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Comment by beamatronic | Hacker News Reader

Is there any estimate of how much income this particular mine can produce, compared the the capital outlay and the ongoing costs?

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This operation currently mines about $262k per month:

230e9 (each machine does 230 Ghash/s) * 2500 (# of machines) * 3600 (second/hour) * 730 (hour/month) / (2^32 (average number of hashes to solve a block at diff=1) * 19.8e9 (current Bitcoin difficulty)) * 25 (BTC/block) * 590 (USD/BTC) = $262000/month

The article says their electricity bill is $60k per month. Subtract the 3 employees salaries, say $5k per month (this is China). So you are looking at a pure profit of $197k per month. Of course these profits are declining quickly over time; look how fast the difficulty has been rising: http://bitcoin.sipa.be/speed.png (logarithmic scale!)

And this mine only represents 0.3% of the total network speed (about 170,000,000 Ghash/s).

Edit: bellerocky: most exchange fees are < 1% to turn BTC to fiat.

Edit: FigBug: roughly yes, but because the network is growing, there are more than 3600 coins mined per day (blocks are solved a bit more often than every 10min).

> So you are looking at a pure profit of $197k per month.

Not including liquidity issues and fees for turning that stuff into actual money, at least until you can start paying all your bills with bitcoin.

$200k/month is not going to run you into liquidity issues.

It's $200k/month worth of Bitcoin. The 'liquidity' we're talking about here is converting Bitcoin into local currency that you can purchase things with.

Again, not a problem.

Possible, perhaps, "not a problem", seems pretty untrue. How exactly would someone go about cashing out $200k worth of bitcoin?

I sold $800k US of bitcoin on bitstamp market earlier this year - i did it over 30 minutes and it dropped the spot price about $6

Sell on an exchange. The big ones have a monthly trade volume of 100k+ BTC ($50+ million): http://bitcoinity.org/markets/list?currency=ALL&span=30d Clearly $200k is a drop in the bucket for them.

that doesn't include the cost of hardware but I guess it is negligible... and I thought mining was not profitable at current prices.

It's not profitable for people with expensive electricity. Location matters greatly.

Mining tends to not be profitable if you pay retail prices for ASICs, but if you make your own ASICs it's still pretty profitable.

The article says their electricity bill is $60k per month. Subtract the 3 employees salaries, say $5k per month (this is China). So you are looking at a pure profit of $197k per month.

Three other significant expenses worth considering: rent/physical plant, hardware, and taxes.

In most cases in mainland China, no tax is paid and cash is king. Only if you are a large, visible company doing business with other large, visible companies do you need to get formalistic. Even then, double or triple sets of accounts are normal.

I pay plenty of taxes. Heck, I pay the tax on my rent for a fapiao that gives me a tax benefit at work. The PRC is getting better about tax collection, though a lot of activity still goes on underground, especially those that are related to money laundering.

If they have 0.3% speed, wouldn't it be expected that they get 0.3% of the coins per month?

3600 coins per day * 30 days * 588.41 BTC/UDS * 0.003 = $189831.60 USD gross per month?

I think for this kind of work $5k is already too much for three Chinese workers. Each worker about $500 and maybe some fees for the living room and food. If you pay $2k it might be fine.

If you pay $5k for such kind of 24/7 job in China you'll make a middle man very happy.

How much would they have paid for 2500 machines that can do 230 Ghash/s each?

you forgot to include capital expenditures, asics are expensive.

Using this calculator https://alloscomp.com/bitcoin/calculator and using 575,000 Gh/s (is that right?) the calculator gets about $260k per month. With $60K for electricity and let's say $10k for misc. overhead I would guess they are clearing close to $190k per month.

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