Stop Mining at a Loss

Stop Mining at a Loss
I have received a lot of comments over the last week advising that I should continue to mine even if electricity costs are higher than mining profits.

No one should do this.

If electricity costs are higher than the value of the coins you are mining, switch off your rigs and buy the coins directly.

Doing otherwise is costing you money.

Referenced Videos:

I’m Selling All My 1060 6GB Graphics Cards – https://www.youtube.com/watch?v=JxtnVl8suDw

Tuesday Crypto Chat – Live Stream – https://www.youtube.com/watch?v=8XcY-rqgd9Y

Be sure to leave a comment below and give your opinion on this topic.

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Kevin

OBVIOUS DISCLAIMER IS OBVIOUS: I am not a financial advisor. My opinions are my own and it is the responsibility of everyone to do their own research for every coin they invest in.

SafeCoin
————-

In June 2018 I joined the SafeCoin project https://safecoin.org/

Find out why at https://www.youtube.com/watch?v=Qt6Hu356Kbo

Buy Cryptocurrency
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Exchange USD, GBP, EUR, and more, to Bitcoin and other popular Cryptocurrencies.

CoinBase – https://www.kevinmuldoon.com/go/coinbase

Cryptocurrency Wallets
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Protect your cryptocurrency with hardware wallets.

Ledger Nano S

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Amazon UK – https://amzn.to/2HY8tTj

Trezor

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KeepKey

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Buy HashPower
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Don’t have a mining rig? Don’t worry, you can purchase hashpower from others and use their equipment to mine the coins you want.

NiceHash – https://www.kevinmuldoon.com/go/nicehash

Mining Rig Rentals – https://www.kevinmuldoon.com/go/miningrigrentals

Crypto Exchanges
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A Selection of exchanges I have used and trust.

SafeTrade – https://safe.trade/ (Beta)

Binance – https://www.kevinmuldoon.com/go/binance

LiveCoin – https://www.kevinmuldoon.com/go/livecoin

HitBTC – https://www.kevinmuldoon.com/go/hitbtc

Kukoin – https://www.kevinmuldoon.com/go/kucoin

Nanex – https://nanex.co/

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Stop Mining at a Loss

15 thoughts on “Stop Mining at a Loss”

  1. Mining is an income based investment, if it doesn't produce an income on a regular basis then there is no point doing it. Most people want a weekly or monthly income from it. Gold and Silver miners don't mine metal and hoard it one day hoping the price will go up, if mining falls below cost of production they shut down. If you want to speculate on future price (capital appreciation) it makes more sense to buy the coin. I and many others have had our arses handed to us in the mining space. I cant even cover the cost of electricity never mind the cost of the hardware. I also calculated that even at these prices/difficulty ill never even mine close to the amount of coins i could have purchased with the capital i laid out for the hardware, assuming a 4 year lifespan on the rigs – well and truely REKT

  2. i think that it is the market value of say ether you have had it good and made money for some months now it drops you are still in profite untill you have lost the profite you have made during the sucsessful time iv just started and iv saved money by buying riggs half price and im still learning im not making but its warming my 3 bed house lol and im still getting coin when the price go's up you have to buy gpu's again at top wack or hard to come by so i say rough with the smooth diggin hold on it will come back or hard fork off but im in to the end i hope it pays off ; }

  3. I understand your position of having 4 rigs, yes that's a lot of money to pay in electricity but why not just keep running one rig or which ever you can afford , is better to have coins ready then have none and see the price going up.

  4. I'm mining at a USD loss right now – however I still get the same number of Satoshi every day. I've been waiting for the day that my Satoshi per day starts to drop / then I know mining is really dead. However, turning the rigs off and buying the Satoshi straight up is probably the better situation for me at this point. My guess is when the USD price gets high enough to turn the rigs back on the difficulty will have increased to where my Satoshi per day is way lower (tears)….

  5. I have mixed feelings about this subject. Whether you are mining at profit or at a loss all depends on if you are cashing out daily, weekly, monthly, etcetera… If you mined a certain coin for the last 6 months and you never cashed out and that coin has now dipped, and you cash out today .. then you've been mining at a loss for six months. If I start mining today "at a loss" and I continue it for 2 months and the price goes up and I sell the coin 2 months from now for a higher price then I wasn't actually mining at a loss today. I mean you're not mining actual fiat currency, you are mining a coin with a fluctuating price. "At a loss" or "at a profit" all boils down to when you get rid of it. That being said, to have that mind set you would really have to be able to afford the electricity for months and months, which I can because I have a very small operation. It is just going to be different for everyone depending on their situation and finances. I respect your decision to get rid of the 1060s, I'm glad my 580's are still slightly profitable for the time being, of course because I haven't cashed anything out I may have been mining at a loss for several months now, only time will tell. If nothing else I do hope the amount of people turning machines off will lower the difficulty for the ones that stick it out.

