Why you SHOULD NOT MINE Ethereum now with more rigs

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  • ddfm1781ddfm1781 Member Posts: 9
    I dont think we will see 30% increases every month.
  • Marvell9Marvell9 Member Posts: 593 ✭✭✭
    Fk the Irs lol
  • thesmokingmanthesmokingman Member Posts: 152 ✭✭
    edited April 2016
    dlehenky said:

    @thesmokingman We'd like to hear what the CPA has to say on the ETH part. :) Self-emplyoyment tax (FICA+) is paid on wages/salaries, i.e. earned income, not capital gains. I was a self-emplyed consultant for years. If you have your mining business set up in such a way that the business pays you a wage to oversee the operation, then you would pay self-emplyment tax on those wages. If mining ETH is an investment in ETH, another way of acquiring that asset, and you're going to pay cap gains, then you wouldn't pay self-employment tax, just as you wouldn't if you were trading stocks in your pajamas. That's been my experience, anyway.

    @dlehenky Just got back from talking with my CPA/Tax Attorney. He only had a chance to read the first 3 pages of the IRS ruling from the link below, so take this with a grain of salt. From what he was able to read, miners who are running their operation as a business, must record the value of the coins on the day they are paid out (since you aren't rewarded for your efforts until you are paid like with any business). Whatever the sum of your payouts are each day is what you will be taxed on. So in essence you are taxed each time you receive a payout from the mining pool at whatever the value of the coin is at that point in time. This requires a spreadsheet to be maintained documenting every payout and the current exchange rate. That's not the crazy part.

    Say you mine ETH for a period of 1 year and never convert any ETH to USD but hold. If for 51 weeks the ETH value is $20 per coin, and then the last week of the year the value tanks to say $0.25 per coin until April 15th/18th. You have to pay taxes at the $20 valuation for 51 weeks and $0.25 valuation for the 52nd week. Since no ETH was sold to FIAT during the year, the miner runs the risk of having to pay the taxes out of his own pocket if enough ETH can't be sold to come up with the taxes owed. So if your tax bill is say $10,000, and you liquidate all your mined ETH and can only come up with $2,000 because of the recent drop in value, in the eyes of the IRS you still owe them $8,000. I think this is going to be an issue for a lot of miners who run their operation as a business and don't plan ahead and take this into account. Depending on the size of the operation, the owner could find themselves owing the IRS thousands of dollars that they no longer have.

    I have to sit down now and make out a plan of action for how I'm going to deal with this and recommend others do this as well. I like holding my coins in case the value increases, so this is going to force me to think differently about how I manage my coins. Either sell the coins I mine when the value is high, or estimate how many coins I will mine over the course of a year with difficulty increases and figure out what my tax obligations will be, and then sell coins till I reach this amount so I have a "cushion" to fall back on once the actual amount is known. Honestly the IRS needs to re-evaluate this position, but until virtual currency takes off I doubt this will ever happen. Hope this information helps you guys out. I have to set another meeting with my CPA/Tax Attn. next month when tax season has calmed down and he's had time to fully disseminate all the information and can give me the full details.

    https://www.irs.gov/pub/irs-drop/n-14-21.pdf
  • thesmokingmanthesmokingman Member Posts: 152 ✭✭
    MrYukonC said:

    dlehenky said:

    @MrYukonC How can you establish cost basis before converting to fiat? ETH isn't money; USD is money. Are you supposed to assign a cost basis for each ETH based on the average exchange rate for ETH->USD at the moment you mine it?

    @dlehenky Yes, that's exactly what and how you're supposed to do it.

    Etherscan.io is capable of spitting out every single transaction (including mined blocks and/or payments received from pools) to your account, with time stamps included.

    You can then load that data into https://cointracking.info/trade_prices.php to get the exact price of ETH at the time it was mined.

    And yes, it is a cost basis in this context. I know it sounds strange, it was to me too at first. But, there is no way around it if you plan to deduct mining equipment, electricity, etc. as a "business".

    Also, it doesn't really matter and doesn't hurt anything down the road by establishing the cost basis like this now. All it does is reduce the amount of capital gains taxes you will pay later when converting to fiat, because the taxes will be levied on whatever the value is then minus this original cost basis.

