Bitcoin mining is a resource war of attrition, so naturally the profit margins will continually dwindle as the network hash-rate continues to increase. This factoring the increasing variable adjusted difficulty to mine BTC.
As the overall bitcoin network hash-rate increases as more mining units are manufactured and added to the network, the mining units being used now become less and less powerful in terms of the amount of bitcoin they can expect to mine on average over their lifespan-- and mining rigs quickly become "obsolete" as faster miners are developed, network hash-rate increases, and difficultly goes up.
Miners are then stuck holding units that are now mining at a loss, a loss which gets deeper and deeper by the day, because the cost of the electricity to power the miner can no longer be offset by the profit the mining rig produces. The price of bitcoin also contributes to this, if it deceases, your profits slide with it.
It's a constant battle.
I started mining bitcoin in mid 2014, receiving batch 7 units of Bitmain's Antminer S3+. With 26 units running overclocked, we were able to get roughly 12 TH/s of mining power combined.
At that time-- (difficulty went up and down and had spikes and drops) but we AVERAGED about 0.50 BTC per day with that setup.
The power consumpution: Roughly 14 kW of Electricity which broke down to roughly 10 kW for the units, 1 kW for ancillary equipment (server mainframe/networking), and then another 3 kW for cooling costs-- as miners output immense amounts of heat.
TODAY:
If you were to run this setup you would would be operating at a loss of about $40/day not even factoring the costs of the equipment/miners/AC Cooling/etc. (Based on $0.12 kWh Electricity Costs).
ONE YEAR LATER:
Our 26 Antminer S3 units were no longer profitable to run. So we purchased 16 Antminer S5 units- giving us 18 TH/s of mining power, which were more effecient power wise, and we were drawing the same amount of power... 14 kW.
ONE YEAR LATER:
The S5 units we purchased were now only breaking even in terms of AC costs.
WHAT I LEARNED:
Mining bitcoin is hard. Mining bitcoin is very expensive. You not only have the upfront costs of the equipment, but the costs to run that equipment.
You are also in an arms race, literally, with all the other miners. The miners you purchased will immediately become less and less effecient/output less BTC per day if difficulty increases.
You will have to constantly be playing the game of replacing your current hardware with new hardware that is more effecient.
ANECDOTE
However, after 2016 Block Halving of Bitcoin, when BTC almost reached $20,000-- suddenly the OLD S3 units were absolutely profitable to run again. So we were able to put some of them back into service (power limitations didn't allow us to run all of them).
This was a small farm, and we were drawing 14 kilowatts of AC every hour. That was, at that time, $1200 in AC costs per month.
FINAL THOUGHT
ASIC technology in terms of the silicon wafers produced will reach a point at which they can no longer be made to run or clock faster than the silicon circuit allows. So unless an entirely new type of technology is created (
The NEW Antminer S19j Pro not yet even shipped and is already SOLD OUT, will give you 90TH/s of mining power drawing 3000 watts of AC-- meaning you're going to need a 240v 3 Phase circuit to power it... Will give you a YEARLY profit of roughly $8000 (not including the price to buy the unit)
HOWEVER, that's only if you had the unit today; which you don't (hasn't shipped and is sold out)... Also, that's also ONLY IF the difficulty of the bitcoin network does not increase AT ALL for a full 12 months... AND that he price of bitcoin remains at least at it's current price today of $48,000.
The unit costs $5000. You profit $8000... if and only if all of the items directly above happen-- price stays at $48,000, difficulty does not increase... etc.
If the difficulty increases month after month, you will reap less profit, lower each month. If the price of bitcoin drops, you're in real trouble.
END ALL BE ALL your profit after purchase is $3000. If BTC goes down $3000... you break even.
So that's why I got out of the mining game by 2016 after he halving.
It was a full time job keeping everything going, and while we were mining 0.50 BTC a day, the value back then dropped at one point to under $100 per BTC... So all the BTC we mined had lost a lot of value.
It was an expensive investment to make purchasing 26 S3 units, replacing 12 months later with 16 S5 units, all the AC costs, meanwhile, not selling the BTC we were mining... It cost a LOT.
Now the game is too tough to even break into unless you have major money to spend and know what you are doing in terms of implementing the technology, and rolling it over, replacing, and gearing up constantly...
It's War. The ammunition, is Electricity.
The Weapons are the mining Rigs.
Cheers!
StratoBTCitz