Recently I decided to utilize my workstation's video cards to mine for Ethereum while I am not working and sleeping. My 2 GTX 1080 GPUs running 24/7 should yield me about $100 / month, not taking out electricity cost or wear and tear on my hardware. But then I started to wonder where will the Peak in Ethereum be? So I worked the numbers.
Anyone who was mining back in the Hay days of bitcoin remembers what happened. We all started out mining with our CPUs, then GPUs, then arrived the ASICs which priced GPUs out of the Bitcoin mining business. Thousands of miners found themselves sitting with GPUs that had no use. Today if you don't have the latest ASIC hardware that can mine at 10 TH/s + don't even bother. Most bitcoin mining today is controlled by large farms with specialized hardware. It was a fast moving arms race where the latest hardware was making other systems Obsolete after just a couple months.
First of all its not possible to use ASICs to mine for Ethereum. The algorithm used is a memory intensive one, that requires at lease 4 GB of GDDR5 memory to be competitive. ASICs designed to hash bitcoin are cheap. Memory is not. This is why you don't see any companies making hardware specific for mining Ethereum. The cost wouldn't be much better than GPUs.
This means the world's ability to mine Ethereum is limited to the number of beefy GPUs produced by AMD and Nvidia.
Of course as more people get into mining the difficulty level will increase, The limit to this is in the efficiency of the graphics cards. As soon as a miner is paying more in electricity than they are making, they stop. The only exception to this is those who are mining on substidized electricity , or electrical connections who have no meter ( think cheap apartments built 40 years ago ). Of course the free ride won't last forever. Landlords are not going to let some guy setup a bunch of miners in their apartment racking up what would be a $800 electric bill each month. So lets assume that all the free rides are gone and miners are forced to pay for the electricity they use.
2 x EVGA GTX 1080 GPUs.
My system with stock settings can hash at about 21 Mh/s per GPU. When I overclock the memory I can get this to almost 26 Mh/s per GPU. At the current Difficutly level I can earn about 0.0125 Coins per day ($3.75). My system when mining uses about 430 watts, which is about 10.3 KWh per 24 hours. 10.3 X $0.115 / KWh = $1.18. This gives me a profit of about $2.80 per day, or $1022 per year.
The problem lies in the fact that as miners continue to upgrade their hardware, and more people get into mining, the total hashing power of the network will increase, lowering the returns of my mining setup.
Taking out the cost of investment in the hardware, and only going by the profit based on what I earn vs what I spend in electricity I decided to calculate at what difficultly would my setup no longer be profitable. This is of course assuming that the value of Ethereum does not increase. Once the Difficulty level reaches 5011814295307890, My system is no longer profitable. Current Difficulty is at 2210162269M. Difficulty is increasing at about 45% per month. So by 10/5/2017 difficulty should be 3204735290M, and by 11/5/2017 4646866171M, and then finally by about 11/10/2017 I will reach the Point of Zero Gain. This all of course assumes the rate continues to increase at 45% per month and the price does not increase. Fortunately it seems the increases are slowing down, and the price is likely continuing to go up. I am guestimating that I will be able to continue mining til the end of 1st quarter 2018. People using the latest AMD Vega 56 and 64 cards will likely be able to continue mining way beyond that point. However those using the more power hungry R9 GPUs will be priced out of the mining business. Eventually all that will be left is farms of AMD Vegas.
Those in the mining business who have spend thousands on multiple GPU rigs, are seeing the end is near. and have opted to try to sell their hardware on ebay before the sheep figure it out. As cool as it would be to have an 8 GPU system mining Ethereum, I likely would never make my money back.
I remember back when millions were being thrown at startup websites in the late 90s. The same is happending today with the Cyrto currencies. There are well over 50 different types to choose from. Most will not last. The only thing hold them up is the speculators. Once either confidence in the coins is lost or the government shuts them down there will only be a few remaining coins left. Once EOCs grow to the point where their market cap rivals that over major companies, the end will be near. The lack of regulation will result in them being shutdown, or taken over by centralized forces. There is too much black market money flowing through them to allow them to continue to run wild.
If you decide to start mining, do it with your current hardware, but don't go out and build rigs dedicated for the job. When the bottom falls out you want to see use your hardware for real work, and nobody needs 6 GPUs to do Real Work. Plus when the bottom falls used GPUs are ebay will sell for pennies on the dollar. Don't assume you will be able to sell your hardware at a later date and get your money back.