    Otherwise, you risk having the IRS question why it wasn't reported to begin with and attempting to assess penalty fines and interest.

    If you don't want to report anything and try to keep it compleley off the books, then you'll have to eat your mining costs (equipment, electricity, etc.). Even then, in a hypothetical best case scenario if ETH were to hit $1k+ like BTC did and you liquidate -- do you think any bank that receives that cash isn't going to file a suspicious activity report? Of course they will, thus tipping off the IRS and you know where it goes from there.

    Best to just try to do everything on the up-and-up from the get-go. Because with the world economy in its current state, entities like the IRS are on high-alert for exactly this type of stuff.
    @MrYukonC As it was explained to me today, the only time you pay capital gains tax is when you buy coins from an exchange and then later sell them for a profit. For miners, your tax obligation is calculated on the day you mine the coin based on the current exchange rate as you've stated. I think the only other tax is a self-employment tax, but think this only kicks in if you depend on the income to live.

    I was thinking the difference between the mined value and sale value was used to calculate the capital gains tax as I was going to roll my FIAT when I cashed out into real estate to avoid paying the taxes, but this can only be done if I purchase my coins not mine them. Again though, the attorney only had a chance to read the first 3 pages of the IRS code, so I may be wrong.
  • syaoran99syaoran99 Member Posts: 204

    dlehenky said:

    @thesmokingman We'd like to hear what the CPA has to say on the ETH part. :) Self-emplyoyment tax (FICA+) is paid on wages/salaries, i.e. earned income, not capital gains. I was a self-emplyed consultant for years. If you have your mining business set up in such a way that the business pays you a wage to oversee the operation, then you would pay self-emplyment tax on those wages. If mining ETH is an investment in ETH, another way of acquiring that asset, and you're going to pay cap gains, then you wouldn't pay self-employment tax, just as you wouldn't if you were trading stocks in your pajamas. That's been my experience, anyway.

    @dlehenky Just got back from talking with my CPA/Tax Attorney. He only had a chance to read the first 3 pages of the IRS ruling from the link below, so take this with a grain of salt. From what he was able to read, miners who are running their operation as a business, must record the value of the coins on the day they are paid out (since you aren't rewarded for your efforts until you are paid like with any business). Whatever the sum of your payouts are each day is what you will be taxed on. So in essence you are taxed each time you receive a payout from the mining pool at whatever the value of the coin is at that point in time. This requires a spreadsheet to be maintained documenting every payout and the current exchange rate. That's not the crazy part.

    Say you mine ETH for a period of 1 year and never convert any ETH to USD but hold. If for 51 weeks the ETH value is $20 per coin, and then the last week of the year the value tanks to say $0.25 per coin until April 15th/18th. You have to pay taxes at the $20 valuation for 51 weeks and $0.25 valuation for the 52nd week. Since no ETH was sold to FIAT during the year, the miner runs the risk of having to pay the taxes out of his own pocket if enough ETH can't be sold to come up with the taxes owed. So if your tax bill is say $10,000, and you liquidate all your mined ETH and can only come up with $2,000 because of the recent drop in value, in the eyes of the IRS you still owe them $8,000. I think this is going to be an issue for a lot of miners who run their operation as a business and don't plan ahead and take this into account. Depending on the size of the operation, the owner could find themselves owing the IRS thousands of dollars that they no longer have.

    I have to sit down now and make out a plan of action for how I'm going to deal with this and recommend others do this as well. I like holding my coins in case the value increases, so this is going to force me to think differently about how I manage my coins. Either sell the coins I mine when the value is high, or estimate how many coins I will mine over the course of a year with difficulty increases and figure out what my tax obligations will be, and then sell coins till I reach this amount so I have a "cushion" to fall back on once the actual amount is known. Honestly the IRS needs to re-evaluate this position, but until virtual currency takes off I doubt this will ever happen. Hope this information helps you guys out. I have to set another meeting with my CPA/Tax Attn. next month when tax season has calmed down and he's had time to fully disseminate all the information and can give me the full details.

    https://www.irs.gov/pub/irs-drop/n-14-21.pdf
    Wow that is crazy and very unfair indeed. What about the part where you can file for losses and claim tax exemption for that amount? Or does that only exist for those who bought ETH instead of mining it? Once again thank you @thesmokingman for the information this is really a game changer for the larger miners out there.

