by Robert DeVoe
Canadian Dan Ingram appeared on CBC News this week to talk about his latest endeavor, a backyard Bitcoin mining operation. Seen pictured in front of several Bitmain S9’s, Dan claims that this is not a get rich quick scheme. He told CBC that if he wanted to get rich quick, he “would’ve just bought bitcoin, and just sat there and crossed my fingers.”
Financial Sense or Digital Nonsense?
Is Ingram crazy? According to his wife Amanda, no, he’s not. She told CBC “Most of his endeavors have been profitable,” and “They may sound crazy, but I trust him.”
While we don’t have many specifics of how his C$100,000 ($77,818) was spent, let’s consider a simple scenario, and see what kind of returns Ingram may, or may not see from his investment.
The listed cost of a Bitmain S9 is currently… unknown. The miners are always in such high demand that Bitmain almost never has available stock, and pre-orders made months in advance are the norm. The article states that Ingram paid between $1,500 and $1,600 each, plus shipping and taxes. For the sake of argument, let’s assume that Ingram paid around $1700 for each miner. Ingram owns 11 S9’s now, giving us a total of about $18,700. However, they have ‘many more’ that just arrived.
For our calculation, let’s assume that Ingram has 25 of the devices. That would total out to $42,500 in exchange for 312.5 terahashes.
Next, in order to build even a somewhat large Bitcoin mining operation, one would need to procure some infrastructure in which to set it up. Cables, racks, and so on. The article states that additional S9’s are being set up in a warehouse space, but contains no other details. This is likely where the rest of the roughly $80,000 is allocated.
Profit or Loss?
With all the above variables assumed as stated, and with an electricity consumption of 1600W per unit, and an average price of $0.10 per KwH, Ingram stands to make a hefty profit. In fact, he will likely see his return on investment in just 108 days of operation. Not only that, he stands to earn nearly $270,000 in total income in one year (at current difficulty rates and BTC price). Specifically, he is looking to earn 1 BTC every 20 days or so, or almost 20 BTC per year.
There are, however, a large number of variables to consider that could affect profitability. Such as machine downtime for maintenance, network difficulty spikes, or a change in electricity prices. For the time being though, Ingram is looking to earn a handsome return in exchange for his risk taking. If BTC prices continue on their massive upward trend, that may prove to be even more true. Many industry experts have speculated that bitcoin may meet or exceed one million dollars over the next decade. Only time will tell if Ingrams investment turned out to be a wise one, or not.