Quote from: QuintLeo on May 27, 2017, 11:32:52 PM

Quote from: gwestcot on May 09, 2017, 08:23:16 PM

Quote from: QuintLeo on May 09, 2017, 07:48:12 PM

Quote from: tobacco123 on May 09, 2017, 04:12:17 AM

At the moment, it is not a viable business opportunity, unless you have millions of dollars to start big.

It's ENTIRELY practical to set it up as a profitable business on a LOT less than "millions" - just not HUGE scale, and you have to mind the costs a bit closer than the big-scale folks can get away with.

$100k would be PLENTY to start up a small professional mining farm BUSINESS - I'm pretty sure I've got less than HALF that invested INCLUDING reinvestment of a lot of my mining income for the 4 years or so I mined "as a hobby".

Cooling costs had better be a LOT less than 50% of your electric use - you can do mechanical air conditioning for less than that, and THAT makes costs quite a bit too high to be truely competative.
If you're putting much more than 10% of your electric usage into cooling, you need to rethink your cooling setup.

Don't count on getting a business loan though, Cryptocoin mining is a LOT too speculative for most banks to even think about dealing with.

For a small farm, you don't NEED staff.

Water usage should be very small, unless you are using evaporative cooling - then it's STILL pretty small.

Idaho electric rates aren't all THAT low - for low electric rates in the USA, you're looking at 3 specific counties in Central Washington state.
Idaho might be a good bit less than 11 cents/KWH in areas it's got hydropower access though - but it's certainly not in the 3 cent ballpark.

1. No, For true cooling costs it will be around 50% and that is for CRAC units that are specifically designed to maintain temperature and humidity for data centers. Sure you can set up some fans and try to cool with ambient temperature but I don't think this is sustainable for long term growth of the mine. (This of course depends on if you live in Iceland or Canada)

2. I will generally agree with this point other than people have gotten financing from both government backed loans and also banks. It will be difficult but it is not impossible. In addition, there are other funding sources besides traditional banks.

3. I definitely agree! You only need 1 per 100 rigs on average or maybe if you are stretching yourself maybe double that.

4. https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
Idaho, as of Feb 2017, is literally one of the cheapest states in the entire country in regards to commercial electricity rates. I simply was talking generally about a state but yes if there is a hydroelectric dam then the rates could be around .03-.05 per kwh. The thing I found funny and surprising was Virginia is very cheap for commercial electricity rates.

1. the "data center" model of needing 68 degrees doesn't even apply to DATA CENTERS any more, and was a legacy holdover from mainframe and BIG mini days that has been dying for a while now.
Look up the Yahoo "chicken coop" data center design they've been using on ALL of their recent data center builds (specifically including Quncy WA), for a well known example of using AMBIENT airflow and flash evap misting for cooling.
Microsoft and Google have similar concepts in place in their large Quincy-based data centers.

Cryptocoin models don't NEED "old style data center" level cooling, and never have - if you're putting more than 10% into cooling, you are being stupid about it and going to lose a TON of money (perhaps 15% if you're in a VERY HOT area and have to use a lot of evaporative cooling).

Cryptocoin mining rigs should be able to handle 90 degree F temps as a general rule without issues, *IF* you have adaquate ventilation. More than that, you either start downclocking or if you can go evaporative cooling.

If you're going to put serious money into a cryptocoin BUSINESS, you don't set it up somewhere that is hot AND humid, BECAUSE that drives your electricity costs up to the point you can't make any money at it long-term.
(this is another reason for the large cryptocoin mining presence in Central Washington - it gets fairly hot but not REAL hot here, and it's DRY year-round - average of 8" or so rainfall A YEAR in the Wenatchee area and parts east).

2. Yes, a FEW folks have managed to get loans and such for a cryptocoin business - but most of them have been at the "BIG" business level with technology-orientated investment banks like SoftBank or venture capitol groups, or the loans have been "signature/personal" loans to someone with a very high credit rating, or in some cases (I know a few of these) folks putting a morgage on their home to finance starting up or growing a cryptocoin business.

4. don't go by "statewide" rates, which is the only thing the EIA reports.
Washington state, for the most important USA example, has different rates in different counties to my direct knowlage that range form a low of LESS THAN 3c/KWH FOR RESIDENTIAL USAGE (Chelan and Douglas counties, 4.5 for residential in Grant but the big-business and industrial rates can be LOWER than Chelan or Douglas by a thin hair and ALL 3 are well under 3c/kwh for large accounts) to well over 10 for INDUSTRIAL (the counties Seattle and Tacoma are in, and a couple of the adjacent ones).
I think the EIA reports Washington as a state at 8.something cents (lower than the national average but nowhere near the lowest in the US) - but Washington also happens to have the 3 counties that have THE lowest rates in the USA, despite not being anywhere near the lowest rate on a state-wide basis.

Chelan County PUD semi-recently made the news because of it's proposals for how to raise it's rates for "bitcoin mining operations" - but the final result was relatively minor, mostly they kicked up the "front end cost to pay for infrastructure" amounts quite a bit in their large user rates if you were setting up a "high density power consumption" operation - Douglas and Grant already HAD such provisions in their rate codes - and none of that applied to SMALL businesses, only to folks pulling in the MEGAWATT+ range.
Smaller folks saw only the same very minor rate increases everyone else got, 1-3 % ballpark.
I think MegaBigPower ended up getting hit with a 10-15% jump in total, and they're probably still THE biggest mining operation in the area - and I'm pretty sure they're STILL paying a fair bit less than 3c/kwh.

Idaho has some hydropower in the state, and a low population that doesn't have a huge power demand - their lows don't go AS low as Washington, but their highs are nowhere near the SeaTac metro area on electric rates.

Setting up a mining operation as a business is in most respects the same as any small manufacturing business.

Your "sell coin into fiat" is your gross income.

If you use coin directly to buy equipment, that has to be counted at the then-current fiat value as income.

Your miners can probably be counted as inventory, which offsets income used to purchase them - and you have to count their sale value as income when you sell them.
You DO have to sell them off sometimes for that, otherwise they have to be treated as computer equipment and depreciated as such - which sucks since ASIC mining gear loses value a LOT faster than most computer gear, and the IRS depreciation allowance for computer gear is ALREADY way too long.

Your rent, electric, water, sewer, garbage, and other costs for the space you put the miners into all count as operating costs.

1. Even with the traditional costs of air conditioning, I am currently making huge profits as I don't mine with ASICS but rather GPU rigs. ASICS are largely not that profitable now and thus that is why people have to resort to such cooling practices. I can tell you that when I made the switch to having dedicated air conditioning my hashrates went up a good 10% and my gpu fans don't have to run ragged. Just to clarify I don't keep it at 68 degrees as most data centers now keep it around 77-79 to lessen electricity consumption. I will have to now amend my cooling costs to being more in the range of 25-30% but to me it is worth it for the stability and sustainability.

2. I happen to be such a person with an exceptionally high credit rating and some extra capital laying around. Wink

3.I agree with you in regards to the rates. I know about the local rates as well but it was just to prove a simple point. Even though they have not increased the rates dramatically it is a reasonably good bet that rates will continue to rise as consumption in that area increases. However, there are still some low profile areas in other parts of the country that are in the .04/.05 kwh range.

4. I agree with the rest of your statement but it is simply basic business practices.