    @kotarius here I think you should stop advising people to claim business and claim the tax return. Let's not be greedy for more customers and provide unfair information that is not within your expertise.

    Also in relation to your last post, I've not attacked you in any way so I think your behavior as a businessman attacking me that way is highly unprofessional. Besides its not like I'm walking into your shop and telling your customers not to buy from you. This is a public forum. Any discussion is welcome here. Besides I think this thread has helped many people understand the weight of mining and it's responsibilities.
  • syaoran99syaoran99 Member Posts: 204
    edited April 2016
    Also @adaseb

    I'm relaxed enough it's just that these information you see here in mining are the serious stuff that many choose to put aside until it's too late to ignore.

    Please if you've got things to share on why people should mine, do list it out instead of just targeting me and saying its still profitable in one sentence. I'd like to read about it to see if I missed anything out. Oh and remember to make sure you tell the whole tale and not just the buttered up half of it. There's always two sides of the coin. It's only about which is better. In kotarius case tho, you can never win the TAX authorities in terms of claiming tax from them instead of paying more. For every tax u claim back, you will likely have paid more elsewhere.

    @rdnkjdi the GPU you sell off eBay is also taxable as income. You would need to declare it or otherwise eBay will declare it to the IRS for you if it exceeds an amount annually/monthly.
  • BiodomBiodom Member Posts: 693 ✭✭✭
    someone keeps trying to infect my computer with some $#%& every time I use this forum
    i wonder who it is?
  • gmangman Member Posts: 1
    Nice how the IRS wants to be there collecting tax at just about every transfer isn't it? They take none of the risk, but always want a cut of the profits. When did the IRS get the right to make arbitrary "rulings" anyhow? Are they a court?
  • dlehenkydlehenky Member Posts: 2,249 ✭✭✭✭
    @gman A ruling is just that: their opinion, their interpretation. Of course, they are always looking out for their own interests, not ours. At some point, someone will have enough skin in the game to challenge the ruling in court.
  • Marvell9Marvell9 Member Posts: 593 ✭✭✭
    adaseb said:

    Buying ETH directly isn't a good idea either because there is no guarantee that it will go up in the future anyways.

    Alot of people have free electricity and they can buy the cheaper R7 370 instead of the 3x cost R9 390.

    The GPUs themselves will never be worth $0. So the ROI period you calculated was incorrect. Most of the GPUs you can resell for 40% of what you paid for, even if the market gets flooded with GPUs. I was around in Spring 2014, and there were gpus flooded on eBay but they still weren't free. And 6 months later in Dec 2014, the prices went up and you could sell a 280X for around $150 USD, which was originally brand new at $300 USD.

    I know you went on this rant to scare people so the difficulty doesn't go up, but the truth is, right now its still VERY profitable to mine. And the difficulty will keep going up and up.

    Yeah i dont understand his reasoning GPUS will ALWAYS have value, and selling 122 GPU's is nothing ive sold 200 plus GPU's in the past over a six month period, they GPUS keep mining lower profitablity coins and when the sell I unplug them and ship them out lol.

    Its not like miners will be in a super hurry to sell these GPU's since we should at least ROI by end of the year at worst
  • MrYukonCMrYukonC Member Posts: 627 ✭✭✭

    MrYukonC said:

    dlehenky said:

    @MrYukonC How can you establish cost basis before converting to fiat? ETH isn't money; USD is money. Are you supposed to assign a cost basis for each ETH based on the average exchange rate for ETH->USD at the moment you mine it?

    @dlehenky Yes, that's exactly what and how you're supposed to do it.

    Etherscan.io is capable of spitting out every single transaction (including mined blocks and/or payments received from pools) to your account, with time stamps included.

    You can then load that data into https://cointracking.info/trade_prices.php to get the exact price of ETH at the time it was mined.

