Quote from: noodle73 on August 12, 2014, 01:14:00 PM

I'd love to know at what point it becomes uneconomical for the corporates currently piling in and they pull the plug.
I imagine small miners have more endurance for making losses than they do, not that it helps right now...

There is a VERY large difference between sunk costs and new capacity.
We are still running avalons from batch 1 and 2. Would we buy another one of those? No.
But as long as the money returned from mining is more than 1.25X the cost of mining, you would keep a machine operating. But you would never buy a new machine. Personally, I would not buy a new machine if I thought it would take more than 100 days to return the capital from the purchase (at bitcoin's vol, you would be crazy to -- buy the coins if you just want to speculate on bitcoin price, the optionality you gain by the liquidity in coins vs. pre-ordering a coin maker is worth a fortune).

So, let's focus on the question of when do you shut down an IN HAND SP10? You can solve for this but there are two variables that affect the answer. Difficulty and price (and they counteract each other). Electric price is there too but that is known (it varies for many people but is known for the user).
Why do I not include 'rent'? Because the cost is 'SUNK'. Most people have leased the building and will have to pay it whether the machines are on or off. Sunk costs are not used to determine what you would do on a variable basis, only the costs that can be eliminated are.

I will use 5 cent per kWh electric since that will allow people to extrapolate for residential and for the people that host in data centers and likely pay around 20 cents total.

Cost of operating 1 SP10 = 1.2kW X 12 days x 24 hours x $0.05 = $17.28 per difficulty adjustment.
So, you should turn this machine OFF when the risk of returning profit gets too high (because the $17.28 is FIXED and will have to be paid if it runs). I would turn off when the machine produces only $17.28 X 1.25 = $21.60 of bitcoin produced.
To solve for difficulty, let's use $400 as the bitcoin exchange rate.
$400 btc = 21.60/400 = 0.054 bitcoin.
Bitcoin produced in the difficulty period = 43,200
Share of the network required to produce 0.054 bitcoin = 0.054 / 43,200 = 0.00000125
How large would the network need to be to turn the SP10 OFF? 1.4 TH/s / 0.00000125 = 1,120,000 TH/s