Bitcoin Blogger: Is It Better To Buy Or Generate Bitcoins?

Nice calculation. certainly it is not worth building a machine for bitcoin creation. However if you already have this computing power sitting idly then you should calculate only the costs of the extra electricity that you need to consume to generate a block. Has anybody done this?
If you want to build a bitcoin generation machine you are probably better off buying a FPGA board and designing a dedicated hash calculating hardware monster.

Interesting note: If one puts 4100000 hash/sec in the calculator then you get 10 minutes average.
10 minutes is the actual target average block production rate.
This means that currently the the total computing power working on solving hashes is 4.1 Mhash/s
or about 900 quad cores. or 3-4 thousand laptops. Pretty impressive!

This means that there are some people who think it is interesting to produce bitcoin.
Who knows why, I stopped several difficulties ago.

I can't wait for someone to write an application that allows group mining of bitcoins.  I just can't wait one month to see 50 bitcoins.

I think that you missed the point of the blog article.

I'd say: it depends. 

if you need coins to do stuff right now, there's no guaranteed way to generate them anyway, can't be "better" that way.
if you dont need coins and just want to support the network, there's no need to buy any (or generate, to try would be enough).

can't even say which is cheaper, or less expensive, that again depends on where you live and what you have to invest (in power and/or hardware).

for me:
i just went down from ~8000khs to ~1500khs at the latest difficulty-step, so i'm actually not expecting to gain lots of coins in the near future, but still generate to help find new blocks.
running a machine (that sucks up >20W) only to generate coins is already useless to me (or needs to be bought/build/invested in first) and (watching current difficulty and market-prices) will prolly result in a loss.
i'm wondering anyway, why the market didn't change at all the last 2 diff.steps, watched and waited a bit, but this is it for me, i'm done generating coins.   
sad thing is, that i have to wait about a month to get coins from MtGox too, but i'll at least get some more than 50btc at once, we'll need some other payment-options there quick.


nice article!

The article is all about the cost of the hardware, neglecting the more significant cost: electricity.

Once you're above baseline power of 11 kWh/day (as any geek is), Southern California utilities get about $0.13/kwh marginal, with taxes, distribution, etc.
The 24-core beast built in the article probably draws some serious current.  Hard to guess how much, but I'd guess about 500W?  Anyone know?

This will add 360kW/h a month to your electric bill, which will easily drive you into the next pricing tier, or maybe two tiers higher.  Now your marginal power can be $0.18 kW/hr.
Yikes.
That bitcoin miner would be about $2/day to run, or $788 a year, which means you've never matched the hardware cost of the system in two or three years.

If you have to actively cool the room with the computer, at least during daytime, double it again.

This is a calculation that depends highly on who you are and where you live.  I live in an area that recently had a 10%+ residental electric rate hike, to about 8 cents per KWH.  This is only slightly more expensive per btu than using natural gas with a 90% efficient gas heater versus a 100% efficent electric heater.  So the price difference for me to run any computer full tilt during the heating season, which is most certainly longer than Southern California, is about half a penny per kilowatt or less.  I don't even know anyone who bothers to shut down their computers from September to May to save money.  There's also someting to be said for the soothing white noise of a (good condition) cpu fan as the beast in the corner crunching numbers keeps your bedroom a couple degrees warmer so that you can turn the house thermostat down to 69 degrees at night.  I can't prove it, but I would bet that I actually save energy doing this, because otherwise my wife would insist on turning up the heat.

difficulty increases of course weren't surprising, we can expect some more sooner or later. 
what surprised me was the non-responding market.
if sellers have to invest more time/energy into mining, why do they still sell that cheap?
i'm ok with it though, i wanna buy anyway. 

The power to the screen gets converted to heat too, even the light produced would get converted to heat.

What you have calculated is the power requirements of system with a single Phenom II X4 processor, the article talks about 6 such processors in one system.

A single Phenom II X4 consumes at full load approximately 125W (see TDP: http://en.wikipedia.org/wiki/AMD_Phenom), 6 such cores would consume about 750W, so a full system including memory, video, motherboard, will draw about 900W, assuming a 1000W power supply unit (a somewhat pricey device which is oddly forgotten in the article) with an efficiency of around 80% you can expect drawing over 1 kW 24/7 running such a system. Assuming 1kW and you pay 0.15ct for each kWh that would be about 3.60 every day on power consumption. That's a little bit more than the value of generating one block (which gives you 50 bitcoins).

As you're expected to generate one block each day, you would actually lose money generating bitcoins, even when you got that $2000 system for free. Of course this is assuming you pay a more or less standard price for electricity, don't have any excess self-generated electricity, you don't recycle waste heat, ...

I set up a Kill-a-Watt to my computer and calculated with 2200 khash/s, I was using 140 watts (monitors off). According to the calculator, I should produce a block every 14 days, 2 hours, 3 minutes, or every 338.05 hours. It would cost me 47.327 Kwh to produce a block, at 12 cents per Kwh, thats $5.68 per block, a net loser.

What is interesting is the reports of the people producing 25,000 khash/sec with their video cards in the CUDA thread. If they are using less than 1000 watts (and should be), it would be profitable again to produce, electricity wise.

Difficulty level 1000 by year end.

i just did a short test on the lately released cuda-client, here's the results

AMD X3 @2.8ghz
->stock client
~3800khs ~150Watt


GTX260
->puddinpop's cuda client
~33000khs ~200Watt

cpu-work isn't profitable for me anymore, i already shut down most generators at the latest diff.step,
gfx-crunching would indeed be profitable again,
i don't really wanna trust a client that fondles with my balance on it's own though, so i don't use it.
hopefully we'll see an open source client some day.


but your joking about that 1000, arent ya?
end of the year?
maybe end of the week.  

I don't like the total cost of the computer. You could do without the keyboard, mouse, monitor. In addition, get the cheapest RAM stick you can find, a cheap 8GB SSD (energy saving) then install Debian 5. Access it through SSH and turn on bitcoin. You could easily do it to $300-$500 less and cut power costs by getting a high-efficiency PSU.

Once the GPU client gets perfected, I'm going to get a GTX 465, throw in a cheap dual-core CPU, 512MB RAM, and a case/cpu combo; then I am going place it in a closet and let it print Bitcoins for a year or two. It's about a $500 investment but with patience and careful energy management it might profit.