Why it’s Wrong to Mine When it’s Unprofitable

There are many people pushing the idea that you should keep mining, even when it’s unprofitable, because someday the coins might be worth more. I disagree. If you really want the most coins and/or fiat at the end of the day, you should not mine when it’s unprofitable. You should instead, turn off the rig and buy the coins directly.

Please note that I’ve been mining for a few months and have no intention of stopping. I’m not suggesting that mining is dead or that everyone should sell their 1080ti’s. If your rigs are profitable, run them. I’m suggesting that if they aren’t profitable at today’s values, you’re financially better off to not run them.

“Unprofitable” to me, means you pay more in electricity costs than you receive in current coin value.

Let me head off this one and just say that most coins ARE still profitable right now on most GPU’s. Just not as much as last month. It’s only unprofitable right now with low end cards and expensive electricity. For example, a 750ti with $0.25/kWh electricity will “make” $0.41/day but will cost $0.45/day in electricity. That is a losing proposition and that’s what I mean when I say “unprofitable”.

Here’s the main reasons I see when people choose to mine unprofitably.

In 6 months, those coins will be worth 50x what they are now. You gotta mine based on future value.

My stance is that this is incorrect. The future value has absolutely no bearing on profitability right now. The only thing that matters is the cost to mine them today vs their value today. The best way to convey this seems to be with an example.

Let’s say we built a few low cost rigs a year ago and we have 100 750ti’s in our mining farm. According to the WhatToMine website, they will make $0.41 per day in revenue mining on NiceHash. However, it will cost $0.45 in electricity per day to run them, for a net loss of $0.04 per day. Multiply by 100 and we have $41/day in revenue at a cost of $45/day. Loss of $4.

By mining for the coins, you are paying $45 today to buy $41 worth of coins. I would rather take my $45 and just buy $45 in coins. I now spent the same amount as you today, but I have $4 more in coins. So, in 6 months when they moon, I’m going to have more coins than you.

This is also sometimes justified by saying you’re not mining fiat, you’re mining crypto, but the same rule applies. If you want the most crypto at the end of the day, you’ll get more if you buy it than you will by mining unprofitably.

So what about the investment in my rigs? I already paid for them, so I might as well keep them running, right?

Nope. Unfortunately, that investment is a sunk cost. Even if you paid $10k for all those juicy 750ti’s, you still make less money each day that you run them at a loss. Even though it feels wrong you’re better off leaving the $10k paperweight turned off and buying $45 in coins. *$10k is a made-up number used only as an example.

Assumptions:

  • You are mining as an investment and not because you want to support the crypto industry.
  • Your goal is to make as much crypto and/or fiat as possible.

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