    And yes, it is a cost basis in this context. I know it sounds strange, it was to me too at first. But, there is no way around it if you plan to deduct mining equipment, electricity, etc. as a "business".

    Also, it doesn't really matter and doesn't hurt anything down the road by establishing the cost basis like this now. All it does is reduce the amount of capital gains taxes you will pay later when converting to fiat, because the taxes will be levied on whatever the value is then minus this original cost basis.

    Otherwise, you risk having the IRS question why it wasn't reported to begin with and attempting to assess penalty fines and interest.

    If you don't want to report anything and try to keep it compleley off the books, then you'll have to eat your mining costs (equipment, electricity, etc.). Even then, in a hypothetical best case scenario if ETH were to hit $1k+ like BTC did and you liquidate -- do you think any bank that receives that cash isn't going to file a suspicious activity report? Of course they will, thus tipping off the IRS and you know where it goes from there.

    Best to just try to do everything on the up-and-up from the get-go. Because with the world economy in its current state, entities like the IRS are on high-alert for exactly this type of stuff.
    @MrYukonC As it was explained to me today, the only time you pay capital gains tax is when you buy coins from an exchange and then later sell them for a profit. For miners, your tax obligation is calculated on the day you mine the coin based on the current exchange rate as you've stated. I think the only other tax is a self-employment tax, but think this only kicks in if you depend on the income to live.

    I was thinking the difference between the mined value and sale value was used to calculate the capital gains tax as I was going to roll my FIAT when I cashed out into real estate to avoid paying the taxes, but this can only be done if I purchase my coins not mine them. Again though, the attorney only had a chance to read the first 3 pages of the IRS code, so I may be wrong.
    @thesmokingman cc: @dlehenky

    @thesmokingman Thanks for that update. I was pretty certain that I was correct about reporting mined coin values at the time they were mined -- IF you're going to file as a business. The cap gains taxes, I wasn't totally sure on, but still believe there will be. Nothing is free as far as the IRS is concerned. However, the reporting of the mined coins as income at the time they were mined will lower the effective cap gains amount that may still possibly need to be reported.

    Anyway, doing it this way allows one to depreciate their equipment, deduct equipment costs (as long as that tax year's profits met or exceeded equipment costs, otherwise, you can deduct a percentage and annually carry over what's left over to the next year, etc), deduct electricity, deduct part of your living space, deduct part of your internet bill, etc.
  • syaoran99syaoran99 Member Posts: 204
    Marvell9 said:

    adaseb said:

    Buying ETH directly isn't a good idea either because there is no guarantee that it will go up in the future anyways.

    Alot of people have free electricity and they can buy the cheaper R7 370 instead of the 3x cost R9 390.

    The GPUs themselves will never be worth $0. So the ROI period you calculated was incorrect. Most of the GPUs you can resell for 40% of what you paid for, even if the market gets flooded with GPUs. I was around in Spring 2014, and there were gpus flooded on eBay but they still weren't free. And 6 months later in Dec 2014, the prices went up and you could sell a 280X for around $150 USD, which was originally brand new at $300 USD.

    I know you went on this rant to scare people so the difficulty doesn't go up, but the truth is, right now its still VERY profitable to mine. And the difficulty will keep going up and up.

    Yeah i dont understand his reasoning GPUS will ALWAYS have value, and selling 122 GPU's is nothing ive sold 200 plus GPU's in the past over a six month period, they GPUS keep mining lower profitablity coins and when the sell I unplug them and ship them out lol.

    Its not like miners will be in a super hurry to sell these GPU's since we should at least ROI by end of the year at worst
    It seems that my prediction might be right afterall. ETH value will likely see below 8 soon if this keeps up and the bulls fail to break resistance. At which point buying ETH outright would be the smartest thing to do instead of buying more mining gear.

    GPU will always have value true, but that value of the gear is significantly reduced with every generation of new gears produced. If you wanted to mine another coin in the future, you would be doing so at a much higher cost of electricity than you would by buying brand new cards during that time. Do take note that AMD is due to release a new line of cards all being as efficient as the Nano while being more powerful. HD 7900 series cards and R9 200 series cards will be so inefficient compared to them and in mining it's all about who pays less for on-going costs that will let you stay in the game.

