Mining Bitcoins solo-Pool-Rental {Post-22}

Mining is by no means an easy task. In the next few lines you will come to know how difficult mining solo is so why don’t we look at some numbers. Let’s say you have a good rig which can handle three AMD HD 7970 cards in CrossFire configuration. Each card gives an estimated 700 MHash/s but the CrossFire configuration will give you 1950 MHash/s on an average. The electricity cost per kWh in India is roughly 20 paise / kWh when generated. Consumer rates are even higher and vary from place to place.The current Bitcoin generation difficulty is at 1,789,546,951. Under these conditions we
can calculate the rate of generation.

As you can see, with such a configuration that has three GPUs totaling  USD 1520.68 you only end up with USD 0.01 per day after subtracting electricity costs. This is ridiculously depressing for someone who spent close to USD 1520.68 for purely mining these coins. If you aren’t part of a pool then your profitability goes down even further since you will only generate one block every 124 years. That’s right, more than a century is needed and that is why solo mining is only for those who have a supercomputer(s) at their disposal. Pool mining is another aspect where you do have the same rig but there are a lot many folk just like you who come together to form the pool. This pool then cumulatively works to solve one block and thus the success rate is much higher and increases as the number of participants in the pool goes up. While this also means that the share that each user gets is way low, it does guarantee to certain extent that you will mine some bitcoins out of the venture rather than solo mining wherein uncertainty looms over you for 124 years. The last option is to rent processing power. Imagine that there are people who can get you the hardware resources but don’t have the money to fund themselves. They turn to consumers and start offering rental services. In this method, you pay to get a certain processing power. They do everything for you so that all you need to worry about is getting your money’s worth in time. That is the problem with upcoming hardware and services. There isn’t any guarantee and some only accept payment in Bitcoins, so there is

no way of getting your money back. Butterfly Labs is one company that has delivered on their promises and are now seeking customers to buy into the rental business. They charge USD 10.53 / [GHash/s]. So if you do spend the
same amount as for the triple crossfire AMD setup then you pay close to USD 2,499. Let’s run the calculation again now. 

Now power costs are irrelevant since you are not paying for that and all you are investing is for the processing power. This means that in just 49 days you will mint enough bitcoins to break even. Everything after that is pure profit. The rental agreement lasts for one year so that means USD 16,817 of profit over a year. Seems too good to be true? Well, these calculations are based on the current difficulty rate and as time goes by this will

increase and you will find it more difficult to mine. That means that the returns reduce significantly. There are plenty of tools available online to help you get estimates on your hardware. Check out http://www.bitcoinx.com/ for a well thought out calculator.