

    But hey you made some nice looking graphs so it must be right?


    Won't repeat myself, yes it is the truth the OP did not even come close to using the many other variables to try and give a reasonable prediction for potential and current miners.

    Seems like you are trying to suggest using very little variables like this is right, in that case I'm just talking to a complete closed minded moron who doesn't read and would rather "be a bully" than truthful.
    To be clear I am well aware of the many many variables that come into play. When I made those graphs I decided to stick with the main 3: hardware cost, revenue, and resale to model how cards can pay for themselves.

    Miners also need to consider power as a major player but even that fluctuates as in my area power during the night time hours is nearly free.

    There's also the potential of cards to die. Your rig(s) might shut themselves off after some error. Any number of things might go wrong. There's so many variables that I just wouldn't even be able to begin to speculate how things might turn out.
  • workwork Member Posts: 2,084 ✭✭✭✭
    @chasewd I thought your article was quite well considered, btw. The numbers don't have to be "right" to express what you were trying to, I think.
  • hasherhasher Member Posts: 642 ✭✭✭
    One scary thing i've noticed over the past few days is that while the total mining hash rate is increasing, the value of ETH is slowly decreasing. This is not good.
  • MrYukonCMrYukonC Member Posts: 627 ✭✭✭
    hasher said:

    One scary thing i've noticed over the past few days is that while the total mining hash rate is increasing, the value of ETH is slowly decreasing. This is not good.

    @hasher As I've been saying. If this price drop continues and/or accelerates, expect the difficulty and hashrate to roll over and possibly even decline as the weak-handed miners bail because they can't pay for their electricity.
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    edited April 2016
    The current price is the same as it was about a week and a half ago, before the latest blog posts came out (March 28th). If it goes below $9.50, then worry.
    Post edited by dlehenky on
  • chasewdchasewd Member Posts: 25
    I really like making graphs and spreadsheets.

    This one assumes you have 220MH/s and you mine for 90 days straight. Includes power cost of $4.80/day for 10 cards, decline of 1%/day for hashrate increase, and a steady rise from $10.50-$12.00 for Ether over the course of 90 days.



    and of course here's that raw data for anyone else who wants to see


  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    Quite reasonable, although I would suggest a less optimistic resale value. Keep in mind, when that phase begins, there will be a torrent of used gear hitting the market, and very possibly gear that is another generation older (new GPUs this summer). I've been penciling in 40%, after packaging and shipping costs, for my own spreadsheet. Even that may be a bit optimistic, depending on timing and how badly you need to recapture the expense.
  • axou64axou64 Member Posts: 21
    I just want to know what are you doing with your ether ? Do you exchange them against bitcoin, or do you hold them in your ether wallet in "prevision" of skyrocket from his price (like bitcoin) ??
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