    Also your claim that ROI by end of the year worst, instead of just spitting a date out care to share some calculations? Predictions as to why worst case end of the year they'd still be able to get ROI? I get pretty annoyed when there're so many threads out there that have already done the calculations saying ROI isn't achievable and yet someone just mentions oh yes it's achievable. Why? because I said it's achievable. It's really a very unintelligent argument for those who've spent a hell lot of time calculating theirs.

    As for @ilia7777 thread, his predictions and calculations are spot on so far and it's been 3 months ongoing already where Difficulty has been increasing at a 35-40+ percent per month that is an exponential amount of GPUs being pumped in at the moment! EXPONENTIAL. It would have to be for the difficulty to maintain a set % of increase per month.
  • blueboxbluebox Member Posts: 181 ✭✭
    edited April 2016
    Regarding altcoin taxation rules in the US, there's some off-base stuff going around. Brought this up in another thread a month ago. I wonder just how different the rules are in other countries, but I'm sure China and its endless supply of GPU's and electricity doesn't give a shit. :D

    Bolded some things for the TL;DR ADHD among us.

    Remember, you still have the basis income of the mined coin to realize in the year it was mined, whether or not you cashed them in, bought something with them, or converted them to another altcoin. This is an important distinction as to what year the cap gain/loss is calculated and how, or whether it can be classified as capital (non-business) or ordinary (business) income.

    It all has to do with when a taxable event is triggered. When a coin is mined, it is counted as income by the IRS and the cash value of each coin, when mined, is your tax basis. Coins are classified as a capital asset for individuals, or possibly ordinary income for businesses. While the ruling is still not clear, the quote from the article should make it quite clear:
    "Generally, if you sell bitcoins to an exchange, your bitcoins are probably not inventory. If you sell them to a specific person or list of persons/companies, then it's possible they are inventory."
    If you are cashing in your altcoins, you don't have classifiable inventory; if you don't have inventory, you're not a business. Regardless, mined coins are counted as income in the year they were mined.

    When it comes to cap gain/loss, mining a coin is handled the same way as purchasing a stock, including short- and long-term (1+ year) holdings for tax calculations. Wash rules also apply. A second taxable event is triggered when you exchange altcoins for cash, product or services.

    If you mine a coin this year and cash it in this year, you're going to pay ~1/3 of that money to the taxman.

    In the end, unless you have a serious case to make that your mining is a "business", deductions for cost (gpu's, systems, electricity, etc.) are not going to be taken lightly by the Feds. Most people won't be able to treat mined income as ordinary like a business, and will be taxed at the highest rate when filed. Unless you like risking imprisonment; don't think this doesn't happen, my cousin is a high-net-worth accountant and has seen what happens for as little as a couple grand. No, I don't work for .gov trying to scare you, just making the info available. Everyone is perfectly free to find out more on their own; I'm still only 90% sure the above is correct, mostly because the IRS has not clarified some rules yet on altcoins.

    As @Biodom mentioned, if you use a currency exchange you will get a 1099 if you go over 200 transactions and $20K in cumulative value, perhaps less nowadays. Wire transfers to bank accounts are also monitored (FinCEN/BSA rules) and you will likely get a 1099 from them for transfers as little as $1000...

    Exchanging altcoins for cash and transferring the money to a bank can and likely will trigger a 1099 form, informing the IRS of your activity and tax obligations.

    I stopped mining two weeks ago. Excluding short-term tax obligations, electricity and a couple gpu's, I've still made a "good" profit. Continuing to mine for fractions more as time goes by only goes to increase cost basis. I feel bad for those who are forced to continue mining just to cover hardware, and probably aren't even thinking of those taxes that are due (or the jail time that may come if they ignore it).

    Mining ETH is already less profitable than many people think, like alcohol was post-Volstead, even though it continues to be a thriving "business". Especially if you're willing to ignore tax obligations and risk jail time like Capone.

    Have a nice day. :)
  • retherrether Member Posts: 258 ✭✭
    The most relevant sections for most people here- and this is straight from the IRS.

    Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer
    resources to validate Bitcoin transactions and maintain the public Bitcoin
    transaction ledger) realize gross income upon receipt of the virtual currency
    resulting from those activities?

    A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value
    of the virtual currency as of the date of receipt is includible in gross income. See
    Publication 525, Taxable and Nontaxable Income, for more information on taxable
    income.
    Q-9: Is an individual who “mines” virtual currency as a trade or business subject
    to self-employment tax on the income derived from those activities?

    A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the
    “mining” activity is not undertaken by the taxpayer as an employee, the net earnings
    from self-employment (generally, gross income derived from carrying on a trade or
    business less allowable deductions) resulting from those activities constitute selfemployment
    income and are subject to the self-employment tax. See Chapter 10 of
    Publication 334, Tax Guide for Small Business, for more information on selfemployment
    tax and Publication 535, Business Expenses, for more information on
    determining whether expenses are from a business activity carried on to make a profit.

    https://www.irs.gov/pub/irs-drop/n-14-21.pdf
  • hasherhasher Member Posts: 642 ✭✭✭
    Thank god I live in asia LOL
  • MrYukonCMrYukonC Member Posts: 627 ✭✭✭
    bluebox said:

    In the end, unless you have a serious case to make that your mining is a "business", deductions for cost (gpu's, systems, electricity, etc.) are not going to be taken lightly by the Feds.

    @bluebox Good post. I agree with pretty much everything except the quoted part. Yes, the guy mining on his gaming rig with 1 or 2 290X's isn't going to be taken seriously if he tries to file as a business.

    But, there are people on here that have $5k, $10k, even $50k+ invested in hardware. Those are what I consider the mid-tier guys and I believe they have every right to file as a business, especially if they are playing by the books and reporting their mined coins as income (and paying the corresponding taxes on them) like they are supposed to do. If the IRS wants (expects!) their cut from the mid-tier (and top-tier) guys, then the IRS needs to remember that it's a 2-way street. Most of the people in this tier and higher, specifically invested in hardware with the purpose of mining for profitability along with all that is involved with that endeavor.

    Then you have the top-tier guys with $100k+ in hardware, equipment, warehouses, etc. and they are of course filing as a business. But, I suspect most of them are not in the US, so what they do doesn't really matter in the US.
  • blueboxbluebox Member Posts: 181 ✭✭
    @MrYukonC IRS doesn't give a crap about "tiers", only how big the fish are they want to go after first. Eventually they get to every level, and back taxes are a bitch.

    The question revolves around IRS interpretation of exchanging your mined coin "inventory" for cash on an exchange, as opposed to selling the "inventory" to individuals or companies. That's just one grey area not addressed by the tax code pubs.

    I'm going to ping my cousin about it, see if she has any CPU time to figure this out now that tax season is over. Then again, she may not want to look at another tax question for a month or more, if she hasn't already flown to Bermuda... :s
  • MrYukonCMrYukonC Member Posts: 627 ✭✭✭
    @bluebox I think you may need to chill a bit. I was simply distinguishing in my own terms how I see it (hence the use of the term "tiers").

    Remember, you're the one who made the claim that people are going to possibly be in for trouble if they try to deduct mining as a business.

    I've got news for ya -- I already filed my taxes for 2015 and paid the taxes for my mined ETH as well as deducted "business" costs related specifically to the mining. The IRS has already cashed the check and we'll see if I hear anything further from them about it. I doubt I will.

    I also plan to pay the capital gains taxes if/when I convert to fiat and the presumptive 1099 is filed, and in the meantime (for 2016 at least) I will be damn sure to deduct all expenses related to this business venture.

