Mining profitability sounds too good, where is the catch?

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I am a beginner looking into Bitcoin mining. I don't want to waste time (or electricity) so I started looking into hardware mining rigs, for example: Saturn

priced at $3000 USD, 275GH/s, consumes ~400Watt (or even Monarch from butterfly labs which claims 600GH/sec @ 350W, priced $4700)

I put these numbers + my local electricity price + current difficulty into a decent calculator, and I get >7,000 $USD profit for 3 months time frame (or >18,000$ for the Monarch). Sounds a bit too good to be true.

I know BTC/USD rate might fluctuate, and that the miner will produce heat, but still. - Where's the catch/mistake, if at all?

mindbomb

Posted 2013-10-01T12:17:01.320

Reputation: 163

possible duplicate of Why does mining profitability tend towards zero?

– Murch – 2015-11-07T12:07:40.220

possible duplicate of Do these new ASIC miners really pay for themselves in 5 days?

– Murch – 2016-01-20T20:33:37.707

Answers

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Keep in mind that difficulty also evolves over time: the more hashes the network produces, the higher the difficulty becomes. As of this writing the difficulty is 148,819,199. By my computation, each additional 275GH/s rig that joins the network will increase the difficulty by about 40,000; if 4,000 of them are sold, the difficulty will more than double (not counting all the competing mining rigs that may join the network). And of course, in a few more months, there may be even more powerful rigs available. So you should expect difficulty to rise, perhaps sharply, and this will decrease your profitability over time.

Nate Eldredge

Posted 2013-10-01T12:17:01.320

Reputation: 22 182

Is the difficulty a factor of the total network Hash power or just raises over time? what's the calculation that you made? – mindbomb – 2013-10-02T10:39:49.200

@mindbomb It's a factor of the total network hash power and the best guesses are that it will about double every month for the next few months. – David Schwartz – 2013-10-02T13:52:54.097

I see. Well as I see it now, there's no point in (pre-)ordering a mining rig as the ROI is not guaranteed, what is certainly guaranteed is that around May-2014 even the strongest rig currently offered will produce 0 BTC monthly... and god knows when those pre-orders will come through.

Seems like 2014 is the end of the BTC mining 'industry' ... – mindbomb – 2013-10-02T14:04:10.207

Well... if miners find that they can't cover their costs (electricity etc) by mining, then they will stop mining, and the difficulty will fall again. In the long run, we should expect that the costs of mining will about balance the revenue, so that you approximately break even. There should be a modest profit available (or nobody would do it), but enormous returns shouldn't be expected. – Nate Eldredge – 2013-10-02T15:11:39.423