Why it is impossible to profitably mine bitcoin (BTC) with GPUs — but still quite profitable to mine litecoins (LTC)

I recently had a conversation in which someone asked me to help build them a bitcoin mining machine.  I explained that looking at the mining configuration hash rates, they should not bother unless they had access to a new ASIC miner.

The problem is even if they do not have to pay for electricity (e.g., it is “free” somehow) the difficulty rating is rising so fast (double digits at every adjustment) that even a top of the line ATI GPU is equivalent to “old school” CPU mining at this point.  They would get mere fractions of BTC even if they set up two or three ATI 7970s.

For example, check out this bitcoin mining profitability calculator and plug in the numbers… only gigahash (and now terahash) producing ASICs will get anything useful out of it.

A souped-up, overclocked Radeon 7970 will do around 700 Mhash/s for BTC.  So let’s say you connect three of the best Sapphire Vapor-X, they are listed at $440 a piece.  Factor in the rest of the system (cheap hard drive, ram, cpu, stable power supply, milk crate) and you are pushing at least $1,700 yet only producing 2100 Mhash/s.

Plug that into the calculator, the break even will be >10,000 days because you are only mining 0.0017 BTC a day.  Assuming you did it for 365 days and the rating difficulty didn’t increase (which it does at double digits every reset) you would end up with 0.6205 BTC in one year.  But again, this wouldn’t happen, more than likely you would get less 0.1 BTC the first year.  And nothing at all the year after.  Why?  Click here to see the visualization of the bitcoin difficulty rating this past year.

Again, you would be much more profitable mining Litecoin, for example, if we use that same system you would end up doing about 2100 KHash/s and generate about 1.42 LTC / day (here is a litecoin estimation calculator).  Note: LTC mining is extremely memory intensive, hence the substantially fewer hash/sec.

But even then, this would decline as the difficulty rating increases each reset.  Best case scenario, that rig would get about 400 LTC/year.  The highest a LTC has sold for thus far this year has been about $20, so you could earn $8,000 in a year (assuming you sold the coins and didn’t save or reinvest them).

Thus, it is far more profitable to mine LTC than BTC.

But let’s go back to the 0.0017 BTC you would make if you set up that system today.  Even in the rosiest of conditions, where one BTC was worth $1 million, .1 would be $100k, .01 would be worth $10k and .001 would be worth $1k.

Therefore, even in the most optimal scenario, there is no GPU solution that is profitable mining BTC, even if the electrical costs were free.

One litecoin now worth more than one ounce of silver

Today, for the first time, one litecoin sold for more than one ounce of silver on the exchanges.

On Okcoin it is 132 RMB ($21.38) and on BTC-e it is $20.10 — versus the spot price of silver that is just around $20.

This of course is merely coincidental symbolism but this also begins the countdown until one BTC (~$860) passes one ounce of gold ($1255).

Wonder how long it will take either to surpass the inflation-adjusted historical record of both?

Science & Technology Roundup: #2

Lots of interesting research and discoveries the past 10 days:

Another Brick in the Wall: Link Edition #53

No big business news again this past week, but several interesting stories and anecdotes.  Thanks to James M, Suzanne F and Sinocism for a couple links.

Another Brick in the Wall: Link Edition #52

Bitcoin was the hot topic this past week, hitting an all-time high at around 7,000 RMB two days ago which is more than $1,100.  It has since dropped by more than half.

Stat of the day: animation in China

Apparently animation companies receive lots of preferential treatment and subsidies which had unintended consequences, from HuXiu:

In 2011, China produced more than 260,000-minutes-long tv episodes of animation, which is 180,000 minutes more than Japan, the second biggest animation-output country of the world. In 2012, a total of 117-thousand-hours-long animation was aired in China.


As a result, fake companies and fake projects arise in the animation industry, taking advantage of the favorable policies by enjoying the generous subsidies while contribute nothing. More than 30 animation festivals were planned in eight months, and more than 20 cities claim they are working on becoming “the City of Animation (动漫之都)”.

Science & Technology Roundup: #1

In addition to reading Asia-related business I typically read through a number of online periodicals regarding science and technology topics.  While this is a side hobby some readers may be interested in this segment as well.  Feel free to send me stories as some of you have with China.

Another Brick in the Wall: Link Edition #51

No big business stories (since nothing changed during the Plenum) but the one-child policy is officially being reformed and several foreign sites have been blocked (the Chinese version of Reuters and the Wall Street Journal).  Only official criticism allowed…

Another Brick in the Wall: Link Edition #50

The story about LEGO below is very interesting, I briefly mention them in my book but their growth has even surprised my optimism in that segment.  The censorship posts about Weibo are very sobering too.

Another Brick in the Wall: Link Edition #49

3rd Plenum has ended but no specific reforms have been publicized yet.  Par for the course.  And Single’s Day (11-11) broke more e-commerce records.

Another Brick in the Wall: Link Edition #48

Probably the most important story for most foreigners out here is the coming stagnation of the EFL industry, see the WSJ article below for more details.

Thanks to Sinocism for several links:

Another Brick in the Wall: Link Edition #47

The WSJ article below about EFL education is very sobering to anyone wanting to get involved in that area as the segment may decrease in size in the long-run due to institutional changes at the city and provincial level.

Thanks to James M and Sinocism for a few of the links.

Another Brick in the Wall: Link Edition #46

I’m surprised that there have not been any overseas initiatives to work with local match-makers to help the 30-40 million single men in China of “marriage age” (and who will not be able to find a local bride due to a lack of available numbers)?  While that may have been a crazy idea just 10 years ago, in the age of Weixin and OK Cupid, it may just be a matter of time for laonei and laowai to become better acquainted.

Thanks to Peter J and Sinocism for a couple links.

Another Brick in the Wall: Link Edition #45

I am in the process of packing and moving so not many comments right now, a few interesting stories.  By the way, if you do plan to live in China for any length of time, 58.com is pretty useful for buying/selling directly from others (like Craig’s List).