    Business is business -- either conduct it like one (regardless of the product / subject matter / etc.) and file accordingly, or don't.
  • shawn_Blah_Blahshawn_Blah_Blah Member Posts: 57
    As long as I'm paying taxes on the mined coins, I'm sure as shit, classifying these video cards that have only mined coins as business assets. I did it previous years, no different than running a website with ads, of course you will report your server costs. Graphic cards were solely purchased to mine coins, what's to debate.
  • brakabbrakab Member Posts: 38
    edited April 2016
    How do I file not as a business, I'm on disability.

    edit: Just include the fair market value of Ethereum on the day that it is mined into my gross income?
  • syaoran99syaoran99 Member Posts: 204
    Quite a few major news and Ethereum price isn't moving up one bit while difficulty continues to grow.

    http://themerkle.com/swift-release-in-depth-report-on-distributed-ledgers/

    Bad times ahead for new miners :(
  • ThatDudeThereThatDudeThere Member Posts: 135
    edited April 2016
    I'm not impressed with the profits from my first rig. I'm at 90 mh/s, and making 1 eth per day. At this rate it will take 4.5 to 5 months to pay it off, assuming everything stays the same. Not sure if this is worth the heat and noise created, or if it's a genius long term decision.
    Edit: I didn't even factor in loss from electricity, so payoff would be longer. Anyone without an agenda have a good insight?
  • rdnkjdirdnkjdi Member Posts: 135 ✭✭
    edited April 2016
    Use claymore's dual miner and the decred will pay your electric bill.

    Mining is inherently risky. But also being in the rental business ... the prospect of paying off your equipment in less than a year is not something you find in often (from what I've seen in my short time on planet earth anyway) outside of very specific niches without the right skillset and contacts.

    If I had it to do over again I'd probably go with the nanos.

    In the big picture of things - I see ethereum as a vote of no confidence in ASICs. GPU / CPU PoW or PoS is the path forward.

    I got in about a month ago and it's taken me a lot longer to get up and running than I anticipated. My angle is having equipment partially or totally paid off for another PoW coin I see in the future & I want in on the ground level. This was just a great springboard. It may work or I may totally regret it ... would have been much safer to get in four or five months ago. I'm not building out with more than what I've got.
  • syaoran99syaoran99 Member Posts: 204

    I'm not impressed with the profits from my first rig. I'm at 90 mh/s, and making 1 eth per day. At this rate it will take 4.5 to 5 months to pay it off, assuming everything stays the same. Not sure if this is worth the heat and noise created, or if it's a genius long term decision.
    Edit: I didn't even factor in loss from electricity, so payoff would be longer. Anyone without an agenda have a good insight?

    Like I've mentioned before, ROI is not possible factoring in electricity and tax obligations. That doesn't include the probability of difficulty increasing 35-40% monthly plus Ethereum devaluing.

    But yeah many of the posts in this thread are talking about the harsh reality of mining with new rigs now.
  • retherrether Member Posts: 258 ✭✭
    rdnkjdi said:

    Use claymore's dual miner and the decred will pay your electric bill.

    Mining is inherently risky. But also being in the rental business ... the prospect of paying off your equipment in less than a year is not something you find in often (from what I've seen in my short time on planet earth anyway) outside of very specific niches without the right skillset and contacts.

    If I had it to do over again I'd probably go with the nanos.

    In the big picture of things - I see ethereum as a vote of no confidence in ASICs. GPU / CPU PoW or PoS is the path forward.

    I got in about a month ago and it's taken me a lot longer to get up and running than I anticipated. My angle is having equipment partially or totally paid off for another PoW coin I see in the future & I want in on the ground level. This was just a great springboard. It may work or I may totally regret it ... would have been much safer to get in four or five months ago. I'm not building out with more than what I've got.

    Hmmm...not sure on the math of decred paying for electric. My hashrate was lower with the dual miner and the decred was really not much at all when you factor in heat, increased power usage and a 2% dev fee. Certainly not going to come anywhere close to paying for power let alone even being more profitable than just using ethminer in stratum. Not to mention, decred is very low market cap.
  • rdnkjdirdnkjdi Member Posts: 135 ✭✭
    edited April 2016
    Like I've mentioned before, ROI is not possible factoring in electricity and tax obligations. That doesn't include the probability of difficulty increasing 35-40% monthly plus Ethereum devaluing.
    So ... first there's not a good way to know what your GPU will be worth six months from now. Pretty stupid that the 290 I got for litecoin mining years ago is worth as much today as it was when I purchased it.

    "ROI" is "what you make" + resale value - expenses - taxes. Assuming Ethereum will continue to devalue makes as much sense to me as assuming Ethereum will double (none at all - I have no idea what it will do.).