  6. Yeah… I've come to same conclusion. I didn't get into mining for the fun of. I got into it to make a buck!

  7. Crypto value is very difficult to gauge in the long run especially with such a significant drop from the previous bubble. New cards are a very good reason to sell current tech due to large improvements in efficiency. But if you look at the prices of the new cards, even with significant efficiency improvements they will have very long ROI's. If you consider that we might be currently at the bottom of the market (we could still go lower)- small losses on mining returns could be acceptable given the potential longer term returns. Things will get better, just not a lot better. I do not agree with simply turning off to save power, however turning off or selling due to a combination of high difficulty and negative profits makes more sense.

  8. But what time horizon defines a loss? If prices drop for a few weeks, is that the same thing as mining since BTC dropped from 20k USD?

    I get some folks simply must be able to pay as they go. That usually means they spent money they could not afford to spend, or to say it the same way they are extended on credit. In that situation your immediate driver means you may have made a faulty business decision in the past based on factors that no longer apply.

    Or it may mean one's past investment is in hardware that cannot maintain against the latest difficulty rates let alone what we'll see within the year. Again, a sane decision to shut down and maybe liquidate the obsolete hardware for something that can keep pace.

    I suggest we should be more concerned with the shift to PoS. That wipes out mining regardless of whether it is GPU, ASIC, FGPA or Doc Brown's 1.21 gigawatts flux capacitor. πŸ™‚

    But my key point is horizon on forecast payback is what defines a loss. Many very successful businesses keep operating at a loss despite being in a highly cyclical industry. Factories don't stop making airplanes just because they won't be back in black for another couple of years. Frankly, real life mining is often at a loss for a few months.

    Never invest with leverage unless you know your clawback plan is realistic. Never spend money you need to keeps the lights on. Profits exist to evolve the business. Cash cow companies don't exist that much anymore.

    Elmer Fudd says it better: πŸ˜€


  9. Our difference of opinion is where I build additional perspective from. Life is a ongoing learning process that which may be irrelative now may become of utter importance at some time in the near or distant future. There always is a time to pull the trigger and to realize when enough is enough. Only do what you can afford, never go broke trying to do anything except when it is for the kids. Even if you do not leave your rigs running 24/7 turn them on part time. Keep at least 1 foot in the game the most economical that you can. Once you sell your rigs all coin purchases are out of pocket versus earned with your long term working hard ware. Who wouldn't love a car that always has gas.

  10. The only other argument I can think of is if you value the lack of KYC requirements outweigh the premium that you are paying (the loss)…. not what I'm doing (my rig is off) but that's all I can think of

  11. So I came across your channel when you were talking about the RTX20-series cards and I will thank you for supporting crypto. However, I think you like many others had crypto all wrong and it shows because you had 30GPUs and talking about profits and business. Don't get me wrong, this is not to attack you or others who built large private mining rigs, but to explain why your logic was wrong and very short sighted in the bigger scheme of things; at least from an economic perspective. You probably have made a lot of fiat currency profits from your mining and good on you for your trading smarts.

    However, remember crypto like bitcoin are partly about removing centralized trust, yes I know in crypto you trust the algorithm, and going decentralizing. People like you who built massive rigs or buying ASICs were ultimately and probably unknowingly moving a decentralized system back to a centralized one. Now we are talking about proof-of-stake (centralized cartel) vs proof-of-work (decentralized lottery). At the scale you were working on you would have been better off expanding to building a farm and selling hashing power to maintain decentralization and reduce your costs. This centralized vs decentralized issue is why profits and prices become extremely important for you to maintain your rigs. You like many others were in a race to the top of hashing power but then it's a problem of he/she who has the deepest wallet or early access to new ASICs wins as you collectively ramp up the difficulty and further cannibalize the market and so require higher crypto prices to cover your costs. And remember that once the last bitcoin is mined/release by the algorithm, all you are left with income wise from mining are transaction fees. These were never going to be large enough to maintain huge private rigs. So your mining business model though profitable in the short run is actually unsustainable. You were fueling a bobble that was inevitably going to burst because you were constantly having to trade out your mined crypto assets into fiat currency assets to fund your costs.

    Your and many others in your situation should never have built private rigs with more than 10gpus and flipping between cryptos to mine if I am being generous.

  12. BTW – with our hydroelectric here in Washington State, USA… we're fortunate to only pay $.08/KW hr. Otherwise… ouch. I feel your pain.

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