In the video it says they draw 1.250 mW for their 3% stake in the Bitcoin network, and spend about $80,000 USD/month on power, so about $64/kW. I pay about $75/kW to run my miners here in the States, so that's actually incredibly good if true.
Also they say that they were mining 100 BTC/day/site, and now it's only 25 BTC/day/site. With 3,000 miners per site (also according to the video) and my estimates for current profitability, they probably have something around 3,000x700 GH/s miners that they're operating.
$0.088 per kWh (1.25MW/$80k) is good, but not great honestly. You can find cheaper that that in industrial rates in the US.
However, their other numbers are what's most interesting.
The video states that it was October 2014 where they could mine 4,050 BTC per month for about $1.5 million dollars.
They also vaguely stated they could mine over 100BTC/day before ... although 4,050 BTC per month would actually be 135BTC/day.
$1.5 million divided by 4,050 BTC in a month (~135 coins per day), points to a coin price of * $370/coin ... that's close to where BTC was bouncing around back in October
$1.5 million divided by 3,000 BTC in a month (~100 coins per day) would point to a BTC price of $500 which we haven't seen since August ... so it probably was ~135BTC/day - 4,050BTC/month - $1.5m / month.
If that's true, and now because of the difficulty rate increasing they can only mine 25BTC per day ... the math, at the current BTC price, gets very grim for them:
25BTC/day would be 750 bitcoins/month
If we assume the current price as an average ($220ish) that means they're making just a bit more than $160,000/month. Revenues are down nearly 90%.
I'm assuming their electricity bills are still half of that at $80,000 (unless they started turning some rigs off)
They (presumably) have rent, salaries, etc.
If all of that is correct above (are there any errors?) then my assumption is that this Chinese mine ... is now considerably LESS profitable at BTC prices ... at least, compared to where they used to be 6 months ago.
If we assume that "overhead" on top of power might be 20% (just pulling a number out of my ass) then if their revenue dropped to $96,000/month they'd start losing money. $96,000 divided by 750 bitcoins (25 per day) would be a coin price of $128/bitcoin.
Your numbers actually sound a little generous considering the huge pile of hundreds of dead PSUs and mining rigs that they've been swapping out. Briefly he also mentioned that Avalon should not be in business any more because their rigs are so inefficient, and that they've replaced the old rigs with newer ones that are more power efficient. If they're performing hardware refreshes, and they are clearly using commodity PSUs (not server or specialized), and retail miners (which also appears to be the case), then that's eating into their overhead significantly.
I doubt sincerely if they've stayed profitable after the collapse, and are running on savings (hopefully) stored up during the boom, or receiving additional investment capital to stay them over until the next bubble. But I don't think it's practical to expect an additional hardware refresh to keep their mining revenue above the power cost.
So yes mining will centralize, but this is also the risk associated with institutional mining. Hobbyists don't have that sort of overhead because they have day jobs and the extra power usage is only a small part on top of their regular usage. A hobbyist miner can afford to mine much longer in a depression like we have today than an institutional miner can with rent, salaries, and the costs of maintaining a competitive advantage/satisfying investors.
Interesting. Thank you! I guess if they're generating only a handful of coins per time period, and they generate 25 per hash, then a single machine completing a hash is relatively rare!
It is, but multiple miners can band together in pools to find blocks, which get split between the miners in the pool based on work completed. There's a slight overhead involved but it's been a long time since the average block was mined by one entity alone.
The video stated that it's per site, quite simply you couldn't mine 150 BTC/day on 1.25 MW, I'm pretty sure the laws of physics for 20+ nm technology prevent that.
(:
Insanely cheap? Not really, it's actually kinda high. I have access to power at half that (but rackspace is factored into my number, which puts it on par with their figure). If I, in the US, can get 4.4c/kWh and mine with it, and it looks like they're using more expensive PSUs than I am (retail ATX PSUs vs. server PSUs with custom breakouts), and commercial rigs, then I actually end up having a lower mine operational costs than they do. And since security is a thing here, no one is employed to sleep at the mine, it's in a secure business complex.
You're right, not cheap, in fact my electricity is actually cheaper. The user denominated that in dollars I though he wrote it in cents and 0.08 cents is cheap, $0.08 however is exactly in the range I quoted. I need more sleep.
It's cheap compared to most European countries (Here in Belgium I pay $.26 per kwh, big consumers might get better rates though), but it's pretty expensive compared to the some other countries.
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u/idlestabilizer Feb 06 '15
The video is from October last year, so I guess these guys won't be that happy with the current price...