Estimating your ROI
When estimating your return on investment, there are many different factors to consider. Whilst we can’t comment on your specific circumstances we can share some information on how us here at The GPU Miner calculate our own profitability.
Let’s look at an example!
To illustrate this, we’re going to working on the assumptions below.
You buy 5 of our 200MH/s Pro Miners for £22,000 (ex VAT) to have 1GH/s of hashing power on the Ethereum network.
We’re going to assume all 5 rigs are hosted and we’ve prepaid so access hosting at £85 per KW. As our Pro rigs are super efficient and using ONLY 850w each, the total power usage is 4.25 KW which totals £4,335 ex VAT per annum. This is an all-in fee covering rent, cooling, setup, basic maintenance and is headache and hassle free – and it’s cheaper than running it at home!
So… now we need to look at how much coins we mine. Now due to mining difficulty, the amount of Ether coins our 5 miners earn will change slightly over the course of the year. It’s hard to determine the exact amount of Ether coins but we will estimate the amount based on today’s factors – and simply acknowledge this could be MORE or less than the amount stated.
In the calculator below let’s enter 1,000MH/s or 1GH/s with a 1% pool fee. We are leaving power costs, maintenance fees and hardware costs blank – because we’re paying a fixed hosting fee and will account for everything separately. We’re ONLY INTERESTED in the amount of Ether coins mined over the year.
Putting it all together
COINS MINED PER ANNUM
When we did our calculation, it shows 28.5 Ether coins mined per annum x 2 years = 57 Ether coins
EXPECTED FUTURE SALES PRICE
This is where we need to make some assumptions… we’re selling in the future so we’re going to ignore any current mining profitability and the current price of Ether – see below for rationale. We now Ether’s previous high was approx $1,400, but in 2 years time we expect this to be surpassed and let’s say we expect it to rise to a modest $2,000 per coin.
$2,000 x 57 = $144,000 REVENUE which is £80,930 (April 18)
The bottom line
Running costs: – £8,670 of hosting
Profit: £72,260 in 2 years which is a 328% ROI with a payback period of 6.5 months.
We still have the hardware costs of £22,000, so even if we write this off at cost, profit is still a massive £50,260. However, this is hardware which is likely to have a resale value (let’s assume 25%) so actually, profit would be in the region of £55,710 on modest estimates. As soon as you recover your cost of capital, everything earned after is PURE PROFIT.
We are selling in the FUTURE when we expect the price to be HIGHER than it is today – otherwise, if we expect the price of cryptocurrency to be lower in the future we wouldn’t even invest in cryptocurrency mining in the first place…that would be a terrible decision.
Luckily, we’re smart and believe in the blockchain and the future. The amount of investment capital which has gone into blockchain companies looking to build decentralised apps and innovative new technology on the blockchain is MASSIVE. This alone is going to positively impact the price of cryptocurrency. Compounded with the industry becoming more accessible to the majority and regulation improving security the demand and adoption of cryptocurrency is going to increase — and you guessed it — this is a GREAT thing which is going to help drive up prices.