    Also taxes aren't an expense unless you have a positive ROI. If you are paying taxes you already have an ROI, no?

    There's also no way to know that another coin won't come along that will be as as or more profitable as Ethereum is now. Or as / more profitable than Ethereum will be three months from now.
  • ThatDudeThereThatDudeThere Member Posts: 135
    edited April 2016
    I need to save $7000 for a down payment on a house in January. I have to decide if I'm going to spend any more money on mining, or save everything. Big decision and allot to weigh out.
    Edit: I have enough for another rig now, but the rest of the $7000 will have to be saved week by week.
  • adasebadaseb Member Posts: 1,043 ✭✭✭

    I need to save $7000 for a down payment on a house in January. I have to decide if I'm going to spend any more money on mining, or save everything. Big decision and allot to weigh out.
    Edit: I have enough for another rig now, but the rest of the $7000 will have to be saved week by week.

    That's a really small down payment, wish houses in my area were that cheap.

  • syaoran99syaoran99 Member Posts: 204
    rdnkjdi said:

    Like I've mentioned before, ROI is not possible factoring in electricity and tax obligations. That doesn't include the probability of difficulty increasing 35-40% monthly plus Ethereum devaluing.
    So ... first there's not a good way to know what your GPU will be worth six months from now. Pretty stupid that the 290 I got for litecoin mining years ago is worth as much today as it was when I purchased it.

    "ROI" is "what you make" + resale value - expenses - taxes. Assuming Ethereum will continue to devalue makes as much sense to me as assuming Ethereum will double (none at all - I have no idea what it will do.).

    Also taxes aren't an expense unless you have a positive ROI. If you are paying taxes you already have an ROI, no?

    There's also no way to know that another coin won't come along that will be as as or more profitable as Ethereum is now. Or as / more profitable than Ethereum will be three months from now.

    Taxes BECOME expenses as Ethereum price depreciates. It doesn't matter whether you already met your ROI or not, you still have to pay the taxes for the amount of Ether you mined ON THAT DAY.

    So figuratively saying, you mined 1000 Ether in on the 19th March 2016 income tax requires you to pay 50% the price of Ether worth that day which was 15 USD (total $7500 in tax owed), but you never sold your ETH on that day and you held your ETH till 19th May 2016 before selling it at a loss at 7 USD.

    You will still need to pay $7500 worth of USD because you mined that ETH on 19th March. and NOT $3500USD.

    Thus, an additional $4000 USD has become additional expenses for you :)

    That much has been VERY CLEAR and discussed above.

    ROI and Taxes are totally independent things AFAIK. The only thing you can escape from taxes is by claiming back tax up to a limit for a business based on the tier of your business. But then as the tier goes up allowing you to claim more, so does your tax bracket! :dizzy:

    So yea. Also only reason R9 290 worth same as last time during LTC is because the R9 390 is no different from it. But we all already know that the next gen AMD cards will put the current ones to shame. Imagine a more powerful r9 nano with double the hashrate. Tell me then the current cards won't become worthless?
  • rdnkjdirdnkjdi Member Posts: 135 ✭✭
    edited April 2016
    Yes but if you sold every day on the day you mined you WOULD have to have a positive ROI before you actually wound up owing taxes.

    My point with the 290 is that people THEN were talking about how they would be worthless (2 years ago) and they were for awhile. Also between that time and now the Nano's came out which are about 2X as efficient as 290/390's esp with modded roms. Are you using Nanos? Are your cards worthless if you aren't?

    The profitability is directly tied to the speculators miners sell to ... the supply cost is tied to the price of the gear, electricity & hashrate. I think you are mixing hashrate up with speculation / demand that really determines profitability.

    Just like the price of oil. When it's $90 a barrel everyone is pumping. When it's $35 not so much.

    I am curious about AMD's new release. I got 390's assuming they would be more power efficient than 290's (for gaming I guess they are) but mining at the same hashrate they pull 35 - 45 more watts than the 290's.

    I read somewhere the drop for AMD's new cards will likely be Q4 or that it got pushed back?
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