Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Technical Analysis of Bitcoin Mining

May 11, 2013 at 3:28 by Nicholas Gager

Bitcoins are decentralized from any central government to eliminate the possibility of overproduction leading to inflation. This leaves the creation of the currency up to the users; the process of creating Bitcoins is called mining and is done by allowing your computer to basically solve math problems, and the miner is issued a certain number of Bitcoins for finding the solution.

Over time the difficulty of mining Bitcoins has slowly raised which has led to the creation of specialized computers known as ASICS. There are two main competitors currently in the market of creating these specialized computers Avalon and Butterfly Labs.

Butterfly Labs produces four different models of computers built for the purpose of mining. The speed of the miners varies from 5 GH/S to an incredible 1,500 GH/S; with the price range varying from about $274 to upwards of $40,000.  Most of the models that Butterfly Labs sells are available on demand aside from their 1,500 GH/S BitForce Mini Rig SC.

Their competitor Avalon produces computers of the same power, aside from the 1,500 GH/S model, but with two downsides. First the Avalon products require more electricity than similar Butterfly Labs models reducing the profit margin of running the miner; second Avalon only ships in batches requiring you to wait a longer amount of time to receive your specialized miner.

By comparing the two competitors we can see that Butterfly Labs produces the cheaper, more efficient, and most available computer.

According to Blockchain the total mining profit for the last 24 hours totals in at $521,387.80 with the electricity cost of running all the miners totaling in at $203,944.50. This means that miners have made a profit of $317,443.29 with an operating profit of 37.94%.

As of 10:26 CST according to Mt.Gox the weighted value of the Bitcoin is at $118.18 having hit a daily low of $122.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply