Bitcoin ASIC ROI

Going along with my earlier post, someone asked me about Bitcoin ASICs and their current ROI. I'm going to give my thoughts on the subject, but know in advance that there's one real killer: all of the worthwhile Bitcoin ASICs are pre-orders, which means you have to fork over a large sum of money in the hope of future profits. It's a huge risk, with quite a few companies failing to ship at anything close to their originally promised dates -- Butterfly Labs being the easy scapegoat. But let's just start with a few of the ASICs that are currently promised.

The Block Erupter was the original ASIC, used by ASICminer back when no other companies weren't yet shipping. They are now readily available, but difficulty has skyrocketed and the prices on Block Erupter haven't kept pace. At present, a single Block Erupter USB ASIC will cost around $80 new, $45 used. Why would anyone sell one of these awesome miners for half price if they're so great? Simple: they're not great -- at least not now. At the current BTC difficulty, a single USB Block Erupter will earn less than $3 per month. Difficulty is increasing pretty consistently at 15% every two weeks (thirteen days), so you'll likely never earn back your investment.

A 10GHash Block Erupter Blade is marginally better; you pay $489 new ($387 used) and generate roughly $85 per month. Note that you need to add a power supply and some other parts to the mix, so $489 doesn't just get you up and running. If you're ready to try that route, you could go with a Block Erupter Cube with three blades, for 30GHash, priced at around $1200. Add a PSU for $100 or so and you'll generate about $325 per month in profits at the current price/difficulty ratio -- so you could potentially match the break-even time for GPU scrypt mining of Litecoin.

Difficulty is of course still going to curtail those earnings, which means in reality it's more like $150 in the first two weeks if you have the 30 GHash rig right now. The next two weeks you drop down to $127, then $108, $92, $78, $66, $56.... That's assuming a constant rate of increase, but what you end up with after one year is that you will actually be past the point where the Block Erupter Blade or Cube earns money, and you'll never actually recoup your initial investment. Add in some of the faster upcoming ASICs that will likely spike difficulty and it looks even worse. So Block Erupter is out.

Let's take one of the hot new ASICs, the KNC Jupiter. It was offered for $5000 for 550GHash, which at present means if you ordered one and now have it up and running you're making around $175 per day and you'll hit the break-even point in just over a month. But they're sold out... so if you want one, you can buy this used one for "only" $20,000. A year from now, instead of rolling in the dough, difficulty increases will mean you'll have earned about $16,000 back from your initial investment and the miner is no longer profitable. I suspect difficulty increases might slow down somewhat, so you could at least break even in a year, but it's still a dicey proposition.

If you want to take a gamble on a not-yet-shipping ASIC, Cointerra is asking $6000 for a 2THash (2000GHash) TerraMiner IV that will show up around April. If they hit their ship date, you break even in about a month, and even if they're a month late you still break even in about 60 days. And realistically, I think difficulty increases will slow down for a bit, as the TerraMiner IV is one of the most efficient ASICs and it's only available in limited supply, which means five months from now you recoup your investment and you actually break even just three weeks after you start mining.

It sounds great on the one hand, but considering you could potentially take the same $6000 and build four perfectly capable scrypt-mining rigs today, it's still a gamble. You could have four rigs with three R9 280X cards each pulling a total of around 9000 KHash/sec up and running within the week. Six weeks to eight weeks and you could be free and clear on your initial investment, while those betting on CoinTerra are still two or three months away from getting their TerraMiner IV.

But I'm just staring at my crazy little crystal ball, so don't take this as anything set in stone. More likely than any of the above scenarios of course is that prices take a dive, at least for the short-term, which means your $6000 investment in hardware is going to make a bunch of noise and look like a money loser for months or even a year, until we get the next big bubble and you're sitting on $100K or more of LTC/BTC/whatever. And if you're an entrepreneur and can play the long game, why not diversify and buy $12000 worth of hardware (one TerraMiner IV and the rest into GPU rigs for scrypt)? One of them is bound to give at least a 2X ROI, paying for both, and the rest